income inequality and growth does the relationship vary with the income level abstract for three different specifications of a cross country growth model the coefficient of initial income inequality is remarkably similar for high and low income countries contrary to some recent suggestions in the literature but varies markedly across models

individual risk attitudes measurement determinants and behavioral consequences this paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects homes using a question asking people about their willingness to take risks in general we find that gender age height and parental background have an economically significant impact on willingness to take risks the experiment confirms the behavioral validity of this measure using paid lottery choices turning to other questions about risk attitudes in specific contexts we find similar results on the determinants of risk attitudes and also shed light on the deeper question of stability of risk attitudes across contexts we conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks occupational choice and smoking the question about risk taking in general generates the best all round predictor of risky behavior

estimating households vulnerability to idiosyncratic and covariate shocks a novel method applied in madagascar households in developing countries are frequently hit by severe idiosyncratic and covariate shocks leading to high consumption volatility a household s currently observed poverty status might therefore not be a good indicator of the household s general vulnerability to poverty in the recent years there has been an emerging literature on the concept and empirical analysis of vulnerability but because of strong data requirements for vulnerability analysis and limited availability of panel and shock data for developing countries static poverty analysis still dominates empirical vulnerability studies in this paper we propose a simple method to empirically assess the impact of idiosyncratic and covariate shocks on households vulnerability which can be applied in a wide context as it relies on more commonly available cross sectional or short panel data we empirically illustrate our approach for madagascar we show that covariate shocks have a relatively higher impact on rural households whereas idiosyncratic shocks have a relatively higher impact on urban households vulnerability

a moral hazard trap to growth this paper studies the consequences of asymmetric information in the investment sector upon economic growth in this paper the information asymmetry generates a moral hazard problem this moral hazard problem restricts financial arrangements it is shown that these restrictions make even the long run competitive equilibrium income dependent upon history this result also holds in case there is perfect capital mobility however when there is capital mobility the government may be able to intervene in a pareto improving way copyright 1992 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

life is unfair in latin america but does it matter for growth summary i analyze the effect of inequality on economic growth in latin america where inequality is measured as the area of family farms as a percentage of the total area of agricultural holdings using data from 18 latin american countries during 1960 2004 i find that inequality has a nonlinear effect on economic growth overall for the countries included in this analysis the share of family farms has a positive significant effect on economic growth these findings are robust to controlling for several factors using a different indicator of inequality land gini and addressing for endogeneity

social security public education and the growth inequality relationship abstract we study how the relationship between economic growth and inequality depends upon the levels of funding of two of the largest government programs public education and social security we do this in the context of an overlapping generations economy with heterogeneous agents where the government collects a tax on labor income to finance these programs we show that in our model an increase in government spending on social security reduces income inequality and can have a non monotonic effect on growth when the initial level of social security funding is low as is the case in most poor economies then its increase will enhance growth when its funding level is high as is typical for developed countries we show that its further increase can slow down growth while reducing income inequality these results obtain regardless of whether the increase in social security funding is financed by a tax increase or by cutting the public education budget we also find that the effects of increasing the level of public education expenditures or the overall size of the government budget holding the budget composition fixed are characterized by similar non monotonic growth inequality relationships

differences in social capital between 54 western european regions beugelsdijk s and van schaik t 2005 differences in social capital between 54 western european regions regional studies 39 1053 1064 based on the extant literature a newly developed index measuring social capital at the regional level in europe is presented it is shown that there are large regional differences on this social capital index it was tested if higher scores on this social capital index correlate with higher levels of economic development and regional economic growth in 54 western european regions though further research is required these preliminary results suggest a positive relationship exists between social capital and regional economic development the paper concludes with suggestions for future empirical research

the income inequality nexus in a developed country small scale regional evidence from austria abstractthe income inequality nexus in a developed country small scale regional evidence from austria regional studies this paper analyses the relationship between regional inequality and average income in a small scale framework for austria the empirical findings are based on a novel inequality database generated from individual wage tax information at the municipality level this study researches the magnitude of regional spillovers of income and inequality using spatial econometric methods the results show a pronounced positive relation between regional income levels and inequality where especially high income municipalities exhibit a large spread in the income distribution furthermore it shows that higher levels of inequality are associated with income gains at the top of the distribution

recent trends in the uk income distribution what happened and why the uk income distribution changed its shape dramatically during the 1980s this paper documents the trends and analyses their causes copyright 1996 by oxford university press

inequality and growth in the united states why physical and human capital matter we investigate the relationship between economic growth and top income inequality under the influence of human and physical capital accumulation using an annual panel of u s state level data our analysis is based upon the unified framework offered by galor and moav 2004 while the empirics account for cross section dependence parameter heterogeneity and endogeneity in nonstationary series we conclude that changes in inequality do not influence growth neither in the short run nor in the long run in the united states as a whole in the 1929 2013 period our findings are robust to the inclusion of overall income inequality measures these findings provide support for the theoretical prediction of the unified theory of inequality and growth according to which the growth effect of inequality becomes insignificant in the latest stages of economic development that the united states experiences during our period of investigation therefore future policies aiming at moderating the concentration at the upper end of income distribution are not likely to have adverse growth consequences in developed countries such as the united states jel i21 o47 c23

