CHILD SUPPORT, ROUTINE INCOME WITHHOLDING, AND POST-DIVORCE INCOME

Policymakers are proposing child support reform as a way of reducing "welfare dependency" and countering the "feminization of poverty" while increasing the well-being of children living in single-parent households. The federal government and some states have begun to change laws regarding establishment of child support awards and collection of payments. The 1988 Family Support Act mandates routine income withholding of child support payments—i.e., collecting child support directly from the payer's paycheck. This article assesses the effects on post-divorce income by using data from a demonstration of routine withholding in ten Wisconsin counties. Unfortunately, these data conclude that routine income withholding has little effect on post-divorce income, at least in the year following divorce. The authors suggest three requirements for substantially increasing post-divorce income, as well as child support: (i) More family court cases must establish awards, (ii) The amount of those awards must be greater. (Hi) The collection rate for those who have awards must improve.     

Global distribution and dynamics of economic freedom: Non-parametric approach

The paper exploits the distributional dynamics and structural changes in the endogenous distribution of economic freedom across countries over time by utilizing the Rosenblatt–Parzen Kernel density estimator compared to the original distribution based on the methodology proposed by the Heritage Foundation. We utilize the distribution of economic freedom as a tool to identify which policies enhanced the overall level of economic freedom. We develop the distribution of endogenous economic freedom by decomposing effects of economic freedom on the level of income per capita in IV–2SLS estimation framework for a panel of 134 countries to identify the effect of institutions of economic freedom on the level of per capita income. Structural estimates indicate that improvements in the monetary, fiscal, and labor freedom exert the strongest direct effect on the level of economic freedom and indirect effect on the level of real income per capita. Our study demonstrates considerable differences between the original and endogenous distributional dynamics of economic freedom over time. In exploiting the non-parametric setting of endogenous economic freedom, we identify a recent emergence of twin-peak distribution across countries where developing nations have improved the level of economic freedom considerably compared to the initial year.     

A SOCIAL WELFARE VIEW OF THE MEASUREMENT OF INCOME EQUALITY

Economists' use of the term "equality" in reference to a distribution of incomes has historically been in the sense of a consensus for some statistical characteristic(s) of the distribution rather than a firm concept of equality. Of course such a concept rests on appropriate welfare assumptions about income and its distribution, assumptions which, for the most part, have been left implicit (and unknown) in discussions of income equality in the literature.
Our purpose in this paper is dual: first, we wish to discover an unambiguous, welfare-related equality measure. This we accomplish through suitable assumptions on a social welfare function. What is produced is an "index" of equality which describes the performance of a given distribution relative to the maximum welfare derivable from the total income it represents. The measure thus depends functionally on the welfare attributes of income, something which in reality we know little about.
This impasse leads us to inquire into the sensitivity of the index over specifications of the welfare function, which is done by comparing equality ranks for the states of the United States for 1960 under various functional forms and among curves within a given form. As an interesting secondary issue, the performance of traditional equality measures is tested relative to the welfare-oriented index to discover implications about their welfare content.
It is found that the equality index is, in certain ranges for the welfare function, insensitive to its specification. The findings lead directly to conclusions concerning traditional equality measures, their usefulness in correctly accounting for equality differences among alternative income distributions and, concomitantly, their implicit welfare inputs.     

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.     

DEMOGRAPHIC CHANGE AND INEQUALITY IN THE SIZE DISTRIBUTIONS OF LABOR AND NONLABOR INCOME

This paper utilizes a joint distribution model of labor and nonlabor income that allows us to analyze the impact of demographic change in the U.S. on the marginal distributions of these two income components over time. The beta distribution of the second kind is the hypothetical statistical distribution used in this study to approximate the observed income graduation. This distribution is sum stable which allows us to compare and contrast the marginal distributions in a consistent manner, a property most hypothesized functional forms of income distribution do not possess. We are in effect using a hyperparameter model to do our estimation. We examined the impact of changes over time in labor force participation and population on the marginal distributions of labor and nonlabor income. We disaggregated the variables by sex and age cohorts and found that changes in the age distribution and in the labor supply behavior of women in particular has had a significant effect on the marginal income distributions over time. We also found that the results vary when we examined overall changes in the labor force participation rate vis a vis changes in women's labor force participation separately. The findings are consistent for both income components.     

