in search of smoking guns what makes income inequality vary over time in different countries we investigate the forces affecting the distribution of income by analyzing an unbalanced panel of information for 16 industrialized countries for the years 1966 through 1994 income inequality is measured with the gini coefficient of equivalent disposable income individuals are the unit of analysis the statistical analysis uses panel methods the results suggest that many factors affect the development of income inequality some factors are strictly economic a decreased industrial sector generally fosters inequality and some support is found for the view that increased trade of manufactured goods from developing countries is also a factor other forces are outside a strictly defined market sphere low inequality is found when a large proportion of the labor force belongs to a trade union and also when there is a large public sector in addition demographic circumstances are important since the proportion of the population under age 15 has a positive effect on inequality we find however no association between the unemployment rate and inequality

reciprocated unilateralism in trade reforms with majority voting this paper shows how unilateral liberalization in one country can increase the voting support for reciprocal reduction in trade barriers in a partner country when trade policies are determined simultaneously in the two countries we show the possibility of multiple political equilibria one in which the countries are both protectionist and another in which they trade freely with each other starting with trade protection in both countries a unilateral reform in one country is shown to bring about a free trade equilibrium that obtains majority support in both countries

did unilateral divorce laws raise divorce rates a reconciliation and new results application of the coase theorem to marital bargaining suggests that shifting from a consent divorce regime to no fault unilateral divorce laws should not affect divorce rates each iteration of the empirical literature examining the evolution of divorce rates across us states has yielded different conclusions about the effects of divorce law liberalization i show that these results reflect a failure to jointly consider both the political endogeneity of these divorce laws and the dynamic response of divorce rates to a shock to the political regime taking explicit account of the dynamic response of divorce rates to the policy shock i find that liberalized divorce laws caused a discernible rise in divorce rates for about a decade but that this increase was substantially reversed over the next decade that said this increase explains very little of the rise in the divorce rate over the past half century both administrative data on the flow of new divorces and measures of the stock of divorcees from the census support this conclusion these results are suggestive of spouses bargaining within marriage with an eye to their partner s divorce threat

the political economy of environmental taxes with an aging population this paper develops a two period overlapping generations model with environmental externalities and uncertain lifetimes and studies how two sources of population aging greater longevity and a lower rate of population growth affect the politically determined environmental tax and the quality of the environment it is shown that greater longevity and a lower rate of population growth have entirely different effects on these factors greater longevity has no effect on the environmental tax and has a non positive effect on the environmental quality whereas a lower rate of population growth has a negative effect on the tax and has a positive effect on the quality in addition the political decision making on the tax leads to an inefficient allocation of capital and environmental quality

should the kuznets effect be relied on to induce equalizing growth evidence from post 1950 development abstract the large body of cross sectional statistical research assessing 1 a kuznets inverted u for less developed countries ldcs 2 b a turning point is analyzed an alternative methodology is presented those countries which started in 1950 well below the turning point in rgdp and which reached an rgdp well above the turning point by 1980 are utilized as key cases income distribution data and assessments from individual country experts are combined with historical comparative microanalyses for each key case brazil costa rica greece japan malaysia south korea taiwan and turkey to construct patterns of income distribution during this crucial growth period it is demonstrated that the jury is still very much out on the kuznets inverted u for ldcs and the notion of a turning point should be rejected copyright 1997 elsevier science ltd

is trade good or bad for the environment sorting out the causality we seek to contribute to the debate over globalization and the environment by asking what is the effect of trade on a country s environment for a given level of gdp we take specific account of the endogeneity of trade using exogenous geographic determinants of trade as instrumental variables we find that trade tends to reduce three measures of air pollution statistical significance is high for concentrations of so2 moderate for no2 and lacking for particulate matter although results for other environmental measures are not as encouraging there is little evidence that trade has a detrimental effect on the environment

effects of public and private expenditures on environmental pollution a dynamic heterogeneous panel data analysis abstract this paper examined the impact of expenditures of household firm and government on aggregate and sectoral carbon emissions in the world economies during 1990 2015 the modified heterogeneous panel data technique was used to estimate both carbon emission and income models from which both the direct and indirect effects of expenditure categories were estimated along with long run and short run analyses empirical results indicate that in the long run the negative direct effect of government expenditure was reduced by the positive indirect effects leading to positive total effect on aggregate carbon emission however in the short run the negative direct effect was enhanced by the negative indirect effect culminating into negative total effect further in the long run the positive direct effect of investment expenditure was reduced by the negative indirect effects resulting into negative total effect on aggregate carbon emissions however the negative short run direct effect was reduced by the positive indirect effect leading to marginal positive total effect the total direct effect of household consumption spending was negative in the long run and could be relatively large in the short run the effect of the household expenditure on sectoral carbon emissions was negative while that of private investment was positive and that of public spending was diverse the policy lessons include the need to conduct value chain environmental pollution implications of any expenditure policy

