The effect of foreign aid on income inequality: Evidence from panel cointegration

Abstract

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Reputation spillover effects from grant‐providing institutions

“…Presuming that individual donors are explicitly aware and care if a nonprofit organization received government or foundation grants (Horne, Johnson, & Van Slyke, 2005), the results of previous studies show consequences of government and foundation funding that vary from a complete cut to a leverage of support by individual stakeholders (Kearns, Bell, Deem, & McShane, 2014;Lu, 2016). The individual donor's decision to crowd in or out depends on the organizational context, in particular, the sector the organization works in, and whether the individual perceives the different income streams as substitutive or complementary (De Wit, Bekkers, & Broese van Groenou, 2017;Herzer & Nunnenkamp, 2012). As public service organizations, that is, nonprofits that follow the goal to provide services that benefit the society in general rather than a certain societal group, depend largely on donations instead of earnings (Fischer, Wilsker, & Young, 2011), government, foundation, and individual funding can be seen as rather complementary.…”

“…The assumption that in the context of public service organizations explicit information about government and foundation funding is seen as complementary rather than substitutive to individual support (Herzer & Nunnenkamp, 2012), which increases individual support intentions, is supported by at least three arguments. First, previous research shows that crowding-in is likely in organizations that provide services to the general public, like libraries, hospitals, higher education (Okten & Weisbrod, 2000), research universities (Payne, 2001), large orchestras (Hughes et al, 2014), or social services (Heutel, 2014).…”

Can stability of foreign aid agreement reduce global income inequality?

“…The existing empirical evidence on foreign aid also fails to prove an inequality decreasing effect on income distribution (i.e. Calderón et al, 2006;Herzer and Nunnenkamp, 2012). The failure of foreign aid may due to various factors, such as poor governance of foreign aid funding, inefficient and unfair aid distribution amongst the recipient countries, conditional requirements of donor countries, political instability in the recipient countries (Dollar and Kraay, 2001;Inanga, 2008;Younas, 2008;Brück and Xu, 2012;Kalyvitis et al, 2012a;Kalyvitis and Vlachaki, 2012b;Raschky and Schwindt, 2012).…”

Variations in homicide

“…The relationship is absent when EHII data is used. EHII data, however, is not without its problems (Herzer and Nunnenkamp 2012).…”

“…The predicted values from the regression are then used as GINI coefficients in the EHII dataset. While the EHII has been seen by some as more accurate than the WIID, it has several shortcomings (Galbraith and Kum 2005;Galbraith 2009;Herzer and Nunnenkamp 2012). First, the EHII GINI coefficients are estimated and are likely subject to some degree of bias.…”