the measurement and trend of inequality comment in a recent article in this review morton paglin proposes a measure of concentration which he claims will correct the gini ratio for overstatement in populations where each individual may be expected to vary his income or wealth over his life cycle the paglin measure suggests that the gini ratio overstates income concentration in the united states by a third and does not reveal a 23 percent decline in concentration which has occurred between 1947 and 1972 these results are based on an improper decomposition of the gini ratio in this note i decompose the gini ratio to derive the paglin measure it is shown to correct for neither demographic nor life cycle income effects and to understate intracohort income or wealth inequality if properly normalized the paglin measure shows that the gini overstates u s income concentration by 7 percent or less and indicates a decline in u s interfamily income concentration of less than 12 percent four percentage points of this decline are the result of demographic change while less than 7 points comparable to the 5 percent decline of the gini are the result of decreased income concentration within cohorts of family heads decomposition further reveals major changes in the division of income among cohorts and in concentration of income within cohorts these changes compensate each other in the paglin measure the use of which as a measure of income or wealth concentration is not recommended the gini concentration ratio

equilibrium behavior in crisis bargaining games this paper analyzes a general model of two player bargaining in the shadow of war where one player possesses private information concerning the expected benefits of war i derive conclusions about equilibrium behavior by examining incentive compatibility constraints where these constraints hold regardless of the game form hence the qualitative results are game free i show that the higher the informed player s payoff from war the higher is his or her equilibrium payoff from settling the dispute short of war and the higher is the equilibrium probability of war the latter result rationalizes the monotonicity assumption prevalent in numerous expected utility models of war i then provide a general result concerning the equilibrium relationship between settlement payoffs and the probability of war

top income shares in the long run an overview this paper offers an overview of what we have learned from a collective research project on income distribution in the long run using historical income tax statistics and a common methodology we have constructed annual top income shares series often broken down by income source for over 20 countries covering most of the 20th century one important con clusion is that the decline in income inequality that took place during the first half of the 20th century was mostly accidental and does not seem to have much to do with a kuznets type process top capital incomes were hit by major shocks during the 1914 1945 period and were never able to fully recover from these shocks probably because of the dynamic impact of pro gressive income and estate taxation our database also allows us to readdress the cross country analysis of the interplay between inequality and growth with better prospects than with standard databases jel d31

strikes and holdouts in wage bargaining theory and data we develop a private information model of union contract negotiations in which disputes signal a firm s willingness to pay previous models have assumed that all labor disputes take the form of a strike yet a prominent feature of u s collective bargaining is the holdout negotiations often continue without a strike after the contract has expired production continues with workers paid according to the expired contract we analyze the union s decision to strike or hold out and highlight its importance to strike activity strikes are more likely to occur after a drop in the real wage or a decline in unemployment

a decomposition analysis of the trend in uk income inequality post war britain has experienced a number of dramatic demographic and social changes that have undoubtedly influenced the distribution of income there has been a rise in the number of pensioners whose incomes are relatively low a considerable increase in the number of young and old households living on their own and a remarkable expansion in the proportion of working wives the potential importance of these structural changes suggests that their impact on the income distribution needs to be examined systematically before any attempt can be made to interpret the observed trend in overall income inequality adequately the method usually adopted for this purpose attempts to create a comparable time series of distributions based on the structural characteristics pertaining in one particular year for example if we wished to investigate the effect of shifts in the age structure of the population this approach would disaggregate the distribution in one year tl and estimate what the distribution would have been like if the age structure had been the same as that observed in some other year to on the assumption that other distributional characteristics such as ageincome differentials and inequality within age groups remain invariant to this demographic change the comparison between the actual distribution at t1 and the constructed distribution at t1 with to s age structure is taken to indicate the impact of changes in the age structure over the period concerned this comparison can be presented in terms of quantile shares summary measures of inequality or the entire lorenz curves this approach known as shift share analysis or standardising the inequality series see semple i975 love and wolfson i976 dinwiddy and reed i977 royal commission i977 rowley and henderson i978 macleod and horner i980 is perfectly adequate for simple and straightforward structural changes when several changes are occurring simultaneously however it becomes difficult to identify the contribution of the individual factors and to assess their relative importance to the overall trend in inequality furthermore the combined impact of several structural influences will not in general sum up to the inequality change requiring explanation the purpose of this paper is to propose an alternative method of analysing

the distribution of wealth measurement and models abstract analysts debating the consequences of a policy change for the wealth distribution may come to different conclusions because of different views about how the distribution should be defined and measured or about the processes determining the distribution the aim of this survey is to provide an analytical framework within which such conflicts may be assessed the first part of the paper discusses conceptual issues in the definition of wealth and compares methods of deriving estimates of wealth distribution the second and larger part of the paper surveys lifecycle and intergenerational models of the distribution of wealth including a discussion of the role played by inheritance the presentation is largely theoretical indeed one of the paper s conclusions is that empirical modelling of the wealth distribution is under developed at least for the purposes of addressing many topical policy issues