wealth inequality and collective action abstract we study the effect of inequality in the distribution of endowments of private inputs e g land wealth that are complementary in production with collective inputs e g contribution to public goods such as irrigation and extraction from common property resources on efficiency in a class of collective action problems we focus on characterizing the joint surplus maximizing level of inequality making due distinction between contributors and non contributors in a framework that allows us to consider a wide variety of collective action problems ranging from pure public goods to impure public goods to commons we show that while efficiency increases with greater equality within the groups of contributors and non contributors so long the externalities positive or negative are significant there is an optimal degree of inequality between these groups

the effects of fiscal policy on co2 emissions evidence from the u s a abstract this paper examines the effects of fiscal policy on co2 emissions using vector autoregressions on u s quarterly data from 1973 to 2013 in particular we analyze the short and mid term interactions between fiscal policy and emissions by using sign restrictions to identify the policy shocks we construct the impulse responses to linear combinations of fiscal shocks corresponding to the scenarios of deficit financed spending and deficit financed tax cuts to consider possible variations of the effect of fiscal policy according to the sources of pollution we distinguish between production and consumption generated co2 emissions the results point out that the implementation of expansionary fiscal spending provides an alleviating effect on emissions from both sources of the pollutant whereas deficit financed tax cuts are associated with an increase on consumption generated co2 emissions the exact pattern of the effects depends on the source of emissions the scenario of fiscal policy that is implemented and the functional class of government expenditure being increased

political internalization of economic externalities and environmental policy abstract this paper derives the characteristics of endogenous environmental policy in a common agency model of politics and proceeds to show that competition between lobby groups is an important source of internalization of economic externalities our analysis generalizes bhagwati s principle of targeting to the case of distorted political markets moreover we show that the politically optimal structure of environmental taxes incorporates a pigouvian adjustment however since lobby groups care about the distribution of income as well as about efficiency the equilibrium structure of taxes differs considerably from the pigouvian rule

finance and income inequality in kazakhstan evidence since transition with policy suggestions abstractkazakhstan gained independence in 1990 and has undergone significant changes in economic social and trade conditions since then we analyse the effects of financial development on income inequality in kazakhstan incorporating economic growth foreign investment education and the role of democracy as the drivers we establish that income inequality in kazakhstan is impaired by financial development in summary we send three messages for policy purposes first strengthening financial sector is necessary to close the gap between haves and have nots second attracting fdi beyond the hydrocarbon sector is necessary to alleviate inequality finally adaptation of education system to the new social and economic environment would help in improving income distribution

diffusion and the international context of democratization democracy does not evolve sui generis the spatial clustering in democ racy and transitions suggests that international factors play a prominent role in forg ing democracies as well as influencing their durability we argue that democracy often comes about as a result of changes in the relative power of important actors and groups as well as their evaluations of particular institutions both of which are often influenced by forces outside the country in question the scope and extent of con nections with other democratic countries in a region can strengthen support for dem ocratic reform and help sustain institutions in transitional democracies results from a transition model demonstrate that international factors can exert a strong influence on the prospects for transitions to democracy and the spatial clustering in democ racy and transitions cannot adequately be explained by the hypothesized domestic social requisites of individual countries

social ideology and taxes in a differentiated candidates framework many observers argue that political polarization particularly on social and cultural issues has increased in the united states how does this influence the political competition on economic issues we analyze this question using a framework in which two officemotivated candidates differ in their fixed ideological position and choose a level of government spending to maximize their vote share in equilibrium candidates cater to a set of swing voters who contain socially conservative and economically liberal voters as well as socially liberal and economically conservative voters we analyze how voters cultural preferences and candidates cultural positions influence equilibrium economic positions jel d72 e62 h50 z13 many observers have argued that polarization between the two major parties in the united states particularly on noneconomic cultural matters has increased this is reflected both at the elite level in particular in congress poole and rosenthal 1984 1985 2000 and among democratic and republican activists and voters abramowitz and saunders 2008 harbridge and malhotra 2011 in the american national election survey respondents report their own ideological position on a scale from 1 very liberal to 7 very conservative the number of respondents who report one of the extreme positions 1 2 6 or 7 has grown from 20 and 21 percent in 1972 and 1976 to 31 and 30 percent in the 2004 and 2008 respectively moreover liberal and conservative voters have become considerably more reliable supporters of democrats and republicans respectively over the last generation 1 if we accept the widespread view that reagan s conservative revolution has created a cultural wedge between the parties that only widened in the 1990s and 2000s what consequences for the parties economic policies should we expect

inequality democracy and institutions a critical review of recent research this paper surveys the theoretical and empirical literature on the effect of economic and political inequality on institutions the current understanding suggests that unequal societies develop exploitative and inefficient institutions empirical research which is scant and has mainly concentrated at cross national level supports to some extent the existence of an inverse relationship between inequality and institutions but more analysis is needed future empirical research should undertake country state and micro level analysis which are a necessary complement to aggregate level studies the effect of inequality could also take place indirectly through the influence of inequality on democratization

