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Does Monetary Policy Impact the Effects of Shares of Manufacturing Employment Shocks on Income Inequality?

  • Eliphas Ndou
  • Thabo Mokoena
Chapter

Abstract

Evidence reveals that unexpected increase in the manufacturing, tradeable, and mining sector employment shares, leads to significant reduction in income inequality. The reduction in income inequality, due to shocks from these sectors’ employment shares, is amplified by low inflationary environment (that is, the consumer price inflation below or equal to 6 %). In addition, the reduction in income inequality is further amplified by the low repo rate level when consumer price inflation is below the 6 % threshold. This evidence reveals that inflation regimes matter for expansionary monetary policy to influence the reduction in income inequality due to improved manufacturing sector employment share.

References

  1. Gumata, N., & Ndou, E. (2017). Labour market and fiscal policy adjustments to shocks: The role and implications for price and financial stability in South Africa. Cham, Switzerland: Palgrave Macmillan.Google Scholar
  2. Topalova, P. (2005). Trade liberalisation, poverty and inequality: Evidence from Indian districts (NBER Working Chapter No. 11614).Google Scholar
  3. World Economic Outlook. (2018). Manufacturing jobs: Implications for productivity and inequality (Chap. 3). https://www.imf.org/en/Publications/WEO/Issues/2018/03/20/world-economic-outlook-april-2018.

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Eliphas Ndou
    • 1
    • 3
    • 4
  • Thabo Mokoena
    • 2
  1. 1.Economic Research DepartmentSouth African Reserve BankPretoriaSouth Africa
  2. 2.Department of Economic, Small Business Development, Tourism and Environmental AffairsFree State Provincial GovernmentBloemfonteinSouth Africa
  3. 3.School of Economic and Business SciencesUniversity of the WitwatersrandJohannesburgSouth Africa
  4. 4.Wits Plus, Centre for Part-Time StudiesUniversity of the WitwatersrandJohannesburgSouth Africa

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