A Decomposition Analysis of Regional Poverty in Russia

The paper applies a new decomposition technique to the study of variations in poverty across the regions of Russia. The procedure, which is based on the Shapley value in cooperative game theory, allows the deviation in regional poverty levels from the all‐Russia average to be attributed to three proximate sources: per capita income, inequality, and local prices. Contrary to expectation, regional poverty variations turn out to be due more to differences in inequality across regions than to differences in real income per capita. However, when real income per capita is split into nominal income and price components, differences in nominal incomes emerge as more important than either inequality or price effects for the majority of regions.     

Inequality and economic growth: the role of initial income

We estimate a panel model where the relationship between inequality and GDP per capita growth depends on countries’ initial incomes. Estimates of the model show that the relationship between inequality and GDP per capita growth is significantly decreasing in countries’ initial incomes. Results from instrumental variables regressions show that in Low Income Countries transitional growth is boosted by greater income inequality. In High Income Countries inequality has a significant negative effect on transitional growth. For the median country in the world, that in the year 2015 had a PPP GDP per capita of around 10000USD, IV estimates predict that a 1 percentage point increase in the Gini coefficient decreases GDP per capita growth over a 5-year period by over 1 percentage point; the long-run effect on the level of GDP per capita is around ??5%.     

The Population Sub-Group Income Effects on Inequality: Analytical Framework and an Empirical Illustration

A method is developed to examine the population sub-group income effects on inequality using the generalized Theil indices. The proposed method is illustrated by computing the effects of marginal changes in the occupation-specific incomes on per capita income inequality in Australia based on data for 7197 sample households relating to the 1988-89 Household Expenditure Survey conducted by the Australian Bureau of Statistics (ABS). The study shows that the growth of (distribution neutral) per capita income in four occupations, namely, unemployed and pensioners, trade-persons, machine operators and laborers, is inequality reducing whereas the growth of per capita income in all other occupations is inequality augmenting. The occupation-specific income effects on between-group inequality are, however, stronger than those on within-group inequality. These findings are invariant to the choice of alternative distributional weights used in the generalized Theil indices.     

SIZE-DISTRIBUTION OF EARNINGS AND HOUSEHOLD INCOMES IN SMALL SOCIALIST COUNTRIES

Part I: Availability and meaning of East European distributional statistics are discussed. Part II: Measures of inequality to be used in this study are examined: the Gini coefficient of concentration, though superior to some other single indicators, is found to be an unreliable comparative measure of inequality, and is therefore supplemented by a set of ratios of selected percentiles to the median. Part III: Inequality of full-time gross monthly earnings is measured for (almost) the whole civilian working population and for some subpopulations (selected industries, men, women) in Czechoslovakia and Yugoslavia through 1970, in Hungary through 1968: the observed inequality appears to be less than in small capitalist countries, in spite of the reversal of the socialist egalitarian trend in the 'sixties. The main factor of equalization of socialist earnings are small interoccupational and interregional differentials and a very flat age profile. Part IV: The socio-economic structure of households, the size of samples underlying the distributional statistics, and the composition of household “revenues” (wage and salary earnings, agricultural incomes, social security payments, relatively unimportant property incomes, as well as non-income cash flows) are examined. Inequality coefficients are estimated for per capita revenues of all households as well as subpopulations of households in Czechoslovakia and Hungary, and some information is given on the distribution of household incomes in Yugoslavia. Part V: Limits of desirable equalization of earnings are discussed. With very narrowly dispersed short-term earnings, lifetime earnings tend to be rather unequally distributed because of the variation of earning years among occupations. With largely equalized primary incomes, per capita household incomes tend to be more unequally distributed, in spite of massive transfers, because of the varying ratio of earners to dependents within households. The need of income differentials as incentives to work, the probable trade-off between income equality and economic growth, and socialist distributive principles are outlined.     

Disparities in Australian Regional Incomes: Are They Widening or Narrowing?

