α‐SERIAL MECHANISMS FOR THE PROVISION OF AN EXCLUDABLE PUBLIC GOOD

We present a new class of “α‐serial mechanisms” for the provision of an excludable public good. Those mechanisms have a similar structure to the serial mechanism, but may let the non‐consumers pay a positive cost. They inherit desirable properties such as anonymity, envy‐freeness, Maskin monotonicity, and population monotonicity from the serial mechanism. We calculate the “maximal efficiency loss” and “maximal manipulation” of α‐serial mechanisms and point out a trade‐off between these two properties.     

基尼系数理论最佳值及其简易计算公式研究

本文针对《中国统计年鉴》有关城镇和农村居民收入数据单列而难以直接测算城乡合一基尼系数的情况 ,证明了 :在收入五分法下基尼系数的计算方法 ,可以五分法中最高收入组与最低收入组各自所占的收入比重之差来简易计算。文章以严格的数学推导证明出基尼系数的理论最佳值为三分之一 ,并用推导出的简易公式对世界银行利用收入五分法所公布的 3 2个国家的统计数据进行了重新计算 ,结果发现 ,以笔者的简易公式所计算出的基尼系数与世界银行公布的基尼系数极其接近。本文关于基尼系数的简易计算公式及其理论最佳值的分析 ,为中国城乡合一的基尼系数的测算及分析提供了一种新的思路。     

FGT Old‐Age Poverty Measures and the Mortality Paradox: Theory and Evidence

Income‐differentiated mortality, by reducing the share of poor persons in the population, leads to the “Mortality Paradox”: the worse the survival conditions of the poor are, the lower is the measured poverty. We show that FGT measures (Foster et al ., 1984 ) are, in general, not robust to variations in survival conditions. Then, following Kanbur and Mukherjee ( 2007 ), we propose to adjust FGT poverty measures by extending the income profiles of the prematurely dead, and we identify the condition under which so‐adjusted FGT measures are robust to mortality changes. Finally, we show, on the basis of data from 2007 on old‐age poverty in 11 European economies, that the effect of extending income profiles of the prematurely dead on poverty measurement varies with: (1) the fictitious income assigned to the prematurely dead; (2) the degree of poverty aversion; (3) the shape of the (unadjusted) income distribution; and (4) the strength of the income/mortality relationship.     

The growth effects of tax rates in the OECD

This paper explores the merits of macro‐ and micro‐based tax rate measures within an open economy “fiscal policy and growth” model. Using annual data for 15 OECD countries we find statistically small, non‐robust long‐run growth effects of macro‐based average tax rates on capital income and consumption, but some evidence for average labour income tax effects. Changes in “micro” marginal income tax rates at both the personal and corporate levels yield statistically robust GDP responses of modest size. Both domestic and foreign corporate taxes appear relevant. In general, tax effects on GDP operate largely via factor productivity rather than factor accumulation.     

“Love of wealth” and economic growth

In a Ramsey–Cass–Koopmans growth framework it is shown that for an optimum a benevolent social planner cannot have an excessive “love of wealth”. With a “right” “love of wealth” an optimum exists and implies higher long‐run per‐capita capital, income, and consumption relative to the standard model. This has important implications for comparative development trajectories. The optimum implies dynamic efficiency with the possibility of getting arbitrarily close to the golden rule where long‐run per‐capita consumption is maximal. It is shown that the optimal path attains its steady state more slowly. Thus, the beneficial effects of love of wealth materialize later than in the standard model. Furthermore, the economy can be decentralized as a competitive private ownership economy. One can then identify “love of wealth” with the “spirit of capitalism.” The paper thus implies that one needs a “right” level of the “spirit of capitalism” to realize any beneficial effects for the long run.     

MEASURING POVERTY USING BOTH INCOME AND WEALTH: A CROSS‐COUNTRY COMPARISON BETWEEN THE U.S. AND SPAIN

We study the correspondence between a household's income and its vulnerability to income shocks in two developed countries: the U.S. and Spain. Vulnerability is measured by the availability of wealth to smooth consumption in a multidimensional approach to poverty, which allows us to identify three groups of households: the twice‐poor group, which includes income‐poor households who lack an adequate stock of wealth; the group of protected‐poor households, which are all those income‐poor families with a buffer stock of wealth they can rely on; and the vulnerable‐non‐poor group, including households above the income‐poverty line that do not hold any stock of wealth. Interestingly, the risk of belonging to these groups changes over the life‐cycle in both countries while the size of the groups differs significantly between Spain and the U.S., although this result is quite sensitive to whether the housing wealth component is included in the wealth measure or not.     

