INTERNATIONAL COMPARISONS OF EARNINGS INEQUALITY FOR MEN IN THE 1980s

In this paper we present a comparative analysis of earnings inequality during the 1980s among prime age men who headed households and worked year-round, full-time from five industrialized countries-Canada, Sweden, Australia, West Germany, and the United States. The data were obtained from the Luxembourg Income Study (LIS) database, a multinational collection of microdata sets from various countries which have been assembled for the primary purpose of making cross-national comparisons of economic and social well-being. The results of the comparison indicated that during the mid-1980s, the United States had the most unequal distribution of earnings and Sweden the least unequal. Between the early 1980s and mid-1980s, however, the earnings distributions in all five countries showed evidence of becoming more unequal, especially in the United States, Canada, and Sweden.     

THE EXPORT PERFORMANCE OF U.S. AND SWEDISH MULTINATIONALS

While the U.S. and Sweden both lost more than 20 percent of their shares of world and developed countries' exports of manufactures between the mid-1960s and mid-1980s, the export shares of their multinational firms stayed fairly stable or even increased. The multinationals raised the proportion of their worldwide exports that they supplied from their overseas affiliates. These developments suggest that the declines in the trade shares of the US. and Sweden were not due mainly to deterioration in the innovativeness or inventiveness of American and Swedish firms, their management ability or their technological capabilities, but rather to economic developments in the firms' home countries.
The finding that firms have done better as exporters than their home countries is strengthened when we look at different industry groups. In both the U.S. and Sweden, and in all industry groups, with one exception, the multinationals' export shares increased relative to those of their home countries. The margins were often wide, and were mostly larger for Swedish firms than for U.S. firms.
Part of the explanation for the growth of each country's exports and those of its multinationals is the initial composition of exports, or the comparative advantages of the countries and their firms. These were skewed, in the mid-1960s, to industries that were to enjoy rapid growth in the next decade or so. Despite these initial comparative advantages, the exports of both countries fell far behind world export growth.
The comparative advantages of both countries' multinationals were even more biased toward fast-growth industries than those of the countries. That fact partly accounted for the better export performance of the multinationals relative to their home countries, but the multinationals outperformed their countries within each industry as well as for manufacturing as a whole.     

POVERTY AND INCOME INEQUALITY IN LATIN AMERICA DURING THE 1980s

On average, poverty and income inequality increased in Latin America during the 1980s. Forty-six percent of the increase in poverty took place in the cities of Brazil alone, though part of this reflects the migration of poor rural inhabitants to urban areas. There is strong evidence that both income inequality and poverty mirrored the economic cycle, rising during recession and falling during recovery. Economies that grew (e.g. Colombia, Costa Rica) performed better with respect to poverty and income inequality than those that stagnated. In particular, countries that failed to stabilize effectively (e.g. Brazil, Peru) experienced substantial increases in poverty. Educational attainment has the greatest correlation with both income inequality and the probability of being poor. From a policy standpoint, there is a clear association between the provision of education, lessening of income inequality, and poverty reduction.     

Quantifying globalization

Globalization is much debated, but is it possible to make reliable ranks of which countries are the most integrated internationally? Traditionally resort is taken to trade measures, but even considering only economic integration this measure disregards a number of aspects. This paper proposes a single measure or index of globalization based on several indicators of economic integration combined by use of the multivariate technique of factor analysis. The index is calculated for 23 OECD countries, and among the findings are that Ireland is ranked as the most globalized country during the 1990s, while the UK was at the top during the 1980s. Some of the most notable changes in the rankings are the decline of the USA, Canada, and to a lesser extent Japan and Norway. There are notable improvements in the ranking for Finland, Italy, Portugal, Spain and Sweden. For Portugal and Spain the changes seem to follow EU membership in the mid-1980s.     

IS POVERTY INCREASING IN THE DEVELOPING WORLD?

We assess the developing world's progress in reducing poverty during the late 1980s using new data on the distribution of household consumption or income per person for 44 countries. Local currencies are adjusted to purchasing power parity. To assess robustness, restricted dominance tests are applied to the poverty comparisons. An overall decrease in poverty incidence is indicated over a wide range of poverty lines and measures. However the change is small, and numbers of poor increased at roughly the rate of population growth. The experience was diverse across regions and countries; poverty fell in South and East Asia, while it rose in Latin America and Sub-Saharan Africa.     

IMPACT OF GROWTH AND DISTRIBUTION ON POVERTY IN MADAGASCAR

Poverty in Madagascar has increased between 1962 and 1980 both in the rural and urban areas based on a comparison of some poverty measures, but decreased based on others. However, it remains predominantly a rural phenomenon. Distributional inequality is the major determinant of the variation in rural poverty, while the changes in urban poverty are due to the lack of economic growth. Thus, the urban bias introduced in government policies in the mid-1970s was not justifiable on strictly poverty-reduction grounds. A reduction of sectoral disparities would have led to a significant reduction of aggregate poverty.     