碳税对我国城镇居民收入分配的累退效应与碳补贴方案设计

本文以碳税的收入分配效应为研究对象,将碳税的收入分配效应分解为直接效应与间接效应,采用《中国统计年鉴2011》、《中国城市统计年鉴2010》、《2007年投入产出表》相关数据,运用收入支出法、投入产出表原理测算了两种效应作用下的我国碳税累退性情况,进而在综合效应分析的基础上,模拟测算两种碳税补贴政策对累退性的纠正效应。测算结果表明,碳税的征收存在明显的累退性,其中,直接效应与间接效应对碳税累退性的贡献不同,直接效应贡献更大,可以解释大部分累退性。同时,按收入水平的有梯度的碳税补贴政策对纠正累退性效果更为显著。     

THE COST OF INCOME REDISTRIBUTION IN AUSTRALIA

This paper analyses the effect of raising effective marginal tax rates on the income of the representative household in each gross income decile in Australia by one percentage point, and distributing the proceeds of the tax increase either in the form of an equal grant, or as an equal payment to members of households in the lower half of the income distribution. The effectiveness of the program in redistributing income is measured as the ratio of total gains in disposable income to households in target deciles to losses in non-target groups, or as the proportional reduction in the poverty gap. The cost is measured as the ratio of the sum of the income-equivalent of changes in the welfare of non-target groups to those of target groups, or as the ratio of income-equivalent losses to gains.     

INCOME DISPERSION AND PRICE DISCRIMINATION

Abstract.  This paper analyses the effects of inter-market and intra-market income heterogeneities on output and social welfare under uniform pricing and differential pricing regimes by considering a finite number of markets. We first derive the linear demand curve in each market under plausible conditions, and then show that more markets (and consumers) are excluded under uniform pricing the higher are the inter-market income differences. We also show that adding markets, even of lower income levels than those of existing markets, helps to decrease prices and thus cause more markets to be served. Implications of intra-market income dispersion are also explored.     

THE COST OF INCOME REDISTRIBUTION IN AUSTRALIA*

This paper analyses the effect of raising effective marginal tax rates on the income of the representative household in each gross income decile in Australia by one percentage point, and distributing the proceeds of the tax increase either in the form of an equal per capita grant, or as an equal payment to members of households in the lower half of the income distribution. The effectiveness of the program in redistributing income is measured as the ratio of total gains in disposable income to households in target deciles to losses in non-target groups, or as the proportional reduction in the poverty gap. The cost is measured as the ratio of the sum of the income-equivalent of changes in the welfare of non-target groups to those of target groups, or as the ratio of income-equivalent losses to gains.     

THE SOCIAL SIGNIFICANCE OF INCOME DISTRIBUTION STATISTICS

In both political discussions and scientific literature the income distribution has come to occupy a central position for the consideration of social welfare and economic equalization. It has been assumed that an individual's income reflects his consumption opportunities and therefore his standard of living or economic welfare. The thesis of this paper is, however, that there are reasons for being quite pessimistic about drawing meaningful conclusions from income distribution data. As illustrated by the use of Swedish data, the distribution of income gives an extremely incomplete picture of the distribution of consumption for a wide variety of definitional and statistical reasons. The distribution of consumption, furthermore, cannot be transformed into a corresponding distribution of welfare, since there is no well defined concept of welfare. The treatment of public consumption in empirical analysis of the distribution of welfare also raises problems. The paper closes with the presentation of the conceptual basis for an alternative to the traditional method of analyzing the distribution of income.     

