New UTSA study delves into income inequality and inflation
(March 6, 2017) --A new study by Edgar Ghossoub, associate professor of economics at The University of Texas at San Antonio, posits that income inequality, in varying economies, can have substantial positive and negative effects for people in all walks of life depending on what kind of financial system they live under.
Income inequality became a wide public issue after the 2008 financial crisis, which was followed in later years by the Occupy movement. Protesters were especially frustrated with the massive gap in wealth between the millionaires and billionaires of Wall Street and the average American citizen.
"Typically, we have different income groups," Ghossoub said. "The low-income groups hold mainly assets like cash, which comes from their salaries, whereas the richer groups have more money to invest in many different assets."
Ghossoub studied financial systems all over the world to understand the relationship between income inequality and inflation, which is the rising or falling value of money. He found that as a system grows and develops, income inequality tends to rise because people are becoming wealthier while many are remaining poor. However, the size of the country's stock market is also a major factor.
"An economy with a large, active stock market leads to less income inequality compared to one with a smaller stock market," Ghossoub said. "A stock market promotes capital formation, which leads to higher wages and a healthier economy."
Still, the rich benefit from the strength of the stock market as the poor continue to rely solely on their own income, which could be significantly weakened with rising inflation, because their money is worth less. In countries like Mexico, with a smaller stock market but higher inflation, income inequality has a more damaging effect on the populace.
"Normally we associate income inequality with poverty," Ghossoub said. "There's always this feeling of unfairness. If you're rich, you have the resources to defend your interests, but the poor are left behind. If income inequality becomes a larger problem, it can lead to social unrest."
He notes, however, that as long as a nation's economy is moving forward, positive effects will follow.
"Central banks should focus on stabilizing prices to mitigate the effects of financial development on income inequality. When we have financial development, everyone is going to benefit," Ghossoub said. "Some people are always going to benefit more, but as the economy advances the welfare of everyone is going to rise."
Read Edgar Ghossoub's study, "Financial Development, Income Inequality, and the Redistributive Effects of Monetary Policy."
Learn more about the UTSA Department of Economics.
Recruiters from across all fields looking to hire students with all different majors will be present at this event looking to hire for their full-time and/or internship opportunities. Dress professionally and bring lots of resumes.H-E-B University Center Ballroom (HUC 1.104), Main Campus
The UTSA Institute for P-20 Initiatives hosts this free breakfast to kick off a new school year and a new opportunity to volunteer at mentoring organizations in our community.Whataburger, 8680 Fourwinds Dr., San Antonio
As part of the International Cooking Series, the experts in the UTSA Demo Kitchen will show you how to make this stuffed bread Latin dish. Register for this cooking demo here.Recreation Wellness Center Demo Kitchen, Main Campus
UTSA's annual sustainability festival, showcases the university’s and the City of San Antonio’s progress on researching and developing sustainable solutions to improve the quality life for future generations.H-E-B University Center Ballroom (HUC 1.104), Main Campus
The institute will feature a performance from Eva Ybarra, the “Queen of the Accordion.” Manuel Medrano will premiere a documentary on Ybarra’s career. Two people receive free admission with a voucher available here.Institute of Texan Cultures, Hemisfair Campus
Get involved and register to vote. Click on the link to find out the locations on the Main and Downtown Campuses.Multiple locations on the Main and Downtown Campuses
Learn about products and services available for studying, working, and making it to graduation! Speak directly to OIT managers, provide feedback on UTSA tech, and have your voice heard! Lunch and OIT gear provided. RSVP at: www.utsa.edu/oit/sic.University Center, Denman Ballroom (2.01.28), Main Campus
Come meet the candidates looking to take home the crown as Mr. and Ms. UTSA 2017-2018. This is your opportunity to hear the candidates platform and learn how they plan to represent and transform UTSA.University Center, Retama Auditorium (UC 2.02.02), Main Campus