Wage,income and consumption inequality in Japan, 1981–2008: From boom to lost decades

In this paper we document the main features of the distributions of wages, earnings, consumption and wealth in Japan since the early 1980s using four main data sources: the Basic Survey on Wage Structure (BSWS), the Family Income and Expenditure Survey (FIES), the National Survey of Family Income and Expenditure (NSFIE) and the Japanese Panel Survey of Consumers (JPSC). We present an empirical analysis of inequality that specifically considers the path from individual wages and earnings, to household earnings, after-tax income, and finally consumption. We find that household earnings inequality rose substantially over this period. This rise is made up of two distinct episodes: from 1981 to 1996 all incomes rose, but they rose faster at higher percentiles; from 1996 to 2008 incomes above the 50th percentile remained flat but they fell at and below the 50th percentile. Inequality in disposable income and in consumption also rose over this period but to a lesser extent, suggesting taxes and transfers as well as insurance channels available to households helped to insulate household consumption from shocks to wages. We find the same pattern in inequality trends when we look over the life cycle of households as we do over time in the economy. Additionally we find that there are notable differences in the inequality trends for wages and hours between men and women over this period.     

DOES SIZE MATTER? THE IMPACT OF CHANGES IN HOUSEHOLD STRUCTURE ON INCOME DISTRIBUTION IN GERMANY

Income inequality in Germany has been continually increasing during the past 20 years. One cause of this development, among others, could be structural shifts in household formation due to long‐term societal trends. These affect per capita incomes, which has repercussions for the income distribution even if wages remain constant. The aim of this paper is to quantify the proportion of changing household structures in the increase in inequality. We find that the growth of the income gap in Germany (for both East and West from 1991 to 2007) is indeed strongly related to changes in household structure and employment behavior, and a large part of this increase is compensated by the welfare state.     

Income distribution under Soviet-type socialism: An interpretative framework

This paper studies the economic logic of the processes that govern distribution of real personal incomes in a socialist economy by examining the allocative function of gross wages and the incentive function of workers' real disposable incomes. Also considered are the differential effects on income distribution of paying workers straight time wages and incentive payments, and the distributive consequences of the organizational principles adopted in shaping the actual structure of the socialist economy. Finally, the factors affecting inequality in the distribution of earnings under socialism and capitalism are compared.     

The Covariance Structure of East and West German Incomes and its Implications for the Persistence of Poverty and Inequality

Abstract. Based on data from the German Socio-Economic Panel (GSOEP), this paper analyzes the dynamics of equivalent income in East and West Germany in the years following reunification. Special emphasis is given to the separation of permanent and transitory components, the persistence of transitory shocks and their implications for the persistence of poverty and inequality. The results suggest that in West Germany, between 52 and 69 per cent of cross-sectional income inequality was permanent, and that poor individuals stayed in poverty for two years on average. In East Germany, the share of the permanent component in overall income inequality rose continuously from 20 per cent in 1990 to 72 per cent in 1998, reaching a level near the one that prevailed in West Germany during the same period. The rising importance of time-invariant components in East German incomes was also reflected in expected poverty durations which slightly increased from 1.47 years in 1990 to 1.67 years in 1998.     

EQUALITY OF OPPORTUNITY: EAST VS. WEST GERMANY

The case of German reunification has been subject to extensive research on earnings inequality and labour market integration. However, little is known about the development of equality of opportunity (EOp) in East and West Germany after 1990. Using German micro data, we empirically analyse how circumstances beyond the sphere of individual control relate to inequality in East and West Germany. Our results show that EOp is larger in East than in West Germany. However, despite increasing income inequality, EOp remained surprisingly constant.     

Factor Components of Inequality: A Cross‐Country Study

This paper uses data from the Luxembourg Income Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the twentieth century. We decompose inequality for six countries (Canada, Germany, Norway, Sweden, the U.K., and the U.S.) into the three sources of market income (earnings, property income, and income from self‐employment) and taxes and transfers. Our findings indicate that although changes in the distribution of earnings are an important force behind recent trends, they are not the only one. Greater earnings dispersion has in some cases been accompanied by a reduction in the share of earnings which dampened its impact on overall household income inequality. In some countries the contribution of self‐employment income to inequality has been on the rise, while in others, increases in inequality in capital income account for a substantial fraction of the observed distributional changes.     

