explaining agricultural productivity growth an international perspective this article presents multi output multi input total factor productivity tfp growth rates in agriculture for 88 countries over the 1970 2001 period estimated with both stochastic frontier analysis sfa and the more commonly employed data envelopment analysis dea we find results with sfa to be more plausible than with dea and use them to analyze trends across countries and the determinants of tfp growth in developing countries the central finding is that policy and institutional variables including public agricultural expenditure and proagricultural price policy reforms are significant correlates of tfp growth the most significant geographic correlate of tfp growth is distance to the nearest oecd country

global inequality how large is the effect of top incomes abstract despite the growing interest in global inequality assessing inequality trends is a major challenge because individual data on income or consumption is not often available nevertheless the periodic release of certain summary statistics of the income distribution has become increasingly common hence grouped data in form of income shares have been conventionally used to construct inequality trends based on lower bound approximations of inequality measures this approach introduces two potential sources of measurement error first these estimates are constructed under the assumption of equality of incomes within income shares second the highest income earners are not included in the household surveys from which grouped data is obtained in this paper we propose to deploy a flexible parametric model which addresses these two issues in order to obtain a reliable representation of the income distribution and accurate estimates of inequality measures this methodology is used to estimate the recent evolution of global interpersonal inequality from 1990 to 2015 and to examine the effect of survey under coverage of top incomes on the level and direction of global inequality overall we find that item non response at the top of the distribution substantially biases global inequality estimates but more importantly it might also affect the direction of the trends

entrepreneurship and income inequality in southern ethiopia this article uses inequality decomposition techniques in order to analyze the consequences of entrepreneurial activities to household income inequality in southern ethiopia a uniform increase in entrepreneurial income reduces per capita household income inequality this implies that encouraging rural entrepreneurship may be favorable for both income growth and income distribution such policies could be particularly successful if directed at the low income low wealth and relatively uneducated segments of the society

economic growth and poverty reduction measurement issues using income and non income indicators summary this paper first reviews the debate on the definition of pro poor growth and argues that a relative definition has merits when defining the state of pro poor growth while an absolute definition is most suitable when analyzing the rate of pro poor growth the second contribution is to extend the pro poor growth toolbox to non income indicators the analysis applied to bolivia shows that this extension greatly improves our understanding of the distribution of change in non income indicators of the linkages between progress in income and non income dimensions of poverty and on the incidence of progress in non income outcomes along the income distribution

democracy volatility and economic development growth stability is an important objective because development requires sustained increases in income because volatility is costly for the poor and because volatility deters growth we study the determinants of average growth and its volatility as a two equation system and find that higher levels of democracy and diversification lower volatility whereas volatility itself reduces growth muslim countries instrument for democracy and measures of diversification identify volatility in contrast to the lack of consensus on the democracy growth relationship the democracy stability link is robust rather than focus on growth this paper forges an alternative link between democracy and development through the volatility channel

democracy and economic growth a meta analysis despite a sizeable theoretical and empirical literature no firm conclusions have been drawn regarding the impact of political democracy on economic growth this article challenges the consensus of an inconclusive relationship through a quantitative assessment of the democracy growth literature it applies meta regression analysis to the population of 483 estimates derived from 84 studies on democracy and growth using traditional meta analysis estimators the bootstrap and fixed and random effects meta regression models it derives several robust conclusions taking all the available published evidence together it concludes that democracy does not have a direct impact on economic growth however democracy has robust significant and positive indirect effects through higher human capital lower inflation lower political instability and higher levels of economic freedom democracies may also be associated with larger governments and less free international trade there also appear to be country and region specific democracy growth effects overall democracy s net effect on the economy does not seem to be detrimental

is economic growth good for the poor tracking low incomes using general means in this paper we propose the use of an alternative methodology to track low incomes based on atkinson s 1970 family of equally distributed equivalent income functions which are called general means here we provide a new characterization of general means that justifies their use in this context our method of evaluating the effects of growth on poor incomes is based on a comparison of growth rates for two standards of living the ordinary mean and a bottom sensitive general mean the motivating question is to what extent is growth in the ordinary mean accompanied by growth in the general mean a key indicator in this approach is the growth elasticity of the general mean or the percentage change in the general mean over the percentage change in the usual mean our empirical analysis estimates this growth elasticity for a data set containing 144 household surveys from 20 countries over the last quarter century among other results we find that the growth elasticity of bottom sensitive general means is positive but significantly smaller than one this suggests that the incomes of the poor do not grow one for one with increases in average income

