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

foreign direct investment and employment home country experience in the united states and sweden we compare the relation between foreign affiliate production and parent employment in us manufacturing multinationals with that in swedish firms us multinationals appear to have allocated some of their more labour intensive operations selling in world markets to affiliates in developing countries reducing the labour intensity in their home production swedish multinationals produce relatively little in developing countries and most of that has been for sale within host countries with import substituting trade regimes the great majority of swedish affiliate production is in high income countries the united states and europe and is associated with more employment particularly blue collar employment in the parent companies the small swedish owned production that does take place in developing countries is also associated with more white collar employment at home the effects on white collar employment within the swedish firms have grown smaller and weaker over time

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

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

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

a taste for taxes minimizing distortions using political preferences abstract we conduct an experiment with online workers to assess whether the distortionary effect of a tax is sensitive to the ideological match between taxpayer and tax expenditures we find that among self identified political moderates the labor supply elasticity with respect to the net of tax wage is significantly smaller when individuals pay taxes to a favored government agency as compared to an unfavored one while the tax has a significant distortionary effect in the latter case with a point estimate for the labor supply elasticity of approximately 0 77 the elasticity point estimate is close to zero when taxes go to a favored agency there is also an increase in total output for the matched population among moderates there is no evidence that these effects hold for self identified liberals or conservatives

partisan bias and expressive voting abstract we conduct an experiment to characterize the expressive voting behavior of political partisans we find that participants who are asked to vote on the answer to factual questions tend to offer more partisan responses than those who must answer as decisive individuals we further test whether voters exploit corrective information that sometimes challenges their partisan views when information is available we observe smaller partisan gaps and more correct responses especially when the information is free when information is costly to acquire we find that voters generally choose to remain uninformed consistent with the downsian theory of rational ignorance

the internationalization of production by italian industrial districts firms structural and behavioural determinants mariotti s mutinelli m and piscitello l the internationalization of production by italian industrial districts firms structural and behavioural determinants regional studies the paper argues that structural and behavioural determinants combine to influence internationalization of production through foreign direct investment fdi by industrial districts firms as far as the former leadership effects represented by the presence of large firms within the district and porterian effects denoted by the intensity of domestic rivalry positively influence the likelihood that district firms will start internationalize through fdi moreover spillovers induced by the presence of foreign owned multinational corporations positively impact on the district s degree of internationalization provided it has already autonomously developed the ability to grow internationally as far as behavioural features previous export relationships increase the district firms likelihood of undertaking fdi while innovat

expressive voting and electoral equilibrium there are two rival accounts of rational voting in the public choice tradition the mainstream instrumental account that sees the vote as a revelation of preference over possible electoral outcomes essentially analogous to a market choice and the expressive account that sees the vote as expressing support for one or other electoral options rather like cheering at a football match this paper attempts to lay out some of the implications of the expressive account of voting for the issue of who votes as well as for the nature of political equilibrium and to compare these implications with those derived from the instrumental account we also identify and discuss the alternative views of the domain of electoral politics associated with the instrumental and expressive accounts of voting and sketch a route towards the integration of expressive and instrumental ideas in the analysis of rational electoral politics

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

a theory of participation in elections we analyze a model of participation in elections in which voting is costly and no vote is pivotal ethical agents are motivated to participate when they determine that agents of their type are obligated to do so unlike previous duty based models of participation in our model an ethical agent s obligation to vote is determined endogenously as a function of the behavior of other agents our model predicts high turnout and comparative statics that are consistent with strategic behavior jel d72

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

ideological segregation online and offline we use individual and aggregate data to ask how the internet is changing the ideological segregation of the american electorate focusing on online news consumption offline news consumption and face to face social interactions we define ideological segregation in each domain using standard indices from the literature on racial segregation we find that ideological segregation of online news consumption is low in absolute terms higher than the segregation of most offline news consumption and significan tly lower than the segregation of face to face interactions with neighbors co workers or family members we find no evidence that the internet is becoming more segregated over time

