Global inequality and international trade

The paper analyses the effect of widespread trade liberalisationon global income inequality. The analysis of the trend in globalinequality during 1981–97, presented in the first partof the paper, shows that the apparent growth of income inequalityamong countries conceals a process of convergence. Some developingcountries achieved significantly faster economic growth thanthe advanced industrialised countries and, though small in number,they actually account for a majority of the population of thedeveloping world. Thus international inequality (i.e., the inequalityof distribution of per capita incomes among the world's population)in fact declined even though the inter-country income inequalityincreased. The analysis in the second part of the paper shows(i) that while improved trade performance did have a stimulatingeffect on growth performance of countries, trade liberalisationhad extremely varied effects on trade performance across countries,and (ii) that the distribution of benefits and costs of tradeliberalisation across countries has been such as to reduce internationalinequality without affecting inter-country inequality.     

Inequality and Economic Growth: A Global View Based on Measures of Pay

This paper discusses two issues in the relationship betweeninequality and economic growth: the data and the econometrics.We first review the income inequality data set of Deiningerand Squire (D&S), which, we argue, fails to provide eitheradequate or accurate coverage, whether through time or acrosscountries. We then introduce our own measures of the inequalityof manufacturing pay, based on UNIDO's Industrial Statistics.These provide indicators of pay inequality that are more stable,more reliable and in our view also more comparable across countries,than the D&S data. Turning to the fabled "Kuznets" relationship between inequalityand economic development, we diagnose several common econometricproblems in the literature, including measurement error andomitted variable bias. By taking steps to account for theseproblems, and by introducing a more complete panel data setbased on pay inequalities, we seek more reliable inferencesconcerning the relationship between inequality, national incomeand economic growth. We find evidence that generally supportsKuznets' specification for industrializing countries: pay inequalitytends to decline as per capita income increases, though withsome tendency for the relationship to curve up for the richestcountries. After 1981 two findings emerge. First, per capitaGDP growth slowed dramatically in most countries, increasinginequality along the augmented Kuznets curve. Second, thereis a global and macroeconomic effect that produces rising inequalityin our data, independent of GDP or its changes. The timing ofthis effect suggests a link to the high real interest ratesand global debt crisis of the period beginning in 1982. (JELC23, D31, J31, O11)     

All About the Giants: Probing the Influences on World Growth and Income Inequality at the End of the 20th Century

This paper presents estimates of world output growth from 1970to 2000, the distribution of income among countries and personsfor the years 1980, 1990 and 2000, and world income povertyrates for the same years. It also presents the results of aseries of simulation exercises that attempt to isolate the effectof particular country and regional experiences on world outputgrowth and changes in global income inequality and poverty. The authors find that rapid growth in China (despite a downwardadjustment of official growth estimates) had a powerful impacton the growth of world output in both the 1980s and 1990s, butthat negative economic growth in Eastern Europe more than offsetthat effect in the 1990s. With respect to the distribution ofworld income between countries, the impressive growth performancesof the worlds most populous countries, China and India, ensureddecreasing levels of inequality during both the 1980s and 1990s.When the distribution of world income between persons is measured,the equalizing effect of China's rapid growth remains dominantthrough both the 1980s and 1990s, despite the contradictoryimpact of increasing domestic inequality. Only India's influenceremained substantial by comparison. Other identifiable eventsof the period, such as the economic contraction in Eastern Europeand continued economic decline in Africa, had little statisticalimpact. However, when the combined influence of China and India'sabove-average growth rates is removed, or their size effectdampened, the improving global distribution of (inter-countryand inter-personal) income suggested by all statistical measuresbecomes one of sharply worsening inequality. The impact of thesetwo countries is similarly critical with respect to global povertyreduction. (JEL F0, I3, O4)     