In this study we examine Australian census data on regional incomes for the period 1976–91. Following a discussion of theories and empirical evidence regarding regional income adjustment, the regional dispersion of per capita income is analysed for the six Australian states and at the sub-state level (statistical divisions, SDs). The coefficient of variation is used as the measure of dispersion, and Gini coefficients are also calculated to analyse income equality within regions. For Australia, the cross-state dispersion of per capita incomes increased over the period, whereas there was neither convergence nor divergence of incomes among Australia's 57 SDs. In addition, the intrastate dispersion of per capita incomes across SDs remained largely unaltered over the period. Gini coefficients indicated that across income strata, the distribution of incomes both within states and within SDs has become more equal.     

四川城镇化与农民收入关系的协整分析

采用协整分析方法、建立误差修正模型对四川城镇化与农民各种收入之间的关系进行实证分析,结果表明四川城镇化与农民各种收入之间存在长期均衡关系,城镇化对农村居民人均总收入、农村居民家庭人均现金收入和农村居民家庭经营收入在长期有显著影响,而对农村居民人均纯收入和工资性收入的影响不显著,但四川城镇化对农民各种收入的短期影响均不显著,说明目前四川农村与城镇化发展并不协调。因此,城镇化发展对四川农民增收具有重要意义,建议未来城镇化发展中应更多地关注农民利益,加快农村劳动力转移和农民市民化步伐,以共享增长,促进城乡和谐发展。     

Inequality and income: The mediating effects of social spending and risk

This paper estimates models of social spending, income risk, and per capita income levels using data from a post-war panel of OECD (Organisation for Economic Cooperation and Development) countries. The objective is to test two theories about the pathway from inequality to per capita income. According to one theory, inequality reduces incomes because it induces social spending, which acts as a drag on the economy. The results here suggest, however, that inequality does not seem to induce social spending, and social spending does not seem to lower per capita incomes. According to a second theory, inequality causes upheaval which adds to the volatility of per capita income, which may reduce the level of per capita income. The results suggest, however, that volatility, measured here as the standard deviation of per capita income, has little measurable impact on either per capita income or social spending. The mainsprings of per capita income are more likely to be the traditional factors: the work force, human capital, and physical capital.
JEL classification: E6.     

European Integration and Inequality among Countries: A Lifecycle Income Analysis

This paper analyzes the effects of the enlargements of the European Union on inequality using an approach based on individuals' lifecycle incomes. This allows one to consider the effect of different rates of growth and survival rates. Inequality in terms of permanent income was substantially less than in current per capita income at the time of all the enlargements except those of the last 10 years. The results point to the key role of policies that stimulate growth in the less developed countries. With an annual β‐convergence of 2% in current income, inequality in permanent income would be less than one third of what it is now.     

影响我国农村居民收入差距的主要因素:从收入构成角度的分解分析

This paper attempts to explore the causes behind the change of the inequality in China rural areas at the very beginning of this century by decomposing the inequality of the total per capita income into the contributions from different income components. Furthermore, we develop the decomposition method of Gini coefficients from the income components and use it not only in the static analysis but also in comparative static analysis. Namely it can be used to explore the change of the overall inequality by decomposing the change of Gini Coefficient from income components. The empirical results show that the wage from local employment, the income from agricultural household business and the incomes from non-agricultural household business are the three income components that made the largest contributions to the inequality of the total per capita income. The total contribution to the overall inequality of non-agricultural incomes was much more than that of agricultural incomes. The incomes from agricultural household business, the incomes from non-agricultural household business and the wages from migration made the positive impact on the increase of the overall inequality. The incomes donated by relatives and friends made the most important negative impact on the increase of the overall inequality.     

Refitting the Kuznets curve using a gender-specific threshold model

Previous studies have reached mixed conclusions regarding the relationship between inequality and per capita income. These studies, however, fail to consider gender differences in income inequality and how these may impact on the relationship between income inequality and per capita income. Using Australian taxation statistics, we derive three sets of Gini coefficients (i.e. female, male and total) for the period 1950–2013. We then examine the relationship between inequality and real per capita income and find that a gender-specific threshold panel regression outperforms three other conventional models. Our findings suggest that ‘one set of coefficients does not fit all’ in that the use of aggregate and constant coefficients may mask variations within, and between, gender inequality over time.     

