Stabilization policy and income distribution in developing countries

The trade-off between income distribution and stabilization is one of the least understood in development economics. The paper reviews the recent literature on the effects of devaluation and monetary and fiscal policy. Devaluation is shown to have a significant impact on incomes through both its expenditure switching and reducing effects, this varying with the time perspective taken. The implications of these effects for poverty are explored, and shown in principle to be complex and uncertain. Similarly, monetary and fiscal restraint is shown to influence income distribution through changes in the level and structure of output. How changes in monetary and fiscal policy affect the poor in developing countries is again difficult to determine theoretically. The labor market is shown to be a key determinant of how policy changes are transmitted to poverty groups. The paper concludes that rigorous empirical research on this subject is long overdue.     

Inequality in South Africa: The distribution of income,expenditure and earnings

This article empirically analyses the state of inequality in South Africa. International comparisons show South Africa to be among the most unequal countries in the world. The levels of income inequality and earnings inequality are analysed with a range of measures and methods. The results quantify the extremely high level of inequality in South Africa. Earnings inequality appears to be falling in recent years, with relative losses in the upper-middle parts of the earnings distribution. Decomposing income inequality by factor source reveals the importance of earnings in accounting for overall income inequality. The article concludes by observing that, internationally, significant sustained decreases in inequality rarely come about without policies aimed at achieving that, and suggests that strong policy interventions would be needed to reduce inequality in South Africa to levels that are in the range typically found internationally.     

A causal model of the size distribution of family income: Some overlooked determinants and policy implications

Summary The causes and interaction of variables affecting income inequality are complex and very little empirical research has been attempted to explain or measure these interactions. This paper employs an eclectic approach to construct a causal multiequation model that specifies a system of interrelationships to examine both the direct and indirect effects which selected socioeconomic and demographic variables have upon the size distribution of family income. This procedure has advantages over single equation models in explaining the processes through which variables affect income inequality, allowing greater accuracy in estimating the impact that variables have upon inequality by measuring both their direct and indirect effects, and facilitating the identification of policy variables and how they may be expected to work through the system of interrelationships to narrow the differentials in family earnings.In particular, our model reveals that the birth rate is the single most important factor exacerbating family income inequality, and selective policies were identified which may interact with many variables within the system to reduce family income inequality. The model further demonstrates a high predictive power with a coefficient of determination of 0.82. Our results demonstrate that causal multiequation models using an eclectic methodology to examine the interactions of variables and processes through which they affect the size distribution of income can be useful in quantifying the relative effects of a wide variety of socioeconomic and demographic determinants and constructing policies in future research efforts in this important area.     

ASEAN FTA,distribution of income,and globalization

This paper examines the impact of Free Trade Agreements on income distribution within the Association of Southeast Asian Nations (ASEAN) and between the members and their trading partners outside ASEAN. The study uses a Computable General Equilibrium model, a modified version of the 57 sector, 87 country, Global Trade Analysis Project (GTAP) integrated model of national input–output tables, version-6.2 (2001 database) with its reserve matrix facility, to simulate income distribution results as an outcome of certain parameter changes that appear in intra and inter regional trade.Within ASEAN, trade liberalization will stimulate the output of each country within the region according to their comparative advantage. Since trade liberalization tends to increase output of capital-intensive goods more than labor-intensive goods, the less-developed countries within the region tend to get smaller benefits compared to other member countries. In addition, the physical means of production tend to gain more relative to the gains of labor from the FTAs. This tends to widen the income gap between high-income and low-income households within ASEAN.Comparing ASEAN and the developed non-ASEAN countries, an FTA within ASEAN tends to reduce the returns to labor of the developed non-member countries and narrow the income gap between ASEAN, as a whole, and those rich countries since capital-intensive products of developing countries are often labor-intensive goods of developed countries.     