conflict and the social contract we consider social contracts for resolving conflicts between two agents who are uncertain about each other s fighting potential applications include international conflict litigation and elections even though only a peaceful agreement avoids a loss of resources if this loss is small enough then any contract must assign a positive probability of conflict we show how the likelihood of conflict outbreak depends on the distribution of power between the agents and their information about each other

the economics of poverty traps and persistent poverty an asset based approach abstract longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty while a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty this paper develops an asset based approach to poverty analysis that makes it possible to distinguish deep rooted persistent structural poverty from poverty that passes naturally with time due to systemic growth processes drawing on the economic theory of poverty traps and bifurcated accumulation strategies this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long term persistent structural poverty as well as relevant extensions of the popular foster greer thorbecke class of poverty measures the paper closes with reflections on how asset based poverty can be used to underwrite the design of persistent poverty reduction strategies

on analyzing the world distribution of income consideration of world inequality should cause reexamination of the key concepts underlying the welfare approach to measuring income inequality and its relation to measuring poverty this reexamination leads to exploration of a new measure that allows poverty and inequality to be considered in the same framework incorporates different approaches to measuring inequality and allows varied expressions of the cost of inequality applied to the world distribution of income for 1820 1992 the new measure provides different perspectives on the evolution of global inequality

on the measurement and trend of inequality reply john formby terry seaks and w smith hereafter fss argue that the p gini coefficient is affected by the arbitrary choice of the age grouping to a degree which brings the validity of the age related measure into question fss 1989 p 2 more pointedly with a sufficiently narrow age partition the p curve can always be driven to the l curve convergence of the p gini to a nonzero estimate does not occur p 4 these conclusions i believe result from a misapplication of gastwirth s theorem on disaggregation and a failure to observe statistical rules relating to sample size and sampling error i will show that when these rules are observed the value of the p gini does not converge to zero but properly reflects the relative importance of the nonlife cycle factors affecting the distribution when calculating the traditional l gini the more disaggregation the better the number and accuracy of the sample points are the only consideration since all are thrown into one conceptual box and compared in terms of income size but if we try to identify the factors which account for income inequality in terms of age versus nonage related factors we are setting up two conceptual boxes the age gini and the p gini and we are no longer simply dealing with a gastwirth type problem statistical considerations come into play for example we must have a sufficient number of sample points in each conceptual box in order to give a reliable estimate of the importance of each factor the key allocating device which i employ is the age gini derived from the average age income profile the age gini shows the amount of inequality that would exist if all nonage related sources of inequality were eliminated when calculating this coefficient the means of the age groups are used in order to wash out all random and nonagerelated influences but this separating device works well only if the means are based on large samples otherwise sampling errors create spurious variation and impart an upward bias to the value of the age gini fss p 4 drive the age gini value up to the l gini by increasing the number of agegroups until they equal the number in the sample since the means of the age groups are now based on samples of one they become as erratic as the individual incomes and impart the maximum upward bias to the age gini it is true that the age income profile and the age gini are conceptually refined by using smaller age intervals but unless sample size is large compared to the number of age intervals the gains from conceptual purification will be more than offset by the greater sampling errors of the age means this kind of limitation is shared by many other statistical measures which do not thereby lose their validity or usefulness under what conditions will the true or limiting value of the p gini emerge fss in their footnote 3 state that there is no limiting value other than zero let us test this claim assume we have a scatter diagram of income y and age x and wish to show average income in relation to age we start with a finite number of age groups and plot their mean incomes on the diagram by continuously reducing the age interval and increasing sample size we end up with a curve passing through the true means of infinitely small age intervals this defines the average age income profile since for each person we have data on income and age we can with this curve or an approximation of it calculate the age gini and l gini without grouping for age or income the age income curve allows us to determine the mean income u at any given age and for all persons department of economics portland state university p o box 751 portland or 97207

u s inequality debt constraints or incomplete asset markets abstract to examine the role of debt constraints and incomplete asset markets lack of insurance markets in explaining u s inequality we run horse races between competing models for a widely used model we decompose inequality into its fundamental driving forces the underlying source of inequality in all models is uninsurable idiosyncratic risk both debt constraints and incomplete asset markets are needed to account for inequality but asset market incompleteness is the key friction it better accounts for the concentration and dispersion of wealth and is the most costly friction in terms of welfare tight debt constraints are important for explaining the lower tail of the wealth distribution

cournot equilibrium in large markets under increasing returns abstract we consider cournot partial equilibria in large markets where firms have decreasing average costs it is shown that the outcome of competition is approximatelyefficient if entry is free

the level and distribution of global household wealth the level of average household wealth in all countries is estimated via the determinants of assets and debts for 39 countries which have balance sheet or survey data the distribution of wealth in all countries is inferred from information on the pattern of wealth ownership for 20 countries covering 59 of world population combining the level and distribution figures suggests that median global wealth was ppp 8 635 in the year 2000 and that ppp 518 361 was needed to belong to the top percentile the top decile owned 71 of world wealth and the global gini value was 0 802