Love and taxes – and matching institutions

Abstract Income disparities and the intra‐family redistribution implied by a marriage may induce a high‐income earner to abstain from marrying a low‐income earner even though they would be a perfect match emotionally. Redistributive income taxation eases this problem, and the design of marriage matching institutions interacts with this role of redistributive taxation. Matching institutions that ensure that people largely from the same income groups meet each other can substitute for redistribution. Matching across income groups that focuses on emotional quality or preference congruence of the match may increase the efficiency‐enhancing role of taxation.     

Relative Income and Indebtedness: Evidence from Panel Data

We examine patterns of indebtedness in the Panel Study of Income Dynamics, focusing on the period surrounding the housing bubble and its aftermath (i.e., 1999–2009). Leverage increased across households, but most quickly among lower income households during this period. We find additionally that leverage grew faster for households with lower relative income compared to other households in similar demographic groups or within a state controlling for own income. Together, these findings provide evidence for the thesis that the rising indebtedness of households in the U.S. is related to high levels of inequality, and that “Veblen effects,” whereby relative income matters for individual well‐being and decisions, may contribute to rising household indebtedness.     

Viewpoint: Measuring the well‐being of the poor with income or consumption: a Canadian perspective

Abstract There is a long tradition of using consumption measures derived from Statistics Canada's household expenditures surveys to study material well‐being, inequality, and poverty. We offer an introduction to this research. Income and consumption measures give different pictures of the patterns of material well‐being in Canada, but the differences are not as large as in the US. We also provide a comparison to Meyer and Sullivan's results on data quality. Canadian expenditure surveys are of high quality. Unique aspects of these surveys (variation in quality control measures over time and the possibility of comparing to income tax data) provide important insights into the quality of survey data on income and consumption.     

The Changing Shape of Global Inequality 1820–2000; Exploring a New Dataset

A new dataset for charting the development of global inequality between 1820 and 2000 is presented, based on a large variety of sources and methods for estimating (gross household) income inequality. On this basis we estimate the evolution of global income inequality over the past two centuries. Two sets of benchmarks about between‐country inequality (the Maddison 1990 benchmark and the recent 2005 ICP round) are taken into account. We find that between 1820 and 1950, increasing per capita income is combined with increasing global inequality. After 1950, global inequality as measured by the Gini coefficient or the Theil index remains more or less constant. It also appears that the global income distribution was uni‐modal in the nineteenth century, became increasingly bi‐modal between 1910 and 1970 with two world wars, a depression and de‐globalization, and was suddenly transformed back into a uni‐modal distribution between 1980 and 2000.     

TRENDS IN AMERICAN LIVING STANDARDS AND INEQUALITY, 1959–2007

We analyze the trends from 1959 to 2007 using an expanded measure of income called the Levy Institute Measure of Economic Well‐Being (LIMEW). LIMEW is different in scope from the official U.S. Census Bureau measure of gross money income (MI) in that our measure includes non‐cash transfers, public consumption, imputed income from wealth, and household production and nets out personal taxes. While the annual growth rates of median LIMEW and MI are very close over the whole period (0.67 and 0.63 percent), median LIMEW grew much faster than median MI after 1982 and much slower before. The Gini coefficient of MI is uniformly higher than that of LIMEW but both show about the same change from 1959 to 2007. Decomposition analysis shows that changes in inequality are driven to a large extent by non‐home wealth in LIMEW and earnings in MI. While the racial gap in MI declined somewhat over the 1990s and 2000s, the racial gap in LIMEW actually widened a bit. Over the same years, while there was little change in the gap in MI between the elderly and non‐elderly, the LIMEW of the elderly actually overtook that of the non‐elderly.     

Inflation and income distribution in Central America,Mexico, Panama,and the Dominican Republic

Analyses of the impact of inflation on income distribution typically only consider the general inflation rate. However, when the consumption structure of households is shaped by its income level and inflation varies across goods and services, they are affected differently by inflation. The aim of this study is to contribute to the analysis of this effect in Central American countries (Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica), Panama, Mexico, and the Dominican Republic (CAPMDR) for the period 2007–2018. According to our findings, there have been significant differences in the inflation rates faced by different income groups. By employing these percentile‐specific inflation rates, we have computed an “inflation‐corrected Gini index.” This adjustment is important because although inequality has been decreasing during past years in the countries in our sample, on average, about half of the gains observed using the standard Gini index are lost once the Gini indices are corrected for inflation, a clearly nonnegligible magnitude.     

Income or Consumption: Which Better Predicts Subjective Well‐Being?

The positive relationship between income and subjective well‐being has been well documented. However, work assessing the relationship of alternative material well‐being metrics to subjective well‐being (SWB) is limited. Consistent with the permanent income hypothesis, we find that a consumption‐based measure out‐performs (surveyed) income in predicting subjective well‐being. When objective measures of consumption are combined with self‐assessments of a household’s standard of living, income becomes insignificant altogether. We obtain our result utilizing household‐level data from Statistics New Zealand’s New Zealand General Social Survey which contains measures of income, SWB and a measure of material well‐being called the Economic Living Standard Index that combines measures of consumption flows and self‐assessments of material well‐being.     

