June 4, 2015
By: A.B. Atkinson ; Anne-Catherine Guio ; Eric Marlier
This paper brings together two approaches to the monitoring of household living standards: the macro-economic (national accounts) analysis of aggregates and the social indicators based on household microdata (European Union Statistics on Income and Living Conditions [EU-SILC]). Both are essential. The national accounts are necessary to provide an overall perspective; the distributional data in EU-SILC are necessary to measure income poverty. The progress, or lack of progress, in reducing income poverty has to be seen in relation to what is happening to the level of real incomes. We begin with the EU-SILC-based headline at-risk-of-poverty indicator, and then consider its relation to the level of household real income as presented in the national accounts. Moving step by step, we seek to identify the reasons for differences between EU-SILC and national accounts measures of real incomes. From this, we make a number of recommendations about possible improvements in the underlying data and in the construction of the social indicators. The substantive results help illuminate the differing experience of the pre-crisis period 2005 to 2008 and the subsequent three year period 2008 to 2011 (income reference years).
Keywords: poverty, inequality, national accounts, social indicators
June 4, 2015
By: Joseph E. Stiglitz
A significant amount of the increase in the wealth income ratio in recent decades is due to an increase in the value of land. We present a series of models that explain why land prices may have increased. These models help us understand the increase in both the wealth income ratio and wealth inequality. One model focuses on certain locations as being positional good. In another, we show that land bubbles are a natural part of market economies, and that on “bubble paths”, wealth may increase, even as the real wealth of the economy diminishes. Focusing on long run equilibrium, we show that a tax on the returns on land (including capital gains) can lead to higher incomes and less inequality. We show the links between the increases in land values and the financial system, demonstrating how changes in the rules governing that sector and the conduct of monetary policy may increase inequality. Given the large amount of life cycle savings, the traditional division of society into the owners of capital and workers or creditors and debtors may no longer provide the most insights for understanding the impact of policies on distribution. The relevant division is between capitalists, who pass on their wealth from generation to generation, and workers, and between the owners of equity and the holders of debt instruments. These distinctions are important for tax, financial and monetary policy. In our simple model, a lowering of interest rates benefits holders of equity— the capitalists—but hurts holders of government bonds, disproportionately life-cycle savers, and thus increases inequality. Similarly, a lowering of collateral requirements or of banks’ capital adequacy requirements does not result in an increase in the overall efficiency of the economy, but leads to more inequality.
JEL: D31 E21 E22
June 4, 2015
By: Stephen P Jenkins
This paper describes the UK income distribution and how it has evolved over the last 50 years. It also includes some comparisons with the income distributions of other rich countries. Multiple perspectives on the distribution are provided: there is evidence about real income levels and inequality, and the prevalence of affluence and of poverty.
Keywords: Inequality, poverty, affluence, income distribution, United Kingdom
JEL: D31 I32
June 4, 2015
By: Olga Alonso-Villar ; Coral del Río
Based on detailed occupation titles and making use of measures that do not require pairwise comparisons among demographic groups, this paper shows that the occupational segregation of Black women declined dramatically in 1940-1980, decreased slightly in 1980-2000, and remained stagnant in 2000-2010. An important contribution of this paper is the quantification of the well-being losses that these women derive from their occupational sorting. The segregation reduction was indeed accompanied by well-being improvements, especially in the 1960s and 1970s. Regarding the role that education has played, this study highlights that, only from 1990 onward, Black women with either some college or university degrees had lower segregation (as compared with their peers) than those with lower education. Nevertheless, the well-being loss that Black women with university degrees derived in 2010 for being segregated from their peers in education was not too different from that of Black women with lower education.
Keywords: occupational segregation measurement, race, gender, Black women, wages, United States
JEL: J15 J16 J71
June 4, 2015
By: Amrita Ahuja ; Sarah Baird ; Joan Hamory Hicks ; Michael Kremer ; Edward Miguel ; Shawn Powers
We discuss how evidence and theory can be combined to provide insight on the appropriate subsidy level for health products, focusing on the specific case of deworming. Although intestinal worm infections can be treated using safe, low-cost drugs, some have challenged the view that mass school-based deworming should be a policy priority. We review well-identified research which both uses experimental or quasi-experimental methods to demonstrate causal relationships and adequately accounts for epidemiological externalities from deworming treatment, including studies of deworming campaigns in the Southern United States, Kenya, and Uganda. The existing evidence shows consistent positive impacts on school participation in the short run and on academic test scores, employment, and income in the long run, while suggesting that most parents will not pay for deworming treatment that is not fully subsidized. There is also evidence for a fiscal externality through higher future tax revenue, which may exceed the cost of the program. Our analysis suggests that the economic benefits of school-based deworming programs are likely to exceed their costs in places where worm infestations are endemic. This would likely be the case even if the benefits were only a fraction of estimates in the existing literature.
JEL: H2 H51 I1 I12 I15 I2 I20 I25 I3 O1
June 4, 2015
By: Duval Hernández, Robert (University of Cyprus) ; Fields, Gary S. (Cornell University) ; Jakubson, George H. (Cornell University)
When economic growth (or economic decline) takes place, who benefits and who is hurt how much? The more traditional way of answering this question is to compare two or more comparable cross sections and gauge changing income inequality among countries or individuals. A newer way is to utilize data on a panel of countries or a panel of people and assess the pattern of panel income changes. How do these two approaches relate to one another? This paper shows, first, that it is possible to have all four combinations – rising or falling inequality and divergent or convergent panel income changes, and second, under what conditions, for various measures of rising/falling inequality and various measures of divergent/convergent income changes, each of the four possible combinations can arise.
Keywords: income inequality, economic mobility
JEL: J31 D63