Do the Rich Save More? Evidence from Canada

This paper provides new evidence on the long‐standing question of whether more affluent households save a larger fraction of their income. The major difficulty in empirically assessing the relationship between incomes and saving rates is to construct a credible proxy for long‐run income—purged of transitory fluctuations and measurement error. The Canadian Family Expenditure Survey provides us with both unusually good data on savings rates and potential predictors with which we can construct reliable long‐run income proxies. Our empirical analysis suggests that the estimated relationship between saving rates and long‐run incomes is sensitive to the predictor used to proxy long‐run income. Nevertheless, our preferred estimates indicate that, except for poorest households (who simply do not save), saving rates do not differ substantially across predicted long‐run income groups.     

健康对非农就业及其工资决定的影响

利用 1 993年中国营养调查数据 ,本文探讨了中国农村地区健康对非农就业及其工资决定的影响 ,并试图从微观层面揭示中国农村地区健康与收入之间的关系。本文的主要发现是 ,对于劳动参与及非农就业机会 ,健康状况都有显著的影响 ;然而在传统的种植业领域 ,健康并不是劳动参与的决定性因素 ;同时 ,在农村的非农就业者中 ,健康并不是劳动力市场表现的重要因素。尽管如此 ,由于非农就业机会对家庭收入的重要作用 ,我们仍不难发现健康在获取非农就业收入乃至增加家庭收入方面的作用     

Perceptions of inequality

Individual perceptions of (income or wealth) inequality have strong effects on their decisions as economic agents or voters. It is therefore important to know more about the relation between perceived and measured inequality. We present a novel formal framework that is based on the assumption that people typically do not observe the entire income (wealth) distribution and that their guesses about the extent of inequality are based on “self-centered” reference groups. This framework predicts that perceptions of inequality will change along positions in the income distribution and that for a specific position various dimensions of inequality perception are related to each other. First, low (high) income individuals overestimate (underestimate) their own position. Second, subjective estimates of average earnings increase with the own income position. Third, high or low income people have different perceptions about the skewness and the “shape” of the income distribution (e.g. pyramid or diamond). Fourth, the subjective perception of inequality is lower for high-income individuals. Survey data from 40 countries provide strong support for the framework.     

Do China's people favour redistribution? Evidence from an incentivized experiment

From 1949, China's leaders brought their country through three decades of income and wealth compression, which was followed by more than three decades of sharply rising inequality. What preferences do China's people hold regarding what price (if any) is worth paying for greater equality? We conduct a laboratory decision‐making experiment mimicking aspects of a macro‐political–economic environment, using Chinese undergraduate student subjects. We find that our subjects have qualitatively similar tastes for equality as their counterparts in parallel US and European experiments; for example, most are willing to sacrifice some payment for more equality of earnings among other participants, and their willingness to do this is stronger when inequalities originate randomly versus based on performance. Considering the cases permitting direct comparison between Chinese and US subjects’ choices, redistributive choices tend to be a bit higher in China if the participant pays no direct cost and a bit lower if he or she pays such a cost, but the two distributions of decisions differ significantly in under 14% of conditions. Survey data too suggests preferences for a more equal income distribution in China than in other East Asian countries, suggesting a possible impact of the Chinese Communist Party dominance in education and media.     

Incomes and Inequality in the Long Run: The Case of German Elderly

Abstract. We use German Sample Survey income data to examine the income distribution for elderly individuals during the period from 1978 to 2003. The elderly population, defined as people of age 55 and older, is decomposed by people resident in the Old and New Federal States. Further, we distinguish between persons receiving old‐age pensions and persons who do not. Inequality estimates are decomposed by income components, and the bootstrap method is used to test for statistical significance of results.     