conflict as a part of the bargaining process this paper investigates the use of conflict as a bargaining instrument it first revises the arguments explaining the role of confrontation as a source of information and its use during negotiations then it offers evidence illustrating this phenomenon by analyzing a sample of colonial and imperial wars the second part of the paper explores a bargaining model with one sided incomplete information parties can choose the scope of the confrontation they may want to engage in an absolute conflict that terminates the game or a limited conflict that only introduces delay and conveys information about the eventual outcome of the absolute one it is shown that confrontation has a double edged effect it may paradoxically open the door to agreement when the uninformed party is so optimistic that no agreement is feasible but it can also create inefficiency when agreement is possible but the informed agent has an incentive to improve her bargaining position by fighting

intimidation linking negotiation and conflict challenger demands a resource from defender in each period challenger chooses whether to attack if attacked defender chooses whether to concede the resource forever each player might be committed to ghting until victory before con ict begins defender can make nitely many offers con ict begins if challenger rejects all offers in equilibrium all offers except the last are unacceptable negotiation cannot eliminate con ict because a larger offer makes con ict increasingly attractive for challenger if negotiation fails prolonged con ict can happen in equilibrium even when uncertainty is vanishingly small we provide comparative statics regarding the probability and length of con ict

the measurement and trend of inequality comment in the september 1975 issue of this review morton paglin posits a new summary statistic the paglin gini which he uses to measure and analyze the level and trend of income inequality in the united states this measure intends to recognize only income differences among families unrelated to the observed age income profile as contributing to meaningful income inequality this is to be contrasted with the standard lorenz gini in which all differences in income among living units contribute to inequality paglin s measure indicates substantially less inequality in the united states than is indicated by the lorenz gini moreover paglin inequality falls considerably in the post world war ii period while other measures indicate very little change in inequality over this period paglin is addressing an important problem for the postwar period when the age distribution the length of time spent in school and the propensity of the young and the old to form their own households have all changed rapidly the trend in the conventional gini coefficient has no obvious normative interpretation however it is often given one unfortunately paglin s proposed index of inequality does not meet its objective and even if it did its normative content would be no clearer than that of the standard measure indeed no single indicator is sufficient to capture trends in normatively relevant inequality without further analysis like any other time series a time series of inequality must be approached with a well specified multivariate model after describing paglin s procedure in the next section we challenge his measure in section ii in section iii paglin s interpretation of policy relevant inequality is questioned and in section iv the implications of the paglin gini for the equity of the transfer system are analyzed section v is a summary of our critique

on the long run evolution of inheritance france 1820 2050 this paper attempts to document and account for the long run evolution of inheritance we find that in a country like france the annual flow of inheritance was about 20 25 of national income between 1820 and 1910 down to less than 5 in 1950 and back up to about 15 by 2010 a simple theoretical model of wealth accumulation growth and inheritance can fully account for the observed u shaped pattern and levels using this model we find that under plausible assumptions the annual bequest flow might reach about 20 25 of national income by 2050 this corresponds to a capitalized bequest share in total wealth accumulation well above 100 our findings illustrate the fact that when the growth rate g is small and when the rate of return to private wealth r is permanently and substantially larger than the growth rate say r 4 5 vs g 1 2 which was the case in the 19th century and early 20th century and is likely to happen again in the 21st century then past wealth and inheritance are bound to play a key role for aggregate wealth accumulation and the structure of lifetime inequality contrarily to a widely spread view modern economic growth did not kill inheritance

how income transfer programs affect work savings and the income distribution a critical review for helpful comments on earlier drafts we thank without implicating moses abramovitz yves balcer john bishop alan blinder richard burkhauser michael darby irwin garfinkel alan gustman daniel hamermesh martin holmer george jakubson robert lampman paul menchik robert moffitt michael murray joseph quinn timothy smeeding eugene smolensky barbara wolfe and two anonymous referees

the duration of interstate wars 1816 1985 we present a model of war duration which incorporates both realpolitik and domestic political variables we hypothesize that strategy terrain capabilities and government type among other variables will play key roles in determining the duration of war we test these hypotheses using hazard analysis and find empirical support for our key arguments we find that the realpolitik variables play a greater role than regime behavior and type in determining war duration we also find that historically on average mobilization and strategic surprise have little effect on war duration and that wars are not duration dependent

some anomalies in the production strategy of a labour managed firm however been given to the appropriate objective function of a labour managed cooperative firm in this paper we show that the conventional formulation of the objective function is incompatible with a homogeneous production function more precisely we prove that a labour managed firm with a production function homogeneous of degree a 1 the level of output depends only on the degree of homogeneity and is otherwise independent of the structural form of the production function in particular the level of output is independent of the price of capital this last result also holds if the production function is homothetic although these shortcomings apply specifically to homogeneous production processes the use of such production functions is so widespread that any objective function of a firm which is incompatible with them significantly reduces its analytical usefulness consequently we think that further research in the theory of labour managed firms will require a reformulation of the objective function in order to remove this anomaly

ranking income distributions a large variety of policy questions involve choices between social states and a consequent ordering of the feasible alternatives when these social states are related to the levels of welfare experienced by individuals or households two central issues stand out in determining the relative desirability of different social outcomes one of these is the essentially positive exercise of achieving comparability between households with different characteristics such as composition or preferences operating in different environments for example facing different price structures the other concerns the normative judgments implicit in the evaluation of alternative allocations of resourcesthe emphasis placed on inequality between households and the extent to which greater inequality can be compensated by higher average living standards this paper focuses on the second of these issues and in doing so we abstract from the problem of household comparability by considering a population of n households identical in all respects except for their incomes the question of ordering social states then becomes one of ranking income distributions over a group of anonymous households or individuals borrowing the usual assumptions imposed on consumer preferences we may suppose that a social ordering of income distributions can be represented by a welfare function 2

