in search of smoking guns what makes income inequality vary over time in different countries we investigate the forces affecting the distribution of income by analyzing an unbalanced panel of information for 16 industrialized countries for the years 1966 through 1994 income inequality is measured with the gini coefficient of equivalent disposable income individuals are the unit of analysis the statistical analysis uses panel methods the results suggest that many factors affect the development of income inequality some factors are strictly economic a decreased industrial sector generally fosters inequality and some support is found for the view that increased trade of manufactured goods from developing countries is also a factor other forces are outside a strictly defined market sphere low inequality is found when a large proportion of the labor force belongs to a trade union and also when there is a large public sector in addition demographic circumstances are important since the proportion of the population under age 15 has a positive effect on inequality we find however no association between the unemployment rate and inequality

globalization and the great u turn income inequality trends in 16 oecd countries the debate on the resurgence of income inequality in some advanced industrial societies has often focused on the impact of an increasingly integrated world economy typified by growing capital mobility heightened international competition and an increase in migration this study represents one of the first systematic cross national examinations of the role of globalization in the inequality u turn results indicate on the one hand that total inequality variation is principally affected by the percentage of the labor force in agriculture followed by the institutional factors union density and decommodification and only then by globalization on the other hand longitudinal variation in inequality while still dominated by the percentage of the labor force in agriculture is also principally affected by aspects of globalization such as southern import penetration and direct investment outflow and to a lesser extent by migration in other words globalization explains the longitudinal trend of inc

economic development and income inequality further evidence on the u curve hypothesis abstract internationally comparable data on inequality and income are utilized to reassess the empirical status of kusnets u curve hypothesis the hypothesis seems well supported when both developed countries dcs and less developed countries lcds are included in the sample however the position changes rather dramatically if the sample is restricted to lcds and very small support for the hypothesis is then observed also a simple comparison indicates that some of the support reported in earlier studies may have been due to the use of conventional gross domestic product per capita in general results based on gini coefficient seem less favorable to the hypothesis than those derived from household income shares

targeting capital a cultural economy approach to understanding the efficacy of two anti genetic engineering movements in the late 1990s the british anti genetic engineering ge movement effectively closed britain s market for genetically modified foods while the u s anti ge movement had a negligible impact in seeking to explain the different outcomes of these similar social movements the authors draw upon the global commodity chains gcc literature to extend the understanding of the economic and industry related openings and closures social movements face as they seek to promote social change this analysis not only illustrates the importance of economic structures and organization for movement outcomes but also shows how the economic sphere is culturally constituted in this fashion it broadens the social movement literature s understanding both of the way that political economy matters to movement efficacy and of the way that cultural processes infuse the economic sphere the study advances the gcc literature by showing how gccs are cultural as well as economic constructs

the nature of economic development abstract economic development has been associated with a sustained increase in real per capita gdp over fairly long periods of time such growth rates have been associated with the phenomenon of structural transformation both among the european leaders and the late comers among the developing countries equally compelling though less pervasive has been an essentially harmonious relationship between the growth of per capita gdp macroeconomic stability and a better distribution of income moreover the incidence of poverty has sharply decreased while the leading indicators of human development have recorded a significant improvement wherever per capita income has increased rapidly this property of economic development christened as orderly transformation in this paper is one of the most outstanding stylized facts of economic development and it has been most evident among countries where growth of per capita income has been in excess of 3 per annum

changing income inequalities within and between nations new evidence fresh data sources on cross national income are examined to document recent changes in the composition of world income inequality within and between nations new evidence shows that during the 1980s and 1990s the composition of world income inequality experienced a fundamental change characterized by the diminishing significance of between nation income differences and the growing prominence of within nation inequalities two competing trends account for this change 1 steady growth in the average level of income inequality within nations and 2 a decline in income inequality between nations these recent trends signify a reversal in one of the major legacies of the industrial revolution the internationalization of world income inequality across national borders the findings raise important questions for future studies of cross national inequality and development

development and inequality revisited three decades after the seminal article of kuznets 1955 and one decade after the empirical investigation of ahluwalia 1976b the relationship between income inequality and economic developement is still controversial this paper examines the above relationship within a time series cross section framework in a sample of countries which are representative of the non centrally planned economies of the world we use gdp per capita in real un international comparison project dollors as an indicator of a country s level of economic development the results lend support to the kuznets inverse u hypothesis although other factors relfecting the institutional setting of a country are found to affect income inequality significantly during the development process as well similar results are obtained if we exclude developed countries from the sample

shaming the corporation the social production of targets and the anti sweatshop movement as social movements co evolve with changes in states and markets it is crucial to examine how they make particular kinds of actors into focal points for the expression of grievances and the demand for rights but researchers often bracket the question of why some kinds of organizations are more likely than others to become targets of social movement pressure we theorize the social production of targets by social movements rejecting a simple reflection model to focus on configurations of power and vulnerability that shape repertoires of contention empirically we extend structural accounts of global commodity chains and cultural accounts of markets to analyze the production of targets in the case of the anti sweatshop movement of the 1990s using a longitudinal firm level dataset and unique data on anti sweatshop activism we identify factors that attracted social movement pressure to particular companies firms power and positions strongly shaped their likelihood of becoming targets of anti swea

should the kuznets effect be relied on to induce equalizing growth evidence from post 1950 development abstract the large body of cross sectional statistical research assessing 1 a kuznets inverted u for less developed countries ldcs 2 b a turning point is analyzed an alternative methodology is presented those countries which started in 1950 well below the turning point in rgdp and which reached an rgdp well above the turning point by 1980 are utilized as key cases income distribution data and assessments from individual country experts are combined with historical comparative microanalyses for each key case brazil costa rica greece japan malaysia south korea taiwan and turkey to construct patterns of income distribution during this crucial growth period it is demonstrated that the jury is still very much out on the kuznets inverted u for ldcs and the notion of a turning point should be rejected copyright 1997 elsevier science ltd

growth and its disparity in rich and poor regions abstract we use international comparison data to relate the regional growth and the inequality across countries for four regions of the non communist world the north south east asia south central asia and sub saharan asia the results are compared with findings by kuznets and others

