A panel data model for subjective information on household income growth

Subjective expectations about future income changes are analyzed, using household panel data. The models used are extensions of existing binary choice panel data models to the case of ordered response. We consider static models with random and fixed individual effects. We also look at a dynamic random effects model which includes a measure for permanent and transitory income. We find that income change expectations strongly depend on realized income changes in the past: those whose income fell, are more pessimistic than others, while those whose income rose are more optimistic. Expected income changes are also significantly affected by employment status, family composition, permanent income, and past expectations. Expectations are then compared to the head of household’s ex post perception of the realized income change for the same period. The main finding is that rational expectations are rejected, and that in particular, households whose income has decreased in the past underestimate their future income growth.     

Welfare effects of energy subsidy reform in developing countries

We analyze the potential welfare effect of energy subsidy reforms. The income distributions of eleven developing countries from different geographical regions are simulated using the assumption that income is lognormally distributed. We use the concept of the compensating variation to measure how much compensation is required to compensate consumers for a price increase in formerly subsidized goods. The behavior of consumers is modeled by a standard Cobb–Douglas and a quasilinear utility function. In the Cobb–Douglas case, a fixed fraction of income is spent on the subsidized good, which does not change after a price increase. With quasilinear preferences, the optimal amount of the subsidized good does not vary with income, but does change as prices change. We show theoretically and empirically that the required compensating variation can be set below the saved expenditures on subsidies, so a budget neutral reform can have a positive effect on social welfare.     

Capital Gains and Income Arising from Nonrenewable Resources

Should capital gains be included in income arising from nonrenewable resources? In the present paper, I show that capital gains from a nonrenewable resource can be divided into two terms: real price change effects and real interest rate change effects. By application of sectoral income theory developed by Asheim and Wei (Environ Res Econ 42:65–87, 2009), only the former term is part of real income of the resource and the latter term should not be included. This result is significant in the sense that all change in real resource wealth can be included as part of real income only if future real interest rates are assumed to be constant. Hotelling rule always implies that capital gains from nonrenewable resources coincide with real interests on resource wealth; net investment generated from the resource cancels out current cash flow from the resource; and real income comes from price change effects.     

居民收入增长对公共支出的需求变动分析——基于中国1978～2006年数据的实证研究

由于不同收入群体的公共产品偏好不同,因此,随着居民收入的增长,公众对于公共产品的需求会有所改变,由此引致的财政支出规模变化应当是＂民生财政＂建立过程中需要重点考虑的因素。本文试图研究中国改革开放以来居民收入增长对财政支出规模的影响,主要从两个层面展开：首先,在理论层面,将财政支出分为不同性质的三类,并以此为基础分析居民收入与财政支出规模二者之间的逻辑关系;接着,对1978～2008年间中国的经验数据进行了实证研究,用协整检验和ARIMA模型等计量工具,实证分析了居民收入增长对中国公共支出结构变动的影响。研究结果表明：长期看来,随着居民收入增长,基础设施需求以及国防安全的需求趋于稳定;在短期中,居民收入的增长最能引起社会文教支出的扩张,其次为国防支出和行政管理支出,对经济建设支出的影响最弱。     

INEQUALITY AND THE MEASUREMENT OF RESIDENTIAL SEGREGATION BY INCOME IN AMERICAN NEIGHBORHOODS

American metropolitan areas have experienced rising residential segregation by income since 1970. One potential explanation for this change is growing income inequality. However, measures of residential sorting are typically mechanically related to the income distribution, making it difficult to identify the impact of inequality on residential choice. This paper presents a measure of residential segregation by income, the Centile Gap Index (CGI), which is based on income percentiles. Using the CGI, I find that a one standard deviation increase in income inequality raises residential income segregation by 0.4–0.9 standard deviations. Inequality at the top of the distribution is associated with more segregation of the rich, while inequality at the bottom and declines in labor demand for less-skilled men are associated with residential isolation of the poor. Inequality can fully explain the rise in income segregation between 1970 and 2000.     

THE FISCAL DIVIDEND MYTH OF AN INCOME/GST TAX SWITCH*

Reaping a windfall fiscal dividend from the taxation of the ‘underground’ economy's expenditures on ‘legitimate’ commodities is often seen as a significant advantage for a goods and services tax (GST) over an income tax. This claim ignores the changes in prices in the underground economy which would arise from the introduction of a GST. Employing a general equilibrium model which allows for tax evasion, we show that any ‘dividend’ arising from a change in the income tax/GST mix is equivalent to a rise in the income tax rate without a GST.     

