price indexes inequality and the measurement of world poverty i discuss the measurement of world poverty and inequality with particular attention to the role of purchasing power parity ppp price indexes from the international comparison project global inequality increased with the latest revision of the icp and this reduced the global poverty line relative to the us dollar the recent large increase of nearly half a billion poor people came from an inappropriate updating of the global poverty line not from the icp revisions even so ppp comparisons between widely different countries rest on weak theoretical and empirical foundations i argue for wider use of self reports from international monitoring surveys and for a global poverty line that is truly denominated in us dollars

is global social welfare increasing a critical level enquiry abstract we assess whether global social welfare has improved in the last decades despite or because of the substantial increase in global population we use for this purpose a relatively unknown but simple and attractive social evaluation approach called critical level generalized utilitarianism clgu clgu posits that social welfare increases with population size if and only if the new lives come with a level of living standards higher than that of a critical level despite its attractiveness clgu poses a number of practical difficulties that may explain why the literature has left it largely unexplored we address these difficulties by developing new procedures for making partial clgu orderings the headline result is that we can robustly conclude that world welfare has increased between 1990 and 2005 if we judge that lives with per capita yearly consumption of more than 1 248 necessarily increase social welfare the same conclusion applies to sub saharan africa if and only if we are willing to make that same judgment for lives with any level of per capita yearly consumption above 147 otherwise some of the admissible clgu functions will judge the last two decades increase in global population size to have lowered global social welfare

the quantity and quality of life and the evolution of world inequality gdp per capita is usually used to proxy for the quality of life of individuals living in different countries welfare is also affected by quantity of life however as represented by longevity this paper incorporates longevity into an overall assessment of the evolution of cross country inequality and shows that it is quantitatively important the absence of reduction in cross country inequality up to the 1990s documented in previous work is in stark contrast to the reduction in inequality after incorporating gains in longevity throughout the post world war ii period health contributed to reduce significantly welfare inequality across countries this paper derives valuation formulas for infra marginal changes in longevity and computes a full growth rate that incorporates the gains in health experienced by 96 countries for the period between 1960 and 2000 incorporating longevity gains changes traditional results countries starting with lower income tended to grow faster than countries starting with higher income we estimate an average yearly growth in full income of 4 1 percent for the poorest 50 percent of countries in 1960 of which 1 7 percentage points are due to health as opposed to a growth of 2 6 percent for the richest 50 percent of countries of which only 0 4 percentage points are due to health additionally we decompose changes in life expectancy into changes attributable to 13 broad groups of causes of death and three age groups we show that mortality from infectious respiratory and digestive diseases congenital perinatal and ill defined conditions mostly concentrated before age 20 and between ages 20 and 50 is responsible for most of the reduction in life expectancy inequality at the same time the recent effect of aids together with reductions in mortality after age 50 due to nervous system senses organs heart and circulatory diseases contributed to increase health inequality across countries

endogenous population with public goods and malthusian fixed resources efficiency or market failure a theoretical population model is developed which takes into account both the desire of a nation for a large population for political and economic reasons as well as the malthusian pressures that suggest that there is a natural tendency toward overpopulation the model assumes that parents care about both the number and well being of their children the results show that these two possible sources of externality do not lead to market failure nor to unfettered competitive individual decisions concerning childbearing that are detrimental to society annotation

the normative significance of using third degree stochastic dominance in comparing income distributions abstract third degree stochastic dominance tsd has been promoted as a normative criterion to refine the partial ordering over income distributions induced by second degree stochastic dominance i e the lorenz criterion this paper enhances our understanding of the normative properties of tsd by defining a rawlsian composite transfer to be a progressive transfer combined with a regressive transfer with the former taking place in a lower income region we show how tsd is a rawlsian extension of the lorenz criterion we also show how this property is affected by changes in the original vector of incomes journal of economic literature classification number d63

the macro effects of unemployment benefit extensions a measurement error approach by how much does an extension of unemployment benefits affect macroeconomic outcomes such as unemployment answering this question is challenging because u s law extends benefits for states experiencing high unemployment we use data revisions to decompose the variation in the duration of benefits into the part coming from actual differences in economic conditions and the part coming from measurement error in the real time data used to determine benefit extensions using only the variation coming from measurement error we find that benefit extensions have a limited influence on state level macroeconomic outcomes we apply our estimates to the increase in the duration of benefits during the great recession and find that they increased the unemployment rate by at most 0 3 percentage point