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

multi issue allocation situations abstract this paper introduces a new class of transferable utility games called multi issue allocation games these games arise from various allocation situations and are based on the concepts underlying the bankruptcy model as introduced by o neill math social sci 2 1982 345 in this model a perfectly divisible good estate has to be divided amongst a given set of agents each of whom has some claim on the estate contrary to the standard bankruptcy model the current model deals with situations in which the agents claims are multi dimensional where the dimensions correspond to various issues it is shown that the class of multi issue allocation games coincides with the class of non negative exact games the run to the bank rule is introduced as a solution for multi issue allocation situations and turns out to be shapley value of the corresponding game finally this run to the bank rule is characterised by means of a consistency property in the spirit of o neill

can education subsidy reverse falling fertility the case of taiwan abstract the education subsidy in taiwan is available for government employees only in 1996 the government ceased to index the education subsidy for inflation which created a natural experiment ideal for studying the effect of the education subsidy on fertility using the difference in differences approach we find that the reform reduced the fertility probability for public sector households by 17 per cent and this negative response appears to be permanent the estimated probability elasticity of fertility is 0 05 which is smaller than that of personal tax exemption 0 8 the results also suggest that the education subsidy has a heterogeneous effect on fertility across income groups

international migration the brain drain and poverty a cross country analysis the aim of the paper is threefold first it empirically investigates the effect of international migration on poverty in origin countries using data from a cross country analysis second it explores the specific part of the income distribution from which migrants are drawn by comparing the effect of international migration on different income quintiles of the population finally given that the selection of migrants depends not only on the income level of their households but also on the skill levels of movers the paper casts some light on the implications of the emigration of skilled workers on poverty this article shows that the stock of international migrants have a positive effect on the income of the poor while it does not have a significant impact on the income of the middle and top quintiles of the population in particular a 10 per cent increase in the per capita stock of migrants resident in oecd nations augments the income of the poor by 1 per cent on average and ceteris paribus finally the poverty reducing effect of migration holds even when the emigration process selects the best and the brightest

growth income inequality and fiscal policy what are the relevant trade offs we develop an endogenous growth model with elastic labor supply in which agents differ in their initial endowments of physical capital in this context the growth rate and the distribution of income are jointly determined we then examine the distributional impact of different ways of financing an investment subsidy policies aimed at increasing the growth rate result in a more unequal distribution of pre tax income consistent with the positive correlation between income inequality and growth observed in the recent empirical literature however there is no conflict between efficiency and equity if inequality is measured in terms of the distribution of welfare

an economic or political kuznets curve this paper examines two closely related empirical hypotheses an economic kuznets curve and a political kuznets curve we find a robust inverted u relationship between income inequality and political development but not one between income inequality and economic development exploring the cross section aspect of the panel data we find that the economic kuznets curve is sensitive to different control specifications and to different functional specifications but the political kuznets curve is robust using dynamic panel data estimation we find that the economic kuznets curve does not hold up intertemporally while the political kuznets curve does

mix and match a strategyproof mechanism for multi hospital kidney exchange as kidney exchange programs are growing manipulation by hospitals becomes more of an issue assuming that hospitals wish to maximize the number of their own patients who receive a kidney they may have an incentive to withhold some of their incompatible donor patient pairs and match them internally thus harming social welfare we study mechanisms for two way exchanges that are strategyproof i e make it a dominant strategy for hospitals to report all their incompatible pairs we establish lower bounds on the welfare loss of strategyproof mechanisms both deterministic and randomized and propose a randomized mechanism that guarantees at least half of the maximum social welfare in the worst case simulations using realistic distributions for blood types and other parameters suggest that in practice our mechanism performs much closer to optimal

ready for capital account convertibility abstract this paper investigates whether the impact of capital account convertibility on the long term volatility of economic growth depends on financial development it estimates a system of three simultaneous equations mean growth volatility of growth and financial development this allows for the study of both the impact of capital account liberalization on volatility as well as its direct impact on financial development results indicate that economies with low financial development fall prey to excess volatility arising from capital account openness while capital account openness itself has a significant positive impact on financial development the results are robust to alternative measures of financial development and volatility and to the removal of outliers

revisiting the effects of imf programs on poverty and inequality investigating how lending programs of the international monetary fund imf affect poverty and inequality we explicitly address model uncertainty we control for endogenous selection into imf programs using data on 86 low and middle income countries for the 1982 2009 period and analyze program effects on various poverty and inequality measures the results rely on averaging over 90 specifications of treatment effect models and indicate adverse short run effects of imf agreements on poverty and inequality for the whole sample while for a 2000 2009 subsample the results are reversed there is evidence that significant short run effects might disappear in the long run author s abstract

changes in income inequality and the black market premium is a high black market premium for us dollars associated with rising or falling income inequality within a nation this paper empirically examines this issue within a cross section of countries and finds that the black market premium is strongly associated with rising income inequality as measured by changes in the gini coefficient others have used the black market premium as a proxy to measure protectionist policies so a possible implication is that protectionist policies further skew the distribution of income within a country however other measures of protectionist policies are not associated with changes in income inequality instead other factors which might drive the black market premium such as interest rate differentials appear to be more relevant in explaining why the black market premium is positively related with increases in income inequality

a pie allocation among sharing groups this paper deals with a pie allocation problem to users who are divided intosharing groups that are not necessarily disjoint the pie is allocated among the groups rather than the users the portion of a sharing group is a public good for its members that is all of them can enjoy it a non cooperative game for allocating the pie and a special equilibrium outcome strongly disappointment free allocation are defined we prove the existence of a unique such allocation and show that it coincides with the nash solution of the related bargaining problem journal of economic literatureclassification numbers c70 c71 c72 and c78

