Carbon-reducing taxes and income inequality: general equilibrium evaluation of alternative energy taxation in Taiwan

Recently, several studies have been a detailed evaluation of the economic implications of energy taxation as a policy instrument to conserve energy and reduce carbon emissions. However, little attention has been devoted to inquiring about the economic implications of energy taxation in the newly industrialized countries (the so-called NICs). In this paper, we use a multisector, multihousehold computable general equilibrium model to assess the distributional effects of alternative energy taxation on the Taiwan economy. The counterfactual simulation technique is applied to investigate the income distribution implications of: (1) an increase in the import taxes of crude oil; and (2) an increase in the excise taxes of petroleum products. Our empirical results basing on Taiwan's data show that both energy taxes increase government revenue and the Gini coefficient, but reduce net value-added, private consumption, disposable income and equivalent variation. A raise in the Gini coefficient implies that there is a worsening in the distribution of income. The lowest income group suffers relatively large welfare and income loss, but the highest income group suffers a relatively small welfare and income loss. The distributional effects differ from household to household depending on the composition of their total consumption and the source of their factor income. Our findings reveal that the energy tax appears to be mildly regressive, there are broadly consistent with those cases of developed countries reported in previous studies.     

The Aggregation of Climate Change Damages: a Welfare Theoretic Approach

The economic value of environmental goods is commonly determined using the concepts of willingness to pay (WTP) or willingness to accept (WTA). However, the WTP/WTA observed in different countries (or between individuals) will differ according to socio-economic characteristics, in particular income. This notion of differentiated values for otherwise identical goods (say, a given reduction in mortality risk) has been criticized as unethical, most recently in the context of the 'social cost' chapter of the IPCC Second Assessment Report. These critics argue that, being a function of income, WTP/WTA estimates reflect the unfairness in the current income distribution, and for equity reasons uniform per-unit values should therefore be applied across individuals and countries. This paper analyses the role of equity in the aggregation of climate change damage estimates, using basic tools of welfare economics. It shows one way of how WTP/WTA estimates can be corrected in aggregation if the underlying income distribution is considered unfair. It proposes that in the aggregation process individual estimates be weighted with an equity factor derived from the social welfare and utility functions. Equity weighting can significantly increase aggregate (global) damage figures, although some specifications of weighting functions also imply reduced estimates. The paper also shows that while the postulate of uniform per-unit values is compatible with a wide range of 'reasonable' utility and welfare specifications, there are also cases where the common-value notion is not compatible with defensible welfare concepts.     

Interdependent welfare functions and optimal income distribution

The relationship between income distribution and social welfare is empirically analyzed, while explicitly allowing for the interdependence of individual welfare functions. The social welfare function is taken to be an additive function of individual welfare functions of income (WFIs). On the basis of Dutch data it is found that under certain conditions (such as absence of effects of income redistribution on productivity) an equal distribution of incomes is suboptimal. The interdependence of WFIs appears to have a pronounced effect on policy conclusions concerning the desirability of income redistribution vis-à-vis economic growth.     

THE INCOME UNIT AND THE ANATOMY OF INCOME DISTRIBUTION*

This paper focuses on a neglected aspect of the treatment of the income unit in the construction of size distributions of income. If the size distribution is to be an indicator of the distribution of economic welfare, and if the economic welfare of each individual in society is to count equally, then conventional distributions are inconsistent with individualistic welfare functions. We estimate size distributions with each person's welfare weighted equally, and contrast these results with those weighting each household unit's welfare equally. The choice of weights is shown to affect both the level and the trend in income inequality.     

国际金融中心演进对国家福利效应的实证检验

本文利用伦敦、纽约、东京三个国际金融中心及其相应国家的大量数据,通过固定效应模型检验方法对国际金融中心演进水平与东道国福利水平之间的关系进行了实证研究,结果显示,国际金融中心银行业的发展会对东道固的居民收入水平、消赍水平和国家财政收入水平有显著为正的效应,而证券业的发展对东道固福利水平的效应不明显,国际金融中心的演进对降低东道国失业率也没有作用.     

Give and Take Between Households and the State: Development and Application of A Benefaction–Contribution Ratio

This study defines a “Benefaction–Contribution Ratio” (BCR), describing the extent to which households are net beneficiaries of or contributors to the economy in relation to income and consumption. Such issues are central to assessment and targeting of policies such as social welfare and taxation. We apply the ratio to 21,144 South African households. South Africa employs various taxation‐funded social grants and subsidized services. A central question is how such transfers affect real household income and consumption. We find that the constitution of social transfers as a function of tax adjusted earned income significantly augments household buying power. Furthermore, we hypothesize and find a negative curvilinear shape which has implications for design of taxation and welfare. This constitution and distribution of this ratio may be useful for international benchmarking and household planning, and as an economic predictor of outcomes such as job seeking, entrepreneurial behavior, family planning, migration, and tax evasion.     