optimal unemployment insurance in an equilibrium business cycle model abstract the optimal cyclical behavior of unemployment insurance is characterized in an equilibrium search model with risk averse workers contrary to the current us policy the path of optimal unemployment benefits is pro cyclical positively correlated with productivity and employment furthermore optimal unemployment benefits react non monotonically to a productivity shock in response to a fall in productivity they rise on impact but then fall significantly below their pre recession level during the recovery as compared to the current us unemployment insurance policy the optimal state contingent unemployment benefits smooth cyclical fluctuations in unemployment and deliver substantial welfare gains

job search and unemployment insurance new evidence from time use data article i nfo this paper provides new evidence on job search intensity of the unemployed in the u s modeling job search intensity as time allocated to job search activities the major findings are 1 the average u s unemployed worker devotes about 41 min to job search on weekdays which is substantially more than their european counterparts 2 workers who expect to be recalled by their previous employer search substantially less than the average unemployed worker 3 across the 50 states and d c job search is inversely related to the generosity of unemployment benefits with an elasticity between 1 6 and 2 2 4 job search intensity for those eligible for unemployment insurance ui increases prior to benefit exhaustion and 5 time devoted to job search is fairly constant regardless of unemployment duration for those who are ineligible for ui

an index of inequality with applications to horizontal equity and social mobility horizontal equity and social mobility are discussed in terms of a non utilitarian social welfare function which takes account of the process by which an ex ante distribution is mapped into an ex post distribution by the tax system for example an index of inequality is proposed which decomposes into two components corresponding to vertical and horizontal equity respectively a functional form for the social welfare function is derived for the purposes of empirical work and an application to data for 5895 uk households is presented the paper contains a theoretical application of the index to a model of optimal taxation it is conventional to assess the merits of alternative public policies in terms of a trade off between equity and efficiency in practice however a change in say the tax system involves three effects first it may have incentive or disincentive effects leading to efficiency gains or losses secondly it may alter the distribution of welfare levels thirdly it may alter the ranking of individuals or households within the distribution these three effects correspond to efficiency vertical equity and we shall argue certain aspects of horizontal equity respectively and any assessment of a tax change must take into account all three the principal assumption of this paper is that government is concerned about the trade off between these three effects a strict utilitarian is concerned only with the consequences of an action and in the evaluation of a particular reform a utilitarian measure of social welfare is defined over the vector of ex post utilities no account is taken of the process by which the vector of ex ante utilities is mapped into the ex post vector and no ethical status is awarded to the ex ante distribution one does not have to adopt an entitlement theory of justice to believe that the utilitarian approach may ignore some relevant considerations such as the fairness of the redistributive process a striking example of this arises in the model used by mirrlees 11 to examine optimal income taxation in that model individuals have identical preferences defined over consumption and leisure and differ only in respect of their potential wage rates or ability levels clearly in the absence of taxation individual utility is an increasing function of ability suppose the government uses redistributive lump sum taxes to achieve the first best optimum then as mirrlees 11 12 shows the first best optimum for a utilitarian social welfare

a measure of horizontal inequity politicians academicians and the general public alike have perceived that the status quo tax and transfer legislation creates inequities among living units tax laws create numerous situations in which living units with seemingly equal abilities to pay are taxed quite different amounts state by state differences in welfare eligibility rules benefit schedules and administrative procedures the general unavailability of cash welfare to childless nonaged healthy couples and single individuals and other features of transfer programs similarly provide vastly different levels of income support to units with equal needs advocates of major tax and welfare reform have marshalled such evidence into a central argument in favor of their proposals while there is wide agreement that the process of redistributing incomes abounds with inequities there have been few attempts to quantify their extent 2 this paper develops a measure of horizontal inequity and illustrates its use section ii discusses the concept of horizontal equity then builds upon familiar lorenz curve gini coefficient analysis to derive the inequity index the third part considers some problems of implementing the measure and illustrates it section iv provides a short conclusion

approaches to inequality of opportunity principles measures and evidence we put together the dierent conceptual issues involved in measuring inequality of opportunity discuss how these concepts have been translated into computable measures and point out the problems and choices researchers face when implementing these measures our analysis identies and suggests several new possibilities to measure inequality of opportunity the relevance of the conceptual issues and modelling choices are illustrated with ndings from the empirical literature on income inequality of opportunity

