THE EFFECT ON POVERTY STATUS IN ISRAEL OF CONSIDERING WEALTH AND VARIABILITY OF INCOME

This paper assesses the effects of including wealth and the variability of income on the incidence of poverty and the degree of income inequality in Israel. A special survey, which includes data on the wealth and income of a national sample of Israeli families in 1963–64 and 1964–65, allows us to go beyond measures based on current income alone.
The first section reviews earlier studies of poverty in Israel. The next section looks at poverty and inequality in terms of current income, current wealth, and a combined measure of income and wealth. The combined measure is the Hansen-Weisbrod measure (HW), which equals income plus the annuity value of wealth, assuming all wealth is just consumed at the time of death. It is interesting that, in spite of the much higher wealth inequality than income inequality, the HW measure was slightly more equally distributed than income. This result occurred because the annuity component made up a low share of the total HW measure and the correlation between income and wealth was well under 1. Although overall inequality and poverty were similar for income and HW measures, the incidence of poverty by subgroup depended on the measure used.
The final section presents a dynamic view of poverty and inequality. Year-to-year changes in poverty were substantial. Because of the use of a relative poverty concept and the rise in real incomes, the real income poverty line rose by 15 percent between 1963 and 1964. Still, of those in income poverty in 1963, 37 percent managed to escape poverty in 1964. The paper shows how the degree to which poverty was stable or transitory varied substantially by age and country of origin.     

Do inward looking trade policies affect poverty and income inequality? Evidence from Indonesia's recent wave of rising protectionism

Unlike previous studies which often focus on trade liberalisation, this paper examines the impact of protectionism in the form of import tariffs and mineral export taxes on rural and urban poverty and income inequality for the first time. Using a dynamic computable general equilibrium model on Indonesia, mineral export taxes were found to adversely affect urban and rural poverty but income inequality hardly changed as the decline in income in the higher income group is not significantly different to the decline in low income groups. However, if smelters for mineral ore are developed, then there is not only a fall in poverty, more so for the rural than urban, but there is some decline in income inequality. On the other hand, although the current imposed import tariffs do not affect poverty or income inequality, any further increases from the current low average MFN applied rates, will see a rise in rural and urban poverty and income inequality. By and large, any small improvements in the trade balance brought upon by the mineral tax and import tariffs are more than outweighed by the substantial decline in real household consumption expenditure due to falls in employment and wages, thereby leading to a fall in GDP growth.     

The impact of the Indonesian income tax reform: A CGE analysis

This study evaluates the impacts of Indonesia's recent income tax reforms on key macroeconomic variables, as well as the impacts on poverty and income distribution. It was found that the reductions in personal income tax and corporate income tax increase economic growth under a balanced budget assumption. The policy reforms also lead to a small reduction in the incidence of poverty. However, the policies also lead to an increase in income inequality because the tax cut is more beneficial to households in the highest income categories. It is recommended that future tax cuts should target the urban and rural poor.     

Negative income taxes,inequality and poverty

We use a neoclassical growth model with heterogeneous agents to analyze the redistributive effects of a negative income tax system, which combines a flat rate tax with a fully refundable credit (“demogrant”). We show that changing the demogrant‐to‐output ratio causes significant changes in the distribution of income. Specifically, we find that increasing the demogrant‐to‐output ratio sharply reduces the level of inequality as well as both relative and absolute poverty (all measured in terms of post‐tax total income). However, these reductions in inequality and poverty come at the expense of a significant reduction in output.     

POVERTY AND INCOME INEQUALITY IN LATIN AMERICA DURING THE 1980s

On average, poverty and income inequality increased in Latin America during the 1980s. Forty-six percent of the increase in poverty took place in the cities of Brazil alone, though part of this reflects the migration of poor rural inhabitants to urban areas. There is strong evidence that both income inequality and poverty mirrored the economic cycle, rising during recession and falling during recovery. Economies that grew (e.g. Colombia, Costa Rica) performed better with respect to poverty and income inequality than those that stagnated. In particular, countries that failed to stabilize effectively (e.g. Brazil, Peru) experienced substantial increases in poverty. Educational attainment has the greatest correlation with both income inequality and the probability of being poor. From a policy standpoint, there is a clear association between the provision of education, lessening of income inequality, and poverty reduction.     