Indexing Out of Poverty? Fiscal Drag and Benefit Erosion in Cross-National Perspective

We assess how tax-benefit policy developments in 2001–11 affected the household income distribution in seven EU countries. We use the standard microsimulation-based decomposition method, separating further the effect of structural policy changes and the uprating of monetary parameters, which allows us to measure the extent of fiscal drag and benefit erosion in practice. The results show that despite different fiscal effects, policies overall mostly reduced poverty and inequality and both types of policy developments had sizeable effects on the income distribution. We also find that the uprating of monetary parameters not only had a positive effect on household incomes, meaning fiscal drag and benefit erosion were avoided, but generally also contributed more to poverty and inequality reduction than structural policy reforms.     

Estimating direct and indirect rebound effects for U.S. households with input–output analysis. Part 2: Simulation

This is the second part of a two-part paper that integrates economic and industrial ecology methods to estimate the indirect rebound effect from residential energy efficiency investments. We apply the model developed in part one to simulate the indirect rebound, given an estimate of the direct rebound, using a 2002 environmentally-extended input–output model and the 2004 Consumer Expenditure Survey (in 2002$) for the U.S. We find an indirect rebound of 5–15% in primary energy and CO₂e emissions, assuming a 10% direct rebound, depending on the fuel saved with efficiency and household income. The indirect rebound can be as high as 30–40% in NO_x or SO₂ emissions for efficiency in natural gas services. The substitution effect modeled in part one is small in most cases, and we discuss appropriate applications for proportional or income elasticity spending assumptions. Large indirect rebound effects occur as the U.S. electric grid becomes less-carbon intensive, in households with large transportation demands, or as energy prices increase. Even in extreme cases, there is limited evidence for backfire, or a rebound effect greater than 100%. Enacting pollution taxes or auctioned permits that internalize the externalities of energy use would ensure that rebound effects unambiguously increase consumers' welfare.     

EFFECTS OF GOVERNMENT POLICIES ON URBAN AND RURAL INCOME INEQUALITY

We use three conventional inequality indices—the Gini, the coefficient of variation of income, and the relative mean deviation of income—and the Atkinson index to examine the effect of income tax rates, the minimum wage, and all the major government welfare and transfer programs on the evolution of income inequality for rural and urban areas by state from 1981 to 1997. We find that these programs have qualitatively similar but quantitatively different effects on urban and rural areas. Most importantly, taxes are more effective in redistributing income in urban than in rural areas, while welfare and other government transfer programs play a larger role in rural areas.     

Monetary transmission with income risk*

In periods of distress, observed and perceived income risk tends to rise. Does this heightened income risk affect monetary transmission? This paper first shows that in partial equilibrium, heightened income risk dampens the substitution effect of interest rate changes but amplifies the indirect income effect of wage changes. The effects are sizable in partial equilibrium. An increase in income risk consistent with heightened risk during recessions affects interest rate and wage responses by around one-third. However, because income risk dampens the effects of interest rate changes but amplifies the effects of wage changes, its effect is weaker in general equilibrium, dampening monetary transmissions to consumption by around 11 percent.     

Subjective well-being in China: direct and indirect effects of rural-to-urban migrant status

The purpose of this article is to provide a recent investigation on the determinants of subjective well-being among Chinese adults, with particular emphasis on internal migrants who hold a rural hukou and have settled in cities. Based on a sample of 7846 adults stemming from the 2011 wave of CHNS survey, we estimate different happiness functions using ordered probit regressions. We first confirm the influence of traditional demographic and socioeconomic characteristics (i.e. age, marital status, gender, illness/injury, income, and education). Second, our results emphasize the importance of taking into account regional differences, but also the positive impact of leisure time and social connections. Finally, our results highlight that being a rural-to-urban migrant is significantly associated with a decrease in the probability of reporting good or very good life satisfaction. We show that this relationship seems to be shaped by direct and indirect effects, and we identify the mediating role of regional patterns and social relations.     

