Analysis of county employment and income growth in Appalachia: a spatial simultaneous-equations approach

County median household income and employment growth rates tend to be characterized by spatial interaction. A spatial simultaneous-equations growth equilibrium model was estimated using GS2SLS and GS3SLS. The results indicate strong feedback simultaneity between employment and median household income growth rates. They also show spatial autoregressive lag simultaneity and spatial cross-regressive lag simultaneity with respect to employment and median household income growth rates, as well as spatial correlation in the error terms. Estimates of structural parameters show strong agglomerative effects and significant conditional convergence with respect to employment growth and median household income growth in Appalachia in the 1990 s.     

Endogenous growth and income distribution

A theory of endogenous growth is based on an investment possibility function, relating the growth rate of output to the ratio of gross investment to output and the growth rate of employment as formulated originally by M. F. Scott. Consumers maximize an intertemporal utility function and producers maximize the value of the firm. The long-run rate of growth depends on consumer preferences, the exogenous growth of labor supply and the tax rate on output. The functional distribution of income is determined along with the investment ratio in the steady state. Labor market imperfections and real wage inertia induce transition processes, which are relevant for medium term growth.We are indebted to Olivier Blanchard, Casper van Ewijk, Frederick van der Ploeg, Anton van Schaik, Maurice Scott, Jacques Smulders, and two anonymous referees for their valuable comments on an earlier version. Of course, the usual disclaimer applies.     

A model of income distribution in a revenue-sharing firm

Income distribution within a fixed-membership firm is modeled assuming that all net revenue is distributed to workers. The payment system used is a generalization, for heterogeneous workers, of an income equation first adopted by Sen. We introduce the assumption that payment rates for different workers are chosen to maximize an individualistic welfare function for the firm. A general result for a maximin welfare function is obtained and, using a simulation, we explore the effects of different elasticities of substitution in individual utility functions and different weights put on egalitarianism in the welfare function.     

An income distribution model for Mexico

Employing a multiple regression model, the purpose of the study is to statistically analyze the variations in income concentration between the federal entities of Mexico. The model presented accounts for 72 percent of inter-state variations in individual income concentration.     

Capital markets integration, growth and income distribution

The paper considers a two-country model of overlapping generation heterogenous economies with intergenerational transfers carried out in the form of bequest and investment in human capital. We examine in competitive equilibrium the transitory and long-run effects of capital markets integration. First, we explore how the regime of public education affects the dynamics of the integrated economy. Second, we study the effects of capital markets integration, in equilibrium, on the intragenerational income distribution in both the host and investing country.     

An empirical test of the Post-Keynesian growth model applied to functional income distribution and the growth regime in Brazil

The main purpose of this paper is to empirically investigate whether, between 1970 and 2008, the Brazilian economy was profit-led or wage-led. To this end, we approach a canonical post-Keynesian growth model (PKGM) to estimate certain vector autoregressive (VAR) models and perform Granger non-causality tests. Three main results are extracted from the generalized impulse-response functions provided by the VAR models. First, a positive profit-share innovation affects economic growth and capacity utilization rate, both in the same direction, suggesting a profit-led pattern. Second, a profit share shock positively affects both the ratio actual/potential output, and capital accumulation, reinforcing the previous result. Third, a capacity utilization shock is shown to positively affect both output growth and capital accumulation via the accelerator effect. On the one hand, the pairwise Granger non-causality test does not provide any evidence of causality running from profit share to economic growth or capacity utilization. On the other hand, there is some evidence of Granger causality running from profit share to capital accumulation.     

Functional income distribution and growth in Thailand: A post Keynesian econometric analysis

The aim of this article is to analyze the effect of the income distribution between labor and capital on the growth performance of Thailand from a post Keynesian view. It rests on the theoretical model of Bhaduri and Marglin (1990 Bhaduri, A., and Marglin, S. “Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies.” Cambridge Journal of Economics, December 1990, 14 (4), 375–393.[Crossref], [Web of Science ®] , [Google Scholar]) to see if an increase in the labor income share has a sufficient positive effect on consumption to offset a negative effect on investment and export demand. In order to investigate the question empirically we adopt and develop the approach of Stockhammer, Onaran, and Ederer (2009 Stockhammer, E.; Onaran, Ö.; and Ederer, S. “Functional Income Distribution and Aggregate Demand in the Euro-area.” Cambridge Journal of Economics, 2009, 33 (1), 139–159.[Crossref], [Web of Science ®] , [Google Scholar]). Several measures of the labor income share are calculated to take into account the fact that wage labor represents only half of the total labor force and check the robustness of our results. We also introduce a new treatment of external trade to better integrate the price competitiveness of Thailand. The econometric investigation shows that the growth regime is profit-led over the period 1970–2011, which shows that rebalancing the Thai economy will be difficult and requires an overall change of strategy going beyond a simple prolabor policy.     