wealth inequality and collective action abstract we study the effect of inequality in the distribution of endowments of private inputs e g land wealth that are complementary in production with collective inputs e g contribution to public goods such as irrigation and extraction from common property resources on efficiency in a class of collective action problems we focus on characterizing the joint surplus maximizing level of inequality making due distinction between contributors and non contributors in a framework that allows us to consider a wide variety of collective action problems ranging from pure public goods to impure public goods to commons we show that while efficiency increases with greater equality within the groups of contributors and non contributors so long the externalities positive or negative are significant there is an optimal degree of inequality between these groups

globalization and competitive strategies in european vulnerable regions affuso a capello r and fratesi u globalization and competitive strategies in european vulnerable regions regional studies this paper highlights the role played by structural economic features and industrial competitive strategies in the performance of a group of european regions defined as vulnerable because of their specialization in industries particularly exposed to international trade different growth patterns emerge among them the most successful regions are those with a strong presence of high value added functions of best performing vulnerable sectors but also with high structural funds expenditure on human resources moreover among the industrial strategies analysed it is found that the only winning strategy explaining higher productivity gains is industrial reconversion at the expense of employment growth affuso a capello r et fratesi u la mondialisation et les strategies competitives des regions europeennes vulnerables regional studies cet article cherche a souligner le rol

risk sharing networks and insurance against illness most risk sharing tests on developing country data are conducted at the level of the village generally the full risk sharing hypothesis is rejected this paper uses detailed data on all insurance networks within a village in tanzania networks are not clustered but largely overlapping we test whether full risk sharing occurs within these networks while village level full insurance cannot be rejected for food consumption we find evidence consistent with at least partial insurance of non food consumption via networks

urban rural income polarization and economic growth in china evidence from the analysis of a dynamic panel data model using a dynamic panel data model and the system gmm this article examines the relationship between urban rural income polarization and economic growth at the provincial level in the period 1995 to 2010 in china the estimated results and significant tests indicate that a certain degree of urban rural income polarization is beneficial to economic growth at the provincial level in both stages for china as a whole though the contribution of urban rural income polarization to economic growth is relatively small aggravating urban rural income polarization has a negative impact on economic growth in china based on a cluster analysis of regional economic growth at the provincial level the authors carried out the same analysis separately for two categories of regions too the results for those two categories of regions show that positive correlations also exist between urban rural income polarization and economic growth in both stages which are very similar to the analysis for the whole of china in additio

vulnerability and poverty dynamics in vietnam drawing upon the vietnam household living standards survey vhlss data that cover the whole of vietnam in 2002 and 2004 ex ante measures of vulnerability are constructed these are then compared with static indicators of poverty i e the headcount ratio in a particular year detailed analyses of the panel data show that i in general vulnerability in 2002 translates into poverty in 2004 ii vulnerability of the poor tends to perpetuate their poverty and iii sections of the nonpoor but vulnerable slip into poverty durable reduction in poverty is conditional on i accurate identification of the vulnerable ii their sources of vulnerability and iii design of social safety nets that would enable the vulnerable to reduce risks and cope better with rapid integration of markets with the larger global economy

is inequality harmful for growth comment endogenous growth models have reignited interest in institutional and path dependencies in the economic growth process one reason for the interest in endogenous growth models is that they may explain why countries consistently grow at different rates in this vein it has been recently proposed that greater economic inequality reduces future economic growth an important paper in this literature is by torsten persson and guido tabellini 1994 who will be referred to as pt pt s model shows why it is reasonable to expect a negative relationship between inequality and future economic growth moreover their empirical evidence is consistent with their contention if pt s findings are robust to other data sets there would be important policy implications for example they imply that policy makers should not only be concerned with the distributional implications of government policies for political and social reasons but also because income distribution has long run effects on economic growth this indicates that greater u s income inequality since the early 1970 s may have resulted in lower subsequent economic growth however pt s results are somewhat fragile to various specifications suggesting that they should be replicated with different data sets and over different time periods pt p 617 with these implications in mind this study employs data from a panel of u s states to further explore the relationship between economic growth and income inequality in what follows section i summarizes pt s study and discusses how this comment extends their findings the empirical implementation and results in section ii directly examine the link between overall income inequality and growth section iii expands the analysis to alternative measures of income distribution and government policy one emphasis in section iii is the distinction between how the overall income distribution especially at the tails influences economic growth from how the relative well being of the median voter affects economic growth section iv provides some concluding discussion