The cost of redistributing income through trade policy

Zusammenfassung Die Kosten der Einkommensumverteilung über die Handelspolitik. — Wenn Handelspolitik nur maskierte Einkommenspolitik ist, lohnt es sich, die ?konomischen Kosten der Einkommensumverteilung durch Handelsbeschr?nkungen zu untersuchen. Für analytische Zwecke verwenden wir ein gebr?uchliches neoklassisches Zwei-Güter-Zwei-Faktoren-Modell mit gegebenem Faktorangebot. Wir nehmen an, da\ auf Güter- und Faktorm?rkten vollkommener Wettbewerb herrscht. Das Land ist im Vergleich zu den Weltm?rkten klein und übt keinen wahrnehmbaren Einflu\ auf die Weltmarktpreise aus. Vor der Einführung von Handelsbeschr?nkungen gibt es keine Allokationsverzerrungen, Steuern oder Subventionen. Das Einkommen wird in Produktionseinheiten gemessen, die zu Weltmarktpreisen bewertet werden. Es werden nur Produktionsverluste berücksichtigt; Verluste in der Konsumsph?re werden au\er acht gelassen. Unter diesen Annahmen wird eine Formel abgeleitet, in der die ?nderung der Anteile der Faktoreinkommen zu dem durch die Handelsbeschr?nkungen verursachten Verlust an realem Einkommen in Beziehung gesetzt wird. Sowohl der Unterschied in den Faktorintensit?ten zwischen den beiden Industrien als auch der Grad der Faktorsubstitution sind ma\gebend dafür, wie hoch der Einkommensverlust bei einem gegebenen Ausma\ der Umverteilung ist. Werden die oben genannten Annahmen über die Steuern und Subventionen aufgehoben, um die Konsequenzen der Einführung eines Zolls auf schon vorhandene Allokationsverzerrungen zu untersuchen, ergeben sich die bekannten ?second best?-Probleme. Abschlie\end wird die Handelspolitik als Mittel zur Regelung der Preise wichtiger Güter untersucht. Eine solche Anwendung der Handelspolitik führt zu einer Einkonunensumverteilung, wenn Arbeiter und ?Kapitalisten? eine unterschiedliche Ausgabenstruktur haben. Aufgrund des ?Vergr?\erungseffekts? wird jedoch die Wirkung auf die Faktoreinkonunen gr?\er sein als die auf die Budgets der Arbeiter und ?Kapitalisten?. Wenn die beiden Wirkungen entgegengesetzt sind, wird also die ?nderung des relativen Faktoreinkommens den Budgeteffekt der ?nderung der relativen Preise mehr als ausgleichen.

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Résumé Les co?ts d’une redistribution des revenus par la politique commerciale. — Si la politique commerciale n’est qu’une politique des revenus en déguisement, il vaut examiner les co?ts économiques de la redistribution des revenus par la restriction du commerce extérieur. Pour analyser ce problème, l’auteur développe un modèle néoclassique de deux facteurs et deux biens: L’offre de facteurs est fixée. La concurrence sur les marchés des facteurs et des biens est parfaite. Le pays est petit en relation des marchés mondiaux et ses actions n’exercent pas d’influence perceptible sur les prix mondiaux. Il n’y a pas de distorsions, d’imp?ts ou de subventions. Le revenu est mesuré en termes de production, évalué aux prix mondiaux. Par conséquent, seulement les pertes de production sont considérées, tandis que les pertes de consommation sont ignorées. Après avoir donné ces suppositions, l’auteur déduit une formule qui met en rapport la variation des partages des revenus de facteurs et la perte de revenu réel en conséquence des interventions dans le commerce extérieur. La différence qui existe entre les intensités des facteurs dans les deux branches et le taux de substitution des facteurs jouent un r?le important pour la détermination du revenu qui est perdu en conséquence d’un montant donné de redistribution. Ensuite, l’auteur supprime la suppositionqu’il n’existe pas déjà d’imp?ts et de subventions et examine les conséquences si l’on impose de plus un tarif douanier. Des résultats familiers de la théorie de second best sont trouvés. Enfin, l’auteur s’occupe de la question si la politique commerciale ne peut pas être une mesure pour contr?ler le prix des biens à clef. Une telle politique redistribuera les revenus si les travailleurs et les capitalistes diffèrent en ce qui concerne la structure de leurs dépenses. Mais à cause de la ?magnification effect?, l’influence sur les revenus des facteurs dominera les influences sur les budgets des travailleurs et capitalistes. Si les directions de ces deux types d’influence sont opposées, la variation de la rémunération relative des facteurs surcompensera l’effet sur le budget qui résulte de la variation des prix relatifs.