我国劳动收入比重偏低的成因分析——基于劳动力市场的视角

近年来我国劳动收入在初次分配中的比重呈下降趋势。劳动收入比重偏低会对收入分配公平、消费投资平衡和经济增长质量产生负面影响。文章基于劳动力市场的视角对我国劳动收入比重偏低的成因进行了理论研究,并采用我国2000-2011年省级面板数据,构建了一个劳动收入比重决定模型,实证检验了经济发展过程中,二元经济转型和劳动力市场分割对我国劳动收入比重变化的影响。研究结果表明,我国劳动收入比重偏低是二元经济转型的特定发展阶段和劳动力市场分割的制约力量协同作用的结果。在二元经济转型过程中,劳动收入比重的变化趋势呈U型规律。我国劳动收入比重偏低的原因在于,劳动力市场城乡分割和劳动力市场行政垄断行业分割延缓了二元经济转型进程,增加了劳动收入比重在下降阶段的停留时间。因此,稳定我国劳动收入比重的关键是削弱劳动力市场分割,加快二元经济转型。     

SELF‐REPORTED ECONOMIC CONDITION AND HOME PRODUCTION: INTRA‐HOUSEHOLD ALLOCATION IN ITALY

This paper applies a collective model of intra‐household welfare distribution using individual self‐reported data. The model accounts for household production, and self‐reported information on economic condition is used to identify the sharing rule governing the bargaining process in the family. The theoretical framework implies a broad concept of full income, which includes household production as time allocated to domestic activities. We find that self‐reported data on economic status are useful in recovering individual shares of household income and that both wages and non‐strictly‐economic individual variables play an important role in the bargaining process determining the sharing rule in Italy.     

A COMPARISON OF DISTRIBUTIONS OF ANNUAL AND LIFETIME INCOME: SWEDEN AROUND 1970.

The concern with income distribution has always mainly existed because of a concern with individuals' economic welfare. In recent years, the question has arisen whether the distribution of annual income—the distribution most often studied—is the best proxy for the distribution of economic welfare. Other measures, such as lifetime income, have been proposed instead.
The paper starts with a discussion of how to define and measure the distribution of lifetime income. By using a simulation model, which partly consists of estimated functions and partly of tax functions taken directly from tax laws, distributions of lifetime income, variously defined, are then constructed. These distributions are compared with each other, and with distributions of annual income. The simulations indicate that the distribution of lifetime income is considerably less unequal than the distribution of annual income. Whether inheritances are included or not seems to be of no importance for the inequality of lifetime income. If, on the other hand, we include the value of leisure time in lifetime income, inequality increases by about 10–15 percent. Distributions of income after tax have Gini coefficients which are approximately 25 percent less than the Ginis for the before-tax distributions. We thus find that the picture of inequality we get is very much dependent on which income concept we use.     

Social welfare and the unrepresentative representative consumer

If, for all prices, income distribution is optimal for a planner with a social welfare function, then aggregate demand is the same as that of a single “representative consumer” whose preferences over aggregate consumption are the same as the planner's. This paper shows that the converse is false. Aggregate demand may be the demand function of a representative consumer although the income distribution is not optimal for any social welfare function. The representative consumer may be Pareto inconsistent, preferring situation A to B when all the actual consumers prefer B to A. We give conditions under which existence of a representative consumer implies that the income distribution satisfies first order conditions for optimality. Satisfying the first order optimality conditions for an additively separable social welfare function is essentially equivalent to aggregate demand for every pair of consumers having a symmetric Slutsky matrix.     

GENERATING INTERNATIONALLY COMPARABLE INCOME DISTRIBUTION DATA: EVIDENCE FROM THE FEDERAL REPUBLIC OF GERMANY (1974), MEXICO (1968) AND THE UNITED KINGDOM (1979).

In this article an attempt is made to generate internationally comparable income distribution data for the Federal Republic of Germany (1974), Mexico (1968) and the United Kingdom (1979). To that end, the same income concept and income unit were adopted for each country, i.e. respectively household available income and the household. Moreover, incomes from various sources were adjusted for inconsistency with National Accounts according to Altimir's methodology. The paper finds that the distribution of persons by household income per equivalent unit is probably the best way of looking at the distribution of economic welfare. It further demonstrates that the distribution of persons by household available income per capita is much closer to this 'ideal' distribution than the distribution of households by household available income. Finally, the paper discusses some of the problems arising from the fact that one normally works with grouped data. It is found that in the case of the three countries under study, grouping is likely to have had only a small impact on the results.     

ON TRENDS IN THE GAP BETWEEN RICH AND POOR IN LESS DEVELOPED COUNTRIES: WHY WE KNOW SO LITTLE

This paper considers the problems involved in measuring trends over time in inequality in less developed countries. After considering some of the conceptual problems involved in choosing a measure of economic welfare, the period it should cover, and the statistical units to which it should be applied, the paper goes on to draw up a list of minimum data requirements for reaching reliable conclusions about such trends. It concludes that in many countries the available information falls well short of the minimum list, and it explores various sources of indirect evidence on trends in distribution. The central argument is that the available data permit no easy tests for trends in the level of economic inequality in less developed countries. At present, the best bet is to complement evidence on income distribution with available data on consumption distribution and on wage trends and production aggregates by occupational and sectoral groups. Inconsistencies will highlight problem areas, and their reconciliation should provide a firmer foundation on which to draw conclusions about distributional trends.     