regional welfare disparities the case of the european union the regional welfare distribution in the european union between 1993 and 1998 is examined using several complementary methodologies the results obtained show a reduction in regional welfare disparities over the period analysed it is worth noting in this respect however that regional productivity differences prove to be the main determinant behind observed welfare inequality in the european context moreover there has also been a decline in regional bipolarization over the six year contemplated while the degree of observed intradistributional mobility is relatively low the empirical evidence presented nevertheless reveals the importance of variables such as the national component the spatial location the regional productive structure or the percentage of gdp devoted to investment or to r d expenditure in accounting for the dynamics of the distribution under analysis

violence and risk preference experimental evidence from afghanistan we investigate the relationship between violence and economic risk preferences in afghanistan combining i a two part experimental procedure identifying risk preferences violations of expected utility and specific preferences for certainty ii controlled recollection of fear based on established methods from psychology and iii administrative violence data from precisely geocoded military records we document a specific preference for certainty in violation of expected utility the preference for certainty which we term a certainty premium is exacerbated by the combination of violent exposure and controlled fearful recollections the results have implications for risk taking and are potentially actionable for policymakers and marketers

income inequality tax policy and economic growth we investigate how the reduction of income inequality through tax policy affects economic growth taxation at different points of the income distribution has heterogeneous impacts on households incentives to work invest and consume using us state level data and micro level household tax returns over the last three decades we find that reducing income inequality between low and median income households improves economic growth however reducing income inequality through taxation between median and high income households reduces economic growth these asymmetric economic growth effects are attributable both to supply side factors i e changes in small business activity and labour supply and to consumption demand

land reforms poverty reduction and economic growth evidence from india recognition of the importance of institutions that provide security of property rights and relatively equal access to economic resources to a broad cross section of society has renewed interest in the potential of asset redistribution including land reforms empirical analysis of the impact of such policies is however scant and often contradictory this paper uses panel household data from india together with state level variation in the implementation of land reform to address some of the deficiencies of earlier studies the results suggest that land reform had a significant and positive impact on income growth and accumulation of human and physical capital the paper draws policy implications especially from the fact that the observed impact of land reform seems to have declined over time

multiple measurements of u s income inequality using 1980 state census data the gini ratio theil index coefficient of variation atkinson measure four values and nelson index as separate measurements of income inequality are regressed with nineteen ses variables traditionally found significant with gini in past research the standard deviation of educational attainment is dominant among all independent variables as the strongest predictor of inequality mean family income dominant in prior research is a distant second in predictiveness more diversity than commonality is evident among the nineteen ses variables as they predict income inequality measured by the eight different techniques copyright 1988 by mit press

a refinement of the relationship between economic growth and income inequality there is mixed evidence in the literature of a clear relationship between income inequality and economic growth most of that work has focused almost exclusively on developed economies in what we believe to be a first effort our emphasis is solely on developing economics which we classify as high income and low income developing countries hidc and lidc we make such distinction on theoretical and empirical grounds empirically the world bank has classified developing economies in this manner since 1978 the data in our sample are also supportive of such classifications we provide theoretical scaffolding that uses asymmetric credit constraints as a premise for separating developing economies in such a way we find strong evidence of a negative relationship between income inequality and economic growth in lidc to be in stark contrast with a positive inequality growth relationship for hidc both correlations are statistically significant across multiple econometric specifications using international

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

risk crop choice and savings evidence from tanzania rural households engaged in agricultural activities face considerable risks in their income process these income risks are especially important if they result in consumption fluctuations this is likely if insurance and credit markets are absent one possible strategy for household is to take up low risk activities even if they imply lower returns such response cannot be viewed independently from the other options available to households to reduce consumption fluctuations this paper focuses on the importance of liquid asset formation for risk taking behaviour by households an intertemporal model of consumption under liquidity constraints is developed in which households can choose between income activities with different returns and riskiness it shows that if liquid asset holdings are large providing a buffer for consumption shortfalls then households will be more willing to take up high risk activities evidence based on survey data from shinyanga district tanzania is presented consistent with this prediction this abstract was borrowed from another version of this item

no condition is permanent middle class in nigeria in the last decade the economic debate on existence and definition of the middle class has become particularly lively in many developing countries despite this growing interest the identification of the middle class group in these countries remains quite challenging building on a recently developed framework to define the middle class this paper tries to estimate the nigerian middle class size in a rigorous quantitative manner by exploiting publicly available panel data the expenditure associated to a 10 percent probability of falling into poverty is estimated and this is used as the middle class threshold for nigeria the threshold expenditure for the middle class in nigeria is found to be 378 39 naira per capita per day 2010 ppp relying on this threshold and through survey to survey imputation the size of nigeria s middle class in 2003 is also estimated the results show that there has been considerable improvement on the size of the middle class and poverty reduction between 2003 and 2013 poverty decreased between 2003 and 2013 from 45 to 33 percent while the middle class increased from 13 percent to 19 percent nevertheless the results still paint a heterogeneous picture of poverty and the middle class in nigeria where the largest portion of the population although above the poverty threshold continues to live with average or high vulnerability to poverty