a duration analysis of democratic transitions and authoritarian backslides recent theories of political development have emphasized redistributive demands as the main drivers of democratic transitions and consolidation the authors employ cox duration models to evaluate a number of economic institutionalist and sociological theories of regime transition using global data from 1970 to 1999 this study suggests that demands for redistribution are insufficient explanators of political transitions the authors find that transitions to democracy depend primarily on a high level of oppositionist social mobilization and secondarily favorable patterns of economic distribution on the other hand a high level of socioeconomic development is by far the best guarantor of democratic resiliency whereas mass political conflict endangers consolidation once democracy has been introduced the study also reveals that institutionalist factors are less influential than socioeconomic characteristics in explaining regime transitions this study highlights the contribution of social movement the

collective labor rights and income inequality this article examines the relationship between income inequality and collective labor rights conceptualized as workers legal and practical ability to engage in collective activity although worker organization is central to explaining income inequality in industrialized democracies worldwide comparative studies have neglected the role of class based actors i argue that the repression of labor rights reduces the capacity of worker organizations to effectively challenge income inequality through market and political processes in capitalist societies labor rights however are unlikely to have uniform effects across regions this study uses unbalanced panel data for 100 developed and less developed countries from 1985 through 2002 random and fixed effects models find that strong labor rights are tightly linked to lower inequality across a large range of countries including in the global south interactions between regions and labor rights suggest that the broader context in which class based actors a

democracy and economic growth a historical perspective recent studies appear to show that democracy has no robust association with economic growth yet all such work assumes that the causal effect of democracy can be measured by a country s regime status in a particular year t which is correlated with its growth performance in a subsequent period t 1 the authors argue that democracy must be understood as a stock rather than a level measure that is a country s growth performance is affected by the number of years it has been democratic in addition to the degree of democracy experienced during that period in this fashion democracy is reconceptualized as a historical rather than a contemporary variable with the assumption that long run historical patterns may help scholars to understand present trends the authors speculate that these secular historical infiuences operate through four causal pathways each of which may be understood as a type of capital physical capital human capital social capital and political capital this argument is tested in a cross country analysis and is shown to be robust in a wide variety of specifications and formats

democracy economic development and income inequality most cross national tests of inverse association between democracy and inequality have operationalized the concept of democracy by measuring its level at a single point in time more compelling theoretical arguments can be made for causal relationships that operate over time between 1 a country s years of democratic experience and income inequality and 2 income inequality and the stability of democracy continuous and qualitative measures of years of democratic experience are estimated to have a significant negative impact on income inequality independent of economic development and other control variables for a sample of 55 countries a very strong inverse correlation is also observed between income inequality and regime stability for a sample of 33 democracies this association holds independent of economic development which is found to have no direct effect on democratic stability after controlling for income inequality

does government expenditure affect environmental quality empirical evidence using chinese city level data abstract with rapid economic development the chinese government expenditures at various levels have increased sufficiently at the same time the environmental pollution in china has deteriorated significantly in this study the city level panel data of 106 chinese cities over the 2002 2014 period are utilized to investigate the impacts of government expenditure on the emissions of three typical pollutants specifically the total effects are divided into two types direct effects through which government expenditure affects pollution directly and indirect effects which refer to the indirect influences of government expenditure on environmental pollution through its impacts on gdp per capita to control for potential endogeneity and introduce dynamics the generalized method of moments gmm method is utilized the estimation results indicate that the total effects of government expenditure on these three pollutants are very different for sulfur dioxide so 2 soot and chemical oxygen demand cod the total effects are decreasing inverted u and u shaped respectively furthermore the indirect effects dominate the direct effects

foreign direct investment and income inequality further evidence abstract this paper examines the relationship between foreign direct investment fdi and income inequality special attention has been paid to data comparability and model specification by comparing models with and without geographical dummies this study shows that the statistically significant correlation between fdi and income inequality widely obtained in earlier studies might capture more of the geographical difference in inequality than the deleterious influence of fdi and to the extent that fdi does give rise to more unequal income distribution in the host less developed countries ldcs only east southeast asia ldcs appear to have been harmed by the inflow of fdi during the 1970s it should be noted however that the second result refers only to the marginal impact not the total impact apart from fdi our empirical evidence suggests that the level of economic development the direct role of government and to a smaller degree the significance of the agriculture sector in an ldc are crucial determinants of income inequality

