Income Inequality,Human Capital,and Income Growth: Evidence from a State-Level VAR Analysis

We use Granger causality and impulse response analysis to examine the relationship between income inequality, human capital attainment, and income growth using annual state-level data over the period 1929–2000. We find consistent evidence that the income share of the top decile Granger-causes income growth, but only weak evidence that income growth Granger-causes the top decile income share. Moreover, an impulse response analysis indicates that income growth responds negatively to permanent changes in the income share of the top decile. These findings appear to have important regional variations, however, with the more densely populated Eastern states showing the strongest associations. We also find evidence that years of schooling may Granger-cause income levels, but little evidence that years of schooling Granger-causes the top decile income share.

The effect of increased labor force participation of married women on the distribution of family income in the Netherlands

Summary In this article we analyse the income equalizing effect of wives' income on the combined income of husband and wife in The Netherlands. We will use the Theil coefficient as a measure of inequality. After some preliminary remarks have been made and relevant data have been presented, the Theil coefficient is decomposed into a number of components. Whereas theory concludes that the effect of wives' income on the distribution of family income should be less equalizing after about 1970, it appears that this does not hold true for the whole period under investigation.The research was carried out in the framework of the project entitled Problems relating to the distribution of social security. The author wishes to thank Professor A. Kapteyn and two anonymous referees for their helpful comments on an earlier draft of this paper.     

A causal model of the size distribution of family income

Summary Through the use of a simultaneous equations framework, NR examined the direct and indirect effects that selected socio-economic and demographic variables have upon the size distribution of family income. From this examination, NR correctly identified the birth rate as the single most important factor exacerbating family income inequality [p. 38]. However, in their examination they failed to note the intermediary importance that the rate of net in-migration has, not only in channeling this exacerbating influence, but also in channeling the influence that other variables have on family income inequality.     

Sources of capital and income for communal area farmers in Kavango: Implications for agriculture and rural development

A survey based on a structured questionnaire was conducted at the beginning of 1995 to identify sources of capital and income for rural households in Kavango. The survey, which covered 80 households, revealed that there was a high dependence on external income sources. Pensions were the major source of income for the highest proportion of all households (33 per cent), followed by wages (23 per cent) and brewing (10 per cent). Other sources of income of similar importance to brewing were crop sales, non‐formal work and cash remittances.

Livestock were a minor source of income but a major source of capital and food security. Households with smaller cattle herds depended more on cattle for income and food security than those with larger herds. Cattle were a highly valued production resource that was only consumed during times of crisis and only in the absence of less valuable assets that could be easily liquidated. Grain storage was more popular among groups with the lowest income. By various criteria, female‐headed households always tended to be in the group of households categorised as the poorest of the poor. However, given sufficient income, over one third of them would purchase cattle to diversify their investment portfolio.

This article presents a number of potential strategies for improving the incomes of rural households in Kavango. These include the promotion of equitable livestock ownership and better use of the grazing resource through community management, intensification of cropping and the implementation of labour‐intensive programmes to develop rural infrastructure.     

Asset stocks and flows in macroeconomic theory: Resolving the ambiguities in the general IS-LM model

Summary In this paper we have critically examined the macroeconomic model developed by Benavie as a generalization of the beginning-of-period model of Tobin and of Patinkin's end-of-period approach. We have focused our attention on the ambiguous effects on income of government spending changes and tax changes that result from this model. Our conclusions are twofold. First, with respect to the effects of government spending on equilibrium income, we find that, if the demand function for money is decreasing in the interest rate, then the effect of government spending onY is unambiguously positive for any value of. The ambiguity discovered by Benavie is a result of his implicit assumption that money has the characteristics of a Giffen good. Second, in the case of the tax ambiguity, we find the source of the problem to be in the particular formulation of Benavie's asset demand functions. Benavie specifies his asset demand functions in such a way that tax changes impinge directly on these demands. If both stock and flow demands depend upon gross income and not taxes, then there isno ambiguity with respect to tax changes regardless of the value of. However, if both stock and flow demands depend upon disposable income, and hence taxes, the effect of tax changes on equilibrium income becomes ambiguous, but again independently of the value of.     