poverty and the welfare costs of risk associated with globalization summary globalization implies change and uncertainty over future change may affect household welfare we use data on lorenz curves over the last 50 years for a sample of 53 mostly developing countries treating each country quintile year as an observation we first account for variation in consumption expenditures finding that global shocks are of less importance than country level shocks in explaining variation in country quintile consumption growth while poorer households experience more rapid consumption growth than do wealthier households they also bear much more risk however we find no evidence that this greater risk is related to globalization

changes in the world distribution of income between 1950 and 1977 trends in the world distribution of income are much discussed and philosophised about the issue of increasing economic inequality among nonsocialist countries in the post war period is central to the debate about the international economic order in i969 the pearson commission report was already pointing to the widening gap between the developed and developing countries as a central issue of our time and was proposing the reduction of that gap as the main objective of international co operation according to that report gnp per capita had increased between i960 and i967 at annual rates of 2 5 and 3 6 in developing and developed countries respectively morawetz i978 found that the gap between the two sets of countries rose from i 2 6 fold in i950 to i3 2 fold in i975 other authors see a more complicated picture atkinson i975 for instance has argued that although the share of poor countries in world income probably declined between i950 and i970 that of the countries at the middle of the world distribution probably increased 2 what may be a mere assessment of relative growth performances among nonsocialist countries becomes a basic theoretical element in the radical stream of economic literature for authors like amin i974 emmanuel i972 and frank i978 the capitalist mode of development necessarily leads to the rich countries of the centre becoming richer and poor countries of the periphery becoming poorer in a degree depending on their involvement in international trade for them a widening gap between developed and developing countries is simply the statistical confirmation of an unavoidable consequence of the national and international capitalist system in the latter perspective the issue at stake is of such importance that the contrast between the abundance of theoretical literature and the lack of empirical work is striking the few existing studies of changes in world distribution provide an inadequate picture intra country income distributions are not taken into account observation periods do not exceed i5 years 8 for andic and peacock i96i and for beckerman and bacon i970 i5 for kirman and tomasini i969 socialist as well as some non socialist countries are excluded and national incomes are converted to u s dollars at official exchange rates 3 finally none of these studies covers the i970s although several shocks which might have affected world distribution occurred during that decade for the non socialist countries to which they refer the andic peacock and beckerman bacon studies found the gini coefficient almost constant over

a malmquist based approach to change in local economic well being murias p novello s and martinez roget f a malmquist based approach to change in local economic well being regional studies the focus on the multifaceted nature of well being has increased substantially in recent years this paper employs data envelopment analysis dea combined with the malmquist index to examine the temporal change in the economic well being of spanish provinces over the ten year period between 1996 and 2006 this method not only allows the aggregation of multiple indicators and the estimation of well being shifts over time but also shows the sources of variation in local economic well being the results seem to suggest that whilst economic well being has improved in the great majority of provinces this advancement stems largely from a more favourable environment than from the specific capacity of each province to reduce its relative distance from key benchmarks

globalization and its challenges rudi was born and grew up in krefeld germany he was an undergraduate at the university of geneva and completed his ph d at the university of chicago in 1971 which is where we met he was a student of robert mundell and both the subject matter the development of the mundell fleming model and the elegance and insights of his early work reflected mundell s influence he taught at the university of rochester and at the university of chicago before accepting an offer from mit in 1975

trade liberalisation and poverty what are the links this paper asks whether a developing country s own trade liberalisation could translate into increased poverty and what information would be required to identify whether it will do so it plots the channels through which such effects might operate identifying the static effects via four broad groups of institutions households distribution channels factor markets and government and the dynamic issues of volatility long term economic growth and short term adjustment stresses an increase in the price of something a household sells labour good service increases its welfare thus the paper first explores the likely effects of trade liberalisation on the prices of goods and services taking into account the distribution sector also critical is whether trade reform creates or destroys markets trade reform is also likely to affects factor prices of which the wages of the unskilled is the most important for poverty purposes if reform boosts the demand for labour intensive products it boosts the demand for labour and wages and or employment will increase however not all developing countries are relatively abundant in unskilled labour and trade can boost demand for semi skilled rather than unskilled labour hence poverty alleviation is not guaranteed trade reform can affect tariff revenue but much less frequently and adversely than is popularly imagined even if it does it is a political decision not a law of nature that the poor should suffer the resulting new taxes or cuts in government expenditure opening up the economy can reduce risk and variability because world markets are usually more stable than domestic ones but sometimes it will increase them because stabilisation schemes are undermined or because residents switch to riskier activities the non poor can generally tide themselves over adjustment shocks from a liberalisation so public policy should focus on whether the initially poor and near temporary setbacks the key to sustained poverty alleviation is economic growth there is little reason to fear that growth will not boost the incomes of the poor similarly while the argument that openness stimulates long run growth has still not been completely proven there is every presumption that it will

new ways of looking at old issues inequality and growth abstract the paper uses new cross country data on income and asset land distribution to show that i there is a strong negative relationship between initial inequality in the asset distribution and long term growth ii inequality reduces income growth for the poor but not for the rich and iii available longitudinal data provide little support for the kuznets hypothesis policies that increase aggregate investment and facilitate acquisition of assets by the poor might thus be doubly beneficial for growth and poverty reduction

