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Economic Policy Institute
Research and Ideas for Shared Prosperity
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From International Labour
Organization
World of Work Report
2008
Income Inequality in the age of Financial
Globalization
The ongoing global economic slowdown is affecting
low-income groups disproportionately. This development comes after a long
expansionary phase where income inequality was already on the rise in the
majority of countries.
● The recent period of economic expansion was
accompanied by substantial employment growth across most regions. Between the
early 1990s and 2007, world employment grew by around 30 per cent. However,
there was considerable variation in labour market performance between countries.
In addition, not all individuals shared equally in the employment gains. In a
number of regions, women continued to represent a disproportionate share of
non-employed persons – reaching nearly 80 per cent in the Middle East, North
Africa and Asia and the Pacific.
● Employment growth has also occurred
alongside a redistribution of income away from labour. In 51 out of 73 countries
for which data are available, the share of wages in total income declined over
the past two decades. Th e largest decline in the share of wages in GDP took
place in Latin America and the Caribbean (-13 points), followed by Asia and the
Pacific (-10 points) and the Advanced Economies (-9 points).
● Between 1990
and 2005, approximately two thirds of the countries experienced an increase in
income inequality (as measured by changes in the Gini index). In other words,
the incomes of richer households have increased relative to those of poorer
households. Likewise, during the same period, the income gap between the top and
bottom 10 per cent of wage earners increased in 70 per cent of the countries for
which data are available.
● The gap in income inequality is also widening –
at an increasing pace – between the firms’ executives and the average employee.
For example, in the United States in 2007, the chief executive offi cers (CEOs)
of the 15 largest companies earned 500 times more than the average worker. Th is
is up from 360 times more in 2003. Even in Hong Kong (China) and South Africa
where executives are paid much less than their United States’ counterparts, CEO
pay still represents 160 and 104 times, respectively, the wages of the average
worker.
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Background papers prepared for World Development Report 2006:
equity and development
Claessens, Stijn and Enrico Perotti.
2005.
The Links between Finance and
Inequality: Chanels and
Evidence.
Much attention has recently been given to whether market reforms reduce or increase
inequality. Inequality often reflects unequal access to productive opportunities and recent
evidence has highlighted the presence of onerous barriers to entry, especially in
developing countries. This paper focuses on the relationships between inequality and
finance. In principle, a better financial system can help overcome barriers, and thereby
increase economic growth and reduce inequality. Indeed, a more developed, that is
deeper, financial sector has been shown to aid economic growth. Financial reform will
only reduce inequality, however, if it improves access for more individuals with growth
opportunities. Reforms thus need to broaden, not just deepen financial systems.
At the same, as recent theoretical and empirical work has shown, ex ante inequality can
hinder welfare enhancing reforms. Concentrated economic and political powers will
likely block financial (and other) reforms, or manipulate their design and/or
implementation, so that the benefits reach fewer individuals. Also, by design or
implementation, financial reforms can lead risks to be allocated unfairly and costs to be
socialized, especially around financial crises, further worsening inequality. Furthermore,
reforms that do not provide gains for many may be followed by a political backlash that
may make even valuable financial sector reforms not sustainable.
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Decker, Klaus, Caroline Sage and Milena Stefanova. 2005.
Law or Justice: Building Equitable Legal
Institutions.
It is now widely accepted that the ‘rule of law’ is key to sustainable development. The
different legal or rule-based systems in any given society underpin the institutions that
govern both market and non-market interactions; they determine the distribution of
economic, social and political rights and obligations affecting both economic and
non economic
relationships. They shape the regulation of market practices and the delivery of
public services, and hence the opportunities people have to take part in economic activity
and generate fair returns.1 Legal institutions also provide mechanisms to mediate conflict
resolve disputes and sustain peace and order.
The belief in the importance of legal institutions is reflected in the emergence of Justice
Sector Reform (JSR) as a central concern for many development agencies. In the past
fifteen years, the World Bank has financed hundreds of legal and judicial reform
initiatives and numerous stand alone projects, and has recently committed to scaling up
these efforts. Other bi-lateral development agencies and multi-lateral donors have
committed hundreds of millions of dollars to reforming judicial systems, with the
majority of developing countries and former socialist states now receiving assistance for
some kind of justice sector reform.
Unfortunately, what is less clear in current development thinking is how a ‘rule of law
system’ is fostered or achieved and what this means for Justice Sector reform initiatives;
a belief in the need for ‘the rule of law’ tells us little about what the rule of law actually
means, how it manifests itself or how a given society can achieve it. Despite concerted
efforts, over a decade of projects have reported limited success and brought current
approaches into question.
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Hoff, Karla. 2004.
What Can Economists Explain by
Taking into Account People's Perceptions of Fairness?
Punishing Cheats, Bargaining Impasse, and
Self-Perpetuating Inequalities.
There is a standard hypothesis in economics, the rational
self-interest hypothesis, which is based on a radically simplified view of human nature.
In this view, individuals are exclusively motivated by their material self-interest and
unboundedly rational in the pursuit of it. This hypothesis provides accurate predictions
for competitive markets with standardized goods. However, much economic activity
occurs outside of such markets—in markets with a small number of traders, within firms...
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Pinglé, Vibha. 2005.
Faith, Equity, and
Development.
Religion, as Casanova observes, went public in the 1980s and it has exhibited a Janus face
since – “as the carrier not only of exclusive, particularist, and primordial identities but also of
inclusive, universalist, and transcending ones.”1 It has worn this Janus face because, I argue, religion
has for sometime been torn by the identity politics of our times, consisting of two conceptually
distinguishable phenomena and processes: the politics of equal dignity, and the politics of difference.
These two political dramas have used the discourse of religion and are leading to new and not
surprisingly contradictory interpretive strands of modernity, development, and equity.
In order to understand how religious movements are influencing the development process and
in particular what implications they have for equity and an anti-poverty agenda it is critical first to
explicate how religious movements may be interpreted using the lens of identity politics.
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Ravallion, Martin.
2005
Inequality is Bad for the
Poor.
It has been argued that inequality should be of little concern in poor countries on the grounds
that: (i) absolute poverty in terms of consumption (or income) is the overriding issue in poor
countries, and (ii) the only thing that really matters to reducing absolute income poverty is the rate of
economic growth. This article takes (i) as given but questions (ii). It is argued that there are a
number of ways in which the extent of inequality in a society, and how it evolves over time,
influences the extent of poverty today and the prospects for rapid poverty reduction in the future.
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Chirayath, Leila, Caroline Sage and Michael
Woolcock. 2005
Customary Law and Policy Reform:
Engaging with the Plurality of Justice
Systems.
The importance of building effective legal and regulatory systems has long been
recognized by development professionals, yet there have been few programmatic
initiatives that have translated empirical evidence and political intention into sustained
policy success. A key reason is that such efforts have too often consisted of top-down
technocratic initiatives that have inadequately appreciated the social and cultural
specificity of the particular context in which they operate, as well as the complexity of
the systems they have attempted to create. Justice sector reforms have frequently been
based on institutional transplants, wherein the putatively ‘successful’ legal codes
(constitutions, contract law, etc.) and institutions (courts, legal services organizations,
etc.) of developed countries have this been imported almost verbatim into developing
countries. Reforms have often lacked any clear theory about the roles and functions of
justice systems, and have failed to consider how successful legal systems in developed
countries were actually constructed—including how they gained authority and
legitimacy. Local level context and the systems of justice actually operating in many
contexts were largely ignored. As such, justice sector reformers have failed to
acknowledge, and thus comprehend, how the systems—which, at least in rural areas, are
predominantly customary, idiosyncratic to specific sub-regional and cultural contexts,
and residing only in oral form—by which many people (if not most poor people) in
developing countries order their lives function.