quality quantity and duration of lives the evaluation of development processes and of public policies often involves comparisons of social states that differ in income distributions population sizes and life longevity this may require social eva luation principles to be sensitive to the quality the quantity and the duration of lives this paper 1 reviews some of the normative issues at stake 2 proposes and discusses some specific methods to address them in a generalized utilitarian framework and 3 briefly illustrates the application of som e of these methods to the global distribution of incomes population sizes and longevity over the last century depending on the approach taken it is found inter alia that global social welfare in 2010 can be deemed to be between 1 8 and 407 times that of 1910 the role given to the quantity of lives bei ng particularly important in that assessment

empirical measurement of horizontal inequity abstract horizontal inequity is the unequal treatment of equals a crucial problem arising when measuring its extent is how should differential treatment which has some equity justification be distinguished from that which does not the literature to date has suggested that genuine equals can be identified and thence the problem solved by adjusting incomes prior to calculations using equivalence scales the paper argues that there are some good reasons for considering an alternative approach labelled partial symmetry in this the emphasis is on measuring horizontal inequity within each group of households with the same equity relevant characteristics rather than on adjusting incomes and then using the same measure for all households in the population the approaches are compared theoritically with reference to summary indices based on the generalised entropy family and to the conditions required to make partial orderings of different redistributions exploratory empirical work suggests there has been a substantial reduction in the horizontal inequity of u k direct taxes between 1976 and 1981 whichever approach is used the sources of the inequity observed are analysed in detail

the concept and measurement of horizontal inequity abstract this paper discusses the concept of horizontal equity and presents three formal principles as a basis for making comparisons of the extent of horizontal inequity produced by different redistributions a condition analogous to the lorenz criterion used for inequality comparisons is established under which the horizontal inequities of redistributions can be ranked without recourse to a cardinal measure of inequity ordinal comparisons are not possible in many cases the three principles suggest three properties that reasonable measures of horizontal inequity should possess a class of measures which satisfies the properties is proposed most other existing measures are found not to satisfy them

does unemployment insurance crowd out spousal labor supply previous research on unemployment insurance ui has emphasized the program s effect on individual search behavior this state contingent income may also reduce the labor supply of family members during the unemployment spell we investigate this question within the context of wives labor supply responses to their husbands unemployment spells we find strong crowdout of this form of family self insurance our estimates imply that for each dollar of ui receipt wives earn up to 73 cents less the reduction in spousal hours of work is over 40 as large as previous estimates of the effect of ui on search time of husbands

social criteria for evaluating population change abstract many applications of economic analysis require social evaluations of alternatives involving different numbers of people in this paper we use the tools of social choice theory to provide an axiomatic formulation of this problem it yields a class of social criteria called critical level generalized utilitarianism this class and its implications are compared with other criteria and are found to yield intuitively appealing results

the developing world is poorer than we thought but no less successful in the fight against poverty a new data set on national poverty lines is combined with new price data and almost 700 household surveys to estimate absolute poverty measures for the developing world we find that 25 of the population lived in poverty in 2005 as judged by what poverty typically means in the world s poorest countries this is higher than past estimates substantial overall progress is still indicated the corresponding poverty rate was 52 in 1981 but progress was very uneven across regions the trends over time and regional profile are robust to various changes in methodology though precise counts are more sensitive

the meaning and measurement of income mobility abstract income mobility may be seen as arising from two sources i the transfer of income among individuals with total income held constant and ii a change in the total amount of income available in this paper we propose several sensible properties defining the concept of income mobility and show that an easily applicable measure of mobility is uniquely implied by these properties we also show that the resulting measure is additively decomposable into the two sources listed above namely mobility due to the transfer of income within a given structure and mobility due to economic growth or contraction finally these results are compared and contrasted with other mobility concepts and measures in the literature journal of economic literature classification numbers d31 d63

measures of distributional change an axiomatic approach in recent years a number of interesting papers have appeared in the general field of the analysis of changes in a frequency distribution the most common applications of such analysis are in the areas of income and wealth re distribution and the contributions have usually focussed on a particular specialised issue such as mobility of individuals within a structure or of horizontal inequity as opposed to vertical inequality implicit in the comparison of two distributions a number of approaches to each of these problems have been suggested and indeed several specific practical indices of mobility or inequity have been proposed 1 whilst some of these can be shown to have very useful features in their application it is probably fair to say that most derive from an ad hoc approach to the particular aspect of the problem on which the author had focussed it is interesting to note that comparatively few papers attempt to exploit the similarities involved in each of these issues all this contrasts rather sharply with the state of play in an obviously closely related game that of the measurement of inequality much of the essential foundation of the problem of measuring inequality as we presently understand it seems to be more or less sorted out in a systematic fashion roughly speaking what may be done is as follows given