income inequality financial development and macroeconomic fluctuations we examine the relationship between income inequality and variability in aggregate consumption growth in high income countries greater income inequality appears to be associated with more volatility in consumption growth whereas in lower income countries higher levels of income inequality tend to be associated with less volatility we present evidence that variability in real gdp growth is also related to income inequality in the same way our results suggest that the level of financial development may help to explain why the distribution of income affects the short run variability of consumption and output differently in high income countries than in low income countries

surviving the great recession the influence of income inequality in us urban counties abstractsurviving the great recession the influence of income inequality in us urban counties regional studies while there has been extensive research on the role of income inequality in economic growth there has been less investigation as to the role of income inequality on economic resilience this paper addresses the relationship between income inequality and resilience by evaluating the vulnerability of urban counties in the united states entering recession between 2006 and 2010 and tests whether income inequality contributes to their probability of recession survival a cox proportional hazards model is used to determine factors contributing toward urban counties resilience to the external shock of the great recession the research is focused on the relationship between the level of income inequality in a county and its recession risk it is found that areas with increased income inequality entered recession earlier

spatial analysis of change trend and influencing factors of total factor productivity in china s regional construction industry total factor productivity tfp is a measure of long term economic growth and a comprehensive industry level productivity measure there are large gaps in china s regional construction industry dev

why are stabilizations delayed when a stabilization has significant distributional implications e g tax increases to eliminate a large budget deficit socioeconomic groups may attempt to shift the burden of stabilization onto other groups the process leading to stabilization becomes a war of attrition each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden the authors solve for the expected time of stabilization in a model of rational delay and relate it to several political and economic variables they motivate this approach and its results by comparison to historical and current episodes copyright 1991 by american economic association

political equilibrium income distribution and growth this paper analyzes the impact of income distribution on growth when investment in human capital is the source of growth and individuals vote over the degree of redistribution in the economy the model has three main features first very different patterns of income distribution are conducive to high growth at different levels of per capita income second growth is associated with an externality whereby investment in human capital by one group increases the productivity of other groups thus potentially enabling them to invest in human capital third the initial pattern of income distribution and the resulting political equilibrium are crucial in determining whether the transmission of this externality is promoted in which case growth is enhanced or prevented in which case growth is stopped using a non overlapping generations model with voting i derive several empirical implications in particular the model implies an inverted u relation between levels of inequality and levels of income in cross sections but not necessarily in time series a result that seems consistent with a number of empirical studies

the impact of income components on the distribution of family incomes attempts have recently been made to assign inequality contributions to various components of income this paper discusses the issues involved in such assignments and highlights the problems that follow from having a number of possible decomposition rules u s data on the distribution of family incomes are used to examine the relative influence of these income components and to evaluate empirically the performance of different decomposition rules a wide range of inequality contributions can be obtained even when restricted to only naturally derived decomposition rules some of the results are plainly absurd and serve to warn against the indiscriminate use of decomposition formulae without first investigating their properties

the role of structural change in european regional productivity growth o leary e and webber d j the role of structural change in european regional productivity growth regional studies recent literature suggests that inter sectoral structural change has a negligible impact on aggregate productivity growth through the application of dynamic shift share methods this paper presents a re examination of this perspective using data for 181 european regions from 1980 to 2007 results suggest that the effect of the inter sectoral component is far from negligible and is substantially stronger for those regions towards the higher deciles of the distribution moreover its effects appear to be particularly growth enhancing when the region is either high and improving or low and deteriorating these results rehabilitate the importance of structural change for growth and convergence

progressive tax and inequality in a unionized economy in this paper we develop a heterogeneous agent endogenous growth model of a unionized economy with distinct progressive tax schedules on labor and capital income with time preference heterogeneity the effective labor force balanced growth and income inequality are endogenously determined and these interact with each other a reduction in the degree of progressive labor tax yields a double dividend in terms of reducing income inequality and boosting economic growth while capital income progressivity displays the usual growth inequality trade off particularly the double dividend effect becomes more pronounced when unionization is declined or trade unions become more wage oriented leading to the so called cheshire cat phenomenon

the economics of poverty traps and persistent poverty empirical and policy implications the moral and economic imperatives to intervene in poverty traps motivate the identification of poverty traps and their structural causes so as to inform the design of appropriate policy responses however empirical identification remains challenging because of poverty traps complexity after reviewing mechanisms that can generate poverty traps we focus on one multiple financial market failures emphasising its heretofore underappreciated testable implications including specific behaviours that are rational only in the presence of a poverty trap we therefore recommend tests for these behaviours rather than more econometrically challenged efforts to directly test for poverty traps in estimated asset dynamics