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

the rise of the super rich power resources taxes financial markets and the dynamics of the top 1 percent 1949 to 2008 the income share of the super rich in the united states has grown rapidly since the early 1980s after a period of postwar stability what factors drove this change in this study we investigate the institutional policy and economic shifts that may explain rising income concentration we use single equation error correction models to estimate the long and short run effects of politics policy and economic factors on pretax top income shares between 1949 and 2008 we find that the rise of the super rich is the result of rightward shifts in congress the decline of labor unions lower tax rates on high incomes increased trade openness and asset bubbles in stock and real estate markets

womens labour force participation and the distribution of household incomes evidence from cross national data this study investigates the effects of womens labour force participation on household income inequality the theoretical background is examined an econometric model is specified and tested and a simulation is performed it is found that the direction and strength of the income distribution effects depend on the level of womens participation starting from low levels a rise in their activity rates intensifies income inequality but the disequalizing tendency diminishes as participation continues to increase and is replaced by an equalizing process when high levels of participation are attained excerpt

from streets to suites how the anti biotech movement affected german pharmaceutical firms how do social movements affect decisions within corporations such as the commercialization of new technologies we suggest that the effect of movement activism is conditioned by the internal polity and therefore varies across organizations this article examines how the anti genetic movement in germany during the 1980s affected six domestic pharmaceutical firms commercialization of biotechnology we develop a process model of how movements penetrate the relatively closed polity of private organizations external contestation weakened the position of internal champions of biotechnology precipitated divisions among organizational elites and undermined collective commitment to the technology the movement also increased perceptions of investment uncertainty but the consequences of this uncertainty depended on organizational logics of decision making as a result investments in some firms were tilted away from domestic biotechnology projects the model also explains this variation in organization level outcomes of movement contestation

organizational responses to public and private politics an analysis of climate change activists and u s oil and gas firms we explore how activists public and private politics elicit different organizational responses using data on u s petroleum companies from 1982 to 2010 we investigate how climate change activists serving as witnesses at congressional hearings and engaging in firm protests influenced firms internal and external responses we find that public politics induced internally focused practice adoption whereas private politics induced externally focused framing activities we also find that private and public politics had an interaction effect as firms faced more private political pressure they were less likely to respond to public political pressures similarly as firms faced greater public political pressure they were less likely to respond to private political pressures the results suggest that activists can have a significant impact on firm behavior depending on the mix of private and public political tactics they engage in we discuss the implications of our study for social movement research organ

distributional implications of macroeconomic policy theory and applications to el salvador abstract this article offers a theoretical framework for designing macroeconomic strategy for el salvador that will both respect stabilization and structural adjustment needs and enhance social equity after outlining the largely negative distributional implications of the orthodox policies followed by el salvador in recent years we argue that stabilization and efficiency could actually be improved by increased equity and sketch out the elements of an alternative approach that would be distributionally sensitive and thereby help consolidate the peace

collective labor rights and income inequality this article examines the relationship between income inequality and collective labor rights conceptualized as workers legal and practical ability to engage in collective activity although worker organization is central to explaining income inequality in industrialized democracies worldwide comparative studies have neglected the role of class based actors i argue that the repression of labor rights reduces the capacity of worker organizations to effectively challenge income inequality through market and political processes in capitalist societies labor rights however are unlikely to have uniform effects across regions this study uses unbalanced panel data for 100 developed and less developed countries from 1985 through 2002 random and fixed effects models find that strong labor rights are tightly linked to lower inequality across a large range of countries including in the global south interactions between regions and labor rights suggest that the broader context in which class based actors a

international diversification of investment portfolios u s and japanese perspectives in this paper we analyze the gains from international diversification of investment portfolios from the japanese as well as the u s perspectives the major findings of this paper include first the potential gains from international as opposed to purely domestic diversification are much greater for u s investors than for japanese investors for u s investors the gains accrue not so much in terms of lower risk as in terms of higher return and the opposite holds for japanese investors second using various ex ante international investment strategies designed to control parameter uncertainty u s investors can realize substantial gains from international diversification in out of sample periods japanese investors however can gain relatively little third hedging exchange risk generally allows the u s but not japanese investors to benefit more from international diversification for u s investors the international bond diversification with exchange risk hedging offers a superior risk return trade off than the international stock diversification with or without hedging

democracy economic development and income inequality most cross national tests of inverse association between democracy and inequality have operationalized the concept of democracy by measuring its level at a single point in time more compelling theoretical arguments can be made for causal relationships that operate over time between 1 a country s years of democratic experience and income inequality and 2 income inequality and the stability of democracy continuous and qualitative measures of years of democratic experience are estimated to have a significant negative impact on income inequality independent of economic development and other control variables for a sample of 55 countries a very strong inverse correlation is also observed between income inequality and regime stability for a sample of 33 democracies this association holds independent of economic development which is found to have no direct effect on democratic stability after controlling for income inequality