财政分权、城乡收入差距与经济增长

利用1994年分税制后的经验数据,本文估计了一个包含增长方程、城乡收入差距方程和财政支出方程的联立方程模型,来估算财政分权对经济增长和城乡收入差距的影响。研究结果表明,财政分权使地方政府的财政支出显著增加,但财政支出的增加并不必然有利于经济增长和拉大城乡收入差距。如果在地方财政支出水平上升的同时,使科学教育和农业支出,特别是科学教育支出在总支出中的比重得以增加,将有可能在保持经济高增长的同时,使城乡收入差距得以缩小。     

Economic information versus quality variation in cross-country data

Data quality in the Penn World Tables varies systematically across countries that have different growth rates and are at different stages of economic development, thus introducing measurement error correlated with variables of economic interest. We explore this problem with three examples from the literature, showing that the problem appears to be minor in growth convergence regressions but serious in estimating the effect of income volatility on growth and in a cross-country test of the Permanent Income Hypothesis. The results suggest, at the least, a need for performing appropriate sensitivity tests before drawing conclusions from analyses based on these data. JEL Classification: E21, O47     

GROWTH,INEQUALITY, AND ECONOMIC FREEDOM: EVIDENCE FROM THE U.S. STATES

This article returns to the discussion of how income inequality affects economic growth. The main argument of the article is that economic freedom is likely to mediate the association between inequality and growth. In a panel of 300 observations from six 5‐year periods across the 50 U.S. states, I employ five different measures of inequality. The results show that across measures, the growth effects of inequality turn more positive with more economic freedom. The moderating effects are mainly driven by measures of public sector consumption. (JEL O11, O38, O43, P48)     

Has Globalization Increased Inequality?*

There is no shortage of theories that purport to explain why globalization may have adverse, insignificant, or even beneficial effects on income and earnings inequality. Surprisingly, the empirical realities remain an almost complete mystery. In this paper, we use data on industrial wage inequality, household income inequality as well as measures of the economic, social and political dimensions of globalization to examine this controversial issue. Overall, while we find that globalization has exacerbated inequality; this is particularly true in the case of income inequality in OECD countries.     

Nature, Power and Growth

This essay reviews the relationship between natural–resource abundance and economic growth around the world, and presents some new results. The principal reasons why resource–based production can inhibit economic growth over long periods are traced to the Dutch disease, neglect of education, rent seeking, and economic policy failures. Across a large number of countries in the period from 1965 to 1998, the share of the primary sector in the labour force is shown to be inversely related to exports, domestic and foreign investment, and education, and directly related to external debt, import protection, corruption, and income inequality. The cross–sectional data show, moreover, that the share of the primary sector in the labour force is inversely related to per capita growth across countries. None of this lies in the nature of things, however. What seems to matter for economic growth is not the abundance of natural resources per se, but rather the quality of their management, and of economic management and institutions in general.     

Trade,growth and income redistribution: A case study of India

The concern of this exercise is with the effectiveness of trade policies and their assessment in achieving economic growth and income equality. A link between growth and equality is provided through employment. If there is substantial increase in employment, the inequality of income distribution is likely to be reduced. Thus, trade by bringing about higher levels of production and employment may reduce income inequality. We have applied a closed input-output model to the Indian data to estimate the interrelationships between trade, growth and income redistribution. It has been found that employment opportunities could be raised substantially through redistribution as well as through export promotion in developing countries such as India, if capital and foreign exchange constraints are not binding. Import substitution, however, does not turn out to be as effective a strategy to achieve these goals.     