the evolution of regional productivity disparities in the european union from 1975 to 2002 a combination of shift share and spatial econometrics le gallo j and kamarianakis y the evolution of regional productivity disparities in the european union from 1975 to 2002 a combination of shift share and spatial econometrics regional studies this paper evaluates the relative significance of the key factors that underlie regional productivity disparities in the european union industry mix and structural regional differences shift share decomposition is performed and the outcomes are investigated with exploratory spatial analysis and space time econometric models substantial changes in the spatial patterns of productivity and its determinants can be observed during the study period results indicate a decrease in geographical clustering for productivity and both regional and sectoral factors spatio temporal dependencies are essential for correct model specification as their omission results in an overestimation of the effect of the industry mix le gallo j et kamarianakis y l evolution des ecarts de productivite regionaux dans l union europeenne

the poor stay poor household asset poverty traps in rural semi arid india summary although identifying household level poverty dynamics would have important implications for poverty reduction policies empirical evidence is still scant this paper employs a novel semiparametric panel data estimator that combines the advantages of estimation methods in the existing literature and applies it to a uniquely long panel data set to examine poverty dynamics in three villages in rural semi arid india structural immobility is pervasive the currently poor are likely to remain poor suggesting a structural poverty trap while all households face static asset holdings higher castes larger landholders and more educated households are significantly less likely to be poor

inequality and growth in the united states evidence from a new state level panel of income inequality measures i introduction rising income inequality in the united states over the past quarter century is well documented see e g gottschalk 1997 krueger 2003 levy and murnane 1992 piketty and saez 2003 whether and by how much this change in inequality is associated with a change in economic performance is an important question yet recent empirical work has been largely inconclusive positive relationships between income inequality and economic growth have been found by partridge 1997 2005 using a panel of states and by forbes 2000 using a panel of countries empirical work by panizza 2002 and quah 2001 however has found little or no stable relationship between inequality and growth the results appear to be extremely sensitive to the econometric specification additionally barro 2000 has found evidence that the relationship is nonlinear with inequality being positively related to growth among wealthier countries like the united states but negatively related to growth among low income countries much of this recent empirical literature was initiated by the important work of deininger and squire 1996 who constructed a large cross national panel of inequality measures containing several time series observations for each nation spaced over multiple decades a parallel empirical literature also emerged using u s state level data with income inequality measures typically spaced at 10 yr intervals see e g panizza 2002 partridge 1997 2005 both the state level and the cross national empirical literatures benefited by exploiting the more advanced panel data econometrics afforded by the large n small t panel dimensions in this paper we offer a new more comprehensive panel of state level income inequality measures and use this panel to reevaluate the empirical inequality growth relationship 1 this panel has the unique feature of being large in both n and t with annual observations of the 48 contiguous states for the entirety of the postwar period 1945 2004 for nearly all the states in the panel the share of income held by the top decile experienced a prolonged period of stability after world war ii followed by a substantial increase during the 1980s and 1990s these state level trends appear to closely replicate the overall trends in aggregate u s inequality found by piketty and saez 2003 exploiting the large and balanced size of our inequality panel we explore the long run relationship between inequality and growth via three alternative dynamic panel error correction estimators the fixed effects fe estimator the mean group mg estimator of pesaran and smith 1995 and the pooled mg estimator of pesaran shin and smith 1999 the greater homogeneity of state level data helps mitigate the difficulty in adequately capturing structural differences across international panels of earlier studies such as forbes 2000 and barro 2000 corruption levels labor market flexibility tax neutrality tradition of entrepreneurship and many other factors are only poorly measured if at all barro 2000 1011 and these sources of heterogeneity are much more likely to contribute to omitted variable bias across countries than across states the results from our analysis indicate that the long run relationship between the top decile share of income and economic growth is positive in nature moreover an evaluation of several alternative income inequality measures suggests that this positive relationship is driven primarily by the concentration of income in the upper end of the income distribution the structure of the paper is as follows section ii presents the new panel of annual state level inequality measures and includes an important discussion of its key limitations section iii then offers an empirical investigation on the impact of income inequality on the growth rate of real income per capita finally section iv offers a brief set of conclusions

does income polarization affect economic growth the case of the european regions ezcurra r does income polarization affect economic growth the case of the european regions regional studies this paper examines the relationship between income polarization and economic growth in the regions of the european union over the period 1993 2003 the results indicate that the level of income polarization is negatively associated with regional growth this finding is in fact robust to various alternative specifications including a number of additional explanatory variables such as initial per capita gross domestic product industry mix human capital stock population density or market potential furthermore it should be noted that the observed negative correlation between polarization and economic performance does not depend on the number of groups used to analyse the degree of income stratification within the sample regions ezcurra r la polarisation des revenus affecte t elle la croissance economique le cas des regions europeennes regional studies cet article etudie les relations en

regional inequality in the european union does industry mix matter ezcurra r gil c pascual p and rapun m 2005 regional inequality in the european union does industry mix matter regional studies 39 679 697 the aim of this paper is to test for the respective roles of regional and sectoral factors in productivity convergence in the european union between 1977 and 1999 the methodology used for this is a new one that combines an alternative version of shift share analysis with various results quoted in the literature on personal income distribution the empirical evidence suggests that regional disparity in productivity in the european union is closely related to intrinsic differences between regions whatever the case the results that emerge also reveal the fundamental role of the country effect in accounting for regional disparities in income per worker in europe in addition our empirical results support the relevance of one sector growth models to explicate per capita income disparities in the european regions

wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

regional economic disparities and decentralisation the study of the influence of decentralisation on economic growth has received some attention in recent years but very few studies deal with its impact on regional inequalities this paper analyses the impact of both fiscal and political decentralisation on regional inequalities using alternative measures for a sample of 17 oecd countries in order to check for other possible influences the study also includes measures of public sector size and the type of party in government the final section studies the relevance of fiscal decentralisation in the regional convergence process observed by several authors during the past two decades the research reveals a strong negative correlation between decentralisation especially fiscal decentralisation and regional inequalities and also a positive influence of decentralisation on regional convergence

shocks individual risk attitude and vulnerability to poverty among rural households in thailand and vietnam summary we examine whether the experience of shocks influences individual risk attitude we measure the risk attitude of more than 4 000 households in thailand and vietnam via a simple survey item the experience of adverse shocks which is typical for poor and vulnerable households is related to a higher degree of risk aversion even when controlled for a large set of socio demographic variables therefore shocks perpetuate vulnerability to poverty via their effect on risk attitude we extend this general finding to various categories of shocks and find differences between thailand and vietnam this suggests that risk coping strategies profit from case specific design

income polarization in european countries and europe wide 2004 2012 polarization is an interesting additional social indicator for analyzing income distribution across countries as it captures the phenomenon of clustering around extreme poles income polarization can be closely linked to social exclusion which is relevant for eu social policy because combatting social exclusion is a central element of the lisbon agenda and the europe 2020 strategy rising income polarization has been observed outside europe but within the eu polarization is relatively unexplored this paper provides theoretical insights into this relatively new dimension of income distribution and analyzes trends in income polarization in 28 eu countries and 3 non eu countries using micro data from eu silc over the period 2004 2012 income polarization is rather stable over this period in european countries and europe wide it was rising among the old eu15 countries in the sub period 2004 2008 but declining afterwards the opposite development is witnessed for new member states despite the great recession we find quite stable income polarization in europe

an inverted u relationship between inequality and long run growth abstract the relationship between income distribution and long run economic growth has been a popular topic in recent economic research existing theoretical works find either a positive or a negative relationship but not both in this paper we propose an inverted u relationship between initial income distribution and long term economic growth and estimate and test the relationship using cross country data

promise and pitfalls in the use of secondary data sets income inequality in oecd countries as a case study this paper examines the role of secondary data sets in empirical economic research taking the field of income distribution as a case study we illustrate problems faced by users of secondary statistics showing how both cross country comparisons and time series analysis can depend sensitively on the choice of data after describing the genealogy of secondary data sets on income inequality we consider the main methodological issues and discuss their implications for comparisons of income inequality across oecd countries and over time the lessons to be drawn for the construction and use of secondary data sets are summarized at the end of the paper

is income inequality harmful for regional growth evidence from the european union this article examines the relationship between income inequality and economic growth in the regions of several european union countries over the period 1993 2002 using the information provided by the european community household panel taking into consideration the relevance of spatial effects in this context different versions of a spatial econometric model are estimated the results indicate that the degree of income dispersion is negatively associated with regional growth this finding is in fact robust to various alternative specifications including a number of additional explanatory variables such as initial per capita gdp the sectoral composition of economic activity human capital stock population density and market potential furthermore the observed negative correlation between income inequality and economic performance does not depend on the specific measure used to quantify the degree of income dispersion

financial development growth and the distribution of income a paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined financial intermediation promotes growth because it allows a higher rate of return to be earned on capital and growth in turn provides the means to implement costly financial structures thus financial intermediation and economic growth are inextricably linked in accord with the goldsmith mckinnon shaw view on economic development the model also generates a development cycle reminiscent of the kuznet hypothesis in particular in the transition from a primitive slow growing economy to a developed fast growing one a nation passes through a stage in which the distribution of wealth across the rich and poor widens

is consumption insured against illness evidence on vulnerability of households to health shocks in rural ethiopia abstract low and volatile incomes and absence of well developed financial markets make consumption smoothing an important issue in low income countries based on the theory of full insurance and using 2 years of panel data this study examines the impact of illness on the consumption of rural households and the capacity of existing risk sharing mechanisms in insuring consumption against health shocks in the rural areas of ethiopia the results show that illness has a statistically significant negative impact on the stability of consumption and the capacity of households or existing intra and interhousehold risk sharing arrangements in insuring consumption against illness varies across different consumption items the regression results show that the hypothesis of consumption insurance cannot be rejected in the case of total food consumption implying that basic items that come from own production and from external sources gifts are better insured and insensitive to the illness of the head however the