城市化、城乡差距以及全国居民总体收入差距的变动-收入差距倒U形假说的实证检验

本文利用两部门模型,从理论和实证上分析了城市化、城乡差距与全国居民总体收入差距的关系。研究结果表明,改革开放以来,城市化是导致倒U现象出现的主要原因。首先,城市化的加快使得由城乡人口流动导致的收入差距于2001年开始缩小;其次,城市化意味着低收入农村人口比例的缩小和低收入城市人口比例的增加;最后,城市化促使我国农村内部收入差距拉大的速度放缓。由此,全国总体收入差距将在2006—2009年迎来倒U形曲线的拐点。     

Recent Changes in Personal Income Tax

The amendments to the Australian system of personal income tax effected in the 1975–76 budget and in the measures announced by the Treasurer on 20 May constitute the first major change in the system since 1950. The legislation of that year established a structure of tax rates and concessional deductions which remained substantially unaltered for 25 years. During that period, the shape and impact of the personal income tax was affected more by inflation than by legislative change, most of which was concerned either with closing loopholes or with monetary adjustments consequent on inflation.     

From income to consumption: measuring households partial insurance

This article computes the degree of consumption insurance with respect to transitory and permanent income shocks. The lack of income–consumption data in the US surveys forces researchers to use an empirical strategy to impute consumption. This procedure is avoided by using the Spanish Household Budget Continuous Survey, which contains true panel data on consumption and income information in the same survey. We find full insurance for transitory income shocks and partial insurance for permanent shocks for some sub-groups. For the full sample, a 10% permanent income shock induces a 4.8% permanent change in consumption, with higher insurance capacity for college, home-owner and high-wealth households. We also compute the role of durables and family income transfers as smoothing devices. The comparison of insurance level when based on true consumption data versus imputed consumption data shows that the use of imputed consumption underestimates permanent insurance.     

构建和谐社会的税收政策研究--以公平收入分配为视角

中国居民收入差距的现状令人堪忧,应遵循“公平优先、兼顾效率”的新财税理念,构建公平居民收入分配的税收对策:转变财税理念,调整税收政策和制度,推进个人所得税征管制度改革。     

The impact of job mobility on earnings: using occupational and industrial classifications to identify job changes

According to the Bureau of Labor Statistics, the median number of years that a US worker has been with their current employer is 4.4 years. Although many job changes may not be classified as ‘career changes,’ any type of job change may have an impact on a person’s future earnings. In the present study, the following three types of job changes are examined in order to determine which ones result in higher incomes: a change in occupational status; a change in industry; or a change in both. Using data from the National Longitudinal Survey of Youth (NLSY), a log-linear wage regression with a correction for self-selection is estimated. Results suggest that changing jobs within the same industry or within the same occupation both increase a person’s income. However, a job change that is characterized by both a change in industry and occupation reduces a person’s income. The present study is one of the few studies to examine the effects of job mobility on earnings when mobility is defined in the context of changes in occupational and/or industrial classification.     

Impact of Taxes and Benefits on Inequality among Groups of Income Units

This paper analyzes the redistributive impact of the fiscal system and simultaneously explains how each tax and benefit instrument satisfies the principles of vertical and horizontal equity within and across different groups of income units. The decompositions of the redistributive effect are based on new axioms concerning the vertical and horizontal equity of the overall fiscal system, including taxes and benefits. The method is based on pairwise comparisons of income units and the “micro” concepts of income supremacy change, deprivation from reranking, and income distance change. The decomposition results provide more detailed insights into the income redistribution process than is typical in the literature. This is illustrated by an empirical application of the method to the Croatian scheme of personal income taxes and non‐pension social benefits, in which households are divided into two groups, those with and those without children.     

ZAKAT AND INEQUALITY: SOME EVIDENCE FROM PAKISTAN

Zakat is an important form of religiously-mandated charity under Islam. This paper examines its impact on income inequality in Pakistan. Data from 1987–88 are used to construct two income distributions-one that would have obtained if zakat had not been given, and one that did obtain when such giving took place. Atkinson-Kolm-Sen relative indices of income inequality are computed which show that zakat does reduce measured income inequality in Pakistan. Both intra-province and inter-province components of over-all inequality decline, though the amount of change is small.

So give to the kinsman his due, and to the needy, and to the wayfarer. That b best for those who seek Allah's countenance.

The Koran     

Economic and Welfare Impacts of Climate Change on Developing Countries

The impact of global climate change on developing countries is analyzed using CGE-multimarket models for three archetype economies representing the poor cereal importing nations of Africa, Asia, and Latin America. The objective is to compare the effects of climate change on the macroeconomic performance, sectoral resource allocation, and household welfare across continents. Simulations help identify those underlying structural features of economies which are the primary determinants of differential impacts; these are suggestive of policy instruments to countervail undesirable effects. Results show that all these countries will potentially suffer income and production losses. However, Africa, with its low substitution possibilities between imported and domestic foods, fares worst in terms of income losses and the drop in consumption of low income households. Countervailing policies to mitigate negative effects should focus on integration in the international market and the production of food crops in Africa, and on the production of export crops in Latin America and Asia.     