The following papers were prepared in
collaboration with the U. K. Department for
International Development (DfID) and the World Bank's
Social Development Department (see the November 15, 2004
Seminar on Promoting Equity in Development, under
Consultations).
Andersson, Martin and Christer Gunnarsson.
2004
Egalitarianism in the Process of Modern Economic Growth: The Case of Sweden.
For some decades after WWII Sweden was time and again referred to as a ‘model’ in
terms of economic and social development. At least until the mid 1980s Sweden was
frequently taken to represent the ‘middle way’ between capitalism and socialism due to
its evident achievement in building up a publicly financed (tax-based) welfare state
while at the same time preserving the conditions and dynamics of a highly expansive
and internationally competitive free-market economy. For anyone looking for
historical evidence in support of the feasibility of a ‘growth with equity’ development
strategy the Swedish experience with ‘capitalism’s most advanced welfare state’
(Freeman 1995:17), would then appear to offer an almost perfect match. Although this
‘ideal model’ has somewhat flaked off in recent decades under the pressures of
globalisation and deregulation it is probably true that Sweden remains more egalitarian
than most other developed economies. Inter-sectoral and regional income disparities
remain fairly limited and the gender income gap has been considerably narrowed. By
and large, it appears that equality remains a fundamental trait of society.
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Barrientos, Armando. 2004
Cash Transfers for Older People Reduce
Poverty and Inequality.
The paper discusses the poverty and inequality reduction properties of non-contributory pension in Brazil,
South Africa and Bangladesh. It examines the development of non-contributory pension programmes
in the countries involved, and the institutional
factors behind their extension and current sustainability.
It also examines the incidence of non-contributory pension programmes on poverty and inequality.
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Black, Richard, Claudia Natali and Jessica
Skinner, 2005
Migration and
Inequality.
Introduction
International migration is a powerful symbol of global inequality, whether in terms of wages, labour market opportunities,
or lifestyles. Millions of workers and their families move each year across borders and across continents,
seeking to reduce what they see as the gap between their own position and that of people in other, wealthier,
places. In turn, there is a growing consensus in the development field that migration represents an important
livelihood diversification strategy for many in the world’s poorest
nations. This includes not only international migration, but also permanent,
temporary and seasonal migrations within poorer countries, a phenomenon of
considerable importance across much of Africa, Asia and Latin America.
Yet it is also clear that migration - and perhaps especially international migration - is an activity that
carries significant risks and costs. As such, although migration is certainly rooted, at least in part,
in income and wealth inequalities between sending and receiving areas, it does not necessarily reduce
inequality in the way intended by many migrants. Much depends on the distribution of these costs and benefits,
both within and between sending and receiving countries and regions. Also important in terms of the aggregate
impact of migration on sending societies is the selectivity of migration itself. Clearly if most migrants were
to come from the poorest sections of society, and they were to achieve net gains from migration, this would
act to reduce economic inequality at least, all other things being equal. But migrants are not always the poorest,
they do not always gain, and other factors are not equal.
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Boix, Carles.
2004
Spain:
Development, Democracy and
Equity.
In the last half century Spain has undergone a dramatic and by most counts successful
political and economic transformation from relative underdevelopment and authoritarianism
to wealth and democracy. In the immediate aftermath of World War II, which resulted in
the re-establishment of democracy in Western Europe, Spain remained a culturally and
diplomatically isolated country, governed by authoritarian institutions. Moreover, whereas
democratic Europe experienced a period of rapid economic growth and growing trade
integration, Spain was burdened by the destruction yielded by its civil war fought in
the 1930s, the pursuit of autarkic policies and a long history of relative poverty.
Following the decision to liberalize its economy in the late 1950s, Spain quickly
transformed into a modern manufacturing and service-based economy, experiencing
unprecedented levels of prosperity, massive urbanization and a growing middle class.
With the death of its dictator in 1975, Spain embarked in a peaceful transition to
democracy, the construction of a broad welfare state and its integration in the European Union.
This successful transition to economic and political modernity is particularly relevant, both theoretically and from the
viewpoint of policymakers, because Spain stands as one of the few countries that managed to move peacefully from underdevelopment
and authoritarianism to democracy and prosperity in the last decades. Most of today’s wealthy democracies
(concentrated in Europe and North America) were already industrialized and had liberal political regimes by the middle
of the twentieth century. With the exception of a few Asian cases and, more recently, some small Eastern European
nations, the rest of the world, which was either underdeveloped, undemocratic or both a few decades ago, has still
a long way to catch up with the developed West.
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Moncrieffe, Joy M.
2004.
Beyond
Categories: Power, Recognition and the Conditions for
Equity.
The World Development Report (WDR) 2006 will reflect some important shifts in popular
thinking about the relationship between inequality, growth and poverty. First, it will refute
the Kuznetsian position that inequality has an invariably positive role and will, instead,
assert that high levels of inequality can curtail the potential poverty-reducing impact of
growth; conversely, where there is low or falling inequality, lower income groups will have a
larger share of any increase in national income (Naschold 2002).
Second, following Sen (1993; 1999) and others, the WDR will stress the importance of
equity, arguing that poverty reflects deprivation in income and consumption, as well as in
capabilities, such as health, education and civil liberties. It will maintain that individuals
have differing levels of advantage, which, in addition to income, could be understood as their
capability and freedom to make choices, and to convert their incomes into well-being—by
establishing personal goals and having realistic means of attaining them. Therefore, it will
attempt to define those policies and institutional arrangements that will supply the assets—
political, social and economic—and opportunities that people in poverty need to transform
their lives...
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Ross, Michael.
2004.
Mineral Wealth
and Equitable Development.
In theory, new mineral wealth should offer governments a chance to boost economic growth and reduce inequality. In practice, it often leads to economic stagnation, civil conflict, and heightened inequality. To avoid these problems, governments must navigate a complex series of economic, social, and political challenges.
One of the most difficult challenges is deciding how to deal equitably with the regional or local communities where the extraction occurs. Both the central government and local communities typically claim ownership of the resources, dispute the other side’s claims, and have some ability to slow or block projects they dislike. Mineral firms are often caught between the two sides. When these disputes can be resolved, mineral development can proceed; when they cannot – as in Bolivia, Sudan, Indonesia, and Papua New Guinea – the result may be political unrest and violent conflict.
This paper explores the problems and opportunities that governments, firms, and local communities face when they must divide the costs and benefits of a mineral development project. It makes four central arguments:
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Sabates-Wheeler, Rachel.
2005
Asset Inequality and Agricultural
Growth: How Are Patterns of Asset Inequality
Established and Reproduced?