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

reexamining the empirical evidence for an environmental kuznets curve this paper uses an updated and revised panel data set on ambient air pollution in cities worldwide to examine the robustness of the evidence for the existence of an inverted u shaped relationship between national income and pollution we test the sensitivity of the pollution income relationship to functional forms to additional covariates and to changes in the nations cities and years sampled we find that the results are highly sensitive to these changes and conclude that there is little empirical support for an inverted u shaped relationship between several important air pollutants and national income in these data

politics and perceived country creditworthiness in international banking this paper marks a departure from most previous studies of country creditworthiness in international banking because it incorporates systematically generated quantitative indicators of political instability in the analysis the authors empirically test for the effects of political instability on perceived country creditworthiness using data on thirty heavily indebted developing countries for the period 1967 86 in addition to economic factors they examine the effects of three types of political instability regime change political legitimacy and armed conflict the authors also distinguish between proximate instability and chronic instability they find significant effects of proximate instability particularly in governmental regime on indicators of countries perceived creditworthiness copyright 1990 by ohio state university press

who is credit constrained in the u s economy an important assumption of the life cycle model of consumption is the postulate of perfect capital markets this hypothesis has recently been challenged by substantial empirical evidence hall and mishkin 1982 using the panel study of income dynamics estimate that 20 percent of united states families are liquidity constrained mariger 1986 derives a life cycle model with endogenous liquidity constraints and using a cross section estimates this fraction to be 19 4 percent hubbard and judd 1986 simulate a model with a constraint on net worth which shows that with reasonable assumptions about preferences 19 0 percent of united states consumers are liquidity constrained the emerging consensus points therefore to a fraction of approximately 20 percent of the population behaving in a manner that is inconsistent with the pure life cycle model in addition hayashi 1985 and zeldes 1989 investigate the correlation among consumption wealth and income for various population groups and infer that liquidity constraints are more important for younger families with low levels of wealth and saving the main limitation of these studies is that in their data sets constrained consumers are not observable and have to be identified via indirect evidence thus there is as yet little firm evidence about the characteristics of the consumers who are likely to be credit constrained this paper adopts an approach that differs from previous tests for liquidity constraints because it makes use of data where constrained consumers are observable and explicitly links their existence to credit market imperfections and personal characteristics the data drawn from the 1983 survey of consumer finances scf and described in section ii provide information on individuals whose request for credit has been rejected by financial intermediaries in section iii a model is developed in which consumers and lenders behavior jointly determines the probability that a consumer is rationed in the credit market this probability is then

equitable productive employment targets for the international development strategy abstract although economic growth in many developing countries has matched and even surpassed the growth targets of the un s international development strategy ids it often has failed to alleviate the problems of employment and income distribution nonetheless preparations for an ids for the third development decade continue to focus on aggregate and sectoral growth targets recognizing the essential linkage between growth employment and poverty this paper formulates targets for employment and growth with equity and integrates them with the proposed overall ids growth objective using a consistent macro framework this paper examines the dynamic implications of this equitable productive employment strategy for the sectoral distribution of labour and capital and for the income distribution and compares it with alternative scenarios the basic results show that an equitable productive employment strategy will not only raise absolute incomes of the poor but improve the income distribution whether measured by the relative income of the poorest 40 or perhaps more important of those who continue to obtain only low productivity employment evidence from some countries in the 1970s indicates that the strategy is feasible provided appropriate policies are pursued an important element in the strategy appears to be the maintenance of a demand for goods produced by the poor in this context the high growth of industry recommended in the ids for low income countries is likely to lead to increasing inequality this paper concludes with some broad policy recommendations for achieving the equitable productive employment target

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

inequality and democracy why inequality harms consolidation but does not affect democratization under what conditions do democracies emerge and consolidate recent theories suggest that inequality is among the leading determinants of both democratization and consolidation by contrast this article argues that inequality harms consolidation but has no net effect on democratization the author shows that the existing theories that link inequality to democratization suffer from serious limitations 1 they are useful only for understanding transitions from below and thus do not apply to many other transitions that is those from above 2 even for democratization from below their predictions are unlikely to hold since inequality actually has two opposite effects and 3 they ignore collective action problems which reduces their explanatory power however these objections do not affect the relationship between inequality and consolidation in particular while inequality has two opposite effects on the probability of transition to democracy it unambiguously increases the probability of transition away from democracy this article conducts the most comprehensive empirical test to date of the relationship between inequality and democracy it finds no support for the main democratization theories contrary to what they predict estimation suggests neither a monotonic negative nor an inverted u shaped relationship yet inequality increases the probability of backsliding from democracy to dictatorship

is aging harmful to the environment how does aging affect the environment we analyze this question using anoverlapping generations model featuring uncertain lifetimes andenvironmental externalities we show that whether aging is harmful to theenvironment depends on the curvature of utility function which ismeasured by the degree of relative risk aversion we also explore theimplication of the results for environmental policy in an aging society

modelling oecd industrial energy demand asymmetric price responses and energy saving technical change abstract the industrial sector embodies a multifaceted production process consequently modelling the derived demand for energy is a complex issue made all the more difficult by the need to capture the effect of technical progress of the capital stock this paper is an exercise in econometric modelling of industrial energy demand using panel data for 15 oecd countries over the period 1962 2003 exploring the issue of energy saving technical change and asymmetric price responses although difficult to determine precisely it is tentatively concluded that the preferred specification for oecd industrial energy demand incorporates asymmetric price responses but not exogenous energy saving technical change