Trends in real income in Britain: A microeconomic analysis

Trends in real national income are typically assessed using aggregate indicators such as GDP per capita, or mean household income, whereas the income distribution literature focuses on trends in income inequality. By contrast this paper takes an integrated approach to real national income measurement; it uses methods incorporating both size and distributional considerations, and applies them to household income microdata in order to measure changes in real income in the U.K. during the 1980s. A parametric class of decomposable real income indisces is proposed which complements quasi-ordering methods such as rank and generalised dominance criteria by telling us how much real income increased over the period (if at all). The indices are also additively decomposable by population subgroup, a property which helps reveal who the gainers and losers were. The analysis also draws attention to the normative and statistical issues raised by the presence of a few very small incomes.     

THE LEVEL OF WORLD INEQUALITY: HOW MUCH CAN ONE SAY?

This paper constructs estimates of income and consumption inequality for the world (124 countries), using various measures of inequality. It then goes on to examine the possible effects of various sources of error in the estimates, and attempts to set rough limits to the size of such effects. Among the sources of error examined are purchasing power parities used for currency conversion, systematic errors in estimates of per capita incomes, differences in age structure, government tax and expenditure policy, and lifetime income effects. The paper concludes that, although the level of uncertainty in the estimates is too great to permit conclusions about, for instance, trends over time, it is clear that the level of world inequality is extreme, and that it is primarily due to differences in average incomes across countries rather than to intra-country inequality.     

Convergence in Brazil: recent trends and long-run prospects

This paper applies to the analysis of the interstate income distribution in Brazil a set of techniques that have been widely used in the current empirical literature on growth and convergence. Usual measures of dispersion in the interstate income distribution (the coefficient of variation and Theil's index) suggest that sigma-convergence was an unequivocal feature of the regional growth experience in Brazil, between 1970 and 1986. After 1986, the process of convergence seems, however, to have slowed down almost to a halt. A standard growth model is shown to fit the regional data well and to explain a substantial amount of the variation in growth rates, providing estimates of the speed of (conditional) beta-convergence of approximately 3% p.a. Different estimates of the long-run distribution implied by the recent growth trends point towards further reductions in the interstate income inequality, but also suggest that the relative per capita incomes of a significant number of states and the number of ‘very poor’ and ‘poor’ states were, in 1995, already quite close to their steady-state values.     

The Distributional Effects of Inflation in Australia 1980–1995

This paper examines the distributional effects of price changes in Australia over the period 1980 to 1995, using equivalent variations and equivalent incomes. The Linear Expenditure System is applied to each of a range of income groups rather than using a single set of parameters. The price changes are found to impose a relatively higher burden on lower income groups in some years, although in other years the higher income groups were affected relatively more. The distribution of equivalent incomes has the highest inequality in years of high overall inflation. However, the effects on inequality are low: the highest increase in inequality as a result of differential price changes is less than one per cent.     

PERMANENT INCOME, CONVERGENCE AND INEQUALITY AMONG COUNTRIES

The literature on inequality has generally focused on the analysis of annual per capita income. This paper adopts a different approach by considering the life-cycle dimension of inequality and convergence between economies from 1960 to 2000. We analyze the present value of the set of incomes individuals obtain throughout their whole life (permanent income). On the basis of this approach, various simulations are made to determine the effect on inequality in permanent income of variables such as survival rates and the long-run growth rates in current income. The results indicate that survival rates are an important source of inequality. Inequality in permanent income is about one third higher than in current income. The implication of this finding is that if the whole life-cycle dimension is not considered, the level of inequality among economies is being underestimated.     

