Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2010:19: Inequality Generating Processes and Measurement of the Matthew Effect

Miia Bask () and Mikael Bask ()
Additional contact information
Miia Bask: Karlstad University, Postal: Centre for Research on Child and Adolescent Mental Health, SE-651 88 Karlstad, Sweden
Mikael Bask: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

Abstract: The first aim of this paper is to clarify the differences and relationships between cumulative advantage/disadvantage and the Matthew effect. Its second aim, which is also its main contribution, is not only to present a new measure of the Matthew effect, but also to show how to estimate this effect from data and how to make statistical inference. We argue that one should utilize the positivity of the natural logarithm of the largest generalized eigenvalue for a non-linear dynamic process as evidence when claiming that the Matthew effect is present in the dynamic process that generates individuals’ socio-economic life-courses. Thus, our measure of the Matthew effect focuses on the dynamic process that generates socio-economic inequality and not on the outcome of this process.

Keywords: Cumulative advantage; cumulative disadvantage; dynamic process; inequality; inter-individual change; intra-individual change; life-course; Matthew effect; socio-economic status

JEL-codes: C02; D63; I31; Z13

23 pages, October 20, 2010

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