Poverty decompositions with counterfactual income and inequality dynamics

Traditional poverty accounting decomposes changes in a country's poverty headcount ratio into changes in income and inequality. We argue that this approach is unsatisfactory from the perspective of policy analysis because it compares a country in two points of time without taking the country's initial situation, and hence its potential for poverty reduction, into account. We thus suggest comparing traditional poverty decompositions with a counterfactual situation. This counterfactual indicates what a country starting from its initial situation could be expected to achieve in terms of income, inequality, and, hence, poverty developments. We construct those counterfactuals by modeling income and inequality trends characterized by convergence and a “Kuznets” relationship between inequality and development. Parameters in those relationships are estimated using PovcalNet survey data from 144 countries and we construct our counterfactual poverty predictions for 71 developing countries. While there is overall a tight relationship between actual developments and counterfactuals, we identify several cases, where both deviate from each other and discuss the policy implications. We also check for commonalities in differently performing countries and find that those who fell particularly short of expectations often underwent political transition and state fragility.     

Evolutions in Consumption Inequality and Poverty in Greece: The Impact of the Crisis and Austerity Policies

Greece is the country hit hardest by the crisis and subsequent fiscal consolidation strategies, suffering a cumulative output loss of about 30 percent since 2008. The present paper presents evidence that along with declining average living standards, consumption inequality has seriously grown, fueled primarily by a disproportionate drop in the consumption levels of what can be considered the middle class. Although poverty has not significantly risen in relative terms, it climbs to around 45 percent once the poverty threshold is anchored to pre‐crisis levels. Furthermore, significant indirect tax hikes have further increased inequality in consumption expenditure. The paper also shows that several reforms launched in the name of reducing labor costs, broadening the tax base or rationalizing the targeting of social benefits have had detrimental effects on one of the most vulnerable population groups, namely families with children, thus implying that the social consequences of the crisis will be long‐lasting.     

A COMPARISON OF DISTRIBUTIONS OF ANNUAL AND LIFETIME INCOME: SWEDEN AROUND 1970.

The concern with income distribution has always mainly existed because of a concern with individuals' economic welfare. In recent years, the question has arisen whether the distribution of annual income—the distribution most often studied—is the best proxy for the distribution of economic welfare. Other measures, such as lifetime income, have been proposed instead.
The paper starts with a discussion of how to define and measure the distribution of lifetime income. By using a simulation model, which partly consists of estimated functions and partly of tax functions taken directly from tax laws, distributions of lifetime income, variously defined, are then constructed. These distributions are compared with each other, and with distributions of annual income. The simulations indicate that the distribution of lifetime income is considerably less unequal than the distribution of annual income. Whether inheritances are included or not seems to be of no importance for the inequality of lifetime income. If, on the other hand, we include the value of leisure time in lifetime income, inequality increases by about 10–15 percent. Distributions of income after tax have Gini coefficients which are approximately 25 percent less than the Ginis for the before-tax distributions. We thus find that the picture of inequality we get is very much dependent on which income concept we use.     