The purpose of this study is to explore the relationship between distributions of asset inequality, how
these distributions are created and maintained, and agricultural growth. We intend to investigate what
policies and institutions tend to promote equally shared growth. The motivating question that guides our
study is: How does differential access to productive assets in the agricultural sector, at various levels
(regional, community and household), effect inequalities in agricultural outcomes in terms of productivity
and poverty? The dominant discourse on agricultural productivity and distribution has been largely
technocratic, focusing on input-output relationships, defined and measured with a yardstick specific to the
discipline of economics. We review certain strands of this literature in depth. A less well-known strand
of literature emphasises the social and political constructions and reproductions of a variety of
inequalities. While this is a relatively small literature we use it to broaden our understanding of the
processes and institutions that link inequality and productivity. Furthermore, we use Ethiopian
agriculture as a case study to highlight the persistent nature of inequality as causally related to historical
choices and path dependency. Rather than unidirectional causalities, what we observe is a complex
system whereby inequality affects growth which in turn reinforces processes that exacerbate and
reproduce inequalities.
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From Journal of World Systems Research, Vol 12 N. 1 2006
A. Heshmati
The World Distribution of Income and Income Inequality: A
Review of the Economics Literature
This review covers a range of measures and methods
frequently employed in the empirical analysis
of global income inequality and global income
distribution. Different determinant factors
along with the quantification of their impacts
and empirical results from different case
studies are presented. A number of issues crucial
to the study of global income inequality are
also addressed. These are the concepts, measurement
and decomposition of inequality, the
world distribution of income and inequality measured
at different levels of aggregation:
global, international and
intra-national. We analyze
income at each of these levels, discuss the
benefits and limitations of each approach and present empirical results found in
the literature and
compare them with those based on
the World Income Inequality Database. Research
on world income inequality supports increased awareness of the problem, its
measurement and
quantification, the identification of
causal factors and policy measures that
affect global income inequality.
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United Nations Department of Economic and Social Affairs
Report on the World Social Situation 2005:
The Inequality Predicament
Focusing exclusively on economic growth and income generation as a development strategy is
perilous as it leads to the accumulation of wealth by a few and deepens the poverty of many.
The global commitment to overcoming inequality, or redressing the imbalance
between the wealthy and the poor, as clearly outlined at the 1995
World Summit for Social Development in Copenhagen and endorsed in the
United Nations Millennium Declaration, is fading. Eighty per cent of the
world’s gross domestic product belongs to the 1 billion people living in the
developed world; the remaining 20 per cent is shared by the 5 billion people
living in developing countries. Failure to address this inequality predicament
will ensure that social justice and better living conditions for all people
remain elusive, and that communities, countries and regions remain vulnerable
to social, political and economic upheaval.
The present Report on the World Social Situation traces trends and patterns
in economic and non-economic aspects of inequality and examines
their causes and consequences. It focuses on the traditional aspects of inequality,
such as the distribution of income and wealth, as well as inequalities
in health, education, and opportunities for social and political participation.
The Report also analyses the impact of structural adjustment, market
reforms, globalization and privatization on economic and social indicators.
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From Finance and Development - December 2005
The inequality trap
F.H.G. Ferreira and M. Walton
Market failures, inequalities, and investment inefficiency. In a
world in which markets worked perfectly, investment decisions would have little
to do with the income, wealth, or social status of the decision maker. However,
for various reasons—mainly economic, but also political—markets are not perfect.
A girl born to a lower-caste family of nine in the slums of Dhaka has vastly
different opportunities from a boy born to well-educated and affluent parents in
the well-heeled neighborhoods. An AIDS orphan in rural Zimbabwe is almost
certain to have fewer chances and choices in life than a compatriot born to
healthy and well-educated parents in Harare. Those differences are even greater
across borders: an average Swiss, American, or Japanese child born at the same
instant as one in a poor, rural area of South Africa will have incomparably
superior life chances.
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R. Jolly - 2005
Global inequality in historical perspective
Many of us have been astounded at the increases in inequality over the
very long run – the increases in inequalities among households or
individuals over most of the last two centuries within countries of most
regions and between the groups of richer and poorer countries.
Notwithstanding the improvements in some indicators of global
inequality in the last two decades due to the impressive expansion of
China and India, indicators of inequalities in recent years are all much
higher than they appeared a hundred or two hundred years ago. All these
trends are indicated by the rise in gini coefficients between 1820 and the
1990s and by the increases in the gaps in per capita income between the
highest and lowest income groups. |
M. Jantti and S. Sandstrom - 2005
Trends in income inequaliy: a critical examination of the evidence in WIID2
This paper examines changes across time in within-country inequality using the most recent, and
we would argue, the most appropriate data at hand, the updated World Income Inequality Database
(WIID2). We attempt to find whether it is possible to find robust evidence on inequality trends.
Our empirical approach is to use so-called mixed-effects models with quintile groups means as the
dependent variable, observed covariates as explanatory variables and allow for (at the most detailed
level) country-specific intercepts and trends. This statistical framework allows us to assess in a
structured fashion the actual patterns of inequality change across the world and to start to examine
if these changes can be accounted for by readily observable economic and demographic factors.
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From The Institute for the Study of Labor, Bonn
The World Distribution of Income and Income inequality
A. Heshmati, August 2004
"...world inequality has declined due to the faster growth in India
and China than the world economy but at the cost of an increased within-country
inequality. The total inequality is driven by a rise in inequality between countries
affecting the evolution of world income inequality. Considering the global trends in
income inequality results based on the WIID database shows that inequality is volatile
prior to 1970 and more stable and increasing post 1986..."
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From The Institute for the Study of Labor, Bonn
Continental and sub-continental income inequality
A. Heshmati, August 2004
The regions
based on available studies include Eastern Europe and former USSR, Scandinavian,
Western Europe, OECD countries, small and medium sized developing countries, sub-
Saharan Africa, Latin America, East Asia, South Asia, South-East Asia and Pacific.
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From The Institute for the Study of Labor, Bonn
Regional income inequality in selected large countries
A Heshmati, September 2004
The countries considered here cover transition (China
and Russia), developing (India) and industrialised (USA) countries. Empirical results
from the literature is further complemented and compared with those obtained from the
WIID data covering post 1950s.
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Jean-Ives Duclos and Q. Wodon
What is "pro-poor"?
Université Laval, Quebec - 2004
Assessing whether distributional changes are « pro-poor » has become increasingly
widespread in academic and policy circles. Starting from relatively general ethical
axioms, this paper proposes simple graphical methods to test whether distributional
changes are indeed pro-poor. Pro-poor standards are first defined. An important
issue is whether these standards should be absolute or relative. Another issue is
whether pro-poor judgements should put relatively more emphasis on the impact of
growth upon the poorer of the poor. Having formalized the treatment of these issues,
the paper describes various ways for checking whether broad classes of ethical
judgements will declare a distributional change to be pro-poor.
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Hong-Ghi Min
Inequality, the Price of Nontradables, and the Real Exchange Rate:
Theory and Cross-Country Evidence
Poverty Reduction Group - World Bank - 2002
This paper provides theoretical and empirical evidence of a negative association between
income inequality and real exchange rates. First, we build a theoretical model showing the
transmission mechanism from inequality to real exchange rates. Second, we demonstrate
that the theoretical argument have empirical support using cross-country data. The
magnitude of association is large, significant, and robust to alternative specifications of the
reduced form model and estimation methodologies. Those findings provide empirical
support for PRSP since this study indicates that “equity-based growth” and “export-drive”
are compatible policies. However, the robustly negative relationship between real exchange
rates and inequality does not imply that dramatic redistributive policies will automatically
bring real depreciation of the domestic currency, improve the external balance, and
accelerate economic growth.
