Growth and income inequality: a canonical model

Summary. We develop an endogenous growth model with elastic labor supply, in which agents differ in their initial endowments of physical capital. In this framework, the growth rate and the distribution of income are jointly determined. The key equilibrating variable is the equilibrium labor supply. It determines the rate of return to capital, which in turn affects both the rate of capital accumulation and the distribution of income across agents. We then examine the impact of various structural shocks on growth and distribution. We find that faster growth is associated with a more unequal, contemporaneous distribution of income, consistent with recent empirical findings.Received: 7 October 2004, Revised: 18 February 2005, JEL Classification Numbers: O17, O40.Cecilia García-Peñalosa: Correspondence toGarcía-Peñalosa would like to acknowledge the financial support received from the Institut d’Economie Publique (IDEP), Marseille. Turnovsky’s research was supported in part by the Castor endowment at the University of Washington. The paper has benefited from seminar presentations at the University of California, Riverside, and the University of Kansas, as well as from the comments of an anonymous referee.     

The Complexities and Potential of Theorizing Gender,Caste, Race,and Class

Most economists have not yet grappled with the demands of intersectional scholarship, which recognizes the intertwined nature of gender, race, class, caste and other influences on the economic situation of individuals and groups. Among economists, feminist economists may have made the most progress and be best positioned to break further ground, though we can do better and much remains to be done. This article synthesizes the case for intersectional work, reviews the state of the economic literature, describes the contributions of the articles in this special issue of Feminist Economics on "gender, color, caste and class," and sketches directions for the future.     

Redistribution and entrepreneurship with Schumpeterian growth

We examine the effects of redistributive taxation on growth and inequality in a Schumpeterian model with risk-averse agents. There are skilled and unskilled workers, and the growth rate is determined by the occupational choice of skilled agents between entrepreneurship and employment. We show that redistribution provides insurance to entrepreneurs and increases the growth rate. The effects on inequality are such that low tax rates increase inequality relative to laissez-faire due to changes in wages, but higher tax rates can simultaneously raise growth and reduce inequality. We contrast the optimal linear income tax with alternative policies for promoting R&D and find that it is preferable on both equity and efficiency grounds.      

A new valuation question: analysis of and insights from interval open-ended data in contingent valuation

This paper introduces a type of open-ended valuation question where respondents state their willingness to pay in the form of an interval rather than a point estimate. Allowing the response to be expressed as an interval has advantages compared to traditional valuation questions: it captures potential valuation uncertainty, facilitates interpretation of uncertainty and most importantly, provides a richer set of information about individuals’ preferences. Furthermore, an open-ended willingness to pay format has advantages if a survey is carried out in more than one country. Too little is known about valuation uncertainty to represent willingness to pay only as an exact value. Therefore, this value should be complemented by upper and lower boundary estimates. In this paper I present new methods for estimating these different values. The methods are illustrated with results from a survey concerning wild salmon in the Vindel River, northern Sweden. The results suggest that the upper and lower boundaries provide a kind of confidence interval for the willingness to pay, which is encouraging for estimating these values to characterise willingness to pay. The results also illustrate that some earlier criticism in the literature of open-ended questions does not apply to the question presented in this paper.     

Influences on Sino-Western joint venture negotiations

This paper attempts to increase the reader's knowledge of the influences present when negotiating in China. The current environment of Sino-Western joint venture (JV) negotiations is examined, and negotiating suggestions resulting from this examination are presented. The paper, the result of the author's research in China in 1987–1989, posits that the major influences on Sino-Western JV negotiations are the ideological and theoretical foundations for such JVs, their history, the problems they experience, and the political, economic, governmental, and cultural contexts of negotiations. The paper's importance lies in two areas: it contributes to the literature on the international transfer of capital and technology, and it provides valuable information to Western firms and individuals who consider entering into JV negotiations in China.     

Ethical Standards in Advertising: A Worldwide Perspective

An empirical study indicates how close advertisers from all the continents have been from the natural law and other fundamental moral principles. In their professional activities, