Matthew effect in wealth accumulation across countries

• Main Authors: Dai, Xinyi, Wang, Yan, Wang, Ye
• Other Authors: Huang Weihong
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Social sciences::Economic theory::Macroeconomics
• Online Access: http://hdl.handle.net/10356/52109
• Institution: Nanyang Technological University

Matthew Effect as a social phenomenon which describes “rich get richer” has long been of interest to scholars from diverse fields such as psychology, political science and cultural studies. In the aspect of wealth accumulation, the phenomenon has captured great attention as the wealth gap among countries has increased dramatically along with industrialization and globalization. Although plenty of studies have been done on the mechanism of Matthew Effect, there are few empirical studies to demonstrate the presence of Matthew Effect in wealth accumulation. Herein, we carried out study on wealth accumulation to verify the existence of Matthew Effect among countries. Furthermore, we aimed to explore the factors that would probably strengthen or weaken the effect.We employed Merton’s Dynamic Model of Matthew Effect to identify growing income inequality. In addition, we have also introduced our measurement of wealth gap to justify the existence of Matthew Effect. Then, we applied regression analysis to identify some factors that could have positive or negative effect on Matthew Effect. The results justified the existence of Matthew Effect and suggested that globalization and popularization of education could weaken the Matthew Effect. The occurrence of financial crisis could reduce Mathew Effect in the short-run but milder influence in the long run. This research has far-reaching significance as the understanding the mechanism of Matthew Effect would provide an insight into the essential attributions of inequality around the world. Being able to identify the factors of influence, we can provide valuable references to policy-makers to stimulate regional development onto the express track.