quantity leadership and social inefficiency a game of simultaneous free entry and sequential output choices is analyzed firms enter simultaneously in stage 1 by paying a fixed cost and they choose output levels sequentially in subsequent stages at the subgame perfect equilibrium of the game the production level of a firm is decreasing with the order of the firm in the decision making the firm that is the last to choose output produces the same amount as a typical firm in the standard symmetric simultaneous moves cournot game moreover industry output and market price are identical in the sequential and the symmetric cournot games it follows that in the sequential game there are fewer active firms and higher total surplus than in the standard symmetric cournot game strategic asymmetry results in higher concentration and higher total surplus without an increase in price

learning by striking estimates of the teetotaler effect we hypothesize that past strike experience will have a negative or teetotaler effect on a collective bargaining unit s propensity to strike in future negotiations other things being equal we test this using a unique micro level sample comprising four consecutive negotiations by 147 bargaining units in u s manufacturing industries controlling for observable and unobservable differences among bargaining pairs in the propensity to strike our results are consistent with the view that the experience of striking is indeed sobering lagged strike experience variables have a significantly negative effect on the propensity to strike in the current negotiation

a model of efficient discovery abstract we construct a model of costly pretrial discovery represented as learning the drift rate of a diffusion process by observing its path and settlement negotiations analyzed as a mechanism design problem in which the gains from settling are the avoided costs of a trial whose outcome is correlated with their private information we show that for this particular model the parties expected gains from a joint plan of discovery preceding the settlement negotiations are unaffected by their privately known parameters hence there is no intrinsic impediment to initial agreement on an efficient plan of discovery journal of economic literatureclassification nos c78 d74 d82 k41

peace war and the balance of power every possible relation between the distribution of power and the likelihood of war has been defended somewhere in the literature on international politics war is least likely if power is distributed equally war is least likely if power is distributed unequally and the distribution of power has no effect on the likelihood of war i try to settle this dispute by examining the effect of expectations about the outcome of war on the choice between war and negotiation i argue that each of these mutually contradictory propositions can be derived from some plausible set of premises and thus that which one is correct depends on which set of premises best describes a situation the most important factors affecting the relation between the distribution of power and the likelihood of war are 1 whether the terms of a compromise agreement that might be accepted in lieu of war affect the distribution of power between the antagonists and therefore the probability that the agreement will be enforced and 2 how many states interests will be affected by the outcome

income inequality in the united states 1913 1998 this paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the united states using individual tax returns data top income and wages shares display a u shaped pattern over the century our series suggest that the large shocks that capital owners experienced during the great depression and world war ii have had a permanent effect on top capital incomes we argue that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks top wage shares were flat before world war ii dropped precipitously during the war and did not start to recover before the late 1960s but are now higher than before world war ii as a result the working rich have replaced the rentiers at the top of the income distribution

global income distributions and inequality 1993 and 2000 incorporating country level inequality modeled with beta distributions abstract using a method of moments estimator flexible three parameter beta distributions are fitted to aggregate country level income data to overcome an untenable assumption of previous studies that persons within each income group receive the same income regional and global income distributions are derived as weighted mixtures of country specific distributions analytical expressions for gini and theil s measures of inequality at country regional and global levels are derived in terms of the parameters of the beta distributions application to data for 91 countries in 1993 and 2000 reveals a high degree of global inequality with evidence of declining inequality largely attributable to growth in china

the effect of changes in the population on several measures of income distribution an economic model is used to explore the relationship between population growth and 2 of the most commonly used income distribution statistics the share of the rich and the poor in total income and the rate of growth of real income of the rich and the poor brazilian statistics applied to the model illustrate the difficulty of interpreting the common inequality measures under conditions of rapid population growth neither income shares nor growth rates can tell much about the degree of progressivity in the growth strategy of a particular country without adjustment absolute income for the base period poor or base period teenagers was greater than reported for either the poor or teenagers however the rise in inequality was also greater for the base period population growth in brazil was seen to be even more regressive than previously thought significant upward mobility was however still possible

welfare losses under cournot competition abstract in a market for a homogeneous good where firms are identical compete in quantities and produce with constant returns the percentage of welfare losses pwl is small with as few as five competitors for a class of demand functions which includes linear and isoelastic cases we study markets with positive fixed costs and asymmetric firms we provide exact formulae of pwl and robust constructions of markets were pwl is close to one in these two cases we show that the market structure that maximizes pwl is either monopoly or dominant firm depending on demand finally we prove that pwl is minimized when all firms are identical a clear indication that the assumption of identical firms biases the estimation of pwl downwards