finance and income inequality what do the data tell us although there are distinct conjectures about the relationship between finance and income inequality little empirical research compares their explanatory power we examine the relationship between finance and income inequality for 83 countries between 1960 and 1995 because financial develop ment might be endogenous we use instruments from the literature on law finance and growth to control for this our results suggest that in the long run inequality is less when financial development is greater consistent with galor and zeira 1993 and banerjee and newman 1993 although the results also suggest that inequality might increase as financial sector development increases at very low levels of financial sector development as suggested by greenwood and jovanovic 1990 this result is not robust we reject the hypothesis that financial development benefits only the rich our results thus suggest that in addition to improving growth financial development also reduces inequality

four scenarios of development and the role of economic policy we ask which economic policies can help a country create the most favourable conditions for development we observe that the dynamics of several development indicators can be grouped into four clusters each cluster corresponding to a different combination of growth and changes in inequality based on this observation we define four different development scenarios and use limited dependent variable regressions to study how structural and policy factors affect a country s probability to achieve the most or the least favourable of these scenarios our results point to a comforting picture through the choice of appropriate policies countries can effectively increase their chances to achieve the most favourable development scenario

did higher inequality impede growth in rural china this paper estimates the relationship between initial village inequality and subsequent household income growth for a large sample of households in rural china using a rich longitudinal survey spanning the years 1987 2002 and controlling for an array of household and village characteristics the paper finds that households located in higher inequality villages experienced significantly lower income growth through the 1990s however local inequality s predictive power and effects are significantly diminished by the end of the sample the paper exploits several advantages of the household level data to explore hypotheses that shed light on the channels by which inequality affects growth biases due to aggregation and heterogeneity of returns to own resources previously suggested as candidate explanations for the relationship are both ruled out instead the evidence points to unobserved village institutions at the time of economic reforms that were associated with household access to higher income activities as the source of the link between inequality and growth the empirical analysis addresses a number of pertinent econometric issues including measurement error and attrition but underscores others that are likely to be intractable for all investigations of the inequality growth relationship

allocation problems among sharing groups abstract we deal with allocation problems among sharing groups there are n agents the agents are divided into several sharing groups a homogeneous good is allocated among sharing groups rather than among the agents the good is a private good for sharing groups and a public good for the members of each sharing group that is all of them in the same sharing group can consume it without rivalry we introduce some allocation rules and axioms the utilitarian allocation rule and the egalitarian allocation rule are characterized by some axioms

the institutional foundations of inequality and growth abstract after a decade of research the effect of inequality on long run economic growth remains unresolved in part because researchers have treated omitted variable bias as an estimation problem rather than a deeper question of causality in this article we argue that the key omitted variable is the quality of economic institutions using both cross country and panel data specifications we find no direct effect of inequality on growth in the long run rather the protection of property rights simultaneously raises growth rates and reduces income inequality we interpret these findings as evidence that insecure property rights disproportionately disadvantage the poor

a household level study of the determinants of incomes and consumption this paper uses micro data to estimate the determinants of household income and to measure how human capital and earnings uncertainty affect consumption we also estimate how home owners react to capital gains on housing and assess whether these gains are treated in the same way as other sources of income using uk micro data we show that estimates of permanent income and of earnings uncertainty have powerful effects on spending we find that precautionary motives may account for a substantial proportion of household saving we also provide estimates of the shape of the earnings profile for various occupational groups and of the returns to education in different professions copyright 1997 by royal economic society

innovation inequality and intellectual property rights we examine whether income inequality explains innovation across countries the mechanism could be twofold first a large middle class could have an impact on institutions including intellectual property rights iprs which could in turn affect innovation second evidence from us economic history suggests direct linkages between middle class share and innovation via supply and demand effects using ive to address endogeneity we find that middle class share explains patterns of resident patenting while non resident patenting is driven more by exogenous factors and global integration our results illustrate an additional channel through which income inequality can impact long run growth

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

ethnic diversity and poverty we examine the relationship between ethnic diversity and poverty for a cross sectional sample of developing countries we measure diversity using indices of ethnic and linguistic fractionalization and measure poverty using the multidimensional poverty index mpi multidimensional poverty headcount mph intensity of deprivation poverty gap and poverty headcount ratio we find that ethnic and linguistic fractionalization contributes to poverty levels specifically after controlling for endogeneity we find that a standard deviation increase in ethnic fractionalization is associated with a 0 32 0 44 and 0 53 standard deviation increase in the mpi mph and the intensity of deprivation respectively moreover a standard deviation increase in ethnic fractionalization is associated with between a 0 34 and 0 63 standard deviation increase in the population living below 1 90 and 3 10 the poverty gap at 1 90 and 3 10 a day and the headcount ratio at 1 90 and 3 10 a day similar results are also observed for linguistic fractionalization with standardized coefficients between 0 53 and 0 93 we find that our results are robust to alternative ways to measure poverty and ethnic diversity including ethnic polarization as well as alternative approaches to address endogeneity