收入增长和分配对我国农村减贫的影响-方法、特征与证据

改革开放30年来,在农村居民收入水平快速增长的大背景下,农村减贫进程却表现出明显的波动性和不一致性。基于此,本文在贫困分解的基础上,运用贫困弹性的动态特征,从理论和实证的角度探讨了收入增长和收入分配对贫困减少的影响,解释上述问题。文章发现:(1)人均收入水平越高,贫困越有可能和收入不平等联系在一起;(2)收入不平等越严重的地区,贫困对收入不平等的反应越迟钝;(3)1998年是我国农村反贫困性质发生改变的拐点。文章建议,今后农村反贫困政策的重点应从以促进收入增长的开发式扶贫向以改善收入分配为重点的社会保护式扶贫政策转变。     

Redistributive effects of minimal equal sacrifice taxation

We examine the circumstances under which minimal equal sacrifice taxation reduces income inequality. Focusing on absolute sacrifice and relative inequality, we show that after tax incomes are more equally distributed than before tax incomes and that after tax inequality decreases with the revenue to be raised if and only if the elasticity of the marginal utility of income is decreasing. However, other things equal, after tax inequality is shown to decline as the utility function becomes more concave. We investigate next how these conclusions extend when one takes the absolute inequality view and considers that it is the relative loss in utility that has to be equalized across individuals.     

The Redistributive Effects of a Minimum Wage Increase in New Zealand: A Microsimulation Analysis

This paper examines the potential effects on inequality and poverty of a minimum wage increase, based on a microsimulation model that captures the details of household composition and the income tax and welfare benefit system and allows for labour supply responses. Results suggest that, largely due to the composition of household incomes, a policy of increasing the minimum wage has a relatively small effect on the inequality of income per adult equivalent person, and a money metric utility measure, using several inequality indices. Hence, the minimum wage policy does not appear to be particularly well targeted, largely due to many low wage earners being secondary earners in higher income households, while many low income households have no wage earners at all. These results are reinforced when allowing for wage spillovers further up the wage distribution. Nevertheless, a minimum wage increase can have a more substantial effect on some poverty measures for sole parents in employment.     

The Role of Banks in Shaping Income Inequality: A Within-Country Study

This paper investigates the role of banks in shaping income inequality. We extend the current literature on the banking–inequality nexus by examining a sample of 103 Italian provinces for the period 2000–2018. We find that a higher banking development decreases income inequality. From a methodological viewpoint, we aim to contribute to the current literature by both adjusting the index of income inequality for the presence of tax evasion in income data and applying different estimation approaches to control for endogeneity. Some policy implications emerge from the findings of this study.     

浅析贫困、经济增长与脱贫时间——基于中国城镇居民调查数据的分析

20世纪90年代以来，经济增长和收入分配不平等对于城镇人口脱贫时间产生了消极影响。研究发现，城镇贫困在1997年达到高峰，然后逐渐缓和；贫困人口的收入增长在初期能使脱贫时间迅速减少，但边际效果是递减的；贫困人口之间的收入分配不平等延长了脱贫时间，如果贫困人口的初始收入增加，则会明显缩短脱贫时间。     

A SYNTHESIS OF POVERTY LINE DEFINITIONS*

A fundamental point of discussion in poverty research is whether poverty is an absolute or a relative concept. If poverty is seen to be a situation of absolute deprivation, a poverty line will usually be defined to be independent of the general style of living in society. If poverty is considered to be a situation of relative deprivation, a poverty line will be defined in relation to the general style of living in society. The choice for one of these two approaches has important consequences for social policy, as absolute poverty may be reduced by economic growth, while relative poverty will only decrease when income inequality decreases. This paper suggests a poverty line definition that is not a priori meant to be either absolute or relative, but depends on the perception of poverty in society. If the poverty line is higher in countries with higher median income (as an indicator of “general style of living”) the poverty line is said to be relative; if the poverty line does not vary with median income, it is said to be absolute. The poverty line definition suggested appears to be a generalization of almost all well-known poverty line definitions. Poverty lines thus defined are estimated for eight European countries on the basis of a 1979 survey. The resulting lines appear to have an elasticity with respect to median income of 0.51, and hence can be said to be halfway on the scale between absolute and relative.     