top indian incomes 1922 2000 this article presents data on the evolution of top incomes and wages for 1922 2000 in india using individual tax return data the data show that the shares of the top 0 01 percent 0 1 percent and 1 percent in total income shrank substantially from the 1950s to the early to mid 1980s but then rose again so that today these shares are only slightly below what they were in the 1920s and 1930s this u shaped pattern is broadly consistent with the evolution of economic policy in india from the 1950s to the early to mid 1980s was a period of socialist policies in india whereas the subsequent period starting with the rise of rajiv gandhi saw a gradual shift toward more pro business policies although the initial share of the top income group was small the fact that the rich were getting richer had a nontrivial impact on the overall income distribution although the impact is not large enough to fully explain the gap observed during the 1990s between average consumption growths shown in national sample survey based data and the national accounts based data it is sufficiently large to explain a non negligible part of it

the top 1 percent in international and historical perspective world top incomes database at http topincomes parisschoolofeconomics eu and has represented a challenge to the economics profession stories based on the and has represented a challenge to the economics profession stories based on the supply and demand for skills are not enough to explain the extreme top tail of supply and demand for skills are not enough to explain the extreme top tail of the earnings distribution nor is it enough to look only at earned incomes different the earnings distribution nor is it enough to look only at earned incomes different approaches are necessary to explain what has happened in the united states over approaches are necessary to explain what has happened in the united states over the past century and also to explain the differing experience in other high income the past century and also to explain the differing experience in other high income countries over recent decades we begin with the international comparison in the countries over recent decades we begin with the international comparison in the fi rst section and then turn to the causes and implications of the evolution of top fi rst section and then turn to the causes and implications of the evolution of top income shares income shares

to each the same and to each his own a proposal to measure responsibility sensitive income inequality this paper deals with the question of how to incorporate modern responsibility catering egalitarianism into economic theory on the measurement of income inequality i present a particular axiomatic expression of the main aspects of such egalitarianism then to measure offensive inequality separately i construct a norm or reference income distribution based upon the axiomatic model to replace the perfectly equal income distribution that is used as norm by all common inequality measures i defend the use of a particular measure of distributional change to determine the degree of offensive inequality and apply the method to belgian income data

perfectly competitive markets as the limits of cournot markets a perfectly competitive partial equilibrium market for a single homogeneous good with a bounded continuum of infinitesimal firms is considered cost functions are essentially unrestricted and are allowed to vary smoothly across firms a sequence net of cournot markets each with a finite number of firms which converge smoothly to the perfectly competitive limit in terms of both the inverse demand functions and the distributioon of firm technologies is introduced and it is shown that all markets sufficiently far along the sequence have a cournot equilibrium and all the cournot equilibria converge to the perfectly competitive equilibrium of the limit market

comparing bargaining solutions in the shadow of conflict how norms against threats can have real effects abstract in many economic environments agents make costly and irreversible investments in guns that may enhance their respective threat payoffs but also shrink the utility possibilities set in such settings with variable threats and a variable utility possibilities set it becomes possible to rank different bargaining solutions in terms of efficiency we compare bargaining solutions within a class in which the influence of the threat point on the bargaining outcome varies across solutions under symmetry we find that the solution in which the threat point is least influential the equal sacrifice solution pareto dominates the other solutions since the equal sacrifice solution puts the least weight on the threat point norms against threats that can be seen in many seemingly rhetorical pronouncements in adversarial relations can mitigate some of the costs of conflict and therefore have efficiency enhancing effects journal of economic literature classification numbers c72 c78 d30 d70 d72 k42

income and wealth inequality and the life cycle a non parametric analysis for china this paper uses the techniques of non parametric density and regression estimation to estimate the chinese age income and age wealth distributions using survey data relating to 1987 although there is evidence of a clear life cycle profile of income earning and wealth accumulation the results suggest that only a small part of observed inequality can be explained by life cycle factors this finding contradicts the results of some other researchers

household wealth trends in the united states 1983 2010 this study investigates wealth trends from 1983 to 2010 the most telling finding is that median wealth plummeted over the years 2007 10 by 47 per cent the inequality of net worth after almost two decades of little movement was up sharply between 2007 and 2010 relative indebtedness continued to expand during the late 2000s for the middle class though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness the sharp fall in median net worth and the rise in its inequality from 2007 to 2010 are traceable to the high leverage of middle class families and the high share of homes in their portfolio the racial and ethnic disparity in wealth holdings after remaining more or less stable from 1983 to 2007 widened considerably between 2007 and 2010 hispanics in particular got hammered by the great recession in terms of net worth and net equity in their homes households under age 45 also got pummelled by the great recession as their relative and absolute wealth declined sharply from 2007 to 2010