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H. Kempf and S. Rossignol
Is Inequality Harmful
for the Environment
in a Growing Economy?
Université Paris-1 Panthéon Sorbonne - 2005
In this paper we investigate the relationship between inequality and the environment in
a growing economy from a political economy perspective. We consider an endogenous
growth economy, where growth generates pollution and a deterioration of the
environment. Public expenditures may either be devoted to supporting growth or
abating pollution. The decision over the public programs is done in a direct democracy,
with simple majority rule. We prove that the median voter is decisive and show that
inequality is harmful for the environment: the poorer the median voter relative to the
average individual, the less she will tax and devote resources to the environment,
preferring to support growth.
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M. Lübker
Globalization and perceptions of social inequality
International Labour Office - 2004
Past decades have coincided with increasing inequality within a majority
countries, and at the same time nation states have been under increasing pressure to
reduce government interventions, a trend that has reduced their ability to apply
redistributive policies. In addition many of the poorest countries have not gained from the
potential benefits of globalization and fallen back further, increasing the gap between the
poorest and the richest nations
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H. Jeong and R. M. Townsend
Growth and Inequality: Model Evaluation Based on an
Estimation-Calibration Strategy
University of Southern California - 2003
This paper evaluates two well-known models of growth with inequality that have explicit micro underpinnings
related to household choice. With incomplete markets or transactions costs, wealth can constrain
investment in business and the choice of occupation and also constrain the timing of entry into the formal
financial sector. Using the Thai Socio-Economic Survey, we estimate the distribution of wealth and the
key parameters that best fit cross-sectional data on household choices and wealth. We then simulate the
model economies for two decades at the estimated initial wealth distribution and analyze whether the model
economies at those micro-fit parameter estimates can explain the observed macro and sectoral aspects of
income growth and inequality change. Both models capture important features of Thai reality. Anomalies
and comparisons across the two distinct models yield specific suggestions for improved research on the micro
foundations of growth and inequality.
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R. Bénabou and J. Tirole
Belief in a Just World and Redistributive Politics
Princeton University and MIT
- 2004
International surveys reveal wide differences between the views held in different countries
concerning the causes of wealth or poverty and the extent to which people are responsible for
their own fate. At the same time, social ethnographies and experiments by psychologists demonstrate
individuals’ recurrent struggle with cognitive dissonance as they seek to maintain, and
pass on to their children, a view of the world where effort ultimately pays off and everyone
gets their just deserts. This paper offers a model that helps explain: i) why most people feel
such a need to believe in a “just world”; ii) why this need, and therefore the prevalence of the
belief, varies considerably across countries; iii) the implications of this phenomenon for international
differences in political ideology, levels of redistribution, labor supply, aggregate income,
and popular perceptions of the poor. The model shows in particular how complementarities
arise endogenously between individuals’ desired beliefs or ideological choices, resulting in two
equilibria. A first, “American” equilibrium is characterized by a high prevalence of just-world
beliefs among the population and relatively laissez-faire policies. The other, “European” equilibrium
is characterized by more pessimism about the role of effort in economic outcomes and
a more extensive welfare state. More generally, the paper develops a theory of collective beliefs
and motivated cognitions, including those concerning “money” (consumption) and happiness,
as well as religion.
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H. Rapoport and F. Docquier
The Economics of Migrants’ Remittances
From The Institute for the Study of Labor, Bonn - 2005
This chapter reviews the recent theoretical and empirical economic literature on migrants'
remittances. It is divided between a microeconomic section on the determinants of
remittances and a macroeconomic section on their growth effects. At the micro level we first
present in a fully harmonized framework the various motivations to remit described so far in
the literature. We show that models based on different motives share many common
predictions, making it difficult to implement truly discriminative tests in the absence of
sufficiently detailed data on migrants and receiving households' characteristics and on the
timing of remittances. The results from selected empirical studies show that a mixture of
individualistic and familial motives explains the likelihood and size of remittances. At the
macro level we first briefly review the standard (Keynesian) and the trade-theoretic literature
on the short-run impact of remittances. We then use an endogenous growth framework to
describe the growth potential of remittances and present the evidence for different growth
channels. We then explore the relationship between remittances and inequality. This
relationship appears to be non-monotonic. This is consistent with different theoretical
arguments regarding the role of migration networks and/or the dynamics of wealth
transmission between successive generations.
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Anton Korinek, Johan A. Mistiaen, and Martin Ravallion
Survey Nonresponse and the Distribution of Income
World Bank Research Papers - 2005 |
Branko Milanovic and Lyn Squire
Does tariff liberalization increase wage inequality?
Some empirical evidence
World Bank Policy Research Working Papers - 2005 |
Moses Shayo
Nation, Class and Redistribution:
Applying Social Identity Research to Political Economy.
Princeton University - 2005
People often conceive themselves, and behave, as members of social groups.
Drawing on a vast empirical literature, this paper offers a definition of social
identification and an equilibrium concept where social identities are
endogenously determined. We apply this framework to the political economy of
redistribution in democracies, focusing on class and national identities. We
present new empirical evidence that supports the main implications of the
model, namely: (a) that identifying with ones nation is more likely among
the poor than among the rich; (b) that controlling for income, national
identification reduces support for redistribution; and (c) that across
democracies there is a strong negative relationship between the prevalence
of national identification and an equilibrium concept where social identities are endogenously
determined. We apply this framework to the political economy of redistribution
in democracies, focusing on class and national identities. We present new empirical evidence that supports the main implications
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Alberto Alesina and George-Marios Angeletos
Corruption, Inequality and Fairness
Massachusetts Institute of Technology - 2005 |
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D. Checchi and C. Garcia-Penalosa
Labour Market Institutions and the
Personal Distribution of Income in the
OECD
Università degli Studi di Milano - IZA - CNRS - 2005 |
Diego Winkelried
Income Distribution and the Size of
the Informal Sector.
This paper studies the role of income distribution as a determinant of the size of the
informal sector in an economy by relying on a channel whereby inequality affects the
behaviour of aggregate demand and thus influences the incentives a firm has to become
informal. It is further postulated that income distribution affects the response of the
informal sector to different fiscal policies, either demand or supply-orientated. The main
findings are that high inequality leads to a large informal sector, and that redistribution
towards the middle class decreases the size of the informal sector and increases the
capacity of fiscal instruments to reduce informality. Empirical evidence for Mexican cities
is provided.
St John’s College, University of Cambridge - 2005 |
Keiji Saito
A fallacy of wage differentials:
wage ratio in distribution
Graduate School of Economics, The University of Tokyo - 2005 |
Santiago Budría and
Pedro Telhado Pereira
Educational Qualifications and Wage Inequality:
Evidence for Europe
From The Institute for the Study of Labor, Bonn - 2005 |
Herwig Immervoll, Horacio Levy,
Christine Lietz, Daniela Mantovani,
Cathal O‘Donoghue, Holly Sutherland and
Gerlinde Verbist
Household Incomes and Redistribution in the
European Union:
Quantifying the Equalising
Properties of Taxes and Benefits
From the Institute for the Study of Labor, Bonn - 2005 |
A B Atkinson and Andrew Leigh
The Distribution of Top Incomes in New Zealand
The Australian National University - 2005 |
Branco Milanovic
Global income inequality: what it is and why it matters?
