Purpose

This paper investigates the joint relationship between economic growth, income inequality and fiscal adjustments using a panel of 47 Japanese prefectures from 1998 to 2017.

Design/methodology/approach

To assess jointly fiscal adjustment impacts on growth and inequality and to take into account the interdependence between these variables, the authors use a simultaneous equation model and estimate it by using the three-stage least squares estimation method.

Findings

The results show evidence of a trade-off between growth and inequality through fiscal adjustments. They reveal that first, fiscal adjustments have contractionary effects on growth. Second, they highlight the disparity between urban and rural taxpayers. Third, they provide evidence of a trade-off between fiscal adjustments and inequality through the labor market.

Research limitations/implications

Based on the literature, the composition of fiscal adjustments is a crucial factor in analyzing fiscal adjustment impacts on economic growth and income inequality. The authors do not consider this aspect in the analysis; however, fiscal policy outcomes variables are included as a workaround for this.

Practical implications

These results suggest that authorities favor expenditure-based adjustments as they are less contractionary on the economy. Moreover, they should finance public expenditures through a tax on capital in order to mitigate fiscal adjustment impacts on inequality while promoting growth.

Originality/value

The paper is novel in testing the existence of a trade-off between economic growth and income inequality through fiscal adjustments at a sub-national level with an additional focus on urban and rural regions.

中文翻译：

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财政调整、收入不平等与经济增长：日本都道府县的实证分析

目的

本文使用 1998 年至 2017 年日本 47 个县的面板研究了经济增长、收入不平等和财政调整之间的联合关系。

设计/方法/方法

为共同评估财政调整对增长和不平等的影响，并考虑这些变量之间的相互依赖关系，作者使用联立方程模型，并使用三阶段最小二乘估计法对其进行估计。

发现

结果显示了通过财政调整在增长和不平等之间进行权衡的证据。他们揭示，首先，财政调整对增长有收缩效应。二是突出城乡纳税人差距。第三，它们提供了通过劳动力市场在财政调整和不平等之间进行权衡的证据。

研究限制/影响

根据文献，财政调整的构成是分析财政调整对经济增长和收入不平等影响的关键因素。作者在分析中没有考虑这方面；然而，财政政策结果变量被包括在内作为解决此问题的方法。

实际影响

这些结果表明，当局倾向于基于支出的调整，因为它们对经济的收缩较小。此外，它们应通过对资本征税来为公共支出提供资金，以减轻财政调整对不平等的影响，同时促进增长。

原创性/价值

该论文在通过地方层面的财政调整（特别关注城市和农村地区）来检验经济增长和收入不平等之间是否存在权衡方面是新颖的。