Social conflict and wage inequality

Organized crime and wage inequality

“…Kaufmann et al () empirically report that governance indicators (including corruption and crime) influence income levels. Although there are many studies investigating the link between unproductive activities and skilled–unskilled wage inequality from different perspectives (e.g., Mandal & Marjit, ; Pi & Fan, ; Pi & Zhang, ; Pi & Zhou, , ), organized crime is greatly overlooked by the literature in this direction. The purpose of this paper is to integrate organized crime and wage inequality into a unified framework.…”

“…Pi and Zhou () find that institutional quality affects the interest rate, and that the interest rate combining with the capital intensity impacts wage inequality. The second strand of literature attaches much importance to the role of social conflict in influencing wage inequality (see Pi & Zhang, ). Social conflict is corresponding to appropriation activities in the sense of Dal Bó and Dal Bó () and other scholars.…”

“…Social conflict is corresponding to appropriation activities in the sense of Dal Bó and Dal Bó () and other scholars. Pi and Zhang () find that whether the interest rate reacts to the change of the labor market matters in the relationship between social conflict and wage inequality. However, the existing literature ignores the role of organized crime in affecting wage inequality.…”

“…In order to bridge the current research gap, this paper establishes three‐sector general equilibrium models to analyze how organized crime affects wage inequality on the basis of Dal Bó and Dal Bó (), Jones (), Pi and Zhang (), and Stolper and Samuelson (). Dal Bó and Dal Bó () pioneer the investigation of appropriation activities in the canonical general equilibrium framework developed by Stolper and Samuelson () and Jones ().…”

“…Dal Bó and Dal Bó () allow appropriation activities to be perfectly or imperfectly competitive, and they focus on how exogenous shocks impact the intensity of appropriation. Pi and Zhang () use a similar framework to study the distributive effect of appropriation activities. However, appropriation activities in Pi and Zhang () are perfectly competitive.…”