inequality among the kibbutzim using a new longitudinal data set we examine the distribution of well being and changes in the distribution of well being among the israeli kibbutzim in 1989 and 1990 we examine the theoretical and practical implications of a variety of definitions of consumption income and wealth of each kibbutz although in many cases the mean value of the relevant income or wealth concept is negative we show that inequality change is ambiguous and welfare is decreasing moreover those kibbutzim with the lowest net worth experienced the greatest deterioration of their net worth recipients although it is quite common to find income distribution studies that deal with the problem of comparing the income and wealth of economic units containing several individuals such as families and households we focus here upon the economic status of a much larger economic unit the israeli kibbutz this topic is of special interest to income distribution analysts since from its inception the kibbutz movement has been associated with an explicitly egalit arian ethic and it presents particularly interesting problems from the point of view of interpretation in terms of applied welfare economics a further reason for special interest in inequality among the kibbutzim is to be found in the considerable economic and social changes that they have recently undergone although the kibbutzim used to be considered one of the economic successes of israel it is no longer clear that this is so and it is possible that the changed economic and social circumstances have impacted unfavourably on the distribu tion of income among the kibbutzim we present a preliminary view of the distribution of economic status among the kibbutzim in the years 1989 and 1990 using a unique consistent data source that enables us to estimate measures of consumption income and wealth for each kibbutz we show that although the picture of inequality change is ambiguous over 1989 90 the gini coefficient rose for consumption and fell for income inequality of wealth fell there is a consistent picture of deteriorating economic status according to standard economic welfare criteria that take into account distributional issues the generalized lorenz curve we are able to offer some insight as to whether success breeds success within the kibbutz movement the data set that has permitted this analysis is an immediate by product of the recent economic and social changes experienced by the kib butzim and it is important to understand the nature of these changes the economic factors behind the recent crisis are primarily associated with accumulated debt the implicit trust placed in the kibbutz movements2 by

wealth concentration in a developing economy paris and france 1807 1994 using large samples of estate tax returns we construct new series on wealth concentration in paris and france from 1807 to 1994 inequality increased until 1914 because industrial and financial estates grew dramatically then adverse shocks rather than a kuznets type process led to a massive decline in inequality the very high wealth concentration prior to 1914 benefited retired individuals living off capital income rentiers rather than entrepreneurs the very rich were in their seventies and eighties whereas they had been in their fifties a half century earlier and would be so again after world war ii our results shed new light on ongoing debates about wealth inequality and growth

top incomes in the long run of history a recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics top incomes represent a small share of the population but a very significant share of total income and total taxes paid hence aggregate economic growth per capita and gini inequality indexes are sensitive to excluding or including top incomes we discuss the estimation methods and issues that arise when constructing top income share series including income definition and comparability over time and across countries tax avoidance and tax evasion we provide a summary of the key empirical findings most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks top income shares do not recover in the immediate postwar decades however over the last thirty years top income shares have increased substantially in english speaking countries and in india and china but not in continental european countries or japan this increase is due in part to an unprecedented surge in top wage incomes as a result wage income comprises a larger fraction of top incomes than in the past finally we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open

large market cournot equilibria in labour managed economies a basic point in the theory of labour managed market economies is the fundamental role of free entry in order to achieve efficiency see dreze 1974 greenberg 1979 ichiishi 1977 meade 1972 1979 vanek 1970 but modelling a framework of firm selection process can be undertaken with different approaches dreze meade and vanek for example consider a perfectly competitive process greenberg and ichiishi build models of coalition formation in the spirit of core theory in the present study we take the other classical way the cournot oligopoly theory in order to capture the effect of increasing competition in the cournot oligopoly two kinds of models have long been traditionally elaborated in the first the effects of an exogenously increasing number of active firms facing a given demand function are examined see okugushi 1976 ruffin 197 1 seade 1980 in the second initiated by shubik 1959 the number of active firms and the size of the market are simultaneously increased at the same rate in this case what is sought is to isolate some sort of pure effect of an increasing number of competitors and not the combined result of a greater number of firms facing a constant market but in the two kinds of approaches the number of active firms are not explained by the theory what is missing is consideration of the role of potential competitors recently novshek 1980 proposed to give the same status to potential competitors and active firms i e to consider that the potential competitors have a cournot type behaviour hence the very fact that they are not active comes from optimizing behaviour in the same way as for active firms a positive production level comes from maximizing behaviour a potential competitor taking the production of the active firms as given and maximizing his objective function remains potential only because he does not find it attractive to produce hence we get a unified theory which explains the number of active firms for the case of u shaped average cost firms novshek 1980 has shown that in sufficiently large markets first such a free entry cournot equilibrium exists and second it is approximately a perfectly competitive equilibrium state in this paper we study the welfare properties of free entry cournot equilibria in labour managed economies we adopt novshek s notion of free entry which is more appealing than the classical zero profit constraint 2 a recent paper by hill and waterson 1983 shows that with the zero profit definition of free entry and strong assumptions of decreasing marginal labour productivity uniqueness and stability of equilibria cournot equilibria are asymptotically efficient and furthermore have the same number of active firms in both the labour managed and entrepreneurial frameworks under much weaker assumptions the graphical analysis of this paper shows that asymptotic

on the theory of international trade between capitalist and labour managed countries abstract this paper attempts to establish a model of international trade between capitalist and labour managed countries and to reexamine whether or not the basic theorems of the traditional trade theory carry over to environments characterized by the coexistence of capitalist and labour managed countries