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

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

when is growth pro poor evidence from a panel of countries abstract growth is pro poor if the poverty measure of interest falls according to this definition there are three potential sources of pro poor growth a a high growth rate of average incomes b a high sensitivity of poverty to growth in average incomes and c a poverty reducing pattern of growth in relative incomes i empirically decompose changes in poverty in a sample of developing countries during the 1980s and 1990s into these three components in the medium to long run most of the variation in changes in poverty can be attributed to growth in average incomes suggesting that policies and institutions that promote broad based growth should be central to the pro poor growth agenda most of the remainder of the variation in changes in poverty is due to poverty reducing patterns of growth in relative incomes rather than differences in the sensitivity of poverty to growth in average incomes cross country evidence provides relatively little guidance as to the policies and institutions that promote these other sources of pro poor growth

looking beyond averages in the trade and poverty debate there has been much debate about how much poor people in developing countries gain from trade openness as one aspect of globalization the paper views the issue through both macro and micro empirical lenses the macro lens uses cross country comparisons and aggregate time series data the micro lens uses household level data combined with structural modeling of the impacts of specific trade reforms case studies are presented for china and morocco both the macro and micro approaches cast doubt on some widely heard generalizations from both sides of the globalization debate additionally the micro lens indicates considerable heterogeneity in the welfare impacts of trade openness with both gainers and losers among the poor a number of covariates of the individual gains are identified the results point to the importance of combining trade reforms with well designed social protection policies

is corruption really bad for inequality evidence from latin america this article presents new evidence on the relationship between corruption and income inequality using a panel data methodology we find that lower corruption is associated with higher income inequality in latin america this result is in contrast to other empirical studies but it makes sense in latin america for a number of reasons the finding of an inverse relationship between inequality and corruption suggests that institutional reform policies by themselves may be misguided

equity measurement in facility location analysis a review and framework abstract in selecting sites for facilities especially in the public sector the issue of equity is becoming increasingly important beginning with the work of mumphreys et al 1971 mcallister 1976 and savas 1978 a substantial literature has developed that incorporates equity in facility siting decision models despite this level of interest however there has been little agreement in these models as to how equity should be measured further except for some recent works there has generally been little comparison of alternative measures or assesment of their relative value let alone any consensus on the best measure s to use perhaps even more surprising is the great number and variety of measures employed the motivation for this paper is to address these problems and provide for researchers a base from which issues of equity can be included in facility siting models more specifically we seek to review the equity literature as it pertains to facility location assemble the set of measures that have been developed and introduce a framework and common notation for organizing them we also will discuss approaches that can be used to select an appropriate measure of equity

is globalization reducing absolute poverty summary using data from 114 countries 1983 2007 we examine the relationship between globalization and world bank absolute poverty estimates we find a significant negative correlation between globalization and poverty robust to several econometric specifications including a fixed effect panel a long run first difference and a pooled ols regression introducing two instruments for globalization we also show that results are robust to correction for potential endogeneity we motivate and test the instruments in several ways in particular information flows and more liberal trade restrictions robustly correlate with lower absolute poverty

income distribution factor endowments and trade openness abstract this paper studies the empirical links among factor endowments trade and personal income distribution by using panel data we show that land and capital intensive countries have a less equal income distribution while skill intensive countries have a more equal income distribution we also show that the effects of trade openness on inequality depend on factor endowments in a way consistent with several recent case studies but not with the simple hecksher ohlin framework our results are robust to the division of the sample according to level of income the inclusion of different regressors the use of different measures of trade openness and of relative factor abundance and tests for possible problems of endogeneity

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

the distributional impacts of an energy boom in western canada in the energy rich region of western canada inequality rose over the past two decades while poverty declined begging the question of whether the recent energy boom was a contributing factor this study uses measures of inequality and poverty across local labor markets that vary in energy extraction intensity to identify these distributional impacts the evidence shows that overall the boom increased inequality and decreased poverty there are however a few notable cases where these relationships are reversed the significance and relative magnitude of growth across and between distributional segments were consistent with these findings

sharing group allocation problems abstract we deal with allocation problems among sharing groups we introduce some allocation rules and axioms the egalitarian rule is characterized by equal treatment of equal groups solidarity and group consistency

development and distribution a critique of the cross country u hypothesis abstract this paper questions the validity of a modern paradigm viz the u hypothesis it argues that notwithstanding contrary claims the recent cross country econometric studies by ahluwalia and others have little in common from a methodological point of view with kuznets earlier intertemporal national studies ahluwalia s cross country u curve is found to be based on defective statistics and questionable methodological premises in specific the estimation of one u curve from observations on both ldcs and dcs is criticised a sample restricted to the ldc group considerably weakens support for the u hypothesis further even marginal variations in the data set lead to the virtual disappearance of ahluwalia s empirical relationship the paper concludes that the cross country u hypothesis is more of a hindrance than an aid to our comprehension of the relationship between economic growth and income distribution

dynamic kidney exchange we study how barter exchanges should be conducted through a centralized mechanism in a dynamically evolving agent pool with time and compatibility based preferences we derive the dynamically efficient two way and multi way exchange mechanisms that maximize total discounted exchange surplus recently several live donor kidney exchange programs were established to swap incompatible donors of end stage kidney disease patients since kidney exchange can be modeled as a special instance of our more general model dynamically efficient kidney exchange mechanisms are derived as corollaries we make policy recommendations using simulations