Economic theories of leisure: Some comments and suggestions

Summary Most economic theories of leisure are concerned with valuations of leisure time related to income as an opportunity cost. After a critical discussion of these theories, leisure time as a constraint is introduced in the theory of consumer behaviour by (1) distinguishing between pleasant and unpleasant consumer activities, (2) discussing the effects on individual's welfare of changes, in the duration of both types of activities and (3) developing time-saving concepts. A theoretical framework for consumer choices under time and/or income constraints leads to suggestions for the lines along which leisure research should be developed as a basis for welfare policy in the widest sense.My thanks are due to Professors P. Hennipman, L. H. Klaassen, A. Pais and Mr. D. B. Needham for the valuable suggestions they made during the preparation of this article. Several parts of it will be presented in a more detailed form in a thesis on the subject.     

Naar De Meetbaarheid Van Een Rechtvaardige Verdeling

Summary The author proposes a method to arrive at a cardinal theory of utility or welfare (considered identical) by the introduction into the utility function of (1) variables, (2) parameters and (3) coefficients. Parameters characterize measured differences between individuals relevant to the problem considered; variables indicate either choices open to individuals (job, income) or exogenous circumstances (a salary scale or a tax scale). The ethical postulate introduced is the equality of each coefficient among different individuals, offered as an interpretation of the fundamental equality of men. Once the utility function has been defined and tested, justice in distribution is defined as equality of the values of that function for all individuals considered. A numerical illustration is added in which years of schooling and degree of independence are used as parameters to characterize twenty social groups and the just as distinct from the actual income distribution is calculated for the Netherlands around 1965.It affords the Board of Editors great pleasure to publish this paper by one of their members. This gives the Board the opportunity, also on behalf of the readers ofDe Economist, to congratulate Professor Tinbergen most cordially upon his 70th birthday, which he celebrated on 12th April, 1973.     

A data base with income and assets of new retirees by race and hispanic origin

This study of persons who retired in 1980-81 across groups partitioned by marital status, sex, race, and Hispanic origin reveals sub-stantial differences in income and asset holdings. Data from the New Beneficiary Survey show that (1) median income ranged from $ 11,000 for black couples to $18,000 for white couples, (2) social security payments were the major source of income, (3) pension income was more frequently received by white retirees, but when received, was of comparable value to all races, (4) home ownership was high among all retirees, especially couples, and (5) median assets of black retirees were very low—near zero.     

Non-Agricultural Activities and Income Distribution in Rural Java∗

This paper addresses two problems relating to non-agricultural employment in rural Java, First, four possible determinants of non-agricultural income at the village level are examined: agricultural income, agricultural density, land distribution and location. Of these, the first two appear most significant. Second, the relationship between non-agricultural activities and rural income distribution is evaluated. In relative terms, income from non-agricultural activities is most important for landless and small farm households, although in absolute terms, large farmers derive sizeable income from this source. The evidence is that non-agricultural income serves to moderate income differences within villages.

     

Some socio‐economic characteristics of tribal and private farmers in the Hlanganani district of KwaZulu*

A survey of eighty‐nine tribal farmers and nine private farmers in the Hlanganani district of KwaZulu was conducted. Results show that agriculture is dominated by elderly tribal farmers operating land allotments of less than one hectare in size primarily for home consumption purposes. Private farmers control much larger farms and are less dependent on off‐farm income.

Almost one half of the tribal farmers interviewed favoured private ownership of grazing and arable land. Traditional leaders favoured the reallocation of land to fewer people and the conversion of grazing land into arable land as a solution to the small farm size problem.

Although education levels were similar among both groups of farmers, most private farmers invested in soil conservation whereas the majority of tribalfarmers did not. Crop losses caused by livestock on arable lands (a result of the tribal tenure system) were identified by tribal farmers as the most important factor restricting increased crop production.     

Are Illegal Drugs Inferior Goods in the US?

Using data from the National Survey on Drug Use and Health, evidence of income inferiority in illegal drug consumption is presented. This is done by estimation of binary choice probit models with endogenous regressors. The endogeneity of income with regard to drug consumption is considered and the more efficient three-stage least squares procedures have been implemented. In general, the results indicate that accounting for endogeneity improves results on income inferiority with regard to drug consumption. An implication of this study is that some form of income distribution policies towards the poor might be more effective in controlling substance abuse. It also points out the regressive nature of the government’s substance abuse program.

