Does institutional quality affect the relationship between income inequality and entrepreneurial activity
Bibliographic Data
| ID | 11196113 |
|---|---|
| Authors | Hazwan Haini (0000-0002-0007-7409, Universiti Brunei Darussalam, corresponding author), Yazid Abdullahi Abubakar (0000-0003-1594-893X, University of Sharjah), Pang Wei Loon (0000-0002-1531-2555, Universiti Brunei Darussalam) |
| Year | 2023 |
| Volume | 43 |
| Issue | 9/10 |
| Pages | 870-892 |
| Publication date | 2023-08-22 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | International Journal of Sociology and Social Policy (JOURNAL) |
| Journal identifiers | ISSN: 0144-333X • E-ISSN: 1758-6720 |
| Publisher | Emerald (PUBLISHER) |
| DOI | 10.1108/ijssp-10-2022-0254 |
| OpenAlex | W4311525882 |
| Language | EN |
| Citations received | 3 |
| References cited | 51 |
Purpose This study examines whether institutional quality affects the relationship between income inequality and entrepreneurial activity. The authors specifically examine whether the greasing or sanding effect holds for the relationship between income inequality and entrepreneurship, while moderating for institutional quality. The greasing effects suggest that income inequality can promote entrepreneurial activity, while the sanding effects disincentivise it. Design/methodology/approach The authors examine this relationship using a sample of 100 advanced and developing countries from 2006 to 2018 using a dynamic panel estimator to control endogeneity and simultaneity. Additionally, the authors include an interaction term to estimate the marginal effects of income inequality, while moderating for institutional quality. Furthermore, the authors differentiate between six measures of institutional quality. Findings Overall, the authors find that institutional quality and income inequality have a positive and significant impact on entrepreneurial activity. However, when moderating for institutional quality, the findings show that the marginal impact of income inequality is negative for countries with low levels of institutional quality. The authors show that the rule of law and government effectiveness are effective moderators in terms of magnitude. Furthermore, the authors find that the sanding effect of income inequality is observed in developing economies, even when moderating for institutional quality. Research limitations/implications The major limitation lies in the estimation of entrepreneurial activity, which is measured using new business formation. While this is commonly used, it focuses on formal entrepreneurial activities and overlooks the informal economy. Originality/value This study provides new empirical evidence on whether institutional quality can moderate and explain the puzzling link between entrepreneurial activity and income inequality
Demographic economics · Econometrics · Economic inequality · Economics · Endogeneity · Entrepreneurship · Inequality · Originality · Panel data · Public economics · Quality (philosophy · Sociology · Economic Growth and Development · Entrepreneurship Studies and Influences · Taxation and Compliance Studies
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| Citations per year | 1 |
|---|---|
| Citation span | 2023 - 2026 (4) |
| Highly cited | No |