permanent income hedonic prices and demand for housing new evidence abstract housing demand is examined by looking quite specifically at the income and price variables based on individual household data permanent and transitory incomes are computed through instrumental variables related to human and nonhuman wealth a price is constructed by spatially varying hedonic techniques separation of measured income into permanent and transitory components substantially improves the predictive power of the housing demand estimation and leads to demand elasticities of 1 and 1 with respect to permanent income and price the permanent income elasticity is roughly twice the measured income elasticity

a positive effect of human capital on growth abstract recent studies have found that economic growth appears to be unrelated to increases in educational attainment in this note i show that there is a correlation in one dataset but it is typically hidden by unrepresentative observations

income inequality and education revisited persistence endogeneity and heterogeneity this article presents new results on the relationship between income inequality and education expansion that is increasing average years of schooling and reducing inequality of schooling when d

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

incentives and loss of control in an optimal hierarchy this paper studies incentives and loss of control in a hierarchy model which combines and generalizes the models of williamson calvo wellisz and keren levhari in our model of the hierarchy the levels of effort from managers and workers the wage scales the span of control and in particular the total number of tiers are all endogenous using optimal control techniques we show that in the optimal hierarchy the wage scales and effort levels decrease as one moves down the hierarchy as the hierarchy expands with no technological progress workers exert less effort and are paid less top managers work harder and are paid more and the wage distribution becomes increasingly skewed

functional form and rental housing market analysis this paper tests functional form for hedonic rent regressions and for rental housing demand regressions for 19 united states metropolitan areas in the hedonic rent regressions both linear and loglinear forms are rejected through box cox maximum likelihood procedures similar tests for demand regressions also reject both linear and loglinear forms these results have useful applications to the analysis of rental housing demand by low income households the more popular logarithmic and linear forms lead to very low estimated income elasticities for households in the low income range whereas the preferred form provides elasticities that are significantly higher this implies greater responsiveness to income subsidies than might otherwise be estimated

estimation and policy implications of rental housing demand abstract the demand for rental housing using the annual housing survey smsa sample for 1977 is estimated the principal determinants of rental housing demand namely housing price and permanent transitory income are computed through spatially varying hedonic price techniques and instrumental variables methods relating to human and nonhuman capital respectively based on the demand estimation results impacts of hypothetical cash and rent subsidy programs are analyzed in terms of housing and welfare effects it is found that a rent subsidy achieves considerably larger effects than does a cash subsidy

generalizations that aren t evidence on education and growth abstract several papers have suggested that the relationship between changes in average schooling and growth is weak in the cross country data this might call into question the relevance of micro estimates of returns to schooling at least for developing countries this paper examines the reliability of some of the aggregate evidence and presents an alternative framework for analysing these questions

does economic globalisation affect income inequality a meta analysis a large volume of econometric literature has studied the impact of economic globalisation on income inequality around the world however reported econometric estimates vary substantially which makes it difficult to draw valid conclusions this paper presents a quantitative summary and analysis of existing estimates regarding the globalisation inequality relationship we use a new data set consisting of 1 254 observations from 123 primary studies by applying meta analysis and meta regression methods we obtain several main findings first globalisation has a small to moderate inequality increasing effect second while the effect of trade globalisation is small financial globalisation shows a more sizeable and significantly stronger inequality increasing impact third we find an average inequality increasing impact of globalisation in both advanced and developing countries fourth education and technology moderate the impact of globalisation on income inequality

features of personal income inequality before and during the crisis an analysis of italian regions this paper gives extensive evidence about disposable income inequality inside the regions of italy and its associated population features it explores whether the great recession changed income ine

human capital and the reduction of inequalities an intra national analysis in italy human capital is a fundamental economic resource in the knowledge economy era and improvements in education are usually associated with both economic development and the reduction of inequality i

the effects of compulsory schooling on growth income distribution and welfare abstract in this paper we consider an olg model with productive capital and human capital affecting the quality of labor in each generation parents invest in their children s education but disregard its external effect on the aggregate production function government intervention in providing compulsory schooling increases economic growth along the equilibrium path while the intragenerational income distribution becomes more equal also in the long run the majority of individuals in each generation are better off due to compulsory schooling