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

education democracy and growth abstract this note presents a model of endogenous growth where redistribution determined by a political equilibrium is in the form of public education it is shown that there need not be a negative relationship between growth and redistribution as public education increases the level of human capital in the conomy and at the same time tends to produce a more even income distribution

economic determinants of democracy the relationship between the level of economic development and the level of democracy found in most quantitative cross national research implies that the largest gains in democracy are experienced by countries at intermediate levels of development during the 1960s and 1970s however middle income countries were more likely to register declines in democracy than increases i explain this anomaly with the hypothesis that income inequality affects democracy and this effect often counteracts the positive influence of economic development because intermediate levels of economic development are associated with the highest levels of income inequality the independent negative effect of income inequality on change in level of democracy explains the declines in democracy in middle income countries cross national data from a sample of 58 countries support the hypothesis of a negative effect of income inequality on change in level of democracy from 1965 to 1980 this effect is robust when noneconomic determinants of democracy are taken into account and when sample size is increased

did unilateral divorce raise divorce rates evidence from panel data since early 1996 at least eight states have begun to consider rolling back unilateral and no fault divorce a major reversal of the liberalizing trend in divorce laws which began around 1970 the proponents of tightening the divorce regime often argue that making divorce more difficult will strengthen families however both theoretical and empirical evidence is decidedly mixed over whether the no fault revolution actually contributed to the sharp increase in divorce rates in the united states observed over the last 30 years in this paper i address the dispute by using a panel of state level divorce rates including state specific trends allows unobserved state divorce propensities to trend linearly and even quadratically over time and reveals that unilateral divorce raised divorce rates significantly and strongly excerpt

intra generational equity and sustainable welfare a time series analysis for the uk and sweden this paper discusses the importance of intra generational equity to sustainable development it outlines a number of methodologies for measuring income inequality in the economy and presents several possible ways of incorporating the impact of distributional effects into measures of welfare in the economy the authors highlight in particular an index developed by atkinson atkinson a b 1970 distributive politics and economic growth q j econ may 465 490 based on the social welfare model this method possesses two main advantages over other methods firstly it is expressed directly in terms of social well being secondly value judgements incorporated into the measure are made explicit through the parameter o which expresses society s degree of aversion to income inequality the paper calculates the value of the atkinson index for two case study countries sweden and the uk between 1950 and 1996 for a central estimate of o0 8 the results show that the welfare loss due to inequalities in the distribution of income varied between 5 and 10 for sweden and between 6 and 14 for the uk with the higher values coming towards the end of the period the paper explores the sensitivity of these results to changes in the value of o for the case of the uk and discusses the relevance of the work to the measurement of sustainable welfare 2000 elsevier science b v all rights reserved

the failure of input based schooling policies in an effort to improve the quality of schools governments around the world have dramatically increased the resources devoted to them by concentrating on inputs and ignoring the incentives within schools the resources have yielded little in the way of general improvement in student achievement this paper provides a review of the us and international evidence on the effectiveness of such input policies it then contrasts the impact of resources with that of variations in teacher quality that are not systematically related to school resources finally alternative performance incentive policies are described

the effects of government spending on deforestation due to agricultural land expansion and co2 related emissions this paper examines the effect of changes in government spending level and composition on deforestation due to agricultural land expansion and related carbon dioxide emissions our theoretical model shows an unintended consequence from increased government spending and widening social safety nets in developing countries where agricultural land expansion significantly affects forest cover there is an increase in deforestation and carbon dioxide emissions from land use change our empirical tests show that an increase in total government spending significantly increases forest land clearing for agricultural production in the short run leading to more carbon dioxide emissions however there is no long run statistically significant effect on the steady state forest cover and carbon dioxide emissions

politics and inequality in latin america and the caribbean this article presents the first pooled time series analysis of the impact that politics and policy have on inequality in latin america and the caribbean the authors build on models consisting of sociological and economic variables adding the strength of the democratic tradition long term legislative partisan political power distribution and social spending to explain variation in inequality they analyze an unbalanced pooled time series data set for income distribution in 18 latin american and caribbean countries from 1970 to 2000 they show that the political variables add explanatory power a strong record of democracy and a left leaning legislative partisan balance are associated with lower levels of inequality as are social security and welfare spending under democratic regimes thus they replicate some and modify other well established findings from studies of organization for economic cooperation and development oecd countries in the very different context of latin america and the caribbean

economic inequality and its socioeconomic impact abstract income inequality is of fundamental interest not only to economists but also to other social scientists a substantial literature in economics and the social sciences has investigated the relationship between income inequality and economic growth and a variety of social phenomena the links between inequality and economic growth are explored as well as those between inequality and such key social variables as political conflict education health and crime the analysis in this paper follows a two step process first a review of the empirical evidence relating inequality to growth and to each of the above social variables is undertaken second the various causal mechanisms that have been proposed in the social science literature to explain those links are surveyed

public goods and the distribution of income abstract this article addresses conceptual issues concerning the distributive incidence of public goods solutions depend on the specific purposes for asking the question of distributive incidence notably assessing the extent to which various public goods should be provided determining how the provision of public goods affects the desirability of income redistribution and providing a meaningful description of the distribution of well being in the course of the analysis a simple and intuitive version of the benefit principle of taxation qualitatively different from those commonly advanced in pertinent literatures is presented and some of the problems confronting empirical attempts to measure the distributive incidence of public goods are resolved