income and gender inequalities in asia testing alternative theories of development during the 1970s and 1980s debates raged about the effects of economic development on income inequality most dependency theorists viewed economic development as a two edged sword linking increasing income inequalities in third world countries to their high growth rates on the other side of the debate economists following simon kuznets along with sociologists of the modernization school claimed that income inequality increases at an early stage of development and later decreases as with advancing development incomes become more evenly distributed among the population 2 yet a third view held that the latter stage of development generally occurs with structural transformation a term used by hollis chenery as well as bruce f johnston and peter kilby to describe long term changes in the structure of demand production and employment which allows the transformation of a traditional mostly agricultural economy to a modem economic system with strength in agricultural manufacturing and service sectors 3 the empirical work on income inequality has not been related to work on other kinds of inequalities for example gender inequality nor have the results been used to contrast the different predictions of the different theories dependency versus kuznets versus structural transformation on the gender issue most of the empirical work in the women in development wid literature 4 however including our own previous efforts 5 fits within the theoretical framework of the dependency school better than it does within the framework of kuznets or structural transformation this is because most of the evidence documents third world women producers unequal access to modern inputs of production that would increase their yields and incomes if equal access were available to them the most famous of the wid studies have concluded that the benefits of economic development do

concentration of income and land holdings abstract economic growth is one of the causes of income disparity among countries however some evidence suggests that the maldistribution of land holdings is the underlying factor of the inequality of income kuznets speculates that over the stages of economic growth it is the initial unequal income distribution that induces a high concentration of asset holdings and this in turn contributes to a high concentration of income to resolve this ambiguity the paper introduces latent variables in a path model designed for causal prediction estimation is done by world s partial least squares method prediction is based on the q 2 statistic findings show that for both dcs and ldcs as well as for a sample of all countries the causal predictive direction between concentrations of income and land holdings is from the former to the latter

natural resource booms and inequality theory and evidence we develop a theory in the context of a two sector growth model in which learning by doing drives growth to explain the time path of income inequality following natural resource booms in resource rich countries under the condition of a relatively unskilled labor intensive non traded sector inequality falls immediately after a boom and then increases steadily over time until the initial impact of the boom disappears using data for 90 countries between 1965 and 1999 we find evidence in support of the theory especially for oil and mineral booms we also find that uncertainty about future commodity prices increases long run inequality

conditional hedging and portfolio performance simple conditional currency hedging rules often increase risk adjusted portfolio returns and are thus of interest to investors several researchers have reported successful application of a forward hedge rule fhr in which one hedges whenever the foreign currency trades at a forward premium an alternative strategy a real interest rate hedge rule rir is based on hedging when the domestic real interest rate exceeds the foreign rate as an extension we propose a combination of these rules a real forward hedge rule rfhr we evaluate the performance of the rules for various currency stock and bond portfolios from the developed countries in tests of risk adjusted returns for 1976 1997 the rfhr significantly outperformed standard benchmarks and often beat the fhr and the rir moreover results of a simple dominance test for rolling 5 and 10 year periods suggest that the rfhr consistently improves portfolio performance for a u s investor

the measurement of inequality and poverty a policy maker s guide to the literature abstract mathematical measures of poverty and inequality embody values that reflect the historical political social intellectual and ethical forces prevalent at the time of their formulation so that policy makers may select measures of poverty and inequality that are consistent with their values it is important to make explicit the value judgements implicit in the measures models designed to measure poverty and inequality fall into four categories absolute poverty measures absolute income measures relative poverty measures and relative inequality measures this article examines the principal models within each category and discusses the assumptions limitations and values implicit in the models

the effect of online protests and firm responses on shareholder and consumer evaluation protests that target firms socially irresponsible behavior are increasingly organized via digital media this study uses two methods to investigate the effects that online protests and mitigating firm responses have on shareholders and consumers evaluation the first method is a financial analysis that includes an event study which measures the effect of online protests on the target firm s share price as well as an investigation of the boundary effects of protest characteristics the second method is an online experiment that assesses the effect of an online protest campaign on consumers perception and purchase intention as well as any mitigating effects that a firm s response may have contrary to recent studies suggesting that participation in online protests is only token support without any substantive effects our results show that online protests do hurt firms can expect to suffer financial reputational and sales damage when an online protest campaign mobilizes consumers successfully we also show that online protests are more likely to take firms by surprise than offline protests firms can exacerbate or reduce the damage by their response we find that although firms may repair the damage to consumers purchase intentions the negative effects on a brand s image are harder to rectify the results have valuable implications for protest organizers and managers faced with the task of responding

diverging patterns with endogenous labor migration abstract the standard neoclassical model cannot explain persistent migration flows and lack of cross country convergence when capital and labor are mobile here we present a model where both phenomena may take place assuming increasing returns and perfect capital mobility the driving forces behind labor migration are the size and the composition of the workforce the size of the workforce produces divergence a larger workforce in one country implies higher wages the wage gap induces in migration and this makes the wage gap even larger in this case migration is only beneficial for the labor importing country the evolution in the composition of the workforce due to migration may have opposite effects in one case in migration keeps the wage of skilled workers high enough to induce people to qualify for skilled jobs this improves the composition of labor in the receiving country only and it makes divergence a likely outcome in another case labor migration keeps the relative wage of unskilled workers in the rich country high enough to induce all migrants to take unskilled jobs and reduce the skilled to unskilled ratio in that country then migration is beneficial to the country which was first exporting labor