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Resumen El coste de la redistributión de rentas mediante la política comercial. — Cuando la política comercial realmente es una política de ingresos es útil analizar el coste económico que ocasiona la redistribución de ingresos a través de restricciones comerciales. A efectos analiticos, recurriremos a un modelo neoclásico con dos bienes y dos factores de producción, basado en los siguientes supuestos: La oferta de factores es rígida. Existe competencia perfecta tanto en el mercador de bienes como en el de factores. El país en cuestión es relativamente peque?o, de manera que no puede influenciar los precios del mercado mundial. Con anterioridad a las restricciones comerciales no existían distorsiones, impuestos o subsidios. Los ingresos se miden en términos de producción, valorada a precios internacionales; ésto significa que solamente se estudian pérdidas de producción y no las de consumo. Bajo estos supuestos, se desarrolla una fórmula que relaciona cambios en la distribución relativa de la renta de factures con la pérdida de ingreso real producida por intervenciones en el comercio internacional. Las diferencias interindustriales de la intensidad en el uso relativo de ambos factures así como las elasticidades de sustitución de factores juegan un papel importante en lo que a la pérdida de ingreso por un volumen de redistribución dado se refiere. A continuación se suprime el supuesto relacionado con los impuestos y subsidios y se estudian las consecuencias que tendrá la imposición de un arancel de aduana en a?adidura a las distorsiones ya existentes. Este estudio lleva a una situación de suboptimación (second-best). Finalmente, el autor analiza el uso de la política comercial para controlar el precio de productos llave. El uso de la política comercial redistribuirá las rentas si trabajadores y capitalistas tienen estructuras de gastos diferentes. Sin embargo, debido a lo que se ha venido llamando el ?magnification effect? el impacto sobre las rentas de factores dominará el impacto sobre los presupuestos de trabajadores y capitalistas. Esto significa, que siempre y cuando los dos de tipos impacto siguen trayectorias opuestas el cambio en la distribución relativa de los factores sobre compensará el efecto de variación de los precios relativos sobre los presupuestos.

     

Export taxes and income distribution: The Philippines coconut levy

Export Taxes and Income Distribution: The Philippines Coconut Levy. — A large, empirically based general equilibrium model of the Philippine economy is used to analyze the implications of a tax on coconut oil exports. The analysis shows how general equilibrium models can be used to derive optimal tax rates and to show the detailed relationship between the rates at which these taxes are applied and their economic effects. The analysis explores in particular the effects such taxes have on economic welfare and on income distribution within the country. The distributional effects of this export tax are shown to be highly regressive, revealing more clearly the policy trade-offs such taxes involve.     

改革个人所得税,增大调节收入分配的力度

一、改革个人所得税的理论支持 根据边际消费倾向递减规律，富人越富越有钱他的边际消费倾向越小，反之，穷人越穷，边际消费倾向越大。收入差距的过大使较大比重的社会财富沉淀在少数人手中，很多有消费欲望的人却无力购买，只好降低边际消费倾向，可见进行收入再分配缩短贫富差距对于刺激消费需求的重要意义。     

The permanent income hypothesis,business cycles,and regime shifts: Evidence from eight countries

Summary We provide international evidence on the joint behavior of consumption and the real rate of interest and examine the rational expectations restrictions of the permanent income hypothesis. We extend the basic model to allow for independent effects of the stage of the business cycle or a regime shift after 1979. In our eight-country sample (using 1970s–1980s data) we find a small but internationally similar rate of intertemporal substitution once we allow for a regime shift affecting the average growth of consumption after 1979. The rational expectations restrictions are formally rejected, most prominently for the United Kingdom and Japan.We thank Ivo Arnold, Eduard Bomhoff, Fanz Palm, Peter Schotman, Carlo Winder, and anonymous referees for their comments and suggestions. All remaining errors are of course our own.     