ON THE “PRO‐POORNESS” OF GROWTH IN A MULTIDIMENSIONAL CONTEXT

This paper represents a first attempt to bring together the issues of multidimensional poverty and growth “pro‐poorness” assessments. More specifically, we suggest the use of sequential dominance procedures to test the “pro‐poorness” of observed growth spells when poverty is measured on the basis of income and another discrete well‐being attribute. Sequential procedures are also used to obtain graphical tools that are consistent with the spirit of Ravallion and Chen's growth incidence curve and Son's poverty growth curve. Contrary to traditional unidimensional tests, our method makes it possible to take into account the importance of deprivation correlations at the individual level and thus may reverse results observed with the traditional tools used to check the “pro‐poorness” of growth. An illustration of our approach is given using Turkish data for the period 2003–05.     

INCOME REDISTRIBUTION IN URBAN CHINA BY SOCIAL SECURITY SYSTEM—AN EMPIRICAL ANALYSIS BASED ON ANNUAL AND LIFETIME INCOME

This study investigates the redistributive effect of social security reform in urban China using the nationally representative urban household surveys of 1995 and 2002. The main findings are as follows. First, public pension is the main income for the elderly in urban China. The majority of people aged 60 and over (72% in 1995 and 82% in 2002) receive a pension. Second, the social security system in urban China has increased the income of low‐income and older age groups and reduced the relative poverty rate. However, the redistributive effect did not offset the expanding income inequality, which resulted in the Gini coefficient of redistributed income in 2002 being higher than that in 1995. Third, during 1995 and 2002, both low‐income and high‐income groups received a positive net benefit from the social security system, but the net benefit increased with income. The Chinese social security system lacks progressivity in contribution, and does not favor the poor in terms of benefits. Fourth, assuming that the reformed policy was applied to public sector employees, the long‐term redistributive effect of the pension system for the working population, calculated using their lifetime income, is larger. (JEL D31, H55, I38)     

The World Distribution of Income And Its Inequality, 1970–2009

This paper provides a full decomposition of world inequality, as measured by the Gini coefficient, in the period 1970–2009. In particular, using the Analysis of Gini (ANOGI), the paper describes the evolution of between inequality, within inequality, and the impact of overlapping on both factors. While there is evidence that between inequality in the last decade significantly declined due to the rapid Chinese growth, within inequality and overlapping went in the opposite direction. Furthermore, with the exception of some Asian countries, the rest of the world has not moved significantly. As a result, world inequality remains high by any standard.     

THE ASYMMETRIC IMPACT OF “INFORMATIVE” AND “UNINFORMATIVE” FEDERAL OPEN MARKET COMMITTEE STATEMENTS ON ASSET PRICES

This paper examines the effect of the information content of Federal Open Market Committee (FOMC) statements on the level and volatility of Treasuries and stock returns. Statements are separated into “informative” and “uninformative” groups with informative statements delivering important information which was not previously anticipated by the consensus. We find evidence that the information content of FOMC statements tends to generate an asymmetric response, with informative statements having a larger effect than uninformative statements. Asymmetries tend to be more pronounced for the conditional mean than conditional volatility. The behavior of volatility is tent‐shaped, spiking during policy announcements and declining before and after the release. We also find that the evolution of the language of the FOMC statements does matter to market participants and that joint releases of target rate changes and informative statements have a distinctly more pronounced impact than other types of announcements. (JEL E52, E58, E65, G12, G14)     

The effect of income inequality on political polarization: Evidence from European regions, 2002–2014

This article investigates whether income inequality leads to political polarization and provides new evidence that an increase in the Gini coefficient at the local level increases the probability of supporting a political party at the extreme left and right of the ideological distribution. Using individual data for 25 European countries from 2002 to 2014, I find that increasing inequality leads on average to more support for left‐wing parties. I also find that increasing inequality leads to more support for far‐right parties among older individuals. Support for far‐right parties seems to be driven by rising anti‐immigrant sentiments. The results are robust to different specifications, including an instrumental variable that addresses the endogeneity of income inequality.     

Skill Upgrading in New Zealand, 1986–2001

Educational attainment increased markedly in New Zealand between 1986 and 2001, while the income premia for higher qualifications first increased and then stabilised or decreased over the 1990s. We first document the growth in qualification‐based skills and then examine its contribution to average income growth and the relationship with relative demand changes. Of the 15 per cent increase in real average incomes between 1986 and 2001, upskilling accounted for 25 per cent, while 70 per cent was due to income growth across all qualifications. The pattern of qualification employment share and relative income changes provides evidence of changing demand for skills within detailed industry–occupation cells.