the structure of income inequality in puerto rico abstract the kuznets hypothesis predicts that the level of income inequality will rise then fall during the course of economic development however empirical studies have found that for many countries inequality levels off after a certain stage of development and remains at this level for a long period of time in this paper one possible reason for the formation of such an inequality plateau is suggested puerto rico is used for our case study employing an augmented input output model we find that the 1963 puerto rican economy had reached such an inequality plateau with a very narrow range of inequality levels permitted by its economic structure we then investigate the relation between the inequality band and the degree of sectoral interdependence we find that under certain assumptions one can show a direct correspondence between the two with the equality range narrowing as the linkages increase once an economic system has reached a certain degree of sophistication in its linkage structure its inequality level may become immobile the implication of this is that after a point the natural course of development will not result in further reduction in inequality at this stage the government might have to intervene directly in income determination to reduce inequality

markets and income inequality in rural china political advantage in an expanding economy when market reform generates rapid growth in an agrarian subsistence economy changes in inequality may be due to economic growth and structural change rather than to the intrinsic features of markets the case of post mao china is examined using nationally representative survey data gathered in 1996 to address unresolved questions about findings from 1980s surveys well into reform s second decade political officeholding has a large net impact on household income comparable to that of operating a private enterprise contrary to findings based on earlier surveys and expectations about the impact of growth cadre household advantages are stable across levels and forms of economic expansion returns to entrepreneurship however decline sharply with the spread of wage employment future declines in relative returns to political position are therefore unlikely to occur due to the further spread of private household entrepreneurship and theories of change based on this mechanism appear untenable

agrarian structures urbanization and inequality summary this study examines the impact of agrarian structures on income inequality over the long run first it exhibits the relationship between land and income distribution by developing a theoretical model based on harris and todaro 1970 and lewis 1954 high land inequality increases income gini coefficients in the urban sector as well as the rural sector not only by creating congestion in the urban subsistence sector but also by feeding the growth of the urban reserve army of labor which pulls down the wages in the urban capitalist sector next the study investigates the empirical relationship between land inequality level of urbanization and income inequality using cross country datasets the estimation results support the theoretical model and indicate that the level of land inequality has a significant impact on determining the level of urbanization and urban and overall income inequalities moreover the analysis finds that overurbanization increases income inequality the empirical analysis controls for institutional factors like education inequality and the level of democracy the results present a stronger evidence on the land inequality s influence through urbanization than through education and democracy these results suggest that policymakers should have a broader view as to the importance of agrarian policies a progressive land reform or and subsidies protecting small peasantry can also reduce urban income inequality and poverty over the long run

semiparametric bayesian inference of the kuznets hypothesis abstract in contrast to the parametric quadratic specification used for examining the kuznets hypothesis this study relies on the semiparametric bayesian inference of the partially linear regression to re assess the validity of an inverted u shape of the kuznets curve the simple framework permits us to perform estimation and model comparison in a unified way empirical results using cross sectional data on 75 countries indicate that there exists an approximately inverted hence asymmetric relation between inequality and per capita gdp moreover judged by the bayes factor overwhelming evidence is found in favor of our semiparametric specification finally robustness check using alternative measure of inequality and pool data confirms our findings

change actors in the u s electric energy system the role of environmental groups in utility adoption and diffusion of wind power we study the contribution of environmental groups to new technology adoption and diffusion by dominant incumbents building on institutional and social movement theory we develop a theoretical framework that sheds light on environmental groups as change actors we theorize that by approaching embedded key constituents with various strategic actions environmental groups affect taken for granted beliefs build legitimacy for renewable energy technologies and convince skeptical constituents to support the new technology we verify our theoretical framework with a case study of wind power development in colorado we find that environmentalists educate constituents on the benefits of the new technology engage in activities leading to regulatory and legislative decisions for wind while also providing direct assistance to the utility as a result utilities are both pressured and encouraged to adopt and diffuse wind power on a large scale this research directs attention to the role of environmental groups as change actors and the legitimating effects of their actions it highlights their part in creating a more favorable institutional environment for new technologies while directly influencing the incumbent s technology choice this paper contributes to an understanding of bottom up actor initiated changes in energy systems taking into account both the systemic technological infrastructure and the institutional context

tactical currency allocation market efficiency depends upon rational profit motivated investors two of the largest communities of currency traders have no profit motive central banks trade to dampen volatility corporations seek to hedge the currency exposure in their book of business currency profits are based not on the movement of the currency but on the movement of the currency relative to the forward rate the forward rate is in turn based upon interest rates if an overseas market has a lower interest rate than the domestic market its currency will trade at enough of a premium in the forward market to equalize the interest rates when they are currency hedged but if an overseas market is trading at a lower interest rate than the domestic rate investment capital will typically be siphoned away from the lower yielding market into the higher yielding market driving its currency down even as its forward rate points up central banks tendency to intervene to dampen currency volatility has the effect of introducing serial correlation if a currency that would have rallied 10 rallies only 5 because of government intervention it will rally by 5 later there is a statistically significant pattern a currency that has gone up will more likely than not continue to rally and vice versa

inequality growth and democracy the analysis of the relationship between inequality and economic growth in distinct politi coeconomic environments has been one of the central preoccupations of the extensive theoretical and empirical work on growth in the last decade the authors argue that the empirical evidence available to date strongly indicates the relevance of this work for understanding the elusive causal connection between economic development and democracy the state of the literature suggests considerable sophistication in conceptualizing the direct economic effects of inequality and contains critical insights into politically unconstrained policy making aimed at the alleviation of their negative economic impact however the political feasibility of the recommended policy measures and the politically mediated effects of inequality and redistributive policy on growth and on the strength and stability of democratic regimes are understood less well the authors discuss the critical factors influencing these effects and sketch several approaches to creating a comprehensive politicoeconomic account of the interaction between inequality redistributive policy making and political regimes