INTERNATIONAL COMPARISONS OF WEALTH INEQUALITY

This study presents reasonably comparable estimates of the size distribution of household or personal wealth for eight OECD countries—Australia, Canada, France, Germany, Japan, Sweden, the United Kingdom, and the United States. In the mid-1980s, the U.S. ranked as the most unequal and Japan the least, while the other six countries had roughly comparable levels of wealth inequality. Moreover, while wealth inequality rose sharply in the U.S. during the 1980s, it increased modestly in Sweden and showed little change or a slight decline in Canada, France, and the U.K. A comparison of time trends for the U.K. and the U.S. suggests that the relatively high wealth inequality in the U.S. in the 1980s represents a marked turnaround from the 1950s, when the U.S. was considerably more equal in terms of wealth ownership than the U.K. Comparative results for the two countries hold for both conventional (marketable) wealth and for augmented wealth, which includes a valuation of public and private pension wealth.     

TOP INCOMES IN NEW ZEALAND 1921–2005: UNDERSTANDING THE EFFECTS OF MARGINAL TAX RATES, MIGRATION THREAT, AND THE MACROECONOMY

Using taxation statistics, we estimate the income share held by top income groups in New Zealand over the period 1921–2005. We find that the income share of the richest fell during the 1930s, rose again after the Second World War, and steadily declined from the late-1950s until the mid-1980s. From the mid-1980s until the mid-1990s, top income shares rose rapidly, particularly at the very top of the distribution. We present evidence that top marginal tax rates and changing top income shares in Australia and the United Kingdom may have contributed to fluctuations in the income share of the richest 1 percent. Past economic growth does not seem to have a strong effect on the income share of the top percentile group.     

Not by growth alone: The role of the distribution of income in regional diversity in poverty reduction

This study examines the role of the distribution of income in determining the responsiveness of poverty to income growth and changes in income inequality using panel data of 58 developing countries for the period 1980-1998. We show that the large cross-regional variation in the capacity of income growth to reduce poverty, i.e. the income elasticity, is largely explained by differences in the initial distribution of income and present region and time specific estimates of the income and Gini elasticities of poverty. We find that the income elasticity of poverty in the mid-1990s equals −1.31 on average and ranges from −0.71 for Sub-Saharan Africa to −2.27 for the Middle East and North Africa, and that the Gini elasticity of poverty equals 0.80 on average and ranges from 0.01 in South Asia to 1.73 in Latin America. Furthermore we show that while differing income growth rates account for most of the regional diversity in poverty trends, the additional impact of differences across regions in rates of inequality change and income and inequality elasticities of poverty is almost always significant and far too large to be ignored, most notably so in Eastern Europe and Central Asia.     

THE SENSITIVITY OF INTERNATIONAL POVERTY COMPARISONS

Using data from the Luxembourg Income Study, I study the sensitivity of cross-national income poverty comparisons to the method in which poverty is measured. Absolute poverty comparisons that keep the purchasing power at the poverty line constant across countries lead to conclusions that differ from relative poverty comparisons in which the real value of the poverty line varies with average income. The absolute poverty ranking of countries also varies as the real value of the poverty line is lowered. Cross-national differences in household characteristics are largely irrelevant in explaining poverty differences.     

AN EVALUATION OF SUBJECTIVE POVERTY DEFINITIONS: COMPARING RESULTS FROM THE U.S. AND THE NETHERLANDS

In this paper, results of applying the subjective definition of poverty, introduced by Goedhart et al. (1977), in the U.S. and the Netherlands are compared. This definition focuses on the monetary amounts which people consider necessary to make ends meet for their households as provided in response to the Minimum Income Question (MIQ). National data from both countries in the early 1980s are analyzed. In regressions of reported minimum income, corrections are made for the omission of income components and selective non-response. For the first time the relationship between fixed expenditures and the MIQ is examined. Factors significantly related to reported minimum income include household income, household composition, age, education, sex, region, fixed expenditures, and whether the household experienced recent income changes. The income elasticity appears to be smaller in the U.S. than in the Netherlands, while the effects of other socioeconomic factors are greater. On average, the resulting subjective income thresholds are above official poverty lines, but more so in the U.S. than in the Nerherlands. Whether thresholds based on answers to MIQs should be regarded as poverty lines remains open to question.     

HOUSEHOLD NEEDS AND POVERTY: WITH APPLICATION TO SPAIN AND THE U.K.