Mexico in the 1990s: The Main Cross-Sectional Facts

This paper describes the main cross-sectional facts on individual and household earnings, labor supply, income, consumption and wealth in Mexico in the decade of the 1990s. We use two different data sources: the Mexican Employment Survey (ENEU) and the Mexican Income and Expenditure Survey (ENIGH). The contribution of this paper is twofold. First, we integrate the two surveys to provide a complete characterization of the changes in employment, wages, income, consumption and wealth in the 1990s. Second, we highlight some distinctive features that characterize the Mexican economy in this decade. In particular, we focus on the changes in the size of the informal sector and we study the relationship between changes in informality and changes in wage inequality.     

Spain is different: Falling trends of inequality

In this article we characterize the evolution of inequality in hourly wages, hours of work, labor earnings, household disposable income and household consumption for Spain between 1985 and 2000. We look at both the Encuesta Continua de Presupuestos Familiares and the European Household Community Panel. Our analysis shows that inequality in individual net labor earnings and household net disposable income has decreased substantially. The decreases in the tertiary education premium and in the unemployment rate have been key ingredients to understand this falling trend. Public transfers have played a crucial role in smoothing out the inequality arising in the labor market, but instead the Spanish family does not seem to have been an important insurance mechanism. Regarding household consumption, inequality has fallen much less than inequality in household net disposable income, with the decrease mostly concentrated in the second half of the eighties. This suggests that the reduction in income inequality has affected the sources of permanent differences between households only during the second half of the eighties. Our estimates of the earnings process for the period are consistent with this view.     

Consumption,income and earnings inequality in Britain

This paper presents an analysis of the trends in inequality across income, earnings and consumption in Britain since 1978. It documents the episodic nature of inequality growth over this period largely dominated by the inequality ‘boom’ in earnings inequality of the 1980s. It builds a consistent picture across these key measures of inequality to provide a coherent link between the microeconomic and macroeconomic analysis of the evolution of inequality.     

Cross-sectional facts for macroeconomists

This article provides an introduction to the special issue of the Review of Economic Dynamics on “Cross-Sectional Facts for Macroeconomists”. The issue documents, for nine countries, the level and the evolution, over time and over the life cycle, of several dimensions of economic inequality, including wages, labor earnings, income, consumption, and wealth. After describing the motivation and the common methodology underlying this empirical project, we discuss selected results, with an emphasis on cross-country comparisons. Most, but not all, countries experienced substantial increases in wages and earnings inequality, over the last three decades. While the trend in the skill premium differed widely across countries, the experience premium rose and the gender premium fell virtually everywhere. At a higher frequency, earnings inequality appears to be strongly counter-cyclical. In all countries, government redistribution through taxes and transfers reduced the level, the trend and the cyclical fluctuations in income inequality. The rise in income inequality was stronger at the bottom of the distribution. Consumption inequality increased less than disposable income inequality, and tracked the latter much more closely at the top than at the bottom of the distribution. Measuring the age-profile of inequality is challenging because of the interplay of time and cohort effects.     

Testing for uniform wage trends in West-Germany: A cohort analysis using quantile regressions for censored data

The rise of unemployment in West Germany is often attributed to an inflexibility of the wage structure in the face of a skill bias in labor demand trends. In addition, there is concern in Germany that during the 70s and 80s unions were pursuing a too egalitarian wage policy. In a cohort analysis, we estimate quantile regressions of wages taking account of the censoring in the data. We present a new framework to describe trends in the entire wage distribution across education and age groups in a parsimonious way. We explore whether wage trends are uniform across cohorts, thus defining a macroeconomic wage trend. Our findings are that wages of workers with intermediate education levels, among them especially those of young workers, deteriorated slightly relative to both high and low education levels. Wage inequality within age-education groups stayed fairly constant. Nevertheless, the German wage structure was fairly stable, especially in international comparison. The results appear consistent with a skill bias in labor demand trends, recognizing that union wages are only likely to be binding floors for low-wage earners.     

Consumption and Income Inequality in Australia

Consumption may be a more appropriate measure of household well-being than income or earnings. Using four ABS Household Expenditures Surveys collected between 1975 and 1993, we compare trends in consumption and income inequality among Australian households. We find that consumption is much more equal than income. While there were significant increases in both income and consumption inequality, consumption inequality rose by much less. One interpretation of the results is that some income inequality in Australia reflects transitory fluctuations which households can smooth,'and that part of the growth in income inequality reflects an increase in these transitory fluctuations.     