The geographic distribution of world income, 1950–1990

Summary PPP-based data (PPP=purchasing power parity) for gross domestic products are used to assess the affluence of more than 100 non-Communist countries in 1950–1990. A seven-region classification, based on the distinction between temperate and tropical zones, is used to summarize the data on individual countries. The seven regions account for nearly 90 percent of the inequality among these countries in each year. Another classification, based on the position of countries with respect to the European Union, is applied to 18 countries in Western Europe. Five journeys around the world are described; the main result is that affluence tends to decline when the traveler moves from temperature zones (in either the Northern or the Southern Hemisphere) toward the Equator. Another topic considered is that of the G-7 countries, the populations of which are all concentrated in the temperate zones of the Northern Hemisphere. Also, attention is paid to Kuznet's hypothesis of divergenceconvergence in a cross-country context.Dedicated to the Memory of Jan TinbergenTheil is the McKethan-Matherly Eminent Scholar Emeritus and Courtesy Professor of Food and Resource Economics, while Seale is Associate Professor of Food and Resource Economics, both at the University of Florida (UF). This paper summarizes results of research conducted jointly with Sri Devi Deepak and Charles B. Moss of the UF Food and Resource Economics Department. Robert Summers of the University of Pennsylvania deserves our gratitude for making the data available to us. Florida Agricultural Experiment Station Journal Series No. N-00973.     

Development and income distribution

Zusammenfassung Entwicklung und Einkommensverteilung. — Wegen der ungleichen Einkommensverteilung in unterentwickelten L?ndern k?nnen besonders drei Fragen gestellt werden: I. Was sind die Ursachen der Ungleichheiten im Einkommen in Entwicklungsl?ndern? 2. Warum wurde bis jetzt so wenig oder nichts getan, um die Ungleichheiten abzumildern ? 3. Was, wenn überhaupt, kann in dieser Hinsicht getan werden ? Der Verfasser kommentiert die beiden ersten Fragen, aber der Hauptzweck der vorliegenden Abhandlung besteht darin, einige vorl?ufige Antworten auf die dritte normative Frage zu geben. Er ?uβert die Vermutung, daβ die Verteilung der Einkommen durch die Auswahl und Vorbereitung besonderer Entwicklungsprojekte beeinfluβt werden k?nne, und skizziert die Umrisse von Methoden, mit denen dies bewerkstelligt werden kann.

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Resumen Desarrollo y distribución del ingreso. — En vista de la distributión desigual del ingreso en paises subdesarrollados cabe preguntar, entre otras cosas, (1) ? cuáles son las razones de las desigualdades en el ingreso en países en desarrollo ? (2) ? por qué se ha hecho hasta el momento tan poco o nada para reducir dichas desigualdades ? (3) ? qué se puede hacer realmente ? El autor comenta las dos primeras preguntas, pero el objetivo principal del présente trabajo consiste en dar algunas contestaciones preliminares a la tercera pregunta. Opina que se podría influenciar la distribución del ingreso a través de la selectión y preparation de projectos especiales de desarrollo, y dise∼na los métodos que se prestarian a llevar ésto a cabo.

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Résumé Développement et distribution du revenu. — Vu la distribution inégale du revenu dans les pays à développer, on peut poser trois questions en particulier: 1. Quelles sont les causes des inégalités de revenu dans les pays à développer ? 2. Pourquoi n’a-t-on, jusqu’à présent, rien fait, ou en tout cas très peu, pour mitiger ces inégalités ? 3. Y a-t-il quelque chose — et quoi ? — qu’on pourrait y faire ? L’auteur fait quelques remarques à propos des deux premières questions, mais c’est son but principal de donner quelques réponses tentatives à la troisième question normative. Il suggère qu’on pourrait exercer une influence sur la distribution du revenu en choisissant et préparant des projets spéciaux de développement, et il donne l’ébauche des méthodes avec lesquelles cela pourrait se faire.

