Human capital inequality and income inequality: testing for causality

This study investigates the causal relationship between human capital inequality and income inequality in case of Pakistan. The annual time series data ranging from 1973 to 2009 is used for econometric analysis. Johanson co-integration and Granger Causality tests are used to confirm the existence of long run relationship and the causal relationship between human capital inequality and income inequality. The results indicate that there is positive relationship between the two types of inequalities in the long run. The estimates of causality test indicate that income inequality causes the human capital inequality but human capital inequality does not cause income inequality. Policy initiatives to reduce income inequality may empower people economically to avail skill building opportunities and accumulate their human capital through access to educational services.     

Perceptions of Affirmative Action Based on Socioeconomic Status: A Comparison with Traditional Affirmative Action

Past research has examined reactions to traditional, gender- and ethnicity-based affirmative action programs. However, research has not examined reactions to affirmative action based on socioeconomic status (SES), even though such programs are promoted by the U.S. government (e.g., Work Opportunity Tax Credit) and thus act as a de facto supplement to traditional affirmative action. Based in theories of self-interest, Study 1 compared reactions of men and women to a traditional affirmative action program and a hypothetical, SES-based affirmative action program in terms of general perceptions of such programs and organizational attractiveness. While women had more positive reactions to traditional affirmative action, men had more positive reactions to SES-based affirmative action. Study 2 took a different approach, examining the reactions of potential job applicants to four hypothetical job ads which included different types of diversity statements. We found that job ads that mentioned any type of specific diversity statement - either based on race and gender or based on SES - were perceived as less fair than job ads that did not include specific diversity statements. Results of the studies are discussed in terms of self-interest theories of affirmative action and considerations of SES-based programs as a supplement to traditional affirmative action.     

Stated Beliefs and Play in Normal-Form Games

Using data on one-shot games, we investigate whether players' actions can be viewed as responses to underlying expectations about their opponent's behaviour. In our laboratory experiments, subjects play a set of 14 two-person 3×3 games and state beliefs about which actions they expect their opponents to play. The data sets from the two tasks are largely inconsistent. Rather, we find evidence that the subjects perceive the games differently when they (i) choose actions and (ii) state beliefs—their stated beliefs reveal deeper strategic thinking than their actions. On average, they fail to best respond to their own stated beliefs in almost half of the games. The inconsistency is confirmed by estimates of a unified statistical model that jointly uses the actions and the belief statements. There, we can control for decision noise and formulate a statistical test that rejects consistency. Effects of the belief elicitation procedure on subsequent actions are mostly insignificant.     

Productivity at the post: its drivers and its distribution

We study the productivity, financial and distributional performance of the United States Postal Service subsequent to its 1971 reorganization. We investigate the magnitude and the economic drivers of productivity change (technical change, change in cost efficiency, and scale economies), and we investigate the distribution of the financial benefits of productivity change (among consumers of postal services, postal employees and other resource suppliers, and residual claimants). We find improvements in technology to have been the main driver of, and diseconomies of scale to have been the main drag on, productivity change. We find labor to have been the main beneficiary, and consumers of postal services the main losers, from postal reorganization.      

Measuring resource inequalities: The concepts and methodology for an area-based Gini coefficient

Although inequalities in income and expenditure are relatively well researched, comparatively little attention has been paid, to date, to inequalities in resource use. This is clearly a shortcoming when it comes to developing informed policies for sustainable consumption and social justice. This paper describes an indicator of inequality in resource use called the AR-Gini. The AR-Gini is an area-based measure of resource inequality that estimates inequalities between neighbourhoods with regard to the consumption of specific consumer goods. It is also capable of estimating inequalities in the emissions resulting from resource use, such as carbon dioxide emissions from energy use, and solid waste arisings from material resource use. The indicator is designed to be used as a basis for broadening the discussion concerning ‘food deserts’ to inequalities in other types of resource use. By estimating the AR-Gini for a wide range of goods and services we aim to enhance our understanding of resource inequalities and their drivers, identify which resources have highest inequalities, and to explore trends in inequalities. The paper describes the concepts underlying the construction of the AR-Gini and its methodology. Its use is illustrated by pilot applications (specifically, men's and boys' clothing, carpets, refrigerators/freezers and clothes washer/driers). The results illustrate that different levels of inequality are associated with different commodities. The paper concludes with a brief discussion of some possible policy implications of the AR-Gini.     

Testing assumptions underlying economic research on transgenic food crops for Third World farmers: Evidence from Cuba, Guatemala and Mexico

Transgenic crop varieties (TGVs) are being promoted as essential for improving small-scale Third World (SSTW) agriculture. Most economic research on this topic makes critical, untested assumptions, including that farmers will choose TGVs over other varieties because TGVs are economically optimal and because farmers are risk neutral profit maximizers. We tested these assumptions using data from a survey of 334 farmers in 6 communities in Cuba, Guatemala and Mexico in which farmers ranked 4 real and hypothetical maize varieties for eating and sowing. Our results did not support these assumptions. Most farmers preferred farmer varieties for sowing and especially for eating, avoiding TGVs, a preference associated with being risk averse and with non-monetary preferences. Farmers more integrated into modern agriculture were more likely to choose TGVs. These results suggest that farmers most in need of support and most important for conserving genetic diversity are least favorable toward TGVs, and that alternative ways of improving SSTW agriculture should receive more attention.     

Valuing ecosystem goods and services: a new approach using a surrogate market and the combination of a multiple criteria analysis and a Delphi panel to assign weights to the attributes

A new approach to valuing ecosystem goods and services (EGS) is described which incorporates components of the economic theory of value, the theory of valuation (USappraisal), a multi-model multiple criteria analysis (MCA) of ecosystem attributes, and a Delphi panel of experts to assign weights to the attributes. The total value of ecosystem goods and services in the various tenure categories in the Wet Tropics World Heritage Area (WTWHA) in Australia was found to be in the range AUD$188 to $211 million year⁻¹, or AUD$210 to 236 ha⁻¹ year⁻¹ across tenures, as at 30 June 2002. Application of the weightings assigned by the Delphi panelists and assessment of the ecological integrity of the various tenure categories resulted in values being derived for individual ecosystem services in the World Heritage Area. Biodiversity and refugia were the two attributes ranked most highly at AUD$18.6 to $20.9 million year⁻¹ and AUD$16.6 to $18.2 million year⁻¹, respectively.     

Relative wage concern: the missing piece in the contract multiplier?

Recent research has cast serious doubts on the explanatory power of staggered wage/price setting to account for both output and inflation persistence following money shocks. This paper extends a dynamic general equilibrium model with wage staggering by incorporating relative wage concern on the part of workers. In sharp contrast to previous analyses, in this model both output and inflation dynamics exhibit substantial persistence. Moreover, persistence results hold for a wide range of parameterisations. Our results suggest that relative wage concern may be the missing piece in the money shock persistence puzzle.     

A Note on Changes in the Earnings and Unemployment Structures in Spain Evidence from the Luxembourg Income Study

This note tests whether the extraordinary rise in Spanish unemploymentin the 1980s can be traced back to rigidities in the earningsstructure in the face of relative net demand shocks againstthe unskilled (this claim is also known as the "Krugman hypothesis").I can establish that youth joblessness is key to the Spanishunemployment problem, but sampling procedures in the data setmake it impossible to track the youth unemployment problem acrosstime in a satisfactory way. Even though high youth unemploymentis consistent with the Krugman hypothesis, substantial skillupgrading of the Spanish labour force in the 1980s explainswhy the low education groups did not experience an increasein relative unemployment. (JEL J21, J31, J64)