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

economic openness democracy and income inequality an empirical analysis scholars have studied effects of economic openness and democracy on national income inequality in two literatures in democracy studies scholars agree democracy reduces inequality but empirical evidence is ambiguous in globalization studies effects of economic openness on inequality are debated but have not been rigorously examined this article is the first systematic statistical study of the effects of both economic openness and democracy on income inequality these effects need to be studied together the authors measure national income inequality from a comprehensive gini coefficient data set economic openness is measured from trade flows foreign direct investment inflows and financial capital inflows the period studied is 1960 to 1996 the unit of analysis is a country decade and the sample includes 69 countries the authors find that democracy and trade reduce income inequality foreign direct investments increase income inequality and financial capital does not affect income inequality policy implications are discussed

should governments stop subsidies to private goods evidence from rural latin america abstract this paper empirically documents the effects of subsidizing private goods to the detriment of the government s supply of public goods we use a new data set from the rural sector in fifteen latin american countries over the period 1985 2001 collected using a methodology that allows us to separate government subsidies to private goods from expenditures in the provision of public goods the econometric evidence shows that the government s decision to subsidize either private or public goods has dramatic consequences for economic development reducing the share of subsidies to private goods or equivalently increasing the share of public goods in the government s budget has ceteris paribus a large and significant positive impact on rural per capita income reduces certain undesirable environmental effects associated with output expansion and contributes to poverty reduction

why has europe become environmentally cleaner decomposing the roles of fiscal trade and environmental policies this paper examines the role of fiscal policy trade and energy taxes on environmental quality in europe using disaggregated data at the monitoring station level for the 12 richest european countries spanning the period from 1995 to 2008 our estimations show that fiscal policies and energy taxes are important determinants of pollution through various mechanisms we find that increasing the share of fiscal spending in gdp and shifting the emphasis towards spending in public goods and against non social subsidies significantly lower the concentrations of sulfur dioxide and ozone but not nitrogen dioxide at the same time energy taxes reduce nitrogen dioxide concentrations but have no effect on ozone and sulfur dioxide finally trade openness has a direct effect on sulfur dioxide but no effect on nitrogen dioxide or ozone our estimates account for time varying unobserved heterogeneity

slow development and special interests this article argues that a natural implication of an innovation based theory of growth is that slow development facilitates the formation of special interest groups we demonstrate this in a growth model where innovations take the form of new goods and new production processes and where factor suppliers in individual industries can organize to form rent extracting special interest groups we then examine the effect these groups have on an economy s subsequent development we find that these groups can retard an economy s development for extended periods but not permanently their long run effect is to increase the volatility of the development process

income inequality development and dependence a reconsideration we reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross national research on foreign capital penetration we analyze an unbalanced cross national data set in which countries contribute different numbers of observations with a maximum of 88 countries and 488 observations dated from 1967 to 1994 random effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality measured as the gini coefficient against the background of an internal developmental model of inequality we adapt firebaugh s 1992 1996 critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by firebaugh we explore tsai s 1995 claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region specific differences an alternative interpretation of the findings of the foreign investment inequality literature is discussed in light of the discovery of an inverted u shaped relationship between income inequality and foreign investment stock per capita we conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment development path relating the inflow and outflow of foreign capital to economic development

youth employment policies in france abstract in this paper we present a summary of recent microeconometric results on the evaluation of the effects of active labor market policies on youth employment in france we focus our discussion on three types of policies 1 youth employment schemes for out of employment and low skilled young adults 2 on the job training schemes 3 payroll tax subsidies for minimum wage workers training programs for unemployed young workers have in general no effects on post training wages or employment probabilities except if they have a large training content in contrast the reduction of labor costs have significant effects on employment probabilities of low wage workers however their effects appear to be stronger for workers between 25 and 30

landownership concentration and the expansion of education we study the relationship between large landownership concentration and the expansion of mass education in nineteenth century prussia cross sectional estimates show a negative association between landownership concentration and enrollment rates fixed effects panel estimates indicate that regions with an initially stronger landownership concentration exhibit increasing enrollment rates this relationship is not driven by differences in the supply of schooling we argue that the implementation of agricultural reforms including the stepwise abolition of serfdom is an important driver of the change in enrollment the results are consistent with the interpretation that emancipation from labor coercion increased the private demand for education