Productivity, innovation and ICT in Old and New Europe

This paper investigates the productivity performance of CEE countries vis-à-vis the EU-15 during the 1990s to detect sources of convergence between the two regions. The paper shows that changes in labour intensity have been an important source of productivity convergence during the 1990s, and are likely to remain so in the near future. It is also found that despite lower income levels, ICT capital in the CEE-10 has contributed as much to labour productivity growth as in the EU-15. Industry analysis shows that manufacturing industries that have invested heavily in ICT have been key to the restructuring process. As such ICT may therefore have been an important source of growth but probably temporary source of convergence. In the longer run the impact of ICT on growth will have to come primarily from its productive use in services. The paper therefore includes a New Economy Indicator that reflects the existence of conducive environment for continued ICT investment and diffusion. It shows that further reforms are much needed for CEE countries to enter a second convergence phase in the coming decades.This paper is written as part of a project on Information & Communication Technologies as Drivers of Economic Development in Post-Communist Countries sponsored by USAid (Grant No. 220/001.6). The industry data for the EU-15 (section 4) are updated estimates derived from a study sponsored by DG Enterprise of the European Union (OMahony and van Ark 2003). We are grateful to Robert Inklaar and Edwin Stuivenwold for statistical assistance, and to various commentators on this paper at seminars and workshops. We benefited in particular from comments by Bart Los and Marcel Timmer. The authors are solely responsible for the results presented and any remaining omissions.     

De Theorie van de Inkomensverdeling en het welzijn van de huisvrouw

Summary The author presents some comments on the discussion between Mrs. Bruyn-Hundt and Prof. Tinbergen inDe Economist, 1973, nr. 6. In analysing the welfare of housewives, the nature of the family and of the raising of children, which is one of the ultimate aimes of human life, should be taken into account. Before deciding if, and to what extent, the unpaid services of housewives and other members of the family should be included in the national income, a production boundary within households should be defined. It is doubtful whether the inclusion of unpaid domestic services in the definition of national income is very useful for purposes of economic analysis.     

The role of dryland cotton as a source of household income in two magisterial districts of KwaZulu

The aim of this paper is to illuminate certain economic aspects of the production of dryland cotton among rural households in the Ubombo and Hlabisa magisterial districts of KwaZulu. In order to assess the viability of the household cotton enterprise, its contribution to household income and the producers' perceived constraints to production, an interview survey was conducted among 100 cotton‐adopting households in the two study areas. Multi‐stage sampling techniques were employed to facilitate the study.

Results show that the Ubombo region's inherent climatic suitability, combined with extensive support services, has benefited the dryland producer and resulted in a lucrative on‐farm enterprise. Cotton contributed an average of 62 per cent to annual household income in this district

In the climatically less suitable Hlablsa district, where producers are limited by lack of finance and small land sizes, wage labour was found to be the prime source of cash income for the household, while cotton contributed an average of 17 per cent towards annual household income.

Producers in both areas are cost effective relative to the white commercial farmer while mean yields and net incomes indicate that dryland cotton has the potential to contribute much to the development of certain areas of KwaZulu. Overspending on chemicals may indicate the need for increased extension into complex pest control management procedures.     

Over inkomenspolitiek

Summary Incomes policy is defined as that part of government activities which is directly and wittingly engaged in the formation and the distribution of incomes. The results of such a policy are limited by market forces, but it is surely possible for the government to influence the distribution of earning capacities, the market system and the formation of incomes.The aims of incomes policy are twofold. Firstly, to achieve economic equilibrium,i.e., full employment, internal and external monetary equilibrium. Secondly, a more reasonable income distribution, which may be translated as: more equality on the condition that the national product (productive strains and savings) is not reduced too severely.Because other instruments are insufficient, incomes policy is indispensable to restrict inflationary pressures. If a more equal distribution is thought to be desirable, too, this kind of policy is necessary, because in peacetime automatic distributive changes are only very small.Incomes policy may be devided into three parts. Firstly (and most radically), the redistribution of earning factors and capacities, especially capital, market power and education. Secondly, measures with respect to factor payments, of which wages policy is an important part. Guidelines have proved not to be sufficient. Thirdly, income transfers, a typically welfare-state instrument of only limited importance.On these subjects a number of rather detailed proposals are made. It is stressed, however, that the definite choice of measures and priorities is a political one.Openbare les uitgesproken ter gelegenheid van de aanvaarding van ambt van lector in de economic aan de Rijksuniversiteit to Groningen op dinsdag 19 maart 1968.     