is there a social kuznets curve the influence of labour standards on inequality abstract this study empirically investigates the impact of core labour standards on income inequality for a range of 90 countries from 1990 2000 a synthetic index of labour standards is computed by means of a multiple correspondence analysis and no significant correlation is found with the gini index one of the reasons pointed out is that the effective implementation of core labour standards depends on the quality of the country s political and legal systems using instrumental variables in a tsls model we found an inverse u shaped curve between the new endogenous index of core labour standards and income inequality

the trend behavior of alternative income inequality measures in the united states from 1947 1990 and the structural break this article tests the hypothesis that the time series process of income inequality has experienced a structural break the timing of the structural break is treated as an unknown parameter to be estimated from the data because it is not possible to associate a single episodic policy event with the break year and to avoid bias in favor of a unit root hypothesis if the break was near the selected year for several measures of income inequality a segmented trend model is more appropriate to account for the fundamentals affecting the behavior of income inequality as opposed to a stochastic trend model

the evolution of inequality after trade liberalization abstract the paper presents a general framework for the analysis of the evolution of personal income distribution following trade liberalization the model allows many factors of production and the possibility of capital gains in this framework the short run evolution of inequality depends on the wage to wealth ratio while changes in the interest rate determine the changes in long run inequality the general framework is applied to the dynamic specific factors model of eaton rev econ stud vliv 1987 in this model the land labor ratio determines whether a country exports the land using or the capital using good in the long run the type of the export good determines the effects of liberalization on inequality in land labor abundant countries inequalities increase decrease along the dynamic path the model provides an explanation for the differences between latin american and asian countries in their response to trade liberalization econometric analysis provides mixed results for these predictions with the correct signs but non significant coefficients for the coefficient on the interaction between openness and the land labor ratio

a new database on human capital stock in developing and industrial countries sources methodology and results abstract the paper describes the techniques and data adopted for the construction of a new series of estimates of the stock of education in 85 countries over 28 years 1960 1987 the series are built from enrollment data using the perpetual inventory method adjusted for mortality estimates are corrected for grade repetition among school goers and country specific drop out rates for primary and secondary students enrollment data series used start as far back as 1930 for most countries and even earlier for others this reduces the need for backward extrapolation of enrollments to provide the initial estimates of the investment inventory

growth and inequality revisited the role of primary distribution of income a new approach for understanding today s economic and social crises this paper presents an innovative interpretative scheme of the relationship between economic growth and income inequality taking the primary distribution of income between profits and wages as the main explanatory variable for that purpose two lines of research are taken as a reference point first the bhaduri marglin model which explains growth in terms of the effect that factor shares have on aggregate demand and second recent empirical analyses that also use the functional distribution to explain the evolution of the top income shares and the gini index after reviewing the literature on the growth inequality relationship the paper identifies several relationships between primary and interpersonal distributions of income in each of the bhaduri marglin model s growth regimes it finds multiple causal relationships between growth and inequality as well as inequality and growth clarifying their implications for economic and social stability the paper offers final reflections on the way the scheme can further the understanding of current economic and social crises

does financial development contribute to poverty reduction the article examines the contribution of financial development to poverty reduction in developing countries building on earlier research which has established links between financial development and economic growth and between economic growth and poverty reduction the article tests for a causal process linking financial sector growth and poverty reduction the empirical results indicate that up to a threshold level of economic development financial sector growth contributes to poverty reduction through the growth enhancing effect the impact of financial development on poverty reduction will be affected however by any change in income inequality resulting from financial development

social divisions and institutions assessing institutional parameter variation this paper investigates the hypothesis that the association between property rights institutions and income is weaker in countries with high social divisions it argues that social divisions should have a negative effect on perceived institutional inclusiveness which in turn should depress institutional payoffs absent a property rights indicator that captures the perceived inclusiveness of institutions social divisions should then weaken the observed association between property rights institutions and income the empirical results support this hypothesis and highlight the importance of evaluating whether the institutions measure used captures the institutional framework applying to the population at large

is there a trade off between income inequality and corruption evidence from latin america abstract in contrast to other research lower corruption is associated with higher income inequality this result is consistent with the idea that the corruption inequality relationship may be different where there is a large informal sector as in latin america

inequality and economic growth the empirical relationship reconsidered in the light of comparable data all of the recent empirical work on the relationship between income inequality and economic growth has used inequality data that are not consistently measured this paper argues that this is inappropriate and shows that the significant negative correlation often found between income inequality and growth across countries is not robust when income inequality is measured in a consistent manner using data from the world income inequality database however evidence is found of a significant negative correlation between consistently measured inequality of expenditure data and economic growth for a sample of developing countries

joint determinations of inequality and growth abstract this paper jointly estimates the effect of inequality on growth and the impact of growth on inequality vis a simultaneous equations model results show that higher inequality is detrimental to growth whereas faster growth worsens the extent of income distribution