Fiscal policy,growth, income distribution and sociopolitical instability

This paper identifies the fiscal instruments that governments can use to promote economic growth when sociopolitical instability (SPI) is present. We show that fiscal policy that takes into account income distribution and SPI transforms a neoclassical growth model into one with both endogenous growth and a poverty trap. Under these circumstances, the growth rate of the economy depends upon SPI, fiscal policy and income distribution. The baseline level of SPI determines an economy's ability to grow. If SPI is high, the economy remains in a poverty trap even if fiscal policy instruments are set appropriately.     

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.     

Public expenditure,income distribution,and growth in OECD countries

Economic growth and the several topics related to it have been studied by economists since their earliest publications. Two different approaches to this area can be found in Neoclassical and Endogenous growth models. The economic growth analysis has focused its attention on the factors that influence the growth of nations, such as fiscal policy or improvement of human capital. Nevertheless, it is also interesting to study the effects of income distribution on economic growth to determine if it has positive effects on growth. The aim of this paper is to study these effects. The authors will develop a theoretical model in which they will introduce public capital in a typical Cobb-Douglas production function. They will estimate OLS, GLS, and SUR fixed effects models for time series and cross-sectional data.     

Educational systems,growth and income distribution: a quantitative study

This study sets out to develop a dynamic model within an economy characterized by the coexistence of public and private schools, under imperfect credit market conditions, in an attempt to provide a clearer understanding of the evolution of economic growth and income inequality. We find that any government wishing to reduce income inequality should adopt policies aimed at increasing the enrollment rate in public schools. However, whilst high enrollment rates can be sustained in private schools, and thus create enhanced economic growth, this can only occur if accompanied by the liberalization of the credit markets.     

Effects of income distribution on household income

The paper uses a complete model of price-independent-generalized-linear Engel equations with estimable income distribution effect parameter to compute average household income for twelve mutually exclusive groups of Australian families to highlight the bias of conventional weighted mean income published by national statistical offices for welfare analysis.     

Development and income distribution in a dual economy: A dynamic simulation model for Zambia

This paper discusses medium-term development prospects for Zambia. The analysis is carried out in terms of a modified dual economy model, suitably modified to capture a number of key aspects of the Zambian Economy. Mining is separated from other urban production and the rural sector is sub-divided into traditional, emergent, and commercial farming. Simulations are carried out on the basis of alternative governmental expenditure, investment, and taxation policies. Special attention is paid to sectoral employment and income distribution implications. In addition, the model is used to derive a number of shadow prices which would be used for project appraisal. These include the shadow price of government savings and a social discount rate.     

Dynamics of income distribution

In this paper, we have obtained closed-form solutions in Cass-Koopmans growth models with heterogeneous agents. The relationship between the form of the production function and the dynamics of income distribution is made explicit. We then use this relationship to determine what production structure is simultaneously consistent with facts on growth and income inequality. Our empirical findings give support to models with decreasing returns in the reproducible factor. JEL Classification: D3, O1, O4
Dans ce mémoire, les auteurs obtiennent des solutions pour des modèles de croissance à la Cass-Koopmans dans le cas où les agents sont hétérogènes. On explicite la relation entre la forme de la fonction de production et la dynamique de la répartition des revenus. On utilise alors cette relation pour déterminer quelle structure de production est arrimée aux faits connus à la fois quant à la croissance économique et à la répartition des revenus. Les résultats empiriques supportent les modèles où les rendements sur les acteurs de production reproductibles sont décroissants.     

Capital income taxation,depreciation allowances and economic growth: A perfect-foresight general equilibrium model

Conclusions The results indicated in Table 1 show that incomplete depreciation allowances reinforce the distortions in the equilibrium growth path brought about by an ideal capital income tax. A reduction in the deductible share of economic depreciation, like an increase in the tax rate, raises the current level of consumption, but reduces the steady state levels of consumption and capital per efficiency unit of labour.The reason for these distortions is that the tax law is able to drive wedges both between the rate of time preference and the market rate of interest, and between the latter and the marginal productivity of capital. The first wedge is created through capital income taxation as such and its size is directly related to the tax rate. The second wedge is created by the incomplete deductibility of depreciation. Its size is directly related to the tax rate and inversely to the deductible share of depreciation. For the distortion in the growth path of the economy it is the sum of the two wedges that counts. Therefore it is plausible that incomplete depreciation allowances reinforce the effects of capital income taxation.Knowing the determinants of the two wedges one can easily derive the influence of a tax reform on the marginal productivity of capital, the market rate of interest and the rate of time preference (cf. Table 2). In the short run, the system of these three interest rates is anchored by the marginal productivity of capital, and hence any measure that widens a wedge is translated into a reduction in the rate or those rates below the wedge. In the long run the system is anchored by the rate of time preference and an increase in the width of a wedge is translated into an increase in those rates or that rate above this wedge.The paper was written in association with the Sonderforschungsbereich 5 (Staatliche Allokationspolitik im marktwirtschaftlichen System).