The absolute health income hypothesis revisited: a semiparametric quantile regression approach

This paper uses the 1998–1999 Canadian National Population Health Survey data to examine the health–income relationship that underlies the absolute income hypothesis. To allow for nonlinearity and data heterogeneity, we use a partially linear semiparametric quantile regression model. The “absolute income hypothesis” is partially true; the negative aging effects appear more pronounced for the ill-healthy population than for the healthy population and when annual income is below 40,000 Canadian dollars. We would like to thank two anonymous referees and Baldev Raj, the editor, for useful and constructive comments and suggestions. The views expressed in this article are those of the authors and do not necessarily reflect the views of Statistics Canada. Both authors would also like to acknowledge financial support from SSHRC of Canada.     

A Cross-country Test of the Permanent Income Hypothesis

The Permanent Income Hypothesis (PIH) predicts an income innovation has the same size effect on consumption as on permanent income, an implication we examine with a cross-country test proposed by Kormendi & LaHaye (1984). The data from industrial countries support PIH but data from developing countries do not. Also, however, data from countries with high quality national income accounts support PIH whereas data from countries with low quality accounts do not. The stage of economic development and data quality are highly correlated. The evidence suggests that the results may be driven primarily by data quality differences rather than systematically different behaviour between industrial and developing countries.     

If not only GDP,what else? Using relational goods to predict the trends of subjective well-being

In the last decade, a lively interdisciplinary discussion has grown around the evidence that, in the long-run, people’s subjective well-being is not significantly correlated with income growth. In other words, GDP growth does not predict the long run growth of subjective well-being. In this paper, we argue that there exists a different predictor of subjective well-being that works pretty well: sociability, i.e. the quality and quantity of social relationships (also referred to as relational goods). More precisely, we illustrate the role of sociability as a predictor of well-being, presenting the available evidence at both the within-country and the worldwide level. In particular, we discuss recent evidence from US cross-sectional data (General Social Survey, 1975–2004), cross-country time series (World Value Survey 1980–2005), and German panel data (German Socio-Economic Panel, 1996–2007). We conclude by indicating the most relevant open issues and suggesting future lines of research.     

The economic relevance of sustainable agroforestry practices — An empirical analysis from Tanzania

This paper investigates the economic relevance of sustainable behavior of agroforestry practices for smallholders using the example of firewood exploitation in rural Tanzania. Three questions are addressed: (1) To what extent do households behave sustainably regarding firewood extraction from agroforestry? (2) Which factors determine the likelihood of households practicing sustainable agroforestry? (3) Are sustainably behaving households better off in terms of income compared to households practicing unsustainable agroforestry? The analysis is based on cross-sectional data of 314 households. A sustainability indicator shows that the share of sustainable households varies between 14 and 41% depending on the underlying wood growth rate. The results of the logistic regression indicate that property rights regarding the ownership of agricultural land and environmental awareness increase the likelihood of sustainable firewood extraction. Empirical evidence from the quantile regression reveals that poorest households generate higher income if they extract firewood unsustainably. The opposite is true for households of upper income percentiles. Thus, the poor are likely to increase environmental degradation to generate more income causing a ‘downward spiral’ of the poverty–environment trap resulting in income losses in the long run. Households with a per capita income of 524 TZS or more manage their tree stocks sustainably.     

Is money where the fun ends? Material interests and individuals’ preference for direct democracy

Are people’s attitudes towards referendums as a decision-making procedure predominantly driven by their material self-interest, or do individuals also value direct democracy as such, regardless of the material payoffs associated with anticipated policy outcomes? To answer this question, we use a survey data set that offers information on respondents’ support for referendums as a procedure to decide on tax policy, their income levels, socio-economic characteristics, and, most importantly, their expectation about the majority’s support for higher taxes. We find that the support of low-income individuals for referendums increases substantially if they expect a clear population majority in favor of more redistribution. Conversely, individuals with a high income who expect a majority in favor of higher taxes do not reject referendums more strongly than individuals with an average income who share these expectations.     