oil nontax revenue and the redistributional foundations of regime stability nontax revenues make up a substantial amount of government revenue around the world though scholars usually focus on individual sources of such revenue for example foreign aid and state owned oil companies using a theory of regime change that builds on recent models of the redistributional foundations of dictatorships and democracies i generate hypotheses regarding all nontax revenue and regime stability i argue that an increase in nontax revenue should be associated with less taxation of elites in democracies more social spending in dictatorships and more stability for both regime types i find support for all three of these hypotheses in a cross sectional time series analysis covering all countries and years for which the necessary data are available significantly i show that the particular source of nontax revenue does not make a difference they all act similarly with regard to regime stability and the causal mechanisms

korea s growth driven trade policies inclusive or exclusive we attempted to find whether the korea s growth driven trade policies during the period of its industrialisation has contributed to output growth together with income distribution by qualitatively analysing the performance of trade policies interacting with the multilateral trading system over time in addition we conducted a regression analysis to investigate the effect of korea s trade growth on inclusive growth during its industrialisation period covering the period of 1976 2011 we found that the recent reform policies reported in the wto s trade policy review for korea in 2016 have attempted to achieve more balanced distribution of gains from trade but not enough to lead the korean economy to a well balanced welfare state more specifically we found the positive effects of international trade on inclusive growth driven by strong output growth effect not by the effect on income distribution even though income distribution measured by gini indices has been worsened after the east asian financial crisis we could not find significant evidence that korea s rapid international trade growth has been responsible for the deteriorating income inequality

what can new survey data tell us about recent changes in distribution and poverty it has been claimed that in recent times the poor have lost ground both relatively and absolutely even when average levels of living have risen this article tests that claim using household surveys for 67 developing and transitional economies over 1981 94 it finds that changes in inequality and polarization were uncorrelated with changes in average living standards distribution improved as often as it worsened in growing economies and negative growth was often more detrimental to distribution than positive growth overall there was a small decrease in absolute poverty although with diverse experiences across regions and countries almost always poverty fell with growth in average living standards and rose with contraction

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

smallholder livelihood adaptation in the context of neoliberal policy reforms a case of maize farmers in southern veracruz mexico governments around the world have embraced trade liberalisation as a means of enhancing efficiency to realise economic growth and alleviate poverty likewise the mexican government implemented neoliberal policy reforms the nafta in particular to stimulate sustainable development using the mexican maize sector as illustration this article describes the adaptation process of smallholders to market changes shaped by these reforms going beyond the aggregated level we have investigated smallholders livelihood strategies contrary to what economic models estimated our data suggests that farmers intensified the cultivation of maize rather than switch to sectors in which mexico has a comparative advantage

paths to success the relationship between human development and economic growth summary this paper explores the two way relationship between economic growth eg and human development hd we develop panel data strategies to estimate the strength of these relationships and find that hd plays an essential role in determining growth trajectories our measure of sustained growth not only is hd a final product in the sense that it measures basic human well being but it is also a critical input into eg our findings illustrate the empirical relevance of endogenous growth and are consistent with threshold effect models our results imply that successful policy requires an early focus on hd not only because of its direct impact but also because of its feedback effect on sustaining eg

income distribution development and foreign trade a cross sectional analysis abstract this paper analyses cross sectional evidence on income inequality in developing countries within a consistent theoretical framework where the major explanatory variables are factor endowments their ownership structure and foreign trade distortions the resulting explanation of cross country differences in income distribution is considerably better than what is found in the existing literature endowments in mineral resources land concentration in agricultural exports trade protection and secondary schooling are shown to be major determinants of differences in income inequality across developing countries

labour market institutions and the personal distribution of income in the oecd we examine what determines differences across countries and over time in the distribution of personal incomes in the oecd we first model the wage determination process and show that unemployment the labour share and the wage differential are all functions of labour market institutions next we show that in a model economy with only four types of agents capitalists skilled and unskilled workers and unemployed the gini coefficient of personal incomes can be expressed as a function of the above three variables labour market institutions hence affect income inequality though the sign of their impact is ambiguous stronger unions and or a more generous unemployment benefit tend to reduce inequality through reduced wage differentials a higher labour share and also higher unemployment we then use a panel of oecd countries for the period 1970 96 to examine these effects we find first that the labour share remains an important aspect of overall inequality patterns and second that stronger unions and a more generous unemployment benefit tend to reduce income inequality high capital labour ratios also emerge as a strong equalising factor which has in part offset the impact of increasing wage inequality on the us distribution of personal incomes

factor shares and savings in endogenous growth in models of steady investment driven growth an individual s propensity to save depends on how much of his income is drawn from accumulated factors of production capital rather than from nonaccumulated factors when agents are heterogeneous in this respect growth oriented policies have distributional consequences and in the absence of lump sum redistribution their implementation faces political constraints if the median voter is capital poor relative to the economy s representative agent political interactions tend to slow down growth when policy acts on capital s income share and tend to accelerate it when investment subsidies are the policy instrument of choice copyright 1993 by american economic association