the economics of movement success business responses to civil rights mobilization1 this article explores why movements are successful in obtaining concessions from economic actors while social movement theorists have suggested that economic actors weigh the costliness of protests the author considers the vulnerability of movement targets to both the cost of disruptions in routine transactions and the cost of conceding to movement demands by addressing the magnitude of these costs and their interaction the author derives an economic opportunity structure to predict the receptivity of economic actors to movement demands and the likely struggles among them over the decision to yield also this cost assessment approach reveals patterns of vulnerability across economic sectors to the costs of disruptive mobilization the author tests this analysis based on case studies of the responses of economic actors to civil rights mobilization in the 1960s in five southern localities these cases depict how the character of protest and variation in the configuration of business communities defined

the re emergence of ppp in the 1990s abstract in this paper we investigate purchasing power parity ppp in a panel with 17 countries for the period 1972 through 1996 the novel feature of our panel methodology is that results are invariant to the choice of a benchmark on numeraire currency in the panel we allow individual country effects in the relation between prices and exchange rates in this way we can identify the currency pairs for which ppp holds or does not hold we conclude that there is substantive evidence for ppp although not to the same extent for every currency evidence in favor of ppp is strongest for many exchange rates relative to the dmark and weakest for the japanese yen for this currency a trend like variable like productivity growth is missing

exchange rate uncertainty forward contracts and international portfolio selection in this paper ex ante efficient portfolio selection strategies are developed to realize potential gains from international diversification under flexible exchange rates it is shown that exchange rate uncertainty is a largely nondiversiflable factor adversely affecting the performance of international portfolios therefore it is essential to effectively control exchange rate volatility for that purpose two methods of exchange risk reduction are simultaneously employed multicurrency diversification and hedging via forward exchange contracts the empirical findings show that international portfolio selection strategies designed to control both estimation and exchange risks almost consistently outperform the u s domestic portfolio in out of sample periods since grubel 11 applied modern portfolio theory mpt to international investment various authors such as levy and sarnat 17 solnik 20 and lessard 16 have examined the gains from international diversification of investment portfolios for the purpose of establishing the gains from international diversification these studies constructed international portfolios using historical risk and return data from a period of fixed or relatively stable exchange rates and showed that internationally diversified portfolios dominated purely domestic portfolios in terms of mean variance efficiency from the standpoint of today s investors however the previous studies fail to offer operational guidance for international diversification for two important reasons first it is now questionable whether the past findings are still relevant under the current flexible exchange rate regime second by being ex post in nature the past studies ignored the issue of estimation risk or parameter uncertainty and therefore may have overstated the realizable portion of the potential gains from international diversification fluctuating exchange rates are likely to mitigate the potential gains from international diversification by making investment in foreign securities more risky as will be shown later a fluctuating exchange rate contributes to the risk of foreign investment not only through its own variance but also through its positive covariances with the local stock market returns during our sample period of 1980 through 1985 for example exchange rate volatility is found to account for about fifty percent of the volatility of dollar returns from investment in the stock markets of such major countries as germany japan and the u k furthermore the exchange rate changes vis a vis the u s dollar are found to be

bureaucratic corruption as a constraint on voter choice this paper has attempted to explain variations among countries in the tax level in the importance of progressive taxes and transfers and in the after tax share of middle income groups particular attention was paid to the declines in each of these variables which are observable in cross section data in the intermediate ranges of development it was argued that these phenomena are difficult to explain by variations in the demand for public spending or in the degree of tax evasion

politics and inequality in latin america and the caribbean this article presents the first pooled time series analysis of the impact that politics and policy have on inequality in latin america and the caribbean the authors build on models consisting of sociological and economic variables adding the strength of the democratic tradition long term legislative partisan political power distribution and social spending to explain variation in inequality they analyze an unbalanced pooled time series data set for income distribution in 18 latin american and caribbean countries from 1970 to 2000 they show that the political variables add explanatory power a strong record of democracy and a left leaning legislative partisan balance are associated with lower levels of inequality as are social security and welfare spending under democratic regimes thus they replicate some and modify other well established findings from studies of organization for economic cooperation and development oecd countries in the very different context of latin america and the caribbean

economic models for the environmental kuznets curve a survey abstract the environmental kuznets curve ekc refers to an inverted u shaped relationship between some pollutant level and per capita income i e the environmental quality deteriorates at early stages of economic growth and subsequently improves at a later stage since the early 1990s a considerable number of empirical studies have been conducted on the ekc and although there is no conclusive proof it has been recognized that the ekc emerges as an empirical regularity however some recent studies cast doubt on the concept and methodology of empirical results and evidence of the existence of the ekc has been questioned in fact how economic growth affects the environmental quality i e the shape of the ekc is still controversial in order to identify the actual relationship between the environmental quality and economic growth it is essential to develop economic models from various points of view this paper overviews the current stage of theoretical models that explain such relationship

the effect on income distribution of development the growth rate and economic strategy abstract an analysis of cross section and time series data for 83 countries confirms some and contradicts other work on income distribution new findings include a dualistic socio political system is highly unfavorable for equality neither the extent of government intervention in the economy nor the rate of manufactured exports are systematically related to income distribution the analysis confirms that there is no systematic relationship between equality and the rate of economic growth educational participation and a reduction in the share of primary exports in gdp are both favorable for equality there is some support for the kuznets hypothesis that inequality increases as per capita income rises to about 400 and then declines with further income increase but the empirical support is not strong and may be weakening over time these findings lead to more optimistic conclusions then other work that rapid growth in a mixed economy is quite consistent with unchanged or even improved income distribution even at early stages of development

the limit of equality projects public sector expansion sectoral conflicts and income inequality in postindustrial economies in this study we investigate how structural economic changes constrain an equality project the public sector expansion strategy first we describe a three stage process in which a growing produc

enterprise inequality and economic development we characterize an equilibrium development process driven by the interaction of the distribution of wealth with credit constraints and the distribution of entrepreneurial skills when efficient entrepreneurs are relatively abundant a traditional development process emerges in which the evolution of macroeconomic variables accord with empirical regularities and income inequality traces out a kuznets curve if instead efficient entrepreneurs are relatively scarce the model generates long run distributional cycles driven by the endogenous interaction between credit constraints entrepreneurial efficiency and equilibrium wages