World Bank papers - 2005
Global inequality is a relatively recent topic. The first calculations of inequality
across world citizens were done in the early 1980s.2 This is because in order to calculate
global inequality, one needs to have data on (within-)national income distributions for
most of the countries in the world, or at least for most of the populous and rich countries.
But it is only from the early- to mid-1980s that such data became available for China, 3
Soviet Union and its constituent republics and large parts of Africa. Before we move to
an analysis of global inequality, however it is useful to set the stage by delineating what
topics we shall be concerned with and what not...
|
Ales Bulir
Income Inequality: Does Inflation Matter?
IMF Staff Papers - 2001 |
J. Humberto Lopez and Luis Servén
The World Bank
A Normal Relationship?
Poverty, Growth, and Inequality
The World Bank - 2006 |
Era Dabla-Norris and Paul Wade
Rent seeking and endogeneous economic inequality
IMF working paper - 2001 |
E.F. Fama and K. R. French
Value versus growth: the international evidence
Draft August 1997 |
J. Flemming and J. Micklewright, 1999
Income Distribution, Economic Systems and Transition
We consider the differences in income distribution between market and
planned economies in two ways. First, using benchmarks from the OECD
area we review evidence from the countries of Central and Eastern Europe
and the former Soviet Union during the socialist period. Second, we look at
the transitions currently being made by the latter. In each case we review
available data and the problems they present before considering in turn (i) the
distribution of earnings of full-time employees, (ii) the distribution of
individuals’ per capita household incomes, and (iii) the ways in which the
picture is altered by non-wage benefits from work, price subsidies and social
incomes in kind. For the socialist period we are able to consider long series
of data, often covering several decades, and we can thus show the changes in
the picture of distribution under the socialist system. We also emphasize the
diversity across the countries concerned. For the period of transition, itself
incomplete, the series are inevitably shorter but we are able to avoid basing
conclusions on evidence drawn from single years. The picture during
transition, like that under socialism, is varied. Russia has experienced very
sharp increases in measured inequality to well above the top of the OECD
range. The Czech Republic, Hungary and Poland have seen more modest
rises. We note the lack of a satisfactory analytic framework in the literature
that encompasses enough features of the transition, a framework which
would help interpretation of the evidence.
|
International Monetary Fund
Fiscal Affairs Department - December 1998
Fundamental determinants of inequality and the role of the government
By V. Tanzi
This paper discusses the fundamental determinants of inequality. These are identified as
world or market forces, social norms, ownership of real and human capital, and the role of
government. The change in the relative role of these factors in determining inequality
during economic development is analyzed.
Inequality is much influenced by systemic factors such as social norms and attitudes, broad
economic changes, and governmental activity. In closed and traditional societies, where public
sector intervention is limited, social norms and attitudes are very important in determining
inequality. In more open and more developed societies, the role of government and the impact
of broad economic forces progressively become more important. This paper analyzes some of
these aspects stressing in particular the role of social norms. It argues that in traditional or
poorer societies the interconnection of real wealth with existing norms goes a long way to
determine the extent of economic inequality. The opening of markets and the broad economic
changes brought about by structural reforms and globalization have powerful effects on social
norms.
When these trends lead to economic development, the result will be a weakening of the impact
of these norms and a progressive replacement of tangible wealth with human capital as the
main determinant of income. Thus, progressively, the distribution of human capital becomes
more important than the distribution of real assets in determining inequality. The role of
government in this process is discussed. That role is carried out through the traditional tools
available to the government, namely taxes, government spending, and regulations. It is
concluded that the role that the government plays in creating human capital may be the most
important impact that the government can have on income distribution.
|
Dikhanov, Yuri. 2005.
Trends in Global Income Distribution 1970–2015
The paper studies recent trends in the global income distribution. The 1970-2000 estimates are
supplemented with two 2015 scenarios: (a) distribution-neural growth (national distributions kept constant)
and (b) pro-poor growth (the poor’s income grows at twice the average rate until 2015). The scenarios are
based on historical 1990-2002 trends in GDP growth and UN population projections for 2015. In addition,
two more simulations are presented: (c) transfers to the poor in 2000, and (d) distribution-neutral growth
during 1970-2000. Scenario (c) examines the alleviation of poverty through targeted transfers occurring at
one time, and scenario (d) studies effects of changes in national distributions on global poverty. Annex II
discusses various inequality measures and shows difficulties of using the Gini coefficient for decomposing
inequality.
Goodman, Alissa. 2005.
The
Links between Income Distribution and Poverty Reduction in Britain
The 1980s was a period of rapidly increasing income inequality in Britain, accompanied
by growing numbers of individuals falling into relative income poverty. While child
poverty rates - in at least the two previous decades - had been very similar to those of the
rest of the population, it was over this same period that a pronounced gap began to
emerge: overall poverty rates were rising but child poverty rates were increasing by an
even greater amount.
Throughout the early 1990s when the growth in inequality halted, the relative position of
families in the income distribution did improve, although by the time Labour came to
power in 1997, child poverty still remained significantly higher than for many other
population groups, and than that experienced throughout the 1960s and 1970s.
Samman, Emma. 2005a.
Openness
and Growth: An Empirical Investigation
In a recent and influential study, Trade, growth and poverty, Dollar and Kraay (2001)
advance the argument that trade liberalization improves the growth prospects of poor
countries. They demonstrate this point principally using multiple regression analysis with
data for 100 countries, through which the share of trade in an economy is shown to have had
a statistically significant positive effect on income growth in the 1980s and 1990s. On the
basis of this analysis, they assert that developing countries should enact more liberal trade
policies to foster growth and reduce poverty.
This paper finds several errors in the conceptual logic and methodology underlying the DK
study. First, it argues that the authors employ selective evidence in support of their view
while overlooking their data that is open to alternative interpretations. Next, it argues that
their reliance on the share of trade in GDP as an indicator of trade liberalization is highly
misleading. Third, the failure to carefully consider selection bias in the descriptive analysis
further distorts the results. Finally, the regression analysis contains several problems relating
to the data used and specification.
———. 2005c.
Wealth
for the Few, Poverty for the Many: The Resource Curse—Examples of Poor
Governance/Corporate Mismanagement Wasting Natural Resource Wealth.
The Grasberg mine – Irian Jaya
U.S company Freeport McMoran hit the headlines in the mid 1990s accused of serious human rights and
environmental violations in its Grasberg mine in Irian Jaya. In its annual report, Freeport acknowledges
responsibility for dumping over 125,000 tons of potentially toxic tailings into the rivers of Irian Jaya every
day. The mine was the world’s largest gold mine and the third largest copper mine in the world valued
between $50 and %60 billion. According to reports by the BBC the mine has been responsible for the deaths
of hundreds of people since the mine began operations in 1972 turning a blind eye while the Indonesian
military killed and tortured dozens of native people in the area around the mining concession.
Sridhar, Devi. 2005.
Inequality
in the United States Healthcare System
Although the United States (US) has been rated highly in the United Nations Human
Development Index, the shining health indicators of the general population do not reflect
the great disparity in the health of certain subpopulations. Absolute health indicators
often make the suffering of the vulnerable, especially those living in the wealthiest
nation, invisible to the world.