The Sins of the Fathers: Intergenerational Income Mobility in China

This paper aims to obtain an accurate estimate of China's intergenerational income mobility and to present evidence on its distributional pattern. Using panel data from the China Health and Nutrition Survey (CHNS) over the period 1989–2009, I find that China is less mobile than most developed countries. Then, I employ five different approaches to investigate the distributional pattern of China's intergenerational mobility across income levels. The results suggest that poor families have relatively high mobility, indicating opportunities for the poor children to escape poverty. Finally, I show that while wealthy fathers are likely to pass on their favorable economic status to their sons, rich sons come from a very wide range of family economic backgrounds.     

What do fiscal stimulus packages mean for household debt?

We study the links between fiscal stimulus packages during times of crisis and households' liabilities. We do so by using household-level data on income and liabilities from the Consumer Expenditure Survey, and estimating an empirical model along those in the literature on the consumption effects of these packages. We find that receiving a check from the government tends to translate into a reduction in outstanding liabilities for American households. This effect is robust to controlling for income levels and household size. The effects are driven by households whose income is below the median and by those who remain employed during the crisis.     

Household Income Inequality and Income Mobility: Implications Towards Equalizing Longer-Term Incomes in India

This paper addresses three important questions. First, what are the trends, levels and sources of income inequality in India? Second, how have been the patterns of income mobility? And finally, exploring the relationship between income mobility and income inequality in the context of India. Results, based on recent India Human Development Survey (IHDS) longitudinal data, advocate that not only is income inequality very high, nonetheless, it has increased – mainly attributable to different income sources – in India. The paper also focused on whether or not this income mobility equalizes longer-term incomes. Results suggest income mobility has resulted in-albeit not robust- equalizing longer-term incomes. Thus, based on imperative findings, the paper suggests, the nature of longer-term well-being is crucial to designing policy interventions to effectively tackle inequality and in this context, economic mobility can be seen as an avenue to long-term equality.     

The disappearing gay income penalty

Since 1995, labor economists have reported on the income disparities between individuals who engage in same-sex behavior and those that do not. Many of these papers report a significant wage penalty, while others find no effect, but few look at the trend over time. We find, using National Health and Examination Survey (NHANES) data from 1988 to 2007, that the income gap has reversed over time from a penalty to a premium.     

POVERTY AND INCOME DISTRIBUTION IN BRAZIL1

The article refutes the contention that Brazil's development has not benefited the poor and that rapid growth has had a polarizing effect on the distribution of income. It uses the National Household Expenditure Survey of 1974–75 to try to quantify the extent of poverty and concludes that the incòme levels of the poor have been underestimated in the past. The evidence suggests also that occupational and regional variables are powerful determinants of income stratification. Wage rate statistics convey information about long-term trends in income. The article notes considerable increases in rural wages during the 1970s as well as wage improvements in the urban informal sector. Shifts in the structure of employment have probably been the most powerful cause of economic improvement in Brazil. The enormous absorption of rural-urban migrants occurred without a flooding of the lower income urban categories. Social indicators and statistics referring to ownership of household durable consumer goods corroborate income and labor market evidence to the effect that there has been considerable progress for the poor during the 1970s. The article reviews statistical evidence bearing on distribution. There is little doubt that the distribution of income in Brazil is very skewed. It is not possible, however, to come to conclusions about changes that might have occurred in the degree of inequality over time. Finally, the article includes data on the “distribution of education” and the “distribution of life expectancy” and notes improvement over time in both. This article takes advantage of the Brazilian population census of 1980 to bring up to date some of the statistical material that bears on the issues of poverty and income distribution. First, the article describes the overall context of Brazilian development since 1960. The second part analyzes the extent of poverty in the mid-1970s. The third part deals with trends in wages, employment and selected welfare indicators. The last section briefly summarizes the information relating to income distribution: what is the extent of skewedness and how has it evolved over time?     