unemployment insurance take up rates in an equilibrium search model abstract from 1989 to 2012 on average 23 of those eligible for unemployment insurance ui benefits in the us did not collect them to understand the implications of these unclaimed benefits we develop a directed search model with an endogenous ui take up rate in equilibrium ui collectors have longer unemployment durations relative to non collectors the difference results from two forces a consumption effect and a private information effect as ui collection histories are unobservable we characterize both effects analytically and quantitatively with an endogenous take up rate the unemployment rate and average duration of unemployment respond significantly slower to changes in the ui benefit level relative to the standard model with a 100 take up rate the private information effect on non collector job finding rates plays an important role in this result

moral hazard vs liquidity and optimal unemployment insurance this paper presents new evidence on why unemployment insurance ui benefits affect search behavior and develops a simple method of calculating the welfare gains from ui using this evidence i show that 60 percent of the increase in unemployment durations caused by ui benefits is due to a liquidity effect rather than distortions on marginal incentives to search moral hazard by combining two empirical strategies first i find that increases in benefits have much larger effects on durations for liquidity constrained households second lump sum severance payments increase durations substantially among constrained households i derive a formula for the optimal benefit level that depends only on the reduced form liquidity and moral hazard elasticities the formula implies that the optimal ui benefit level exceeds 50 percent of the wage the exact identification approach to welfare analysis proposed here yields robust optimal policy results because it does not require structural estimation of primitives

the world distribution of income falling poverty and convergence period we estimate the world distribution of income by integrating individual income distributions for 138 countries between 1970 and 2000 country distributions are constructed by combining national accounts gdp per capita to anchor the mean with survey data to pin down the dispersion poverty rates and head counts are reported for four specific poverty lines rates in 2000 were between one third and one half of what they were in 1970 for all four lines there were between 250 and 500 million fewer poor in 2000 than in 1970 we estimate eight indexes of income inequality implied by our world distribution of income all of them show reductions in global inequality during the 1980s and 1990s

true world income distribution 1988 and 1993 first calculation based on household surveys alone the paper derives world income or expenditure distribution of individuals for two years 1988 and 1993 it is the first paper to calculate world distribution for individuals based entirely on household survey data from 91 countries and adjusted for differences in purchasing power parity between the countries measured by the gini index inequality increased from an already very high 63 in 1988 to 66 in 1993 the increase was driven more by rising differences in mean incomes between the countries than by rising inequalities within countries the most important contributors were rising urban rural differences in china and slow growth of rural incomes in south asia compared to several large developed market economies

total utility overlapping generations and optimal population the necessary and sufficient conditions for the solution to an optimal population growth model with overlapping generations using the sum of total utility per generation as the objective function are derived the solution for a specific steady state model and an example are presented and compared to that for a similar model without overlapping generations in both cases a positive but less than infinite optimal growth rate is found next since an additively separable individual utility function is used the differences between a total utility per generation model and a total utility per period model a la lerner are discussed finally the results of the total utility model are compared to those from a model in which the discounted sum of per capita utility is the objective function an extension to the samuelson lerner utility paradox concerning the optimal rate of population growth is discussed

a quantitative analysis of unemployment benefit extensions abstract extensions of unemployment insurance ui benefits have been implemented in response to the great recession this paper measures the effect of these extensions on the unemployment rate using a calibrated structural model featuring job search and consumption saving decisions skill depreciation and ui eligibility the ongoing ui benefit extensions are found to have raised the unemployment rate by 1 4 percentage points which is about 30 of the observed increase since 2007 moreover the contribution of the ui benefit extensions to the elevated unemployment rate increased during 2009 2011 while the number of vacancies recovered the successive extensions kept search intensity down

inequality with ordinal data the standard theory of inequality measurement assumes that the equalisand is a cardinal quantity with known cardinalization however one often needs to make inequality comparisons where either the cardinalization is unknown or the underlying data are categorical we propose an alternative approach to inequality analysis that is rigorous has a natural interpretation and embeds both the ordinal data problem and the well known cardinal data problem we show how the approach can be applied to the inequality of happiness and of health status

