Inequality Generating Processes and Measurement of the Matthew Effect

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.