Growing richer and taller: Explaining change in the distribution of child nutritional status during Vietnam's economic boom

Over a five-year period in the 1990s Vietnam experienced annual economic growth of more than 8% and a 15 point decrease in the proportion of children chronically malnourished (stunted). We estimate the extent to which changes in the distribution of child nutritional status can be explained by changes in the level and distribution of income, and of other covariates. This is done using data from the 1993 and 1998 Vietnam Living Standards Surveys and a flexible decomposition technique based on quantile regression that explains change throughout the complete distribution of child height. One-half of the decrease in the proportion of children stunted is explained by changes in the distributions of covariates and 35% is explained by change in the distribution of income. Covariates, including income, explain less of the decrease in very severe malnutrition, which is largely attributable to change in the conditional distribution of child height.     

Decomposing Poverty Change: Deciphering Change in Total Population and Beyond

In the understanding of decomposing poverty change, the growth effect of mean income is replaced with the growth effect of total income and the impact of change in total population. These two, along with changes in inequality, form the three broader effects that can be computed in multiple ways depending upon the base period and the sequence of calculation. Changing the base does not alter the broader effects while specific attributions within each effect get interchanged. For a given base, there will be six possible sequences and we take an average of these to compute the three broad effects. Finally, poverty change on account of the three broad effects comprising growth of total income, change in inequality, and change in total population are shown as part of the within‐group effect while change in population shares, which is different from change in total population, is a between‐group effect. We provide empirical illustrations with data from India.     

Ownership structure,size, and interest income substitution by banks: An exploratory study in the Indian context

This study explored how emerging economy banks are rebalancing their interest income and non-interest income to ensure stability. We set our study in India during the period 2005–2017. Interestingly, we observe that time–series correlation of interest income growth and non-interest income growth for public sector banks as well as for private banks is on the negative side. We applied panel vector auto regression and generalised method of moments methodology. This study found that when bank interest income falls, they try to increase their non-interest income to offset their losses to a certain extent, and the trend is increasing. Public sector banks are overall substituting non-interest income for a reduction in the margin, and there is an increasing trend for this substitution. Based on the size of banks, it has been found that change in non-interest income in the subsequent year due to change in interest income in the previous year is there for large banks, whereas no such significant change has been found in case of small banks.     

The corporation as a tax shelter: Evidence from recent Israeli tax changes

Shifting of income between the corporate and the personal income tax bases in response to tax incentives is the premise of the literature on taxation and organizational form. Empirical evidence of income shifting is, however, merely circumstantial. Using a unique panel of high-frequency VAT data from Israel, we trace the footprints of income shifting through incorporation by high-income individuals who convert their labor income into less-taxed dividends. A rise in the personal income tax rates resulted in more than 4500 companies–a 5% addition to the corporate sector–being registered in the 12 months following the tax change, mainly by self-employed professionals in the industries of business activities and health services; behavioral response to taxation was found only in the top percentile of the income distribution.     

THE TREATMENT OF STOCK APPRECIATION IN THE MEASUREMENT OF NATIONAL INCOME*

In the latest official national income publication the Australian Commonwealth Statistician has altered the treatment of stock appreciation in the measurement of national income at current prices. Previously, stock appreciation had been included in both national expenditure and national product. Now the amount of stock appreciation (the difference between the change in the value of stocks and the value of the change in stocks) has been deducted from investment in stocks, and consequently national expenditure, and from trading incomes, and consequently national income. The former procedure (including stock appreciation in national expenditure and national product) had been advocated by the present author, when editor of the first official national income publications issued by the Commonwealth Statistician. In this note an attempt is made to set out the reasons for this view. A new approach is also suggested for handling the item of stock appreciation in national income accounts, which does not rest on the assumption that stock appreciation is a capital gain which should be excluded from trading incomes and national product.     

Calculation and decomposition of income inequality in low- and middle-income countries: a survey data analysis

This article estimates income inequality in a sample of four low- and middle-income (LMI) countries namely; Albania, Nepal, Tajikistan and Tanzania using the household survey data – Nepal Living Standard Measurement Survey Second. First, we estimate the income generation function for each country and calculate the income inequality using Gini index (GI). Second, we decompose the income Gini into the determinants of income generation functions. Based on the decomposition result, socio-economic factors are the most important determinants of income inequality followed by geographic factors. Demographic factors have the least effect on income inequality in all four countries. Third, we propose a new method to quantify the effect of change in each covariate of income generation function on income Gini. That allows us to quantify the effects of change in specific policy such as increase in investment in schooling or public health to specific group of the population in society on income inequality. A carefully chosen, integrated policy can significantly reduce inequality in all four countries under study.