International Trends in Income Inequality and Social Policy

In most OECD-countries income inequality has increased during the last two decades. In this paper, we investigate whether changes in the overall distribution of income can be attributed to social policy measures. For most (but not all) countries we find a possible relationship between changing welfare state policies (as measured by expenditure ratios and replacement rates) and changing income inequality. Especially the United Kingdom and the Netherlands combined an above-average rise in inequality with a reduction in the generosity of the welfare system.A more elaborate budget incidence analysis for the Netherlands indicates that in the period 1981–1997 inequality of disposable household income increased sharply. The two main forces behind this phenomenon were a more unequal distribution of market incomes and changes in social transfers. Fundamental social security reforms in the Netherlands indeed seem to have made the income distribution less equal. However, income inequality in the Netherlands is still below the OECD average at the end of the observed period.     

Tail Estimates and the Ems Target Zone*

Characteristically, distributions of exchange-rate returns are fat-tailed. We use a nonparametric tail-index estimator based on extreme value theory for seven EMS currencies between April 1979 and October 1991. We find that the behavior of the Belgian franc, the Danish Krone, the French franc, and the Italian lira has become significantly less fat-tailed over time. We attribute this to the decline in the exchange-rate variance as observed in the EMS, which according to the target-zone literature should lead to a convergence of fixed exchange-rate behavior to that of floating rates. A comparison of tail estimates for the Deutsche mark and dollar exchange rates supports this notion.     

Meaning Shift of Items in Different Language Versions. A Cross-National Validation Study of the Illegal Aliens Scale

The 20-item Illegal Aliens Scale, which was developed and validated by Ommundsenand Larsen at Oregon State University (1999), has been translated into Norwegian andDutch. Cross-national comparisons of attitudes require equivalence of measurementinstruments (Rogler, 1999). The results of a translation – back translation procedure anda split sample study by (Ommundsen et al., in print) suggest that linguistic equivalencemay not be sufficient to detect other non-equivalence of meaning in cross-national research.This paper discusses a follow-up methodological study of the Dutch and Norwegianversions of this scale. This study consisted of two parts: (a) A `cognitive' test by meansof the three-step test-interviews (Hak et al., 2001) with Dutch and Norwegiansubjects. (b) A comparative study of differences in political salience of the itemsof the scale between Norway and the Netherlands. Results show that differences inhistorical, political and cultural context result in different interpretations of seeminglystraightforward concepts and that this affects how responses to attitude items are constructed.     

Flat income taxation,redistribution and labour market performance

A flat tax rate on labour income has gained popularity in European countries. This article assesses the attractiveness of such a flat tax in achieving redistributive objectives with the smallest distortions to employment. We do so by using a detailed applied general equilibrium model for the Netherlands. The model is empirically grounded in the data and encompasses decisions on hours worked, labour force participation, skill formation, wage bargaining between unions and firms and a wide variety of institutional details. The simulations suggest that the replacement of the current tax system in the Netherlands by a flat rate will harm labour market performance if aggregate income inequality is contained. Only flat tax reforms that reduce redistribution will raise employment. This finding bolsters the notions from optimal tax literature regarding the equity-efficiency trade off and the superiority of nonlinear taxes to obtain redistributive goals in an efficient way.     

The Return of the State: Neocollectivism,Agrarian Politics and Images of Technological Progress in the MAS Era in Bolivia

The Movement towards Socialism (MAS) party promised to break with neoliberal politics when it rose to power in Bolivia in 2006. Using the concept of neocollectivism to characterize MAS agrarian politics, this paper examines one of its key instruments for achieving rural development: the state enterprise EMAPA. This state company, which supports small producers, envisions a new agrarian structure of production and commercialization, one that will break the power of the Santa Cruz–based agro‐industrial elite. Drawing on a discussion of the mechanisms of governance employed by this state entity, we argue that new complexities in state–civil society relations and a low state capacity have constrained its ability to shift power relationships between the state and the agro‐industrial elites. Instead of reducing the dependency of small producers on agro‐industrial capital, the Bolivian state has increased it, thereby undermining its goal of redistribution. The paper also analyses different moments of politicization and depoliticization in the intervention process arising from the demand for political change, as well as for technically efficient and profitable agricultural production.     

Semantic validity Testing the operationalization of ideological frames of reference

In this article, we draw attention to some problems involved in testing the semantic validity of operationalizations of abstract theoretical concepts. Particularly, we are dealing with concepts used in the field of text analysis. We shall demonstrate a procedure for carrying out a validity test, using a method of scaling of which the underlying theoretical model is generally known as the “law of categorical judgment”. This procedure may be seen as a contribution to traversing the time-honoured deadlock between reliable but irrelevant versus relevant but unreliable methods of content analysis.     

Exchange rate expectations and risk premia in the European Monetary System: 1985–1991

Using a new set of survey data on EMS exchange rates, we investigate exchange rate expectations and risk premia between December 1985 and August 1991 to assess credibility of the system. It appears that the EMS—with the exception of the Italian lira—had become credible since early 1990. Moreover, one of the core predictions of the target zone literature—the inverse correlation between the position of the spot rate in the fluctuation band with its expected change—is corroborated for several currencies in the period after April 1990. Although the system appeared to be more credible, the persistence of interest differentials suggested the existence of risk premia. For four out of six currencies we find a significant relationship between the risk premium and the inflation differential relative to Germany.     

Changes in world real interest rates and inflationary expectations

Changes in World Real Interest Rates and Inflationary Expectations. —One of the major macroeconomic puzzles has been that the real interest rates were persistently low in the seventies and persistently high in the eighties. The authors use a news framework to investigate the extent to which shocks in real output, money supply, world trade, oil prices, stock prices and expected inflation affect the world and national real interest rates. They find dominant effects on real interest rates from movements in expected inflation rates. This suggests the presence of persistent misperceptions about future inflation and the need of further research into the formation of inflationary expectations.     

Book reviews

New Perspectives on Technology and Organization.

Innovative Banking: Competition and the Management of a New Networks Technology J. Howells & J . Hines Eds) Ldon, Routledge, 1992, 252pp., £40.00 (hbk), ISB-V 0-415-05941-0. Technology and Organization: Power, Meaning and Design H. Scarborough & J.M. Corbett London. Routledge. 1992, 178pp., ,£15.00, (pbk), ISBN 0-415-05941-0.

Beyond Partnership-Strategies for Innovation & Lean Supply Richard Lamming Hemel Hempstead, Prentice-Hall International, 1993, ix + 299pp., £19.95 (hbk).

From Anticipation to Action: A handbook of Strategic Perspective Michel Godet.