In this paper, I will demonstrate why the US private-public healthcare system should not
be used as a model for other countries as it exacerbates the inequality in access to care
and health status between the haves and the have-nots.
|
From the Joseph Rowntree Foundation - 30 April 2007
Poverty twice as likely for minority ethnic groups:
education fails to close the gap
The poverty rate for Britain’s minority ethnic groups
stands at 40%, double the 20% found amongst white British
people, according to new research published today (30 April)
by the Joseph Rowntree Foundation (JRF). Minority ethnic
groups are also being overlooked for jobs and are being paid
lower wages, despite improvements in education and
qualifications.
The research highlights the differences between minority
ethnic groups with 65% of Bangladeshis living in poverty
compared to 55% of Pakistanis, 45% of Black Africans and 30%
of Indians and Black Caribbeans. Over half of Bangladeshi,
Pakistani and Black African children in the UK are growing
up in poverty with a staggering 70% of Bangladeshi children
growing up poor.
|
UNU-WIDER - December 2006
Pioneering
Study Shows Richest Two Percent Own Half World Wealth
The
richest 2% of adults in the world own more than half of global
household wealth according to a path-breaking study released today by
the Helsinki-based World Institute for Development Economics Research
of the United Nations University (UNU-WIDER).
The
most comprehensive study of personal wealth ever undertaken also
reports that the richest 1% of adults alone owned 40% of global assets
in the year 2000, and that the richest 10% of adults accounted for 85%
of the world total. In contrast, the bottom half of the world adult
population owned barely 1% of global wealth.
|
E. M. Uslaner - 2005
The inequality trap
Successful (or “well-ordered”) democracies are marked by high levels of trust in other
people and in government, low levels of economic inequality, and honesty and fairness in the
public sphere. Trust in people, as the literature on social capital has shown, is essential for
forming bonds among diverse groups in society... Trust in government is
essential for political stability and compliance with the law. Corruption robs the economy of
funds and leads to less faith in government (perhaps also to less faith in fellow citizens) and thus
lower compliance with the law. And institutions seen as biased (unfair) cannot secure compliance
and may exacerbate inequalities in society.
|
|
|
Jordi Estivill - 2003
Concepts
and strategies for combating social exclusion. An overview
Social exclusion is a phenomenon of both the past and the
present, and if nothing is done, it will also be one of the future. It affects
millions of persons who struggle to survive in the hardest living and working
conditions. Throughout history, the forms taken by exclusion have evolved, both
with regard to their characteristics and the attitudes adopted towards them.
Exclusion currently takes on different appearances on the various continents,
and even within them, at the regional and national levels. But it affects
everyone. Programmes and measures addressing its various aspects have also
changed and are not the same in all four corners of the world. The actors
involved do not play the same role in their desire to reduce and eradicate
exclusion.
|
The Christian Science Monitor - August 03, 2006
New Treasury head eyes rising inequality
In his first major speech Monday, Henry Paulson pushed
America's wide income gap onto the agenda.
By Mark
Trumbull - Staff writer of The Christian
Science Monitor
The wide gap between the
richest and poorest Americans has not often been the topic of choice for the
Bush administration's two previous Treasury secretaries.
So it was notable this week that Henry Paulson,
the president's latest Treasury head, chose to put that issue on his short list
- as one of the nation's four prominent, long-term economic challenges. Mr.
Paulson's head-on approach during one of his first public appearances as
secretary differs from his predecessors' strategies, some analysts say.
The wealth gap is hardly new, but income inequality has been
growing in America over the past quarter century. Even as average worker
productivity has surged, average hourly earnings have stagnated. Meanwhile, the
nation's economic elites have prospered.
|
| |
René Morissette, Xuelin Zhang and Marie Drolet
The Evolution of Wealth Inequality
in Canada, 1984-1999
November 2003
|
From the Official UK Statistics:
Social and Economic inequalities in the United Kingdom
2006 |
From The Economist - 10 August 2006
Class: But did they buy their own furniture?
Class is no longer a reliable guide to anything in Britain. But it still
matters
WHEN George Orwell wrote in 1941 that England was “the most class-ridden
country under the sun”, he was only partly right. Societies have always had
their hierarchies, with some group—Boston's Brahmins, France's
énarques, the Communist Party of China—perched at the top. In the
Indian state of Bihar the Ranveer Sena, an upper-caste private army, even killed
to stay there.
By that measure class in Britain hardly seems entrenched. But in another way
Orwell was right, and continues to be. As a new YouGov poll for The
Economist shows, Britons are surprisingly alert to class—both their own and
that of others.
|
From The Institute for the Study of Labor, Bonn
Poverty persistence in Sweden
J. Hamsem and R. Wahlberg, July 2004 |
Jesper Roine and Daniel Waldenström
Top Incomes in Sweden over the Twentieth Century
Stockholm School of Economics - 2005 |
United Nations University
World Institute for Development Economic Research:
DP2003/08
Stefan Dercon and John Hoddinott:
Health,
Shocks and Poverty Persistence
In this paper we review the evidence on the impact of large shocks, such as drought, on
child and adult health, with particular emphasis on Zimbabwe and Ethiopia. Our focus
is on the impact of shocks on long-term outcomes, and we ask whether there are
intrahousehold differences in these effects. The evidence suggests substantial
fluctuations in body weight and growth retardation in response to shocks. While there
appears to be no differential impact between boys and girls, adult women are often
worse affected by these shocks. For children, there is no full recovery from these losses,
affecting adult health and education outcomes, as well as lifetime earnings. For adults,
there is no evidence of persistent effects from transitory shocks in our data.
DP2003/25
Kym Anderson:
Trade
Liberalization, Agriculture, and Poverty in Low-income Countries
This paper offers an economic assessment of the opportunities and challenges provided by the
WTO’s Doha Development Agenda, particularly through agricultural trade liberalization, for
low-income countries seeking to trade their way out of poverty. After discussing links between
poverty, economic growth and trade, it reports modelling results showing that farm product
markets remain the most costly of all goods market distortions in world trade. It focuses on what
such reform might mean for countries of South Asia and sub-Saharan Africa in particular, both
without and with their involvement in the MTN reform process. What becomes clear is that if
those countries want to maximize their benefits from the Doha round, they need also to free up
their own domestic product and factor markets so their farmers are better able to take advantage
of new market-opening opportunities abroad. Other concerns of low-income countries about
farm trade reform also are addressed: whether there would be losses associated with tariff
preference erosion, whether food-importing countries would suffer from higher food prices in
international markets, whether China’s WTO accession will provide an example of trade reform
aggravating poverty via cuts to prices received by Chinese farmers, and the impact on food
security and poverty alleviation. The paper concludes with lessons of relevance for low-income
countries for their own domestic and trade policies.