inequality among world citizens 1820 1992 this paper investigates the distribution of well being among world citizens during the last two centuries the estimates show that inequality of world distribution of income worsened from the beginning of the 19th century to world war ii and after that seems to have stabilized or to have grown more slowly in the early 19th century most inequality was due to differences within countries later it was due to differences between countries inequality in longevity also increased during the 19th century but then was reversed in the second half of the 20th century perhaps mitigating the failure of income inequality to improve in the last decades jel d31 f0 n0 o0

the comparison of multi dimensioned distributions of economic status the literature on inequality measurement has been largely concerned with single dimensioned indicators this paper explores some of the issues which arise when there are several dimensions to inequality and these are not readily reduced to a single index concentrating particularly on the two dimensioned case we make use of results on multi variate stochastic dominance in portfolio theory extending these and applying them to the measurement of inequality the use of the dominance conditions is illustrated by an application to the international distribution of income and life expectancy

inequality measurement an axiomatic approach the theory of inequality measurement is examined using some basic axioms which extend the pigou dalton principle of transfers from these basic axioms various inequality indices may be derived as an alternative to ad hoc methods or to methods involving prior specification of a social welfare function the key idea is the concept of distance between two income shares conventional inequality indices are analysed in terms of their implied distance functions

social criteria for evaluating population change an alternative to the blackorby donaldson criterion abstract an ethical objection is raised against the blackorby donaldson criterion of optimum population maximizing the sum total of utilities in excess of some critical level since it may disprefer a social state with more people and with more worthwhile lives however the criterion may serve as a practicably reasonable compromise between maximizing total and average utility nevertheless an alternative compromise the maximization of number dampened total utility is proposed that is free from the above objection

transfer principles in income redistribution abstract dalton s principle of transfer for income redistribution says that society will be better off when a unit of income in transferred from a richer to a poorer individual this paper investigates the conjunction of a natural extension of dalton s principle which says that any combination of a socially desirable transfer with its inverse at uniformly higher levels of income will have positive social benefit and a traditional utilitarian egalitarian formulation of social welfare the transfer principles involved in the extension of dalton s rule correspond to stochastic dominance relations between income distributions with a common mean and lead to the conclusion that when and g are income distributions the social welfare of is larger than that of g if e ax x ax g x for all positive a this conclusion is intimately connected with a measure of income inequality studied by kolm

three meanings of intergenerational mobility we axiomatize three different motivations for being concerned about intergenerational mobility mobility as a description of movement as an indication of equality of opportunity and as an indication of equality of life chances these three motivations are shown to be incompatible none of the existing measures is acceptable as an indicator of equality of opportunity or equality of life chances we propose two new measures of intergenerational mobility which more adequately reflect these concerns

delayed collection of unemployment insurance in recessions contrary to assumptions in the unemployment insurance ui literature this paper argues that unemployed workers do not always lose uncollected ui benefits when they start a new job instead they may postpone the collection of leftover benefits to future unemployment spells further using cross time and cross state variations in ui policies the paper finds empirical evidence that allowing unemployed workers to delay the collection of benefits increases their incentives to find a job during recessions when wages are low job separation rates are high and ui benefits are extended i quantify the effects of the policy of allowing delayed collection of benefits on aggregate unemployment by introducing endogenous search effort benefit eligibility and wage indexed benefits into a standard search and matching framework the model demonstrates how the policy increases the future value of employment even though more generous ui benefits in general reduce the net value of employment using a calibrated model i find that allowing delayed benefit collection raises the proportion of unemployed workers receiving benefits and reduces the unemployment rate during 2009 2012

what do we know about global income inequality in this paper we review the recent literature on global interpersonal income inequality while all estimates agree that the level is very high with a gini of between 0 630 and 0 686 in the 1990s there is no consensus regarding the direction of change we discuss methodological issues including the use of national accounts versus survey based estimates of mean income or consumption and the choice of purchasing power parity exchange rates findings of a rise or fall in global income inequality are not robust across different estimation methods and datasets given the diversity of estimates and various sources of uncertainty including gaps and errors in the underlying data we conclude there is insufficient evidence to determine the direction of change in global interpersonal inequality in recent decades