projection pursuit regression and disaggregate productivity effects the case of the indian blast furnaces productivity of blast furnaces in india is studied by disaggregating the production process and the utilization process a dimension reducing nonparametric approach projection pursuit regression is used we find that productivity can be increased significantly by improving the quality of coal there is no evidence that executives have a positive marginal product the production workers have a negative marginal product for the production process and a positive one for the utilization process but the training of executives has a positive effect whereas that of the production workers has a negative effect on productivity copyright 2004 john wiley sons ltd

in search of economic well being worker power and the effects of productivity inflation unemployment and global trade on wages in ten wealthy countries theory the theory addresses the forces that determine the real wages which workers receive it is proposed that in the free market system worker power plays a crucial mediating role between economic considerations involving labor supply and productivity and the real wages available to workers in the economy hypotheses in moderate and weak worker power countries real wages will vary inversely with the labor supply in terms of domestic unemployment and international trade in strong worker power countries real wages will vary with changes in productivity and inflation methods separate regression analyses are developed for 10 countries varying in their level of worker power over a 30 year time frame results in moderate and weak worker power countries changes in real wages were best predicted by levels of unemployment and changes in global trading in strong worker power countries changes in real wages were best predicted by changes in productivity and inflation although in one case of a strong worker power country a significant positive association occurred between global trading and real wages

international trade and the accumulation of human capital changes in the terms of trade affect both the incentives and the ability of individuals to purchase education in a credit constrained economy a model is developed that shows how individual decision making is affected in a small economy when it opens up to trade empirical results indicate that credit constraints are an important factor influencing school enrollment rates particularly in low income countries as a result countries with low human capital stocks tend to increase their accumulation of human capital with increased trade the response in high income countries is more muted

structural unemployment cyclical unemployment and income inequality this is the first study that decomposes unemployment into its structural and cyclical components and investigates their impact on income distribution controlling for the influence of inflation increases in structural unemployment have a substantial aggravating impact on income inequality inflation has a progressive impact which is due to the unexpected component the study demonstrates that previous work failed to take into account the stochastic trend behavior of the variables consequently specifications used by previous research cannot predict the behavior of income shares after 1983 whereas the specification used by this paper generates accurate forecasts the results also indicate that a sustained gnp growth is not necessarily associated with an improvement in income inequality because sustained gnp growth can coexist with increased structural unemployment

trade and relative wages the role of supervisory function by skilled workers abstract the effect of trade on relative wages is examined taking into consideration some aspects of internal organization of firms namely the twin function of production and supervision by skilled workers when trade is based on endowment differences the effect of trade is greater than is predicted by the stolper samuelson theorem when trade is based on technological differences freer trade tends to reduce the relative wages in each country in a two country world economy

the assessment the twentieth century achievements failures lessons the past century saw unprecedented rises in life expectancy and living standards it also witnessed major structural changes the rise of big government and two globalizations yet the century s economic history was marred by policy and market failures resulting in a massive world wide depression frequent financial crises particularly in the developing world and several inflation spurts central planning set back development for one third of the world s population transition to the market economy was at best slow in some instances disastrous income distribution within countries changed little while productivity convergence between rich and poor economies was virtually absent policy making learnt some lessons from the 1930s experience particularly in the areas of macroeconomic management international cooperation and free trade dogmatic recipes however were often resorted to at home aided and abetted by the pretensions of the economics profession

what marshall didn t know on the twentieth century s contributions to economics some of this century s many valuable contributions to economics like macroeconomics econometrics and game theory are widely recognized however arguably equally important is the enhanced role of empirical study permitted by more abundant data and improved methods also insufficiently recognized are the increased rigor and use of applied economics in public finance regulation corporation finance etc employing abstract theory and sophisticated data analysis the striking contrast with earlier intuitively based applied economics and empirical study is illustrated comparison with marshall s principles also indicates that except for macroeconomics remarkably little space in today s texts deals with some of the rich contributions of this century what has twentieth century economics accomplished a great deal as will be shown here but the discussion needs an illuminating starting point in 1946 after arriving at the london school of economics as an entering graduate student 1 i soon found that in