-
DP2003/28
Giovanni Andrea Cornia and Tony Addison with Sampsa Kiiski:
Income
Distribution Changes and their Impact in the Post-World War II Period
This paper analyses the trends in within-country inequality during the post-World War II
period, with particular attention to the last 20 years. This is done on the basis of a review
of the relevant literature and of an econometric analysis of inequality trends in
73 countries, which account for 80 per cent of the world’s population and 91 per cent of
world GDP-PPP. The paper suggests that the last two decades have been characterized by
a surge in within-country inequality in about two-thirds of the developing, developed and
transitional nations analysed. It also suggests that in those countries where the upsurge in
inequality was sizeable or where inequality rose from already high levels, growth and
poverty alleviation slowed down perceptibly. While this trend towards higher inequality
differs substantially across countries in its extent, timing and specific causes, it marks a
clear departure from the pattern observed during the first 30 years of the post-World War
II period during which a widespread move towards greater egalitarianism was noted in the
majority of the socialist, developing and industrialized economies, with the exception of
Latin America and parts of Sub-Saharan Africa.
DP2003/36
Kræn Blume, Björn Gustafsson, Peder J. Pedersen and Mette Verner:
A
Tale of Two Countries: Poverty among Immigrants in Denmark and Sweden since 1984
The paper focuses on the problems of low income among immigrants, analysed by using
comparable panel datasets for two Scandinavian welfare states. After a brief survey of a
few earlier studies on immigrant poverty, we present Denmark and Sweden as
interesting cases for comparative research. Cyclical profiles have been very different
since the 1980s and both countries have experienced considerable differences with
regard to the number and composition of immigrants from the less developed countries.
Poverty rates, analysed relative to different background factors, are fairly high, in
particular when considering the welfare state background of Denmark and Sweden. A
number of differences are found in spite of the institutional similarities between the two
countries.
DP2003/52
Chris Elbers, Peter Lanjouw, Johan Mistiaen, Berk Özler and Ken Simler:
Are
Neighbours Equal? Estimating Local Inequality in Three Developing Countries
(PDF 340KB)
DP2003/67
Ruslan Yemtsov:
Quo Vadis? Inequality
and Poverty Dynamics across Russian Regions (PDF 439KB)
DP2003/65
Michael F?er, David Jesuit and Timothy Smeeding:
Regional
Poverty and Income Inequality in Central and Eastern Europe: Evidence from the
Luxembourg Income Study (PDF 251KB)
DP2003/69
Almas Heshmati:
Measurement
of a Multidimentional Index of Globalization and its Impact on Income Inequality
In recent years, theoretical research on the link between globalization and world
inequality has been intense. However, analysis of the link at the empirical level is
scarce. The causal connections between globalization and inequality in developing
nations are best understood by building on what we have learned about inequality
change during the pre-globalization phase. Extensive empirical research points to two
stylized facts. First, there is no structural relationship between growth and inequality.
Second, income inequality levels in the pre-globalization phase were generally
immobile and trendless.
-
DP2003/74
Stanislav Kolenikov and Anthony Shorrocks:
A Decomposition Analysis of Regional Poverty in Russia (PDF
326KB)
DP2004/02
Bart Capéau and André Decoster:
The
Rise or Fall of World Inequality: A Spurious Controversy? (PDF
233KB)
DP2004/01
Anthony Shorrocks and Guanghua Wan: Spatial
Decomposition of Inequality (PDF 200KB)
DP2004/04
Erik Thorbecke: Conceptual
and Measurement Issues in Poverty Analysis (PDF
211KB)
RP2004/01
Anthony Shorrocks: Inequality
and Welfare Evaluation of Heterogeneous Income Distributions (PDF
457KB)
RP2004/12
S. Subramanian: Poverty
Measures and Anti-Poverty Policy with an Egalitarian Constraint (PDF
217KB)
RP2004/11
S. Subramanian: Some
Simple Analytics of Poverty Redress through Direct Income Transfers and Wage
Employment Programmes: A Review and Commentary (PDF
231KB)
RP2004/10
S. Subramanian: A
Re-scaled Version of the Foster-Greer-Thorbecke Poverty Indices based on an
Association with the Minkowski Distance Function (PDF
167KB)
RP2004/26
Ann Harding, Rachel Lloyd, Anthea Bill, and Anthony King Assessing
Poverty and Inequality at a Detailed Regional Level: New Advances in Spatial
Microsimulation (PDF 624KB)
RP2004/25
S. Subramanian:
Indicators of Inequality and Poverty (PDF 272KB)
RP2004/33
Susan Harkness: Social
and Political Indicators of Human Well-being (PDF 254KB)
RP2004/31
Douglas A. Hicks: Inequalities, Agency,
and Well-being: Conceptual Linkages and Measurement Challenges in Development
(PDF 177KB)
RP2004/30
Andrew Sumner: Economic
Well-being and Non-economic Well-being: A Review of the Meaning and Measurement
of Poverty (PDF 227KB)
RP2004/29
Mariano Rojas: Well-being
and the Complexity of Poverty: A Subjective Well-being Approach (PDF
243KB)
RP2004/41
Sara Lelli: What
Money Can’t Buy: The Relevance of Income Redistribution for Functioning Levels
(PDF 353KB)
RP2004/40
Oleksiy Ivaschenko: Longevity
in Russia’s Regions: Do Poverty and Low Public Health Spending Kill?
(PDF 630KB)
RP2004/38
Nicholas Minot and Bob Baulch: Poverty
Mapping with Aggregate Census Data: What is the Loss in Precision?
(PDF
476KB)
RP2004/37
Mozaffar Qizilbash: On
the Arbitrariness and Robustness of Multi-Dimensional Poverty Rankings
(PDF 228KB)
RP2004/57
Sarah White and Jethro Pettit: Participatory
Approaches and the Measurement of Human Well-being (PDF
165KB)
RP2004/59
S. Subramanian: Social
Groups and Economic Poverty: A Problem in Measurement (PDF
148KB)
RP2004/63
Mark McGillivray and Farhad Noorbakhsh: Composite
Indices of Human Well-being: Past, Present, and Future (PDF
167KB)
DP2004/07 Ruut Veenhoven: Subjective
Measures of Well-being(PDF 250KB)
DP2004/06 Des Gasper:
Human Well-being: Concepts and Conceptualizations (PDF
291KB)
DP2004/05 Stephan Klasen: Gender-Related
Indicators of Well-Being (PDF 253KB)
RP2005/46
Indranil Dutta and Ajit Mishra: Inequality,
Corruption, and Competition in the Presence of Market Imperfections
(PDF 247KB)
RP2005/57
Ethan Ligon: Poverty
and the Welfare Costs of Risk Associated with Globalization (PDF
213KB)
RP2005/59
S. Subramanian: Reckoning
Inter-group Poverty Differentials in the Measurement of Aggregate Poverty
(PDF 264KB)
RP2005/64
Bram Thuysbaert and Ricardas Zitikis: Consistent
Testing for Poverty Dominance (PDF 237KB)
RP2005/63
Rafael E. De Hoyos
The
Microeconomics of Inequality, Poverty and Market Liberalizing Reforms
(PDF 472KB)
This paper illustrates how the use of microeconometric techniques can be used to
uncover the micro dynamics behind macro shocks. Using Mexican micro data we find
out that—controlling for everything else—between 1994 and 1998 returns to personal
characteristics in the tradable sector increased particularly those of skilled labourers. By
the year 2000 the positive shock upon the tradeable sector vanishes with returns to
personal characteristics converging to the levels observed in the non-tradable sector. We
use our model’s results to simulate a scenario where the Mexican economy experienced
the negative shock of the peso crises in the absence of trade liberalization (NAFTA) and
find out that under such a scenario the poverty headcount ratio would have increased
more than 2 percentage points above the one observed in 1996. The simulated secondorder
effect of these changes shows that the skill mixed changed in a way that favoured
relatively skilled men and relatively unskilled women. These changes in labour
participation and occupation had an overall positive income effect though adverse in
distributive terms.