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

can the kuznets effect be relied on to induce equalizing growth abstract the use of internationally comparable income data to test kuznet s inverted u hypothesis introduces several econometric problems this study a explains and corrects for these econometric problems b assesses the sensitivity of estimated results to alternative functional specifications and sample variations c provides a more rigorous test for structural change between more and less developed countries in the phasing of the inequality trend and d estimates the time likely to elapse before various of the developing countries reach the turning point the study s findings offer broad support for kuznets s hypothesis but do not support the advocacy of development policies focused exclusively on growth for low income countries growth s equalizing phase cannot be anticipated to set in for half a century

economic change and rising income inequality in the oslo region the importance of knowledge intensive business services wessel t economic change and rising income inequality in the oslo region the importance of knowledge intensive business services regional studies the growth of market income inequality in the oslo region of norway between 1993 and 2004 is investigated using two measures it is shown that most of the change occurred within knowledge intensive business services and further within demographic subgroups changes in mean income between group inequality and shifts in the balance between segments of the economy are of minor importance the results support a combined focus on productive paths and institutions labour relations in particular appear as an important explanation however labour relations can hardly explain why men rather than women and western immigrants rather than non western immigrants converge towards employment in high profit businesses this particular pattern requires research beyond the economic and institutional landscape wessel t

income inequality development and dependence a reconsideration we reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross national research on foreign capital penetration we analyze an unbalanced cross national data set in which countries contribute different numbers of observations with a maximum of 88 countries and 488 observations dated from 1967 to 1994 random effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality measured as the gini coefficient against the background of an internal developmental model of inequality we adapt firebaugh s 1992 1996 critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by firebaugh we explore tsai s 1995 claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region specific differences an alternative interpretation of the findings of the foreign investment inequality literature is discussed in light of the discovery of an inverted u shaped relationship between income inequality and foreign investment stock per capita we conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment development path relating the inflow and outflow of foreign capital to economic development

political regimes and income inequality abstract we construct a theoretically motivated model of income inequality through a pooled regression on an international panel we demonstrate that political regime whether extractive redistributive or reinvestment oriented correlates with within country income inequality

determining the impact of federal antidiscrimination policy on the economic status of blacks a study of south carolina this paper evaluates alternative explanations for the dramatic increase in black employment in south carolina manufacturing that occurred in the mid 1960s black progress in traditionally segregated sectors of manufacturing in operation at the time jim crow laws were passed cannot be attributed to tight labor markets the decline of agriculture or the growth of education of the black workforce the only plausible explanation is federal government civil rights and affirmative action policy for newer industries that entered the state on a large scale after world war ii the growth of skills among blacks accounts for black economic progress copyright 1989 by american economic association

currency hedging for international portfolios this paper examines the benefits from currency hedging both for speculative and risk minimization motives in international bond and equity portfolios the riskreturn performances of globally diversified portfolios are compared with and without forward contracts over the period 1974 to 1990 inclusion of forward contracts results in statistically significant improvements in the performance of unconditional portfolios containing bonds conditional strategies are also implemented both in sample and out of sample and are shown to both significantly improve the risk return tradeoff of global portfolios and to outperform unconditional hedging strategies whether international portfolios should be hedged against currency risks is the subject of an active debate the theoretical side of the debate has been closely associated with two strands in the academic literature international asset pricing and optimal hedging in the futures markets in the international asset pricing model iapm of solnik 1974 optimal portfolios contain positions in forward contracts or equivalently foreign currency denominated bills these positions which can differ from the positions in foreign stocks have since been termed hedges black 1990 shows that under additional assumptions the hedge ratios should be identical for all investors regardless of their nationality universality and that investors should never fully hedge their foreign currency exposures similarly theoretical models from the futures literature produce demands for hedging instruments that contain both speculative and hedging components the empirical issue unanswered so far is whether adding forward contracts to international portfolios significantly improves the risk return profile of global investments empirical research has barely begun to respond to the challenges of theoretical models there exists little empirical evidence on either the relevance of black s universal hedge ratios or the optimality of hedge ratios less than one instead researchers have concentrated on the benefits of fully hedging exchange risk for example eun and resnick 1988 indicate that stock portfolios perform better when fully hedged but offer no statistical tests

bargaining power strike durations and wage outcomes an analysis of strikes in the 1880s strike outcomes in the 1880s had a winner take all character successful strikes ended with a discrete wage gain failed strikes ended with a return to work at the prestrike wage we present a theoretical interpretation of these outcomes based on a war of attrition model we fit an empirical model specifying the capitulation times of the two parties and the size of the wage gain in the event of a strike success the results show a systematic relation between the determinants of strike success and the determinants of the wage gain for a successful strike

a currency preferential approach to international equity investment we propose a timex strategy for reducing the foreign exchange risk associated with international equity investment pertaining to countries with currencies correctly or undervalued by the standard of ppp the performance of timex is examined from the perspectives of eight developed nations with long histories of free floating currencies based on the data from 1986 q1 to 2014 q4 we find unambiguous evidence for the superior performance of timex in the foreign exchange market compared with the passive diversification strategy and the morgan stanley capital international msci world index timex offers higher total returns and risk adjusted total returns when rebalanced every 6 or 12 months for investors based in all eight countries under study when rebalanced at a 3 year interval timex outperforms the passive diversification and the msci world index for five and all eight countries respectively