household inequality social welfare and trade abstract working with sen social welfare functions meaning explicit separability between mean income and income dispersion we develop a generalized dual approach to tracking household inequality aspects of social welfare in general equilibrium we highlight how household equity can be examined analytically alongside production efficiency in duality based models using our dual framework to explore potential trade offs between efficiency and equity effects of trade policy our results complement the set of standard inequality results in trade theory focused on functional rather than household inequality we also find that the relative distributional impact of tariffs on welfare is conditional on the initial level of inequality

the personal and the factor distributions of income in a cross section of countries abstract the shares of capital and labour in national income vary substantially both over time and across countries this paper shows that the factor distribution of income is an essential determinant of the personal distribution of income we use cross country and panel data for a group of developed and developing countries to show that a larger labour share is associated with a lower gini coefficient of personal incomes this effect is not only statistically significant but also economically important an increase in the labour share in mexico to that observed in the us would reduce the gini coefficient of the former by between two and five points

welfare impacts of china s accession to the world trade organization data from china s national rural and urban household surveys are used to measure and explain the welfare impacts of changes in goods and factor prices attributable to accession to the world trade organization wto the price changes are estimated separately using a general equilibrium model to capture both direct and indirect effects of the initial tariff changes the welfare impacts are first order approximations based on a household model incorporating own production activities calibrated to household level data and imposing minimum aggregation the results show negligible impacts on inequality and poverty in the aggregate however diverse impacts emerge across household types and regions associated with heterogeneity in consumption behavior and income sources with possible implications for compensatory policy responses

the simultaneous evolution of growth and inequality research on inequality and growth can be divided into two strands one deriving from kuznets and lewis has tried to identify a mechanistic relationship between growth or level of income and inequality the other has tried to find causal explanations of growth and inequality treating each independently in this paper we draw from both strands to test whether growth and inequality are the joint outcomes of other variables and processes we find that simultaneous examination of growth and inequality yields significantly different results and has different consequences for policy from previous independent studies the empirical literature on growth and inequality can be divided into two broad strands one following the pioneering work of kuznets and lewis is motivated by the pessimistic conjecture that the process of growth and development somehow requires increasing inequality at least in the early stages this has led to many efforts to identify a mechanical relationship between the level of development and inequality anand and kanbur 1993 or to determine whether faster growth requires higher or lower inequality the second strand has sought to identify the causal factors influencing the evolution of growth and inequality independently this research has looked either at growth for example barro and sala i martin 1995 or at inequality li et al 1997 but has not tried to identify those factors that might simultaneously influence both growth and inequality 2 thus the literature that looks simultaneously at growth and inequality descending most notably from kuznets 1955 relates them in a mechanistic manner that ignores or minimises the role of other causal factors including policy while the literature that incorporates other causal factors including policies looks independently at growth and inequality neither approach is particularly convincing from a theoretical standpoint the evolution of growth and inequality must surely be the outcome of similar processes in addition neither approach is particularly useful for the policy maker who needs to balance the impact of policies on both growth and distribution in this paper we investigate whether growth and inequality are simultaneously determined and if so whether or not they are subject to

explaining international and intertemporal variations in income inequality this paper explores the propositions that income inequality is relatively stable within countries and that it varies significantly among countries a new and expanded data set provides broad support for both propositions drawing on a political economy and capital market imperfection arguments to explain the intertemporal and international variation in inequality the empirical analysis shows that the predicted variables associated with the first argument a measure of civil liberties and the initial level of secondary schooling and the second argument a measure of financial depth and the initial distribution of land are indeed important determinants of inequality this paper explores two propositions regarding income inequality they are first income inequality is relatively stable within countries and second it varies significantly across countries to illustrate note that the gini coefficient in india remained almost constant for forty years 1951 92 with mean 32 6 and standard deviation 2 0 2 in contrast the variation in gini coefficients across countries is large 61 9 in honduras in 1968 compared with 17 8 in bulgaria in 1976 if substantiated these propositions have potentially significant implications for poverty the significance of the first is obvious barring any fundamental socio political change poverty reduction will depend crucially on the rate of economic growth given this the significance of the second is that in inegalitarian economies the poor will enjoy a smaller share of any national increment in income than in more egalitarian ones drawing on a new and expanded data set on inequality deininger and squire 1996a the first of the paper s three sections conducts standard statistical tests of the two propositions the sample comprises 573 observations on the most common measure of inequality the gini coefficient for 49 developed and developing countries covering the period 1947 94 the results broadly confirm our two propositions specifically analysis of variance anova shows that about 90 of the total variance in the gini coefficients

financial development financial structure and income inequality in china using panel data of 23 provinces during the period 1996 2012 this paper investigates the impacts of financial development and structure on income inequality in different administrative districts urban rural and overall in china the results produced by the dynamic generalised method of moments estimator provide some evidence for a linear and inverse u shape relationship between financial development and income inequality and increasing the relative importance of financial markets to banks helps to reduce income inequality furthermore the results of panel threshold regressions show that the benefits of financial development only occur if the stock market activity has reached a threshold level and disappear if the stock market capitalisation has reached a certain scale meanwhile the impact of the financial structure weakens as the financial development expands and the proportion of financial markets increases we also find that the impacts of financial development and structure on rural income inequality are stronger than those on urban income inequality