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

theory and estimation in the economics of housing demand the main purpose of this paper is to review recent theoretical and empirical developments in the economics of housing demand in particular we ask what is known concerning the permanent income elasticity of housing demand vis a vis the current or measured income elasticity what is known concerning price elasticities what is the appropriate functional form for housing demand equations what is the role of demographic variables what is known concerning dynamic aspects of housing demand what appear to be the major sources of bias in existing estimates of demand equations

foreign direct investment and the relative wage in a developing economy abstract this paper examines the issue of the effect of foreign direct investment on the relative wage in the context of a developing economy recognizing that competing domestic entrepreneurs are potentially skilled workers foreign investment in skilled labor intensive sectors is shown to lower the relative wage moreover a general lump sum subsidy to foreign and domestic firms is shown to lower aggregate welfare whereas a discriminatory subsidy only to foreign firms may raise welfare

does education reduce income inequality a meta regression analysis this paper reexamines the effects of education on inequality through a comprehensive meta regression analysis of the extant empirical literature we find that education affects the two tails of the distribution of income education reduces the income share of top earners and increases the share of the bottom earners education has been particularly effective in reducing inequality in africa some of the results suggest that secondary schooling appears to have a stronger effect than primary schooling though this finding is not always robust the heterogeneity in reported estimates can be largely explained by differences in the specification of the econometric model and measure of inequality and education

economic globalization domestic politics and income inequality in the developed countries a cross national study this article assesses the impact of economic globalization and domestic political factors on income inequality and state redistribution in the developed countries over the past two decades using household level data from the luxembourg income study that are more detailed accurate and cross nationally comparable than those used in previous empirical work it examines three major modes of international integration trade direct foreign investment and international financial flows as well as four domestic political variables the partisan balance of national cabinets electoral turnout union density and the centralization of wage setting institutions the study finds only scattered relationships between global integration and income distribution or redistribution but reasonably strong positive relationships between several domestic political variables and an egalitarian distribution of income and or extensive state redistribution these findings are consistent with a growing number of studies that emphasize the resilience of domestic political factors in the face of economic globalization

international trade policy in a model of unemployment and wage differentials the author examines the effects of import tariffs and export subsidies in a two sector model with sector specific wage differentials and an equilibrium level of unemployment in general such policies change both the composition and level of employment policies designed to attract workers to the high wage sector could also result in reduced employment and lower social welfare this could happen if the low wage sector is also the relatively labor intensive sector in such situations the optimal policy might entail protecting the low wage labor intensive sector i examine the effects of import tariffs and export subsidies in a two sector model with sector specific wage differentials and an equilibrium level of unemployment in general such policies change both the composition and level of employment policies designed to attract workers to the high wage sector could also result in reduced employment and lower social welfare this could happen if the low wage sector is also the relatively labour intensive sector in such situations the optimal policy might entail protecting the low wage labour intensive sector

distribution and growth cross country evidence an endogenous growth model is presented to examine the determinants of economic growth and income distribution and their relationship three major findings from a cross country analysis of 45 countries are 1 a higher level of educational attainment of the labour force has an equalizing effect on income distribution while the larger the dispersion of schooling among the labour force the greater the income inequality 2 human capital investment as well as physical capital investment are significant factors contributing to economic growth and 3 income inequality has a negative effect on economic growth supporting the existence of a complementary relationship between equity and growth

human capital and income inequality in india is there a non linear and asymmetric relationship the article attempts to provide empirical evidence on the relationship between human capital and income inequality in india in a non linear and asymmetric framework to capture both long run and sh

efficiency wages in a ricardian model of international trade abstract this paper examines the implications of efficiency wages for international trade in a simple extension of the ricardian model in which labour performs two different tasks in production and where workers are imperfectly monitored in the performance of one of the tasks as a result of the factor market distortion the one factor economy may behave like a heckscher ohlin model an important result is that transfers of income have efficiency reducing effects and hence the standard aggregate analysis of trade policy may be inappropriate