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

does liberte egalite a survey of the empirical links between democracy and inequality with some evidence on the transition economies the effect of the distribution of political rights on income inequality has been studied both theoretically and empirically the authors review the existing literature and in particular the available empirical evidence the literature suggests that formal exclusion from the political process through restrictions on the voting franchise appears to have caused a high degree of economic inequality and democratization in the form of franchise expansion has typically led to an expansion in redistribution at least in the small sample of episodes studied in a less pronounced way albeit more emphatically compared with the ambiguous results of earlier research recent evidence indicates an inverse relationship between other measures of democracy based on civil liberties and political rights and inequality the transition experience of eastern european countries however seems to some extent go against these conclusions this opens possible new vistas for research namely the need to incorporate the length of democratic experience and the role played by ideology and social values

a future for carbon taxes abstract carbon taxes have been frequently advocated as a cost effective instrument for reducing emissions however in the practice of environmental policies only six countries have implemented taxes based on the carbon content of the energy products in this paper we evaluate carbon taxes with regard to their competitiveness distributional and environmental impacts the evidence shows that carbon taxes may be an interesting policy option and that their main negative impacts may be compensated through the design of the tax and the use of the generated fiscal revenues

the survival of the welfare state this paper provides an analytical characterization of markov perfect equilibria in a model with repeated voting where agents vote over distortionary income redistribution a key result is that the future constituency for redistributive policies depends positively on current redistribution since this affects both private investments and the future distribution of voters the model features multiple equilibria in some equilibria positive redistribution persists forever in other equilibria even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period skill biased technical change makes the survival of the welfare state less likely

democracy stability and dichotomies an early debate in the empirical study of political democracy concerned the measurement of democracy initial work employed dichotomous indicators and incorporated stability into political democracy measures evidence accumulated showing that this approach could adversely affect analyses particularly in the study of income inequality despite this some recent studies have renewed the flawed practices we draw upon recent work to highlight the confusion that can result when democracy and stability are confounded and the problems with dichotomous indicators we propose that stability is analytically distinct from political democracy and should be treated as such empirically and we suggest ways to estimate incremental effects of political democracy we further argue that political democracy is continuous and that measures of it should reflect this it is important that the measurement history of this construct not repeat itself

calculation and decomposition of income inequality in low and middle income countries a survey data analysis this article estimates income inequality in a sample of four low and middle income lmi countries namely albania nepal tajikistan and tanzania using the household survey data nepal living st

median voter equilibria in the neoclassical growth model under aggregation we study a dynamic version of meltzer and richard s median voter model where agents differ in wealth taxes are proportional to income and are redistributed as equal lump sum transfers voting occurs every period and each consumer votes for the tax that maximizes his welfare we characterize time consistent markov perfect equilibria twofold first restricting utility classes we show that the economy s aggregate state is mean and median wealth second we derive the median voter s first order condition interpreting it as a tradeoff between distortions and net wealth transfers our method for solving the steady state relies on a polynomial expansion around the steady state

inequality and political violence revisited in their 1987 article in this review muller and seligson used logged ordinary least squares lols to estimate the effect of income inequality on cross national levels of deaths by political violence t y wang challenges the robustness of the main conclusion and argues for the application of a maximum likelihood approach the exponential poisson regression epr model rather than lols he concludes that the widely used lols approach yields misleading conclusions when applied to event count data dixon muller and seligson replicate previous work using both lols and epr approaches and conclude that in most but not all respects the two approaches yield similar results supporting the effect of inequality when the specifications are identical they also argue in response to concerns expressed by brockett 1992 that the inequality results are robust when account is taken systematically of the best information on underreporting of deaths

the effects of annuities bequests and aging in an overlapping generations model of endogenous growth we examine the effects of introducing actuarially fair annuity markets into an overlapping generations model of endogenous growth the complete annuitisation of agents wealth is not in general dynamically optimal the degree of annuitisation that is dynamically optimal depends nonmonotonically on the expected length of retirement and on the pay as you go social security tax rate the government has an incentive to restrict the availability of actuarially fair annuities contracts and can often move the economy from a pay as you go to a fully funded social security system via voluntary contributions to a government sponsored actuarially fair pension today accompanied by reductions in social security taxes tomorrow

limits and cycles of environmental policy the olg model analyzes emissions of an accumulative pollutant in a laissez faire economy and an economy regulated through a government controlled license market the government either takes the price on the license market as given or sells the licenses demanded at the cournot price the first type of regulation is called a liberal environmental policy and the second type a monopolistic environmental policy the forward looking temporary and the stationary equilibria as well as the pollution boundaries of the mechanisms are studied if people can choose between laissez faire and regulation or between the liberal and the monopolistic environmental policy regime then in general no steady state exists instead endogenous policy cycles can alternate between laissez faire and regulation or between liberal and monopolistic regulation

the political economy of pollution taxes in a small open economy abstract this paper develops a positive theory explaining pollution tax policy outcomes in a small open economy the equilibrium tax rate depends on lobby group membership the relative importance of lobbying activities and the tax elasticity of pollution the equilibrium properties are investigated the model is extended to incorporate pollution abatement and a pollution abatement subsidy we show that total pollution may be increasing in the pollution abatement subsidy rate this effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium

income inequality and democratization revisited comment on muller m uller s 1995 conclusion that income inequality has a major impact on rates of democratization continues a line of thought from muller 1988 and muller and seligson 1994 and is at odds with our earlier empirical results bollen and jackman 1985a the major difference between muller 1988 and muller 1995 is that he is now more concerned with accounting for changes in democracy whereas in the earlier paper he sought to explain years of stable democracy to measure change in political democracy muller 1995 uses 1965 and 1980 measures of democracy developed by bollen 1980 1993 in lieu of his own earlier years of stable democracy measure muller s analysis is not compelling on two counts first he fails to provide a convincing rationale for the hypothesized link between inequality and rates of democratization second using his data we find that his results are not robust but instead are sensitive to plausible respecifications of the model

intergenerational altruism and the environment we construct an overlapping generations model of pollution externality in which individuals are altruistically linked to their offspring as in barro 1974 it is shown that steady state consumption may be a decreasing function of the intergenerational degree of altruism despite individuals altruism the competitive equilibrium is not optimal we thus study the social optimum and show that it can be decentralized

income distribution and poverty an interregional comparison abstract this paper compares experiences in economic growth income distribution and poverty in different regions of the world it examines the causes of interregional disparities in growth and distribution assessing the nature of the link between growth and distribution among other results it concludes that low inequality is most likely to be consistent with sustainable growth and that positive growth is neither a sufficient nor a necessary condition for low inequality or poverty incidence in the context of the new global economy alleviation of inequality and poverty calls for an articulate strategy targeting on the marginalized population at large

income inequality democracy and public sector size this study synthesizes and tests explanations of how public sector size and democracy affect income inequality the results based on unbalanced panel data for 64 developing and developed countries

inequality growth and environmental quality trade offs in a model with human capital accumulation this paper develops a simple endogenous growth model where pollution exposure and vulnerability are unequally spread across the population and growth and distribution are endogenous in this set up we investigate whether trade offs between growth distributional and environmental concerns may emerge we show that a tighter environmental policy reduces income inequality and can improve both growth and total welfare immediate welfare losses though do occur and are larger for countries that start at low levels of environmental quality e g developing countries inegalite croissance et qualite de l environnement arbitrages dans un modele d accumulation de capital humain nous developpons un modele de croissance endogene ou l exposition et la vulnerabilite a la pollution sont inegalement reparties dans la population et ou la croissance et la distribution des revenus sont determinees de facon endogene dans ce cadre d analyse nous cherchons s il existe des arbitrages entre la croissance les inegalites et l environnement notamment dans les pays en developpement nous montrons qu une politique environnementale plus stricte conduit a la fois a une reduction des inegalit es et a une augmentation de la croissance et du bien etre dans un premier temps cependant ce changement de politique conduit a une reduction du bien etre qui est relativement plus importante pour les pays dont la qualite environmentale est initiallement faible e g les pays en developpement

the political economics of not paying taxes this paper considers redistributive as well as political consequences of tax avoidance when tax avoidance is possible the official tax rate does not necessarily correspond to what individuals actually pay this affects both redistributive outcomes as well as political attitudes towards taxation depending on the avoidance technology different political equilibria emerge when the avoidance possibilities are limited the classical conflict between rich and poor is sustained if the tax avoidance technology is more effective however the equilibrium outcome can change to a situation where a coalition of poor and the very richest favor a higher tax rate comparing the model predictions with data on income inequality and evidence of avoidance activity it comes surprisingly close to actual observations

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

an overlapping generations model of growth and the environment this article analyzes the potential conflict between economic growth and the maintenance of environmental quality in an overlapping generations model short lived individuals make decisions which have long lasting effects on both factor productivity and the environment the model provides a theoretical explanation of observed correlations between environmental quality and income whereby economic growth is associated first with declines then improvements in environmental quality it suggests circumstances in which multiple pareto ranked steady state equilibria may arise and in which sustained growth of both capital and environmental quality may occur overmaintenance of the environment analogous to dynamically inefficient overaccumulation of capital may emerge copyright 1994 by royal economic society

solving the mystery of the africa dummy abstract most empirical studies have reported a negative effect on growth of being an african country even when accounting for ethnic heterogeneity modeling policy choices has reduced this effect in recent studies but these have begged the question of why africa appears adverse to developmental policies this paper uses a cross sectional data set to show that the governments of arbitrary postcolonial states as are most african states face substantial limitations to their power and are constrained in their responses deriving greater relative power payoffs from neo patrimonial than from developmental policies differing levels of state legitimacy account therefore largely for the policy choices which characterize most of africa

public goods merit goods and the relation between private and government consumption in this paper we investigate the relation between public and private consumption by constructing a general government spending data set by function for 12 european countries in particular we split government consumption into two categories the 1rst category public goods includes defence public order and justice the second category merit goods includes health education and other services that could have been provided privately equations from a relatively general permanent income model are estimated by gmm the estimates are fairly robust in showing that public goods substitute while merit goods complement private consumption however the relation between merit goods and private goods turns out to be stronger than that between public goods and private goods thus in the aggregate government and private consumption are complements c