如何实现经济增长的效率和公平双目标?——基于联立方程模型的研究

如何在保持经济快速增长的同时使收入差距得以缩小,实现效率与公平的双目标,是当前我国经济发展中急需解决的重要问题。文章在分析我国经济增长和收入差距关系内在机制的基础上,建立了一个同时考察经济增长和收入差距影响因素的联立方程模型。省级面板数据的估计结果表明,教育和非国有化既能促进经济增长,也有利于收入差距的缩小,并且该结果对于模型的不同设定具有稳健性。因此,增加教育投资,提高人力资本的存量水平,进一步促进非国有经济的发展,是实现我国经济发展的效率和公平双目标的有效途径。     

论公平经济增长

目前,中国的基尼系数已经达到0.48,超过了收入差距过大的警戒线.居民收入差距过大,可从三个方面影响中国经济的增长:(1)居民收入差距过大通过减少消费需求来减少有效需求;(2)居民收入差距过大导致人们教育投入的不平衡影响经济发展的动力;(3)居民收入差距过大容易导致社会不稳定,影响经济发展的外部环境.我们应该采取相应对策,实现公平经济增长.     

Non‐linear finance–growth nexus

This paper revisits the question of whether the finance–growth nexus varies with the stages of economic development. Using a novel threshold regression with the instrumental variables approach proposed by Caner and Hansen (2004) to the dataset used in Levine et al. (2000) we detect overwhelming evidence in support of a positive linkage between financial development and economic growth, and this positive effect is larger in the low‐income countries than in the high‐income ones. The data also reveal that financial development tends to have stronger impacts on capital accumulation and productivity growth in the low‐income countries than in the high‐income ones. The findings are robust to alternative financial development measures and conditioning information sets.     

ICT and income inequality: a cross-national perspective

The importance of information and communications technology (ICT) for economic growth and development is widely researched and seemingly well understood, but the effect of such investments on income inequality is less well documented. On the one hand, improvements in infrastructure are expected to expand economic opportunities for previously underserved populations. On the other hand, ICT growth may exacerbate inequality due to differential access and skill premiums. We use panel data from 109 countries during the period 2001–2014 to examine the empirical connection between ICT and income inequality in a cross-national context. Our results suggest that the effect of ICT on income inequality depends both on the specific type of ICT and on the measure of income inequality. In addition, the magnitude of ICT’s effect on income inequality is comparable to that of more traditional forms of economic infrastructure. Finally, we find that the association between ICT and income inequality is conditional on other economic and political characteristics.     

Population increase,economic growth,educational inequality,and income distribution: some recent evidence

The relationship between population increase, economic growth, education and income inequality was examined in a cross-section study based on data from 26 developing and 2 developed countries. As other studies have noted, high population growth is associated with a less equal income distribution. A 1 percentage point reduction in the rate of population growth tends to raise the income share of the poorest 80% in the less developed world by almost 5 percentage points and is associated with a 1.7 percentage point increase in the income share of the poorest 40%. The relationship between short-run income growth and equality, on the other hand, is strong and positive. Estimates suggest that a 1 percentage point increase in the short-run rate of growth of the gross domestic product (GDP) increases the income share of the bottom 80% by about 2 percentage points and that of the poorest 40% by almost 1 percentage point. Although higher mean schooling appears to be a mild equalizer, educational inequality does not appear to have an adverse effect on income distribution. Overall, these results challenge the widely held belief that there must be a growth-equity trade-off. Moreover, they suggest that the impact of educational inequality on income distribution may be different from that observed in earlier studies, implying a need for caution in using these earlier results as a basis for educational policy development.     

An empirical characterization of the effects of public debt on economic growth

Based on a data set of 115 economies, this article empirically investigates the relation between public debt and economic growth. Using the World Bank’s classification for income groups, we initially find that those countries that present the lowest public debt are characterized by the highest economic growth, while the smallest growth rates are associated with the highest public debt. Nevertheless, this conclusion is tempered when we analyse the countries by income level: low-income countries have a different behaviour with respect to lower-middle, upper-middle and high-income countries. When using the IMF’s country classification, the results do not suggest a clear pattern in the public debt–economic growth nexus across different countries, but indicate a heterogeneous relationship between such key macroeconomic variables.     