Causal relationship between energy consumption and GDP growth revisited: A dynamic panel data approach

This paper uses the panel data of energy consumption and GDP for 82 countries from 1972 to 2002. Based on the income levels defined by the World Bank, the data are divided into four categories: low income group, lower middle income group, upper middle income group, and high income group. We employ the GMM-SYS approach for the estimation of the panel VAR model in each of the four groups. Afterwards, the causal relationship between energy consumption and economic growth is tested and ascertained. We discover: (a) in the low income group, there exists no causal relationship between energy consumption and economic growth; (b) in the middle income groups (lower and upper middle income groups), economic growth leads energy consumption positively; (c) in the high income group countries, economic growth leads energy consumption negatively. After further in-depth analysis of energy related data, the results indicate that, in the high income group, there is a great environmental improvement as a result of more efficient energy use and reduction in the release of CO₂. However, in the upper middle income group countries, after the energy crisis, the energy efficiency declines and the release of CO₂ rises. Since there is no evidence indicating that energy consumption leads economic growth in any of the four income groups, a stronger energy conservation policy should be pursued in all countries.     

Infinite horizon CAPM equilibrium

Summary. This paper derives the equilibrium of an infinite-horizon discrete-time CAPM economy in which agents have discounted expected quadratic utility functions. We show that there is an income stream obtainable by trading on the financial markets which best approximates perfect consumption smoothing (called the {\it least variable income stream} or LVI) such that the equilibrium consumption of each agent is some multiple of the LVI and some share of aggregate output. The welfare of agents is a decreasing function of the lack of consumption smoothing achievable, measured by the distance of the LVI from the perpetuity of one unit of income for ever. If in addition the economy has a Markov structure, the LVI, and hence the equilibrium, can be calculated by dynamic programming. When the model is calibrated to US data a striking prediction emerges: the quasi-irrelevance of the bond market. Infinitely-lived agents achieve almost all their desired consumption smoothing by applying carryover strategies to equity, the proportion of agents' portfolios in bonds rarely exceeding 3%.     

Individual welfare functions and social reference spaces

A model of interdependent welfare functions is developed. The relationship between the parameters of an individual's welfare function and the income distribution in his Social Reference Space is established. Results based on Dutch data are presented.     

收入分配与经济增长——基于消费需求视角的研究

收入分配会对经济增长产生何种影响,一直是经济学中相当重要的问题。通过对收入分配——消费需求——经济增长这一传导机制进行理论分析,表明收入分配将会通过消费需求这一渠道影响经济增长。采用1990~2007年中国经济的相关数据对消费需求与经济增长、收入分配与消费需求的关系进行了实证分析,分析表明收入分配调整将会对经济长期稳定增长产生重要作用。在此基础上提出了收入分配政策的分类和选择范围,并对部分收入政策工具的效果进行了模拟。     

损失规避与经济波动的福利成本研究

目前经济波动的福利成本研究均建立在基于消费的效用函数基础上，而引入收入波动后我们发现：收入波动导致的福利成本才是更为重要的因素。本文定义的偏好具有损失规避的特点，在比较温和的参数设定下，考虑了收入波动后得到的福利成本指标A在1．4％--13．4％之间，比此前各种技术方法得到的A值提高了1—2个数量级。采用中国转型期以来的统计数据，消除短期波动的福利效果等同于将消费的长期增长率再提高约0．25个百分点，这表明如能进一步稳定经济的运行，仍会带来可观的福利提升。     

Conflicting Interests in Environmental Policy-making?

This paper focuses on possible conflicts of interests between the political aims of reduced emissions from energy consumption, redistribution of welfare and efficient policy-making. We use the results from a LES estimation to calculate the consumption reductions, compensating variations and excess tax burdens of three different tax schemes: one linear and two non-linear. Unless the tax scheme is optimally designed to correct for externalities, there is a conflict of interests between the aims of reduced consumption and efficient policy-making. When ranking different tax schemes, there is a conflict between the aims of redistributing welfare and reduced consumption if we are concerned with the well-being of individual households, but not if we are concerned only with the mean household in different parts of the income distribution.     

我国收入分配失衡对消费需求的影响分析

伴随着经济的发展,我国收入分配情况却呈现出失衡的状态,收入差距正在扩大。收入分配情况直接影响一国的消费需求总量和结构,我国的消费需求内需不足,为利用内需拉动经济增长带来较大阻力。为此,今后应致力于消除由不合理因素造成的收入差距过大的问题,继续深化产业结构调整,充分发挥市场的调节作用,发挥政府在收入再分配中的重要作用,提高整个社会的福利水平。