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

information aggregation rationality and the condorcet jury theorem the condorcet jury theorem states that majorities are more likely than any single individual to select the better of two alternatives when there exists uncertainty about which of the two alternatives is in fact preferred most extant proofs of this theorem implicitly make the behavioral assumption that individuals vote sincerely in the collective decision making a seemingly innocuous assumption given that individuals are taken to possess a common preference for selecting the better alternative however in the model analyzed here we find that sincere behavior by all individuals is not rational even when individuals have such a common preference in particular sincere voting does not constitute a nash equilibrium a satisfactory rational choice foundation for the claim that majorities invariably do better than individuals therefore has yet to be derived

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

outward fdi and the investment development path of a late industrializing economy evidence from ireland b arry f g org h and m cdowell a 2003 outward fdi and the investment development path of a late industrializing economy evidence from ireland reg studies 37 341 349 the investment development path idp hypothesis holds that a country s net outward direct investment position is systematically related to its level of economic development ireland is an interesting test case because of the importance of inward foreign direct investment fdi over the last three decades and the recent increase in outward fdi by irish owned multinationals we find empirical support for the idp concept for the irish case our sectoral analysis suggests that ireland s outward fdi flows are disproportionately horizontal and oriented towards non internationally tradable sectors also the firm specific assets of irish multinationals lie neither in r d nor in the type of product differentiation associated with high advertising expenditures b arry f g org h et m cdowell a 2003 l investissement direct a l etranger

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

voting behavior and information aggregation in elections with private information we analyze two candidate elections in which voters are uncertain about the realization of a state variable that affects the utility of all voters each voter has noisy private information about the state variable we show that the fraction of voters whose vote depends on their private information goes to zero as the size of the electorate goes to infinity nevertheless elections fully aggregate information in the sense that the chosen candidate would not change if all private information were common knowledge equilibrium voting behavior is to a large extent determined by the electoral rule i e if a candidate is required to get at least x percent of the vote in order to win the election then in equilibrium this candidate gets very close to x percent of the vote with probability close to one finally if the distribution from which preferences are drawn is uncertain then elections will generally not satisfy full information equivalence and the fraction of voters who take informative action does not converge to zero

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

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

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

incentives to create jobs regional subsidies national trade policy and foreign direct investment a national authority wishes to attract foreign direct investment fdi to create local jobs we analyse the optimal national trade policy when local authorities might offer subsidies to convince a multi national enterprise mne to invest in their jurisdiction with centralised decision making or with allocation of investment to particular localities the central authority s optimal policy is to use a high tariff to avoid payment of any subsidy to the mne despite this some socially undesirable but locally desirable fdi cannot be avoided if local authorities compete to offer subsidies to attract local investment then the central government s optimal policy is to try to discourage fdi by choosing a low tariff despite this some socially undesirable and even locally undesirable fdi prevails we conduct our analysis both assuming an upper bound on tariffs as would be consistent with trade liberalisation and allowing tariffs to vary freely the effect of increasing trade liberalisation depends heavily on the system of granting local subsidies if the system is centralised trade liberalisation decreases the range of parameters for which fdi occurs if the system is decentralised and competitive it increases this range

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

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

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

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

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

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

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

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

expressive voting and government redistribution testing tullock s charity of the uncharitable models of expressive voting postulate that voters will consume ideological stances on issues by voting for them even when they are against the voter s own narrow selfinterest if the probability of being a decisive voter is low when a voter is unlikely to sway the outcome the odds that avoter will incur any real personal cost a higher tax burden for example from her own expressive vote is small we testand find support for tullock s straightforward empiricalimplication of this model that government welfare transfer payments are inversely related to the probability of being thedecisive voter

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

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

facts alternative facts and fact checking in times of post truth politics abstract how effective is fact checking in countervailing alternative facts i e misleading statements by politicians in a randomized online experiment during the 2017 french presidential election campaign we subjected subgroups of 2480 french voters to alternative facts by the extreme right candidate marine le pen and or corresponding facts about the european refugee crisis from official sources we find that i alternative facts are highly persuasive ii fact checking improves factual knowledge of voters iii but it does not affect policy conclusions or support for the candidate iv exposure to facts alone does not decrease support for the candidate even though voters update their knowledge we find evidence consistent with the view that at least part of the effect can be explained by raising salience of the immigration issue

would rational voters acquire costly information abstract we analyze an election in which voters are uncertain about which of two alternatives is better for them voters can acquire some costly information about the alternatives in agreement with downs s rational ignorance hypothesis individual investment in political information declines to zero as the number of voters increases however if the marginal cost of information is near zero for nearly irrelevant information there is a sequence of equilibria such that the election outcome is likely to correspond to the interests of the majority for arbitrarily large numbers of voters thus rationally ignorant voters are consistent with a well informed electorate