the short run relationship between inequality and growth evidence from oecd regions during the great recession abstractthis paper provides evidence on the relationship between income inequality and economic growth in organisation for economic co operation and development oecd regions during the decade 2003 13 it combines household survey data and macroeconomic databases covering over 200 comparable regions in 15 oecd countries the econometric results based on two alternative sets of instruments highlight a general negative association between inequalities and economic growth since the start of the economic crisis this relationship is sensitive to the type of urban structure higher inequalities seem to be more detrimental for growth in regions characterized by medium to large sized cities while regions characterized by small cities and rural areas are less affected

a comparison of international income inequality an ordered probit model analysis in this study the ordered probit model with marginal effect was applied to examine the key elements that influence changes in the gini levels the empirical results indicated that export incentives and poverty have a positive impact on the gini levels moreover the marginal effect revealed that export incentives increase income inequality for countries with higher inequality and reduce inequality for those countries with a relatively even income distribution likewise the study found that the asian pacific economic cooperation apec and the eu countries move from inequality to equality more efficiently than countries in the latin american integration association laia

landownership concentration and the expansion of education we study the relationship between large landownership concentration and the expansion of mass education in nineteenth century prussia cross sectional estimates show a negative association between landownership concentration and enrollment rates fixed effects panel estimates indicate that regions with an initially stronger landownership concentration exhibit increasing enrollment rates this relationship is not driven by differences in the supply of schooling we argue that the implementation of agricultural reforms including the stepwise abolition of serfdom is an important driver of the change in enrollment the results are consistent with the interpretation that emancipation from labor coercion increased the private demand for education

why construction industry productivity is declining according to unpublished data compiled by bls productivity in the construction industry reached a peak in 1968 and except for a brief and small upturn between 1974 and 1976 has been falling ever since this paper examines the sources of this productivity decline between 1968 and 1978 by estimating a production function to assign weights to various factors responsible for productivity change and deriving a new price deflator for construction which does not rely on labor or material cost indexes thus eliminating a systematic bias toward overstating the rate of growth of prices the production function analysis indicates that productivity should have declined by 8 8 percent between 1968 and 1978 representing 41 percent of the observed decline the biggest factor in this decline was the reduction in skilled labor intensity resulting from a shift in the mix of output from largescale commercial industrial and institutional projects to single family houses other important factors include declines in the average number of employees per establishment capital labor ratio percent union and the average age of workers the difference between the official deflator and the new deflator proposed here accounts for an additional 51 percent of the reported productivity decline leaving only 8 percent of the decline unexplained this abstract was borrowed from another version of this item

an exploration into pigou s theory of cycles abstract this paper explores a theory of business cycles in which recessions and booms arise due to difficulties encountered by agents in properly forecasting the economy s future needs in terms of capital the idea has a long history in the macroeconomic literature as reflected by the work of pigou industrial fluctuation macmillan london 1926 the contribution of this paper is twofold first we illustrate the type of general equilibrium structure that can give rise to such phenomena second we examine the extent to which such a model can explain the observed pattern of u s recessions frequency depth without relying on technological regress we argue that such a model offer a framework for understanding elements of both the recent u s recession and of the asia downturns of the late 1990s

refitting the kuznets curve using a gender specific threshold model abstractprevious studies have reached mixed conclusions regarding the relationship between inequality and per capita income these studies however fail to consider gender differences in income inequality and how these may impact on the relationship between income inequality and per capita income using australian taxation statistics we derive three sets of gini coefficients i e female male and total for the period 1950 2013 we then examine the relationship between inequality and real per capita income and find that a gender specific threshold panel regression outperforms three other conventional models our findings suggest that one set of coefficients does not fit all in that the use of aggregate and constant coefficients may mask variations within and between gender inequality over time

between development and social policies the impact of european structural funds in objective 1 regions rodriguez pose a and fratesi u 2004 between development and social policies the impact of european structural funds in objective 1 regions reg studies 38 97 113 european regional support has grown in parallel with european integration the funds targeted at achieving greater economic and social cohesion and reducing disparities within the european union eu have more than doubled in relative terms since the end of the 1980s making development policies the second most important policy area in the eu the majority of the development funds have been earmarked for objective 1 regions i e regions where gdp per capita is below the 75 threshold of the eu average however the european development policies have come under increasing criticism based on two facts the lack of upward mobility of assisted regions and the absence of regional convergence this paper assesses using cross sectional and panel data analyses the failure so far of european development policies to fulfil their objective of de

the political economy of growth a critical survey of the recent literature this article reviews the recent literature on the political economy of growth focusing on the research that has developed at the intersection of the endogenous growth literature and the new political economy it explores the relationship among four key variables economic growth and capital accumulation political instability political freedom and democratic institutions and income inequality