We examine the sensitivity of U.K.-Spanish poverty comparisons to variations in the dependence of equivalence scales on household size and composition, using evidence from national household budget surveys. We sum up these comparisons using subjective confidence levels. Taking into account the dissimilarities in the distribution of incomes and needs across countries, we find, inter alia , that although the poor are typically more numerous in Spain than in Britain, the actual headcount differences may vary by up to 10 percent of the population when needs allowances are altered, even when kept the same across the two countries. Comparisons of poverty composition across the two countries are also very sensitive to the choice of equivalence scale parameters. Generally, however, the proportion of single adults among the poor is much less important in Spain than in Britain, the reverse being true for households with three or more adults.     

Unemployment Shocks and Income Distribution: How did the Nordic Countries Fare during their Crises?

We study the inequality of disposable income in Denmark, Finland, Norway and Sweden during the late 1980s and early 1990s when unemployment rose dramatically in all four countries. A standard measure of inequality — the Gini coefficient – was surprisingly stable in all countries during this period. By decomposing the Gini into income components, we test hypotheses about the reasons for this stable income distribution. Our most straightforward hypothesis, that rising unemployment benefits counteracted the impact of more unequally distributed earnings, receives only limited support. More complex mechanisms seem to have been at work.
JEL classification: D 30; D 31; J 60     

Poverty reduction without economic growth? : Explaining Brazil's poverty dynamics, 1985-2004

Brazil's slow pace of poverty reduction between the mid-1980s and the mid-2000s reflects both low growth and a low growth elasticity of poverty reduction. Using GDP data disaggregated by state and sector for a twenty-year period, this paper finds considerable variation in the poverty-reducing effectiveness of growth—across sectors, across space, and over time. Growth in the services sector was substantially more poverty-reducing than was growth in either agriculture or industry. Growth in industry had different effects on poverty across different states and its impact varied with initial conditions related to human development and worker empowerment. But because there was so little of it, economic growth actually played a relatively small role in accounting for Brazil's poverty reduction between 1985 and 2004. The taming of hyperinflation (in 1994) and a substantial expansion in social security and social assistance transfers, in large part mandated by the 1988 Constitution, accounted for the bulk of the overall reduction in poverty.     

POVERTY AND INCOME DISTRIBUTION IN BRAZIL1

The article refutes the contention that Brazil's development has not benefited the poor and that rapid growth has had a polarizing effect on the distribution of income. It uses the National Household Expenditure Survey of 1974–75 to try to quantify the extent of poverty and concludes that the incòme levels of the poor have been underestimated in the past. The evidence suggests also that occupational and regional variables are powerful determinants of income stratification. Wage rate statistics convey information about long-term trends in income. The article notes considerable increases in rural wages during the 1970s as well as wage improvements in the urban informal sector. Shifts in the structure of employment have probably been the most powerful cause of economic improvement in Brazil. The enormous absorption of rural-urban migrants occurred without a flooding of the lower income urban categories. Social indicators and statistics referring to ownership of household durable consumer goods corroborate income and labor market evidence to the effect that there has been considerable progress for the poor during the 1970s. The article reviews statistical evidence bearing on distribution. There is little doubt that the distribution of income in Brazil is very skewed. It is not possible, however, to come to conclusions about changes that might have occurred in the degree of inequality over time. Finally, the article includes data on the “distribution of education” and the “distribution of life expectancy” and notes improvement over time in both. This article takes advantage of the Brazilian population census of 1980 to bring up to date some of the statistical material that bears on the issues of poverty and income distribution. First, the article describes the overall context of Brazilian development since 1960. The second part analyzes the extent of poverty in the mid-1970s. The third part deals with trends in wages, employment and selected welfare indicators. The last section briefly summarizes the information relating to income distribution: what is the extent of skewedness and how has it evolved over time?     

How to Compare Apples And Oranges: Poverty Measurement Based on Different Definitions of Consumption

Poverty rates calculated on the basis of household consumption expenditures are routinely compared across countries and time. The surveys which underlie these comparisons typically differ in the types of food and non-food expenditures included, often in ways which are easily overlooked by analysts. With several examples we demonstrate that these commonly occurring variations in expenditure definitions can give rise to marked differences in poverty rates where there are no real differences in well-being. We show that one approach to calculating poverty lines, used with the headcount measure of poverty, can allow comparisons based on data with different definitions of consumption. In addition to allowing comparative poverty analysis using existing survey data, the results suggest that poverty monitoring could be done effectively at lower cost by alternating detailed expenditure surveys with far more abbreviated surveys.     

GROWTH AND INCOME POVERTY IN LATIN AMERICA AND THE CARIBBEAN: EVIDENCE FROM HOUSEHOLD SURVEYS

This paper provides evidence on growth and income poverty in Latin America and the Caribbean (LAC). Results are obtained by processing microdata from household surveys of 18 LAC countries covering the 1990s and early 2000s. Over this period the LAC economies experienced heterogeneous patterns of growth and poverty changes. Most countries in the region had a rather meager performance in terms of poverty reduction. Episodes of positive, significant and unambiguously pro-poor income growth have been rare in Latin America.