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

the market for news we investigate the market for news under two assumptions that readers hold beliefs which they like to see confirmed and that newspapers can slant stories toward these beliefs we show that on the topics where readers share common beliefs one should not expect accuracy even from competitive media competition results in lower prices but common slanting toward reader biases on topics where reader beliefs diverge such as politically divisive issues however newspapers segment the market and slant toward extreme positions yet in the aggregate a reader with access to all news sources could get an unbiased perspective generally speaking reader heterogeneity is more important for accuracy in media than competition per se

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

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

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

moral bias in large elections theory and experimental evidence in this article we provide evidence that voters in large elections tend to vote against their material self interest and to vote for a morally or ethically appealing alternative it may seem puzzling that voters might behave differently in small elections than they do in large ones however we show that such behavior is a logical consequence of voters having a conflict between obtaining a better material outcome and choosing a moral action we develop a simple model of this conflict and show that decreasing the probability that a single vote is decisive i e pivot probability reduces the importance of outcomes relative to actions in voter decision making because pivot probability is generally small in large elections alternatives that are understood by voters to be morally superior are more likely to win in large elections than in small ones thus compared to the preferences of voters election results will be biased in favor of moral alternatives 1 the model produces a set of predictions that we test in a laboratory experiment to clarify ideas consider a situation in which two outcomes are possible a and b assume that b gives

an experimental study of expressive voting in this paper we report results of an initial attempt to test the theory of expressive voting our experiment involves requiring subjects to vote between receiving a in cash or having b donated to charity on their behalf across subjects we vary the probability that their vote will decide which disbursement is made as the probability of being decisive is lowered the opportunity cost of giving expression to charitable sentiment decreases hence the likelihood of voting in accordance with such sentiment is expected to increase we find weak support for the hypothesis but the results do not replicate when we alter the parameter settings limitations of our design are discussed

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

the curse of uninformed voting an experimental study we study majority voting over two alternatives in small groups individuals have identical preferences but are uncertain about which alternative can better achieve their common interest before voting each individual can obtain information by buying a valuable but imperfect signal about the better alternative voting is either voluntary or compulsory in the compulsory mode each individual must vote between the two alternatives while in the voluntary mode they can also abstain an uninformed random vote generates a negative externality since it may override an informative group decision in pivotal events in our experiments participants in randomly re matched groups obtain information more often with compulsory than voluntary voting and the average number of signals is greater in larger than smaller groups surprisingly uninformed voting is common even in the voluntary mode finally group performance is poor in all treatments indicating the need to reconsider current practice of jury and committee voting

when votes are words not deeds some evidence from the nuclear freeze referendum according to our empirical results voting patterns in the nfr were consistent with the central thesis of an expressive model that moral expression dominates consequentialist behavior when choice is costless while consequentialist theory would predict that owners of capital would favor nuclear weapons capital owners could afford to vote contrary to their interests and in line with common morality because the costs of moral expression in the nfr were so low just as the capital ownership variables do not work in the direction predicted by our consequentialist model neither does income does this mean that wealthy voters cast votes diametrically opposed to their self interest not at all the expressive model contends that when voting is costless people do not have interests but rather moral judgments which now cost very little to express indeed when votes involve words not even individuals interests in government expenditure can be detected