RP2005/62
S. Subramanian: Poverty
Measurement and Theories of Beneficence (PDF
151KB)
RP2005/75
George Mavrotas and S. Mansoob Murshed: The
Poverty Macroeconomic Policy Nexus: Some Short-run Analytics (PDF
203KB)
RP2005/40
Rhys Jenkins: Globalization,
Production and Poverty (PDF 128KB)
RP2005/02
Alain Chateauneuf and Patrick Moyes:
Measuring
Inequality Without the Pigou–Dalton Condition (PDF 363KB)
DP2005/03
Rehman Sobhan: A
Macro Policy for Poverty Eradication through Structural Change (PDF
84KB)
DP2005/08
Machiko Nissanke and Erik Thorbecke: Channels
and Policy Debate in the Globalization-Inequality-Poverty Nexus (PDF 219KB)
RP2005/41
Jinhua Zhao: The
Role of Information in Technology Adoption under Poverty
(PDF 166KB)
RP2005/37
Almas Heshmati: The
Relationship between Income Inequality, Poverty, and Globalization
(PDF
194KB)
RP2005/36
Adriaan Kalwij and Arjan Verschoor: A
Decomposition of Poverty Trends across Regions: The Role of Variation in the
Income and Inequality Elasticities of Poverty (PDF 751KB)
RP2005/34
Indranil Dutta and Ajit Mishra: Does
Inequality lead to Conflict? (PDF 273KB)
RP2005/33
Carol Graham: Globalization,
Poverty, Inequality, and Insecurity: Some Insights from the Economics of
Happiness (PDF 184KB)
RP2005/32
Kaushik Basu: Globalization,
Poverty and Inequality: What Is the Relationship? What Can Be Done?
(PDF 111KB)
RP2005/30
Pranab Bardhan: Globalization
and Rural Poverty (PDF 94KB)
RP2005/29
Martin Ravallion: Looking
Beyond Averages in the Trade and Poverty Debate (PDF 252KB)
RP2005/28
Rimjhim M. Aggarwal: Globalization,
Local Ecosystems, and the Rural Poor (PDF
103KB)
RP2005/27
Gregory Graff, David Roland-Holst, and David Zilberman:
Biotechnology
and Poverty Reduction in Developing Countries (PDF
133KB)
RP2005/22
Matthew Clarke: Assessing
Well-being Using Hierarchical Needs(PDF
119KB)
RP2005/21
Daniel T. Haile:
Wealth Distribution, Lobbying and Economic Growth: Theory and Evidence
This paper presents a model allowing one to analyze the joint determination of
inequality, taxes, human capital and growth. We consider the political economy of
redistribution between three income groups in a dynamic economy. The paper seeks to
explain the effect of corruptibility (exemptions) and lobby group size on policy
outcomes. Theoretically, this paper provides a linkage between lobbying activities,
wealth distribution and growth. By endogenizing the weights the social planner gives to
their constituents, our analysis explains why the relationship between redistribution and
inequality is non-monotonic. In particular, the theory predicts a non-monotonic relation
between the level of education, taxation and growth. Our empirical results, moreover,
confirm the conjectured effect that in economies with a higher degree of corruption and
inequality, we observe a lower tax/GDP ratio, leading to a lower development of human
capital and thus lower growth.
DP2006/06
Markus Jäntti, Juho Saari, and Juhana Vartiainen:
Growth and Equity in Finland (PDF 273KB)
RP2006/64
Lars Osberg and Kuan Xu: How
Should We Measure Global Poverty in a Changing World? (PDF
246KB)
RP2006/45
M. S. Qureshi: Trade
Liberalization, Environment and Poverty: A Developing Country Perspective
(PDF 369KB)
RP2006/38
Melanie Grosse, Kenneth Harttgen, and Stephan Klasen: Measuring
Pro-Poor Progress towards the Non-Income Millennium Development Goals
(PDF 346KB)
RP2006/34
Eric M. Uslaner:
Corruption
and Inequality
Economic inequality provides a fertile breeding ground for corruption and, in turn, leads
to further inequalities. Most corruption models focus on the institutional determinants of
government dishonesty. However, such accounts are problematic. Corruption is
remarkably sticky over time. There is a very powerful correlation between cross
national
measures corruption in 1980 and in 2004. In contrast, measures of democracy
such as the Freedom House scores are not so strongly correlated over time, and changes
in corruption are unrelated to changes in institutional design. On the other hand,
inequality and trust-like corruption are also sticky over time. The connection between
inequality and the quality of government is not necessarily so simple. The aggregate
relationships between inequality and corruption are not strong. The path from inequality
to corruption may be indirect, through generalized trust, but the connection is key to
understanding why some societies are more corrupt than others. This study estimates a
simultaneous equation model of trust, corruption, perceptions of inequality, confidence in
government, and demands for redistribution in Romania, and shows that perceptions of
rising inequality and corruption lead to lower levels of trust and demands for
redistribution.
RP2006/32
Richard Jolly:
Inequality
in Historical Perspective
Adam Smith, Tom Paine, John Stuart Mill and Karl Marx were all bold and outspoken
about the injustices of extreme inequality, nationally and internationally. Yet by almost
every standard, global inequality has grown substantially since they were writing, and
national income inequality also over the last two or three decades. There is a case today
for more outspokenness about the extremes of inequality, both about the causes and how
these causes are linked to extreme injustices in the past.
-
RP2006/15
Farhad Noorbakhsh:
International
Convergence or Higher Inequality in Human Development? Evidence for 1975 to 2002
The concept of convergence is extended to the human development index. Evidence of
weak absolute convergence is found over 1975-2002. The results are robust and verified
by various conditional β-convergence models and also supported by the evidence of
weak σ-convergence. Population weighted analyses provide support for polarization in
the human development index amongst developing countries but a slight reduction in
world inequality. The dynamics of regional analysis reveal a movement of sub-Saharan
Africa towards the low band of human development with Asia and Latin America
making progress. High immobility of the early part of the period is followed by
considerable upward and downward mobility in the latter part indicating a possible case
of the ‘twin peaks’ type of polarization.
RP2006/10
Giovanni Andrea Cornia and Leonardo Menchini:
Health
Improvements and Health Inequality during the Last 40 Years
This paper juxtaposes changes over the last forty years in income growth and
distribution with the mortality changes recorded at the aggregate level in about 170
countries and at the individual level in 26 countries with at least two demographic and
health surveys covering the last twenty years. Over the 1980s and 1990s, the infant
mortality rate, under-5 mortality rate, and life expectancy at birth mostly continued the
favourable trends that characterized the 1960s and 1970s. Yet, especially in the 1990s,
the pace of health improvement was slower than that recorded during the prior decades.
In addition, the distribution between countries of aggregate health improvements
became markedly more skewed. These trends are in part explained by the negative
changes recorded in sub-Saharan Africa and Eastern Europe, but are robust to the
removal of the two regions from the sample. This tendency is observed also at the
intraregional level, with the exception of Western Europe. Thirdly, demographic and …/
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