The Labor Market as a Smoothing Device: Labor Supply Responses to Crop Loss

The paper studies the way in which labor supply responses enable households to smooth consumption in the face of crop loss. The 1993 Indonesian Family Life Survey is unusual because it contains self-reported information on crop loss and on household responses to crop loss. Of those households that report a crop loss, 41.6% also report that they responded by taking an extra job. Using these self-reported measures, the authors find evidence which suggests that the income associated with this shock-induced labor supply is important in allowing the household to avoid reducing consumption expenditure. Household members, however, do not seem to increase their total hours of work. They appear to just reallocate their time from household farming to other labor market activities.     

Who benefits from big government? A life satisfaction approach

Which impact does government size have on life satisfaction, and how do effects of bigger government differ between income groups in society? Previous studies typically employed country averages and thus neglected possibly heterogeneous happiness effects between income groups. This paper addresses empirically the effects of government spending on subjective well-being of individuals belonging to different income groups. Our analysis is based on individual data from 25 European countries participating in the European Social Survey. In contrast to most previous studies we take account of the endogeneity between relative income position and reported life satisfaction by an instrumental variable approach. Our results suggest, first, that most government spending categories, including social protection, are on average negatively related to individual well-being. Secondly, estimated marginal effects of health, education and social protection spending at different income levels show that spending increases always have a stronger negative effect on high income groups’ well-being than on low income groups’ life satisfaction. For all government spending categories, marginal happiness effects of higher public spending are clearly negative for income groups at the top.     

Environmental Kuznets curve: Evidence from the British Household Panel Survey

A well-known hypothesis providing support for a policy that emphasizes economic growth at the expense of environmental protection is the environmental Kuznets curve (EKC) hypothesis. Although this relation has been mainly explored at the macro-economic level, there are few researches examining micro-economic level. This study looks for empirical evidence between air pollution and income using social data from the British Household Panel Survey during the period 1991–2009. The first approach refers to a fixed effects model, the second to dynamic panel data and Arellano–Bond GMM, while the third approach concerns a binary Logit model with fixed effects. The current study's fixed effects results show that there is no evidence of EKC hypothesis for the air pollutants examined. On the contrary, there is a strong evidence of EKC hypothesis for the air pollutants examined based on Arellano–Bond GMM and logit model's results with fixed effects and all the types of household income indicating that EKC hypothesis holds. Furthermore, regarding personal income, using the Arellano–Bond GMM methodology, the EKC hypothesis does not hold. This indicates that air pollution and income might be based on communitarian arrangements instead of on individualistic actions.     

Politics and Income Inequality: Does Politics Still Matter in New Democracies

Does politics still matter for reducing income inequality in new democracies? The standard explanation is that political institutions, in particular the left government and proportional representation, are negatively associated with income inequality among advanced industrial countries, but there have been so few studies attempting to explain the variation of distributional outcomes across new democracies. This article tests the hypotheses about the effects of political institutions on income inequality with unbalanced pooled time-series cross-sectional data that cover 26 fledgling democracies for 1975–2006. The evidence presented here suggests that, other things being equal, a parliamentary system and PR are substantially more likely to be associated with lower levels of income inequality, but a left government and more years of democracy do not appear to be related to lower income inequality.     

The Pattern of Household Savings During a Hyperinflation: The Case of Urban China in the Late 1980s

This paper presents evidence on household savings in urban regions of the Chinese provinces Sichuan and Liaoning, based on data from the State Statistical Bureau's Urban Household Survey for the late 1980s. In this period the Chinese economy was subject to extensive reforms that resulted in rapid economic growth followed by extremely high inflation. The high inflation rates gave the households strong motives to switch from financial savings to purchase of consumer durables, which also appear to be consistent with the structure of the observed data. By providing empirical evidence on the relative importance of savings by lower, middle and upper income groups for single-child families and for all households, this study also discusses whether savings decisions depend on the level of household income. Single-child families are focused, not only because of their growing dominance in the current Chinese society, but also to control for the effect of demographic disparities.