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Riassunto Sviluppo e distribuzione dei redditi. — A causa délia disuguale distribuzione dei redditi nei Paesi in via di sviluppo, tre questioni possono essere specialmente poste: 1. Quali sono le cause délie disuguaglianze nel reddito nei Paesi in via di sviluppo ? 2. Perché fino ad ora è stato fatto cosí poco o niente per attenuare le disuguaglianze? 3. Che cosa può essere fatto, se mai, sotto questo riguardo ? L’autore commenta le prime due questioni, ma lo scopo principale del présente saggio consiste in questo, di dare alcune risposte provvisorie alla terza questione normativa. L’autore esprime l’ipotesi che mediante la scelta e la preparazione di speciali progetti di sviluppo possa essere influenzata la distribuzione del reddito e schizza le linee di metodi con cui ciò può essere realizzato.

     

收入分配中的政府责任

导致收入分配失衡、贫富差距过大的原因有很多。对中国来说,首要的问题是,先搞清楚政府的本分是什么,然后才能以此为基础实现收入分配的真正改善.     

Fertility,income distribution,and economic growth: theory and cross-country evidence

The authors perform discriminatory, empirical tests of a theoretical model that predicts that family size adversely affects output per capita and nonsteady state growth rates. Neoclassical models posit that adverse output and nonsteady growth rates are affected by labor force growth (LFG) or population growth (PG). This study tests whether family size (FS) will be more significant than LFG or PG in explaining differences in economic growth (EG) rates across countries during 1960-88. A proxy variable for the public education system was used to separate government interventions on human capital formation from market forces. Data were obtained for 73 countries, which exclude centrally planned economies, oil-producing countries, and those with less than 1 million population. The empirical test is run with 58-country, 45-country, and 96-country samples to test for robustness and reliability. The empirical test supports the theoretical model. It demonstrates that equal distribution of income and smaller FS enhance EG. With income inequality, the effect of FS was significant, and the effect of the LFG rate or PG rate was insignificant. With a given FS, LFG was positively correlated with EG. A reduction of the net fertility rate by one point would increase the worker output growth rate by 0.25%, and the differences in growth rates between high- and low-fertility countries would be 1%. An increase in the income share of the bottom 60% would increase the growth rate of worker output by about 1%. Higher investments in public or private education would be conducive to growth.     

Inter-farm,inter-regional and farm-non-farm income distribution: The impact of the new cereal variaties

HYVs affect distinct aspects of income distribution. Among farmers, the technology on balance most readily benefits the small; but public policy - on prices, credit, irrigation, nutrients, mechanisation, crop-breeding - has skewed gains towards larger owners. Between landed and landless the latter gain, as HYVs — unless subverted by inappropriate mechanization — raise and smooth wages and employment. The evidence on rich and poor regions lightens the prevailing gloom; and agronomic features of newer HYVs fit them well for some long-neglected, ill-watered areas. As for city and country, urban price policies, etc., have diverted some gains from HYVs towards less-poor urban consumers (and their employers). However, natural scientists are sufficiently independent of policy-makers to produce — with proper socio-economic support - research that steers benefits from HYVs towards the natural gainers from more food, labour-intensively grown: the rural poor.     

Trade, convergence, and globalisation: The dynamics of the international income distribution, 1950-1998

This paper investigates the evidence for convergence in per capita incomes across 115 economies during the period 1950-1998 and examines the impact that international trade had on this process. Drawing on trade-conditioning within a distribution dynamics framework, that explicitly models frequency distributions of the cross sections of economies over time, this study suggests that trade patterns in the Golden Age were conducive to the formation of middle and high income groups or clubs of economies, but similar trade patterns (dominated by the rich economies) do not seem to explain the perpetuation of these group formations in the post-Golden Age period. If foreign trade is a key aspect of globalisation, why does it matter in accounting for the observed dynamics of the international income distribution during the Golden Age, but not during the decades since the first oil-shock? Further, the evidence from the ergodic (long-run equilibrium) distribution suggests that in the long term the established trade patterns favoured the growth of the rich at the expense of the poor economies across the world.     

The role of real income level and income distribution in fulfillment of basic needs

Using internationally comparable estimates of real GDP per capita, along with World Bank data on seven basic-needs indicators and one income equality measure, relative importance of real income level and income equality, for improvement in the provision of basic needs, is assessed on the basis of a multiple regression model. Income level seems important in almost all cases; but the importance of income equality is observed only on a limited scale. Although income is probably more important in low-income LDCs, the relationships studied appear broadly similar in the low-income and the middle-income LDC contexts.