Income distribution dynamics across European regions: Re-examining the role of space

This paper is aimed at exploring the role played by space on the dynamics of regional per capita income disparities in Europe between 1980 and 2005. To do that, an analysis based on the so-called distribution dynamics approach is used as benchmark. Therefore, the external shape of the per capita income distribution and movements within it are examined using both continuous and discrete techniques. This first approach reveals that regional disparities across European regions have decreased over time and, based on the computation of a mobility index, also highlights the existence of a medium mobility degree within the distribution. Subsequently, a spatially conditioned distribution dynamics approach is developed to adequately assess the spatial dimension of the convergence process. In this new approach per capita income of each region is doubly conditioned on its per capita income and the per capita income of its neighbours, both in a previous period. Additionally, a novel mobility index on the basis of a spatial Markov chains approach is devised. The results illustrate the importance of geography in explaining regional per capita income evolution; in particular it is shown that poor regions surrounded by rich regions have a much higher probability of escaping the poverty trap than other poor regions.     

THE DISTRIBUTIONAL CONSEQUENCES DURING THE EARLY STAGES OF RUSSIA'S TRANSITION

We consider the distributional consequences at a national level in Russia during the initial phase of market reforms between the mid-1980s and the early 1990s. Although the incomes of many individuals changed favourably under the reforms during this period, average real household per capita income declined between 1985 and 1992. In particular during the first year of major reform in 1992 households at the lower end of the income distribution seemed to incur the largest fall in income. As a consequence there was a rise in measured income inequality. The Gini coefficient, estimated by various researchers to have been around 27 percent between the late 1960s and early 1990s. we estimate to have increased to 32.2 percent by the end of 1992. We also estimate that poverty increased with 18.5 percent of the population on incomes lying below the official subsistence level at the end of 1992.     

Global distribution and dynamics of economic freedom: Non-parametric approach

The paper exploits the distributional dynamics and structural changes in the endogenous distribution of economic freedom across countries over time by utilizing the Rosenblatt–Parzen Kernel density estimator compared to the original distribution based on the methodology proposed by the Heritage Foundation. We utilize the distribution of economic freedom as a tool to identify which policies enhanced the overall level of economic freedom. We develop the distribution of endogenous economic freedom by decomposing effects of economic freedom on the level of income per capita in IV–2SLS estimation framework for a panel of 134 countries to identify the effect of institutions of economic freedom on the level of per capita income. Structural estimates indicate that improvements in the monetary, fiscal, and labor freedom exert the strongest direct effect on the level of economic freedom and indirect effect on the level of real income per capita. Our study demonstrates considerable differences between the original and endogenous distributional dynamics of economic freedom over time. In exploiting the non-parametric setting of endogenous economic freedom, we identify a recent emergence of twin-peak distribution across countries where developing nations have improved the level of economic freedom considerably compared to the initial year.     

Multimodality in the distribution of GDP and the absolute convergence hypothesis

This article shows that, contrary to common wisdom, the insurgence of a multiplicity of clusters in the distribution of income is not necessarily against the hypothesis of absolute convergence. Using data for the world economies, the US states, the EU regions, and the Italian regions, we find that despite the distribution of income per capita for both the world economies and for the Italian regions is multimodal, only in the former case absolute convergence can be rejected. Similarly, although the distributions for the EU regions and the US states are both unimodal, convergence is unambiguously taking place in the latter case only. We show that these results are consistent with the neoclassical model of growth in the presence of non-convexities in production. We conclude that polarization in the distribution of per capita incomes is neither a sufficient nor a necessary condition to reject the absolute convergence hypothesis.     

Distribution Dynamics and Cross‐Country Convergence: A New Approach

Distribution dynamics is a method for studying the evolution in time of an entire cross‐section distribution and has been initially employed to assess cross‐country convergence of per capita incomes. It has subsequently seen a widespread application in many different economic areas. When describing the law of motion of the distribution as a Markovian stochastic process, working in a discrete state‐space set up has several advantages, but the arbitrary discretisation of a continuous state‐space process has the undesired effect of removing the Markov property. This paper outlines a rigorous method for discretising a continuous state‐space Markov chain. The method is then applied to the distribution of per capita income across countries to reassess the (non‐) convergence phenomenon. It is found that the long run polarisation of per capita incomes across countries emerges even more dramatically than in previous studies.