The impact of demographic changes on income distribution in a developing country

"A common hypothesis regarding the distribution of income is that it tends to become more unequal in the initial and middle stages of economic development, in part because of demographic changes. However, previous studies of the effect of demographic changes on income distribution are not based on the underlying micro determinants of the income components." In the present paper, "the micro determinants of the probability of receipt and amount received conditional on receipt of four income components are estimated for three regions defined by the degree of urbanization. Five simulations of hypothetical demographic changes are conducted. The simulated effects on some of the regional income component distributions are fairly considerable in regard both to equalizing the distributions and increasing the shares of the poorest. However, the overall effects are regressive in both urban and rural regions."     

Estimating direct and indirect rebound effects for U.S. households with input–output analysis Part 1: Theoretical framework

This is the first part of a two-part paper providing an analytical model of the indirect rebound effect, given a direct rebound estimate, that integrates consumer demand theory with the embodied energy of household spending from environmentally-extended input–output analysis. The second part applies the model developed in part one to simulate the direct and indirect rebound for the average U.S. household in terms of primary energy, CO₂e, NO_x, and SO₂ emissions and for energy efficiency investments in electricity, natural gas, or gasoline services. Part one provides a critical review of the largely independent economic and industrial ecology literatures on the indirect rebound. By studying the two-goods case and the n-goods case, we demonstrate that the indirect rebound is bounded by the consumer budget constraint, and inversely related to the direct rebound. We also compare the common proportional spending and income elasticity spending assumptions with our model of cross-price elasticities including both substitution and income effects for the indirect rebound. By assuming zero incremental capital costs and the same embodied energy as conventional technologies for efficient appliances, we model an upper bound of the indirect rebound. Future work should also consider the increase in consumer welfare possible through the rebound effect.     

Benefit Incidence of Public Recreation Areas—Have the Winners Taken Almost All?

This study presents a framework for investigating the benefit incidence of provision of public recreation opportunities. The proportion of individuals who use outdoor recreation services increases with income, and frequency of use differs by the users’ gender and life situation (e.g., depending on whether they are students or older citizens). The decomposition of distributive incidence shows that a bias in favor of high-income groups may be accentuated when the perceived value of these services is taken into account in monetary terms. We compare alternative strategies in terms of equity for improving recreation opportunities, e.g., reduced distance to or increased acreage of recreation sites. Our results indicate that although these strategies improve the welfare distribution among the income groups, a considerable proportion of benefits nevertheless accrue to high-income groups.      

MONETARY POLICY,FINANCIAL CONSTRAINTS,AND REDISTRIBUTION

This article examines how financial constraints affect redistribution via monetary policy. We explore a novel mechanism of monetary nonneutrality, which is based on debt limits imposed in nominal terms. Specifically, when debt is constrained by current income, monetary policy can alter the real terms of borrowing. Changes in inflation exert ambiguous effects, depending on the initial debt/wealth position and the willingness to borrow. We show analytically that borrowers can benefit from increased debt limits under lower inflation rates. This novel effect can dominate conventional debt deflation effects. We find that particularly less indebted borrowers as well as potential future borrowers gain and that aggregate welfare can be enhanced under a permanent reduction in inflation.     

Welfare and Distribution Effects of Water Pricing Policies

In this paper, distribution and welfare effects of changes in block price systems are evaluated. A method is discussed to determine, for a Marshallian demand function, equivalent variation in case of a block price system. The method is applied to compare, for the Metropolitan Region of São Paulo, alternative pricing policies on the basis of their demand, welfare and distribution effects of changing water prices. Results show that there is a trade off between average welfare and income distribution. A pro-poor price system may result in lower average welfare than a flat price system, but in higher individual welfare for the poor. Moreover, there is a trade off between revenues for the water company and income distribution. Even though pro-poor price systems may not be as good for average welfare as flat price systems, their direct effects on poverty are important. Introducing pro-poor price systems, however, may have financial consequences for the water companies.