inequality and development across and within countries summary this paper provides a cross country comparison of how income inequality has evolved within countries at different levels of development it uses overlapping nonparametric regression which allows visual comparisons of inequality both within and across countries as a result the methodology allows more specific conclusions than cross country regressions and yet is more general than within country case studies the approach highlights the problematic conclusions that can arise with parametric regressions in particular with tests of the kuznets curve while some previous results are confirmed some new results on inequality across countries are also discovered

growth and imperfect competition on factor markets increasing returns and distribution abstract although seldom modeled outside the monopolistic competition framework market incompleteness and imperfect competition are central to the new growth theories we propose here a strategic model of imperfect competition with endogenous growth and endogenous market structure where we focus on labor market issues for growth to be possible we assume increasing returns at the firm level due to heterogeneity on the labor market the market structure is not degenerate then because of increasing returns short run efficiency is maximized under monopoly and free entry implies too many firms in the market however in the long run competition can generate growth through a distribution effect whereas a monopoly leads to a zero growth steady state thus there is a trade off between static and dynamic efficiency this trade off implies the existence of a growth maximizing degree of competition in our economy

growth and equity with endogenous human capital taiwan s economic miracle revisited this paper presents an endogenous growth model for a small open economy with a significant trade surplus and active government development strategies in order to reexamine the major determinants of economic growth and income distribution this analysis provides a better interpretation for the intertwined relationship between growth and equity an important economic issue that has not been fully addressed by the well known models 5 9 20 in traditional growth studies economists have emphasized the role of two major factor inputs physical capital and labor output growth is considered to depend merely on exogenous shifts in population and technology recently lucas points out that this conventional approach to studying economic growth may leave more than half of output growth unexplained 12 in order to improve the understanding of the underlying endogenous forces promoting economic development new growth theorists have proposed several alternatives to the conventional models such as the endogenous fertility choice 4 the endogenous technological evolution 16 and the endogenous human capital accumulation or learning process 12 13 to name but a few these contributions have generated additional interests in and rich implications for empirical studies of public policy 6 and cross country comparisons 3 15 lucas s endogenous human capital formation model is particularly suitable for studying the

book reviewinequality poverty and history jeffrey g williamson basil blackwell cambridge ma 1991 isbn 1 55786 118 8 pp vii 151 19 50

level of development rate of economic growth and income inequality most of the research mentioned above focused on estimating the relation between the level of economic development usually proxied by real gross domestic product gdp per capita and income inequality so as to judge whether an inverted u pattern is observed however notwithstanding the potential significance of the kuznets paradigm it should be evident that level of development or income is just one determinant of income inequality and that rate of economic growth is another important and related factor nevertheless very few studies have investigated how the rate of growth is related with inequality at various levels of development or income except perhaps incidentally and through an additive growth term in kuznets type models of inequality even the studies that did consider the growth inequality nexus have reported somewhat contradictory results for example an additive gdp growth term in m ahluwalia s regression estimates indicated a statistically insignificant equalizing effect of growth and in a later work he noted that

neoliberalism and income distribution in latin america abstract this paper reviews the principal neoliberal policy measures instituted in latin america in the last decade and their impact on equity it first emphasizes the difficulty of separating the impact of liberalization measure from the necessary fiscal adjustments of the 1980s and their transitional vs longrun effects and then places the observed movements in distribution in global and historical context the second part places several innovations of neoliberal regimes in historical perspective and argues that their overall impact is unlikely to be regressive and that previous regimes were probably not especially progressive over the long run developments in factor markets the demand side driven by reoriented industrial growth and the increasing importance of the service sector interacting with the relative supplies of skilled and unskilled labor are likely to be of overriding importance in determining the evolution of the distribution of income

can an oil rich economy reduce its income inequality empirical evidence from alaska s permanent fund dividend abstract the main focus of this paper is to empirically examine the effect of the permanent fund dividend pfd payouts on alaska s income inequality by taking into account the roles of income and population to that end an autoregressive distributed lag ardl approach to cointegration and the johansen cointegration approach are applied to annual time series data from 1963 to 2012 we find that the pfd payouts tend to worsen income inequality in alaska in both the short and long run we also provide evidence to support the existence of kuznets hypothesis for alaska growth deteriorates income inequality initially and improves it later finally population is found to reduce alaska s income inequality in the short and long run

income inequality democracy and public sector size this study synthesizes and tests explanations of how public sector size and democracy affect income inequality the results based on unbalanced panel data for 64 developing and developed countries

the kuznets process and the inequality development relationship abstract in his classic paper on economic growth and income inequality kuznets discussed the process of population shift from traditional to modern activities as the basis for a theory of distributional change during the course of development in this paper we present a formalization of the kuznets process conduct a general analysis of distributional change under this process and derive the functional forms of and conditions for a turning point in the inequality development relationship for six commonly used indices of inequality the functional form appropriate to each index is then estimated using cross section data on 60 developing and developed countries finally some extensions to the initial formalization of the kuznets process are considered

income distribution and development some stylized facts in recent years the relationship between income distribution and the process of development has come under increasing scrutiny much of the debate has focused on the hypothesis originally advanced by simon kuznets that the secular behavior of inequality follows an inverted u shaped pattern with inequality first increasing and then decreasing with development this hypothesis has become so much a part of the conventional wisdom on this subject that it has generated considerable skepticism about the welfare implications of the development process indeed on some interpretations developing countries face the grim prospect not just of increasing relative inequality but also of declining absolute incomes for the lower income groups