The long-term consequences of external debt: Revisiting the evidence and inspecting the mechanism using panel VARs

We estimate a panel vector autoregression model to examine the relationship between external debt and economic growth. We use a large dataset based on 123 countries, classified according to income levels over the period 1990–2015. While total external debt appears to have a negative effect on growth rate overall, it is positively associated with income growth in the lower- and upper-middle income countries. Further disaggregating external debt into its components reveals that public external debt negatively affects economic growth across all income categories of countries, whereas the impact of private external debt is not statistically significant. We do not detect a common threshold level in the relationship between public debt and economic growth across countries. Savings and investment are the primary channels through which external debt impacts economic growth. These results are robust to various model specifications, additional controls, and identifying restrictions.     

INCOME DISTRIBUTION AND ECONOMIC GROWTH IN PUERTO RICO,ARGENTINA, AND MEXICO*

Has economic growth in developing countries led to increasing inequality in the size distribution of income? Following a brief review of the advantages and deficiencies of several traditional measures of income distribution, the author examines the evidence from Puerto Rico, Argentina, and Mexico in recent years. The findings suggest that the income shares received by the lower half and by the top 5 per cent of families in Puerto Rico and Mexico have declined from 1950 to 1963, while the income shares received by the bottom nine deciles of families in Argentina have also fallen during the same period. The rising Gini ratio and standard deviation of the logs of income, both indicating greater inequality, contrast with a declining coefficient of variation for all three countries. More detailed sectoral distributions for each year reveal greater equality within agriculture than non-agriculture for Puerto Rico and Mexico, while Argentina and the United States demonstrate less equality within agriculture. The trends in the countrywide distributions are consistent with the observation of the increasing differential between sectors, the increasing weight of the more unequal sector, and the increasing level of inequality within both sectors. These trends, however, are qualified by the particular set of measures which are applied to the data. Finally, the author speculates on possible explainations for these trends in terms of changes in the crop and industry mix.     

The impact of macroeconomic factors on income inequality: Evidence from the BRICS

In this paper we investigate how the evolution of income growth, real interest rates, and inflation have driven income inequality across a variety of countries with particular focus on the BRICS economies (Brazil, Russia, India, China, and South Africa) during the period 2001 to 2015. Our work suggests that, when central banks of the BRICS economies use monetary policy for macroeconomic stabilization, they need to consider the impact monetary policy changes have on the distribution of income in their nations. Our estimates reveal that the unintended consequence of policies that induce economic growth and higher prices is higher income inequality. We find that the positive relationship between the three macroeconomic variables and income inequality for the BRICS economies is stronger during the post-2008 period.     

储蓄倾向差异、要素收入分配 和我国产业结构升级*

高储蓄率、要素收入分配不平等和产业结构升级是我国经济增长过程中三个典型事实。本文构建一个非平衡增长模型表明这三者是一个自洽的系统,存在相互制约和矫正关系。在我国劳动收入和资本收入的储蓄倾向不同与劳动收入占比较低的背景下,高储蓄会出现两个相反地影响产业结构的动力。一方面,高储蓄转化的高投资更多体现为工业品,阻碍了服务业发展,同时,高储蓄导致的低消费使得恩格尔效应无法发挥作用,阻碍了产业结构升级;另一方面,高储蓄导致高投资,推动了资本深化,这又促进了产业结构升级。产业结构变迁又反过来影响社会储蓄率和要素收入分配。文章证明这个系统存在一个广义平衡增长路径。     

Natural resources,education, and economic development

Economic growth since 1965 has varied inversely with the share of natural capital in national wealth across countries. Four main channels of transmission from abundant natural resources to stunted economic development are discussed: (a) the Dutch disease, (b) rent seeking, (c) overconfidence, and (d) neglect of education. Public expenditure on education relative to national income, expected years of schooling for girls, and gross secondary-school enrolment are all shown to be inversely related to the share of natural capital in national wealth across countries. Natural capital appears to crowd out human capital, thereby slowing down the pace of economic development.