Overall trade specialization and economic development: countries diversify

This paper provides evidence for an aspect of trade often disregarded in international trade research: countries’ sectoral export diversification. The results of our semiparametric empirical analysis show that, on average, countries do not specialize; on the contrary, they diversify. Our results are robust for different statistical indices used to measure trade specialization, for the level of sectoral aggregation, and for the level of smoothing in the nonparametric term associated with per capita income. Using a generalized additive model (GAM) with country-specific fixed effects it can be shown that, controlling for countries’ heterogeneity, sectoral export diversification increases with income.

Engeland en de Europese Technische Samenwerking

Summary This article attempts to evaluate the possible British contribution to research and development in an enlarged European Economic Community, and formulates the conditions for progress of the British economy when joining the Common Market.In the past the stop-go policy of the consecutive British governments created an atmosphere not conducive to economic growth. In the sixties the so called brain drain and the capital export were extensive. Annual gross investment in relation to gross national product was about 5% lower than in the Common Market countries, and pure capital productivity - represented by the ICOR and corrected for the contribution of labour - was unsatisfactory when measured according to EEC standards. These circumstances led to a considerable underinvestment in the United Kingdom (the author's very crude estimate regarding the period 1958–1968 reaches the figure of about £ 11.300 million), a process that probably will go on in the seventies, as the British income policy meets with huge difficulties. Without skilful and efficient use of the more than sufficiently available British research and development resources -so that the capital productivity can be raised - and without a drastic increase of the investment-income ratio as well as an adequate income policy, the success of the British entry into the Common Market will remain doubtful. Otherwise the export of valuable production factors will continue and unemployment will keep on increasing, so that even participation in the scheduled economic and monetary union by 1978 will be questionable. Even if the above mentioned conditions are fulfilled, considerable capital import may still be necessary to modernise capital stock in Britain, especially in the field of infrastructure, factory building and housing.     

Income distribution,economic structure and employment in South Africa

This paper discusses the impact of a redistribution of current income from the White to the Black population on the distribution of sectoral output, and total employment by means of a semi‐closed input‐output model.

The results show that a redistribution of current income towards Black households — which no doubt will have positive social and political repercussions — has a non‐negative effect on GDP and a definite positive effect on the performance of sectors with a high private consumption expenditure component, as well as on total employment.     

On the dependence of population growth on income: New results in a ricardian - Malthus model

Summary We have been able to complete an investigation of Niehans' well-known neoclassical growth model with endogenous population by analytical methods so that the full range of steady-state solutions and their properties are revealed. For certain ranges of the equilibrium capital-labor ratio, an increase in the saving rate decreases equilibrium growth rates and per capita income, and an increase in the marginal propensity to proliferate increases equilibrium growth rates and per capita income. Thus a complete analysis provides new results, some contrary to expectations, which provide a basis for comparing Niehans' model with other specifications of the population sector.Professors, respectively, of Economics and Systems Engineering at the University of Illinois at Chicago Circle. This research was supported by a grant from the National Institute of Child Health and Human Development.     

Smoke of leets

Summary This is a review of some of Mrs. Joan Robinson's ideas, and the author's conclusion is that these ideas do not contribute to the present state of economic theory. Her view on international trade is lopsided, her criticism of traditional capital theory goes too far, her refutation of income distribution theory is mainly unfounded. Basically, Mrs. Robinson rejects the notion of relative scarcity of capital; the author believes that this is a useful notion in economics. Moreover, her recent work shows a strong anti-empiricist tendency. If Mrs. Robinson's negative train of thought were to be applied to all concepts of macro-economic theory (total labour force, real national income etc.) these concepts would vanish in thin air. The whole of macro-economics might go up in smoke.