retirement wealth and lifetime earnings this article argues that a satisfactory theory of wealth inequality should account not only for the marginal distribution of wealth but also for the joint distribution of wealth and earnings the article describes the joint distribution of retirement wealth and lifetime earnings in the panel study of income dynamics it then evaluates the ability of a stochastic life cycle model to account for key features of this distribution the life cycle model fails to account for three key features of the data 1 the correlation between lifetime earnings and retirement wealth is too high 2 the wealth gaps between earnings rich and earnings poor households are too large 3 wealth inequality among households with similar lifetime earnings is too small models in which households differ in rates of return or time preferences account much better for the joint distribution of retirement wealth and lifetime earnings

policies and impact an analysis of village level microfinance institutions this paper uses variation in policies and institutional characteristics to evaluate the impacts of village level microfinance institutions in rural thailand to identify impacts we use policies related to the successful unsuccessful provision of services as exogenous variation in effective financial intermediation we find that institutions particularly those with good policies can promote asset growth consumption smoothing and occupational mobility and can decrease moneylender reliance specifically cash lending institutions production credit groups and especially women s groups are successful in providing intermediation and its benefits to members while buffalo banks and rice banks are not the policies identified as important to intermediation and benefits the provision of savings services especially pledged savings accounts emergency services and training and advice surprisingly much publicized policies such as joint liability default consequences or repayment frequency had no measured impacts jel 012 016

bargaining and conflict with up front investments how power asymmetries matter abstract we examine settings such as litigation labor relations or arming and war in which players first make non contractible up front investments to improve their bargaining position and gain advantage for possible future conflict bargaining is efficient ex post but we show that a player may prefer conflict ex ante if there are sufficient asymmetries in strength there are two sources of this finding first up front investments are more dissimilar between players under conflict and they are lower than under bargaining when one player is much stronger than the other second the probability of the stronger player winning in conflict is higher than the share received under nash bargaining we thus provide a rationale for conflict to occur under complete information that does not depend on long term commitment problems greater balance in institutional support for different sides is more likely to maintain peace and settlements

striking for a bargain between two completely informed agents this paper models the wage contract negotiation procedure between a union and a firm as a sequential bargaining process in which the union must decide in each period whether or not to strike for the duration of that period we show that there exist subgame perfect equilibria in which the union engages in several periods of strikes prior to reaching a final agreement although both parties are completely rational and fully informed this has implications for other inefficient phenomena such as tariff wars debt negotiations and wars in general we characterize the set of equilibria show that strikes can occur in real time and discuss extensions of the model such as lockouts and the possibility of multiple recontracting opportunities copyright 1991 by american economic association

women wealth and mobility using estate tax returns data we observe that the share of women among the very wealthy in the united states peaked in the late 1960s at nearly one half and then declined to one third we argue that this pattern reflects changes in the importance of dynastic wealth with the share of women proxying for inher ited wealth if so wealth mobility decreased until the 1970s and rose thereafter such an interpretation is consistent with technological change driving long term trends in mobility and inequality as well as the recent divergence between top wealth and top income shares documented elsewhere jel d31 j16 j62 033 the extent of and changes in intergenerational mobility of wealth are central to understanding dynamics of wealth inequality but are hard to measure in this paper we argue that the share of women among the wealthiest americans can be used as a proxy for the importance of inherited rela tive to self made wealth this approach assumes that women tend to inherit rather than make great fortunes if so a higher share of women among the wealthy would reflect a rise in inherited wealth at the top and thus lower wealth mobility conversely higher wealth mobility where self made wealth replaces inherited wealth would result in more men at the top of the wealth distribution judged by this proxy and corroborated by various data sources wealth mobility decreased in the period 1925 1969 and increased thereafter such a pattern is consistent with an important role for technological change in shaping the wealth distribution and can provide an explanation for why wealth concentra tion has remained stable despite increasing income concentration in the last three decades over the past century the share of women among the very wealthy followed an inverse u pattern peaking in the late 1960s according to estate tax returns in 1925 one quarter of the wealthiest 0 01 percent were women this fraction rose rapidly through world war ii wwii and then more slowly to peak in 1969 when women neared parity with men since then the decline has been marked by 2000 women s share had fallen to one third its prewar level while the rise was evident among all wealth groups in the top 1 percent of the wealth distribution the decline was confined to the very top figure ia graphs the share of women for four different groups in the top 1 percent among decedents by year figure ib does the same for the living population with the help of estate multipliers a method that treats death as a random sampling device and uses mortality rates by age and gender to infer the distribution of wealth among the living as described in the data appendix while the rise in the share of women among the wealthy until the 1960s could reflect improve ments in women s economic status labor market gains work against the recent decline for instance since the 1970s the share of women among top earners top 0 1 percent has risen by

older or wealthier the impact of age adjustment on wealth inequality differences in individual wealth holdings are widely viewed as a driving force of economic inequality however as this finding relies on cross sectional data a concern is that older is confused with wealthier we propose a new method to adjust for age effects in cross sections which eliminates wealth inequality due to age yet preserves inequality arising from other factors using a new cross country comparable database we examine the impact of age adjustments on wealth inequality across countries and over time we find that the most widely used method yields a substantially different picture of age adjusted wealth inequality than our method 2011 the editors of the scandinavian journal of economics