Unequal we stand: An empirical analysis of economic inequality in the United States, 1967–2006

We conduct a systematic empirical study of cross-sectional inequality in the United States, integrating data from the Current Population Survey, the Panel Study of Income Dynamics, the Consumer Expenditure Survey, and the Survey of Consumer Finances. In order to understand how different dimensions of inequality are related via choices, markets, and institutions, we follow the mapping suggested by the household budget constraint from individual wages to individual earnings, to household earnings, to disposable income, and, ultimately, to consumption and wealth. We document a continuous and sizable increase in wage inequality over the sample period. Changes in the distribution of hours worked sharpen the rise in earnings inequality before 1982, but mitigate its increase thereafter. Taxes and transfers compress the level of income inequality, especially at the bottom of the distribution, but have little effect on the overall trend. Finally, access to financial markets has limited both the level and growth of consumption inequality.     

收入机会不均、收入差距与居民消费

选取1995年、2002年和2010年中国31个省(自治区、直辖市)的平均工资数据和细分行业的平均工资数据,利用有序响应模型,实证研究了国有单位和非国有单位的在岗职工在获得不同水平收入(高、中、低)的概率上存在的差异,据此确定了"收入机会"不均等的存在,然后估计了"收入机会"不均等造成的收入差距对居民消费的影响。研究结果显示:国有单位的在岗职工获得高收入的概率明显高于非国有单位的在岗职工,而前者获得低收入的概率明显低于后者,且这种趋势呈加剧状态;居民收入差距的扩大明显抑制了整体消费需求。     

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.     

Effects of growing wage disparities and changing family composition on the U.S. income distribution

U.S. income inequality soared after 1979. The present paper estimates the contribution of increased earnings inequality to the surge in overall income inequality between 1979 and 1996. The direct contribution of increased earnings inequality is surprisingly modest. Even if male and female earnings inequality had remained unchanged at their 1979 levels, about two thirds of the observed increase in overall U.S. inequality would have occurred. Other factors contributing to higher overall inequality include the growing correlation of husband and wife earned incomes and the increasing percentage of Americans who live in single-adult families, families that typically have much more unequal incomes than husband–wife families.     

SOME COMPARISONS OF THE CANADIAN-U.S. INCOME DISTRIBUTIONS

This paper compares the income distribution of Canada and the United States as well as other characteristics of the population such as the labour force and income trends in the two countries in the post-war years. In both countries family income distributions show similar degrees of inequality and similar movements in real incomes through time. However, an examination of Canadian data suggests that differences do exist in underlying patterns. For example, there are greater earnings differentials between skilled and unskilled workers in Canada than in the United States while on the other hand in the United States greater differences exist between family incomes with heads in different age groups than is the case in Canada.     

CROSS-NATIONAL DIFFERENCES IN INCOME MOBILITY: EVIDENCE FROM CANADA, THE UNITED STATES, GREAT BRITAIN AND GERMANY

Using a standardized dataset, this paper compares the differences in income mobility among four countries—Canada, the United States, Great Britain and Germany—during the 1990s and early 2000s. The results suggest that, in general, there exist diverse levels of income mobility across the four countries. Although the precise magnitudes of the differences are sensitive to the measurement method used, incomes in Britain are by far the most mobile. Our findings also reveal country-specific driving forces that underlie income mobility. The stabilizing effects of government transfers are most pronounced in Canada. In Germany, it is the progressive tax system that offsets earnings variations and results in smaller changes in longitudinal incomes. Moreover, we also discover that demographic factors provided only limited explanation of differences in income mobility.     

Income inequality dynamic measurement of Markov models: Application to some European countries

In this paper we present a methodology for measuring income inequality dynamically within a Markov model of income evolution. The proposed methodology requires knowledge of the evolution of the population and the averages and medians of the incomes in a country and allows the computation of dynamic inequality indices. The methodology is supported with statistics from Eurostat data applied on France, Germany, Greece and Italy.     

Why Did Income Inequality in Germany Not Increase Further After 2005?

While income inequality in Germany considerably increased in the years before 2005, this trend stopped after 2005. We address the question of what factors were responsible for the break in the inequality trend after 2005. Our analysis suggests that income inequality in Germany did not continue to rise after 2005 for the following reasons. First, we observe that the general rise in wage inequality that explained a lot of the inequality increase before 2005, became less steep (but did not stop) after 2005. Second, despite further increases in wage inequality after 2005, inequality in annual labour incomes did not increase further after 2005 because increased within‐year employment opportunities compensated otherwise rising inequality in annual labour incomes. Third, income inequality did not fall in a more marked way after 2005 because also the middle and the upper part of the distribution benefited from the employment boom after 2006. Finally, we provide evidence that the effect of a wide range of other factors that are often suspected to have influenced the distribution such as capital incomes, household structures, population ageing, changes in the tax and transfer system and the financial crisis of 2008 did not significantly alter the distribution after 2005.