the kuznets curve and the great u turn income inequality in u s counties 1970 to 1990 the authors examine the determinants of inequality in the distribution of family income in approximately 3 100 counties of the united states in 1970 1980 and 1990 such a study provides a window on global trends in social inequality during the period which spans the tail end of the kuznets curve and the more recent upswing in income inequality results from random effects regression models that control for unmeasured heterogeneity among states reveal the continued importance of the kuznetsian pattern of declining inequality with economic development a positive effect of urbanization on inequality a declining positive impact of sector dualism an increasing positive effect of educational heterogeneity and a persistent effect of racial dualism several variables associated with the recent upswing in inequality have significant effects female labor force participation negative female headed households positive percent of the population over age 65 changes from positive to negative over the period manufacturing employment negative and unemployment ambiguous they also discuss methods of estimating the gini coefficient for income inequality at the county level and measures of sector farm nonfarm dualism racial black white dualism and educational heterogeneity

taking the u out of kuznets a comprehensive analysis of the ekc and environmental degradation unlike most environmental kuznets curve ekc studies which focus on narrow measures of pollution as proxies for environmental quality we test the validity of the ekc using the ecological footprint ef a more comprehensive measure of environmental degradation we find no empirical evidence of an ekc relationship between the ef and economic development and only limited support for such a relationship among the components of the ef in addition we discover that energy is largely responsible for the lack of an ekc relationship and that energy consumption levels would have to be cut by over 50 in order for a statistically significant ekc relationship to emerge from the data overall these results suggest that growth alone will not lead to sustainable development

growth effects of foreign and domestic investment over tha past few years numerous studies in sociology have concluded that foreign investment harms poor nations these studies have focused on the coefficient for foreign capital stock controlling for flow new investment and defying logic have inferred that a negative coefficient for stock reflects dependency effects that retard economic growth since capital stock is the denominator for investment rate the greater the stock the lower the investment rate for a given level of new investment hence the negative coefficient for capital stock found in dependency studies indicates a beneficial investment effect not a harmful effect this point is demonstrated by reanalysis of the data used in dependency studies in these data foreign investment spurs growth earlier analysts have concluded otherwise only because their conclusions have belied their findings

political rights and income inequality a cross national test among contemporary nations the relationship between income equality and national wealth exhibits an inverted u shape low among the richest and poorest nations and high for nations with intermediate wealth to examine the reasons for this relationship i hypothesize that both political democracy and educational enrollment are related in a similar way to income inequality two data sets are used in this analysis modified version of muller s set of 62 nations circa 1965 1975 and hoover s data set multiple regression reveals that measures of political democracy and the educational enrollment levels have an inverted u relationship with income inequality national wealth gnp had no consistent direct effect on income inequality a satisfactory specification of national levels of income inequality must include the polynomial functions of political democracy and education

concentration of land holdings an empirical exploration of kuznets conjecture abstract according to kuznets 1963 the dynamics of the maldistribution process starts from an initial unequal income distribution then through a cumulative effect a high concentration of asset holdings is induced which in turn contributes to a high concentration of income in other words unequal income distribution tends to be self perpetuated and unequal asset holdings is a medium of such process the literature on rural income distribution seems to suggest a different emphasis by assigning a more crucial role to asset holdings i e land in the explanation of unequal income distribution this study shows via a simultaneous equation model and a multi nation cross sectional set of data that both the land and income concentration ratios are positively related of the two rival conjectures of emphasis the empirical evidence lends support in the general case to kuznets that is over the entire range of countries developed and less developed inequality in income seems to cause inequality in land holdings rather than vice versa in the specific case of less developed countries it is the high concentration of land holdings that influences the unequal distribution of income

determinants of relative poverty in advanced capitalist democracies using relative poverty measures based on micro level data from the luxembourg income study in conjunction with pooled time series data for 14 advanced capitalist democracies between 1970 and 1997 the authors analyze separately the rate of pretax transfer poverty and the reduction in poverty achieved by systems of taxes and transfers socioeconomic factors including de industrialization and unemployment largely explain pre tax transfer poverty rates of the working age population in these advanced capitalist democracies the extent of redistribution measured as poverty reduction via taxes and transfers is explained directly by welfare state generosity and constitutional structure number of veto points and the strength of the political left both in unions and in government

food security in less developed countries 1970 to 1990 despite a global food surplus almost half of the worlds less developed countries suffer significant problems concerning food most social science and policy discussions of food security make the food availability assumption that increased food supply is the key to reducing hunger critics argue however that increased food supply has little impact on hunger and that the primary culprits are entrenched inequality and militarism a lagged panel analysis of food supply and child hunger rates 1970 90 shows that the food supply has only modest effects on child hunger rates and that food supply is structurally rooted in development processes domestic investment urban bias foreign capital penetration while child hunger is politically based in arms imports internal violence and political democratization population pressure tapped by increased age dependency undermines both the supply of food and the populations access to it and culturally dualism magnifies the effects of population pressure on child hunger the effects of economic growth trickle down to affect food both supply and child hunger and economic growth is also positively correlated with political democratization suggesting there is no short term trade off between growth democratization and social equity authors

is complete hedging optimal for international bond portfolios over the 1980s however non u s investors could have lowered their international portfolios risks by taking on some currency exposure for these investors the benefits of diversification across currencies more than offset the cost of the currencies volatilities evidently the free lunch argument misses something and investors should be concerned that the missing link might change across countries or over time

a valuation approach to currency hedging 1994 a valuation approach to currency hedging financial analysts journal vol 50 no 2 pp 55 59