Understanding Rising Income Inequality in Germany, 1999/2000–2005/2006

We examine the factors behind rising income inequality in Europe's most populous economy. From 1999/2000 to 2005/2006, Germany experienced an unprecedented rise in net equivalized income inequality and poverty. At the same time, unemployment rose to record levels, part‐time and marginal part‐time work grew, and there was evidence for a widening distribution of labor incomes. Other factors that possibly contributed to the rise in income inequality were changes in the tax and transfer system, changes in the household structure (in particular the rising share of single parent households), and changes in other socio‐economic characteristics (e.g., age or education). We address the question of which factors were the main drivers of the observed inequality increase. Our results suggest that the largest part of the increase was due to increasing inequality in labor incomes, but that changes in employment outcomes and changes in the tax system also contributed considerable shares. By contrast, changes in household structures and household characteristics, as well as changes in the transfer system only seem to have played a minor role.     

Indian Income Inequality, 1922‐2015: From British Raj to Billionaire Raj?

We combine household surveys and national accounts, as well as recently released tax data to track the dynamics of Indian income inequality from 1922 to 2015. According to our benchmark estimates, the top 1 percent of earners captured less than 21 percent of total income in the late 1930s, before dropping to 6 percent in the early 1980s and rising to 22 percent in the recent period. Our results appear to be robust to a range of alternative assumptions seeking to address numerous data limitations. These findings suggest that much more can be done to promote inclusive growth in India. We also stress the need for more transparency on income and wealth statistics, which is key to allow an informed democratic debate on inequality.     

Measuring lnequality in the Middle East 1990–2016: The World’s Most Unequal Region?

In this paper we combine household surveys, national accounts, income tax data and wealth data in order to estimate income concentration in the Middle East for the period 1990–2016. According to our benchmark series, the Middle East appears to be the most unequal region in the world, with a top decile income share as large as 64 percent, compared to 37 percent in Western Europe, 47 percent in the US and 55 percent in Brazil (see Alvaredo et al. 2018). This is due both to enormous inequality between countries (particularly between oil‐rich and population‐rich countries) and to large inequality within countries (which we probably under‐estimate, given the limited access to proper fiscal data). We stress the importance of increasing transparency on income and wealth in the Middle East, as well as the need to develop mechanisms of regional redistribution and investment.     

On the distributional effects of commodity taxation

A commodity tax system is inequality reducing if the after‐tax distribution of income Lorenz dominates the before‐tax distribution of income, regardless of initial conditions. This paper identifies necessary and sufficient conditions under which an ad valorem commodity tax system is inequality reducing, shedding light on the role of taxing luxury—as opposed to necessary—commodities in the equalization of after‐tax incomes.     

GROWTH, POVERTY, AND INEQUALITY IN LATIN AMERICA: A CAUSAL ANALYSIS, 1970–94

Taking advantage of consistent poverty and income inequality data for 12 Latin American countries between 1970 and 1994, we analyze the determinants of changes in the incidence of urban and rural poverty and in Gini coefficients over spells of years, stressing in particular the role of aggregate income growth. We find that income growth reduces urban and rural poverty but not inequality. We also find that income growth is more effective in reducing urban poverty if the levels of inequality and poverty are lower, and the levels of secondary education higher. We show that there is an asymmetry in the impact of growth on poverty and inequality, with recession having strong negative effects on both poverty and inequality. Since growth does not reduce inequality, economic cycles create ratchet effects on the level of inequality. However, post-structural adjustment growth is quite effective at reducing poverty, particularly if inequality is low.     

收入分配研究述评

收入差距拉大引发的社会两极分化问题已成为中国社会最为敏感问题之一,这一问题也影响着社会与经济的可持续发展。收入分配不公带来的社会冲突、分层加剧、资源配置失衡等危害也已引起政府的高度关注。本文着重从行业垄断、税收调控、社会保障等方面评述影响收入分配差距拉大的因素。为改善我国收入分配不平等状况,需要对初次分配与再分配加以规范。因此,限制公共权力,加强对垄断的监管,规范劳动力市场是关键,与此同时,税收、转移支付与社会保障等宏观调控手段应被广泛采用。