measuring unfair in equality abstract this paper shows one way of generalizing the standard framework of inequality measurement to allow for a distinction between fair and unfair inequalities we introduce the unfairness lorenz curve and the unfairness gini which are generalizations of the standard versions of the lorenz curve and the gini with this more general framework in place we study the implications of responsibility sensitive theories of justice for the evaluation of the income distribution in norway from 1986 to 2005 we find that both the pre tax and the post tax income distributions have become less fair in norway even though the standard gini for the pre tax income distribution has decreased in the same period two trends explain this development the increase in income share of the top percentile and the change in the situation of females in the labor market the concentration of income at the top of the distribution contributes both to increased unfairness and increased inequality whereas the increase in females working hours and level of education primarily contributes to a reduction in inequality thus the latter effect dominates for the standard gini and the former effect for the unfairness gini furthermore we find that the increase in post tax unfairness is even larger than the increase in pre tax unfairness which shows that the tax system in norway contributes less to eliminating unfairness in 2005 than in 1986

balance of power and the propensity of conflict we study the role of an imbalance in fighting strengths when players bargain in the shadow of conflict our experimental results suggest in a simple bargaining game with an exogenous mediation proposal the likelihood of conflict is independent of the balance of power if bargaining involves endogenous demand choices however the likelihood of conflict is higher if power is more imbalanced even though endogenous bargaining outcomes reflect the players unequal fighting strengths strategic uncertainty causes outcomes to be most efficient when power is balanced in turn the importance of exogenous mediation proposals depends on the balance of power

strategic bargaining models and interpretation of strike data attrition screening and signalling models of strategic bargaining are characterized in terms of their predictions about the incidence mean duration and settlement rates of strikes and the terms of wage settlements these predictions are compared with the general features observed in empirical studies of strikes in canada and the united states conclusions are drawn about the types of models capable of generating these features and about the conformity of the models to the evidence methods are described for computing the numerical examples used to illustrate the models

a unified theory of the behaviour of profit maximising labour managed and joint stock firms operating under uncertainty a comment in a recent paper of this journal hey i98i addressed the problem of a unified theory which treats three types of firms a profit maximising firm henceforth pmf a labour managed firm henceforth lmf and a joint stock firm henceforth jsf by one framework on the basis of his unified theory he concluded that with respect to the behaviour of the lmf and the jsf the results can be deduced from those of the pmf the purpose of this comment is to point out that his argument in the long run about the behaviour of these three firms does not hold if their production functions are homogeneous we use the same notation as hey to begin with the objective functions of the pmf the lmf and the jsf under certainty are defined respectively as follows

cournot equilibrium with free entry the case of decreasing average cost functions this paper investigates in the context of a market for a homogeneous commodity the asymptotic properties of cournot equilibria with free entry when the size of the market increases indefinitely the analysis focuses on the case where the average cost function is always decreasing and the marginal cost function is non decreasing for all sufficiently large outputs

the forbes 400 and the pareto wealth distribution abstract statistical regularities at the top end of the wealth distribution are examined using the forbes 400 lists during 1988 2003 we find that the wealth is distributed according to a pareto power law distribution with an average exponent of 1 49

the tullock bastiat hypothesis inequality transfer curve and the natural distribution of income conventional wisdom has long held that public policy has worked to reduce income inequality in contemporary america or that at least it has the real capability of achieving that goal thurow 1971 for example the evidence is strong that there was a pronounced decline in measured inequality during the 1930s and 1940s a period of greatly increased governmental intervention on both the tax and expenditure side designed to reduce inequality lindert and williamson 1980 increased government expenditures went or so it was argued largely to alleviate the plight of the poor and thus greater federal public aid expenditures brought about greater equality similarly it commonly has been maintained that higher and more progressive federal taxes serve to further reduce inequality in america there is another view however which holds that governmental intervention in markets may have a different impact while he believes the modern welfare state has clearly reduced incomes for the extremely wealthy tullock 1983 has suggested that many government transfers are not transfers from higher to lower income groups but rather transfers within the middle class allowing at least the possibility that governmental transfer activity might not in the aggregate increase income equality in any significant manner perhaps the citizenry are interested in promoting income equality but only to some limited extent in that regard evidence compiled by lebergott 1975 is interesting since the midnineteenth century there has been a remarkable rough constancy in government payment levels to the poor relative to wage levels of common laborers to be sure there have been some periods of increased support for the poor such as during the heyday of the war on poverty in the late 1960s but as tullock has expressed in private correspondence with us the body politic has spasms of feeling more than usually charitable and then goes back to normal the conventional wisdom had previously been questioned by reynolds and smolensky 1977 and for that matter by bastiat 1848 1964 who said that the state produces more poverty than it cures along similar lines lebergott 1975 15 speaking of poor elderly americans observed they are not impoverished in spite of the american capitalist welfare state they are in poverty because of it

the use of cross section microdata in life cycle models an application to inequality theory in nonstationary economies this paper examines the appropriate use of cross section microdata in life cycle models drawing upon recent empirical work based upon panel data we illustrate how these results can be used as priors to generate a distribution of life cycle earnings such a surrogate distribution can be shown to possess the same properties as actual distributions we focus attention particularly upon the treatment of economic growth and the unobservable components of earnings in the final section of the paper we show how such distributions might be used in inequality analysis