spatial disparities in the european agriculture a regional analysis this article examines the territorial imbalances in european agriculture during the period 1980 to 2001 by means of the information provided by various methodological instruments which allow us to overcome the drawbacks of conventional convergence analysis the results obtained reveal that the regional distribution of productivity in the agricultural sector is characterized by the presence of positive spatial dependence this fact implies that the european regions in close spatial proximity register similar levels of the variable under study which highlights the relevance of geographical location in this context the empirical evidence presented also shows that regional disparities have remained almost constant during the time interval considered however the increase in density around the european average explains the observed reduction in the degree of bipolarization while intra distribution mobility is relatively limited finally the analysis carried out allows us to assess the role of variables s

identification of endogenous social effects the reflection problem this paper examines the reflection problem that arises when a researcher observing the distribution of behaviour in a population tries to infer whether the average behaviour in some group influences the behaviour of the individuals that comprise the group it is found that inference is not possible unless the researcher has prior information specifying the compisition of reference groups if this information is available the prospects for inference depend critically on the population relationship between the variables defining reference groups and those directly affecting outcomes inference is difficult to implossible if these variables are functionally dependent or are statistically independent the prospects are better if the variables defining reference groups and those directly affecting outcomes are moderately related in the population

income distribution and sociopolitical instability as determinants of savings a cross sectional model the purpose of this cross national study is twofold first it introduces income distribution and sociopolitical instability as arguments in the savings function second it presents some empirical evidence in relation to their quantitative effects on savings it is shown that sociopolitical instability has profound effects on the savings ratio it is also shown that the bulk of savings is produced by the middle income class as a result a redistribution of income at the expense of the upper income class yields a constant or an increased savings ratio developing on whether such a redistribution includes the lower income class or not

relative sources of european regional productivity convergence a bootstrap frontier approach enflo k and hjertstrand p relative sources of european regional productivity convergence a bootstrap frontier approach regional studies this paper addresses the issue of western european regional productivity growth and convergence by means of data envelopment analysis dea decomposing labour productivity into efficiency change technical change and capital accumulation the decomposition shows that most regions have fallen behind the production frontier in efficiency and that capital accumulation has had a diverging effect on the labour productivity distribution using bootstrapping methods the paper also accounts for the inherent bias and the stochastic elements in the efficiency estimation it is found that the relative ranking of the efficiency scores remains stable after the bias correction even after controlling for spatially correlated measurement errors and that the dea successfully identifies the regions on the production frontier as significantly more efficient than other regions enfl

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

inequality is bad for growth of the poor but not for that of the rich the paper assesses the impact of overall inequality as well as inequality among the poor and among the rich on the growth rates along various percentiles of the income distribution the analysis uses micro census data from u s states covering the period from 1960 to 2010 the paper finds evidence that high levels of inequality reduce the income growth of the poor and if anything help the growth of the rich when inequality is deconstructed into bottom and top inequality the analysis finds that it is mostly top inequality that is holding back growth at the bottom

temporal stability of risk attitudes and the impact of adverse shocks a panel data analysis from thailand and vietnam summary exogenous negative shocks and intrinsic risk attitudes are two important elements characterizing the vicious cycle of poverty associated with rural households in developing countries recent empirical studies suggest that adverse shocks a key driver of poverty can trigger substantial changes in the risk attitudes of poor people leading to decisions that perpetuate their lives in poverty although the temporal variability of risk attitudes is a controversial topic the literature advocating the temporal variability of risk attitudes suggests that covariate shocks such as natural disasters alter risk attitudes over time whereas idiosyncratic shocks show no such significant impact this paper aims to test the temporal stability of risk attitudes in rural households in thailand and vietnam to determine whether this pattern covariate shocks that affect risk attitudes and idiosyncratic shocks that do not can be confirmed for these households i use an exogenous measure of shocks to explain temporal variation in risk attitudes thus i estimate variation in consumption using a multilevel model in which variation in consumption at the individual level serves as a proxy for idiosyncratic shocks while variation in consumption at the aggregate level is used to measure covariate shocks my study finds temporal variability in risk attitudes that is driven by covariate shocks in vietnam and in contrast to past research by idiosyncratic shocks in thailand the results suggest that vietnamese respondents may be better in insuring idiosyncratic risks for example through safety nets while mutual insurance across individuals does not seem to work well in thailand in addition results indicate that the mutual insurance problem in thailand seems to increase in wealth the differences that i find between thailand and vietnam and across poverty types correspond to the difference in political systems and consequently the focus of socio political measures thailand s recent political volatility and the growing lack of social cohesion in thai society support these findings

risk bearing and the theory of income distribution this paper develops the stochastic theory of distribution with a dynamic model which focuses on the role of incomplete insurance in generating inequality unlike previous work our approach takes explicit account of the reason for market incompleteness in modeling agents behaviour in particular the amount of risk borne is endogenous using a model of growth with altruism in which agents are risk averse and there is moral hazard we show that lineage wealth follows a markov process which converges globally to an ergodic distribution this also represents the long run population distribution of wealth we discuss the role of particular assumptions such as availability of production loans and unboundedness of utility in yielding the qualitative properties of the distribution of wealth the choice of occupation and the prevention of poverty traps