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

the interactions among foreign direct investment economic growth degree of openness and unemployment in taiwan the vector autoregression method of variance decomposition and impulse response function analysis are applied to analyse various relationships among foreign direct investment fdi economic growth unemployment and degree of openness in taiwan the analysis results show that these five variables have a long run equilibrium relationship however unemployment rate and fdi outflow have weak exogeneity we also found that there exist three unidirectional causalities from fdi outflow to fdi inflow from economic growth to degree of openness and from economic growth to unemployment in short run furthermore the shocks of economic growth and degree of openness have positive effects on fdi inflow on the contrary the shocks in economic growth and fdi inflow have negative effects on unemployment rate

trade policy issues and empirical analysis interest in u s trade policy has been stimulated in recent years by the massive american trade deficit by the belief that intervention by foreign governments in international markets has given other countries a competitive edge over the united states and by concern about the increase in protectionism among industrial countries in turn major analytical developments in international economics have revolutionized trade theory broadening its scope both by introducing in a more formal manner such concepts as imperfect competition increasing returns product differentiation and learning effects and by including the study of political and economic factors that shape trade policy decisions this collection of papers the result of a conference held by the nber applies these new trade theories to existing world cases and also presents complementary empirical studies that are grounded in more traditional trade theories the volume is divided into four parts the papers in part 1 consider the problem of imperfect competition empirically assessing the economic effect of various trade policies introduced in industries in which the new trade theory seems to apply those in part 2 isolate the effects of protection from the influences of the many economic changes that accompany actual periods of protection and also examine how the effects from exogenous changes in economic conditions vary with the form of protection part 3 provides new empirical evidence on the effect of foreign production by a country s firms on the home country s exports finally in part 4 two key bilateral issues are analyzed recent u s japanese trade tensions and the incident involving the threat of the imposition of countervailing duties by the united states on canadian softwood lumber

free trade agreements and foreign direct investment the role of endogeneity and dynamics this article studies the impact of free trade agreements fta on outbound foreign direct investment fdi from one perspective fta may promote fdi since fta aim to promote economic activity between countries however lower trade barriers may lower the incentive of firms to conduct fdi therefore the net impact is an empirical question using a panel of countries for the years 1990 2006 this article effectively controls for participation in an fta when analyzing the impact on outbound fdi the lengthy time series also allows us to examine effectively the dynamic nature of the relationship failing to account for endogeneity and dynamics would likely generate inaccurate conclusions regarding the impact of fta on outbound fdi our analysis finds that outbound fdi is either unrelated to participation in an fta or is negatively affected

the swing voter s curse the authors analyze two candidate elections in which some voters are uncertain about the realization of a state variable that affects the utility of all voters they demonstrate the existence of a swing voter s curse less informed indifferent voters strictly prefer to abstain rather than vote for either candidate even when voting is costless the swing voter s curse leads to the equilibrium result that a substantial fraction of the electorate will abstain even though all abstainers strictly prefer voting for one candidate over voting for another copyright 1996 by american economic association

ignorance and bias in collective decisions we study theoretically and experimentally a committee with common interests committee members do not know which of two alternatives is the best but each member can acquire privately a costly signal before casting a vote under either majority or unanimity rule in the experiment as predicted by bayesian equilibrium voters are more likely to acquire information under majority rule and attempt to counter the bias in favor of one alternative under unanimity rule as opposed to bayesian equilibrium predictions however many committee members vote when uninformed moreover uninformed voting is strongly associated with a lower propensity to acquire information we show that an equilibrium model of subjective prior beliefs can account for both these phenomena and provides a good overall fit to the observed patterns of behavior both in terms of rational ignorance and biases

voting when money and morals conflict an experimental test of expressive voting abstract moral considerations may matter much in voting because the costs of expressing support for a morally worthy cause may be low in a referendum these costs depend on whether a voter expects to affect the outcome of the referendum to test the low cost theory of expressive voting we experimentally investigate a proposal to tax everyone and to donate tax revenues the analysis of expectations and voting decisions shows that the low cost theory fails to explain voting decisions instead we find that voters tend to approve of the proposal if they expect others to approve too

abstention ideology and information acquisition we consider an election in which each voter can collect information of different precision voters have asymmetric information and preferences that vary both in terms of ideology and intensity in contrast to all other models of voting with endogenous information in equilibrium voters collect information of different qualities we show that information and abstention are not necessarily negatively correlated some voters are more likely to abstain the more informed they are we also discuss the manner in which incentives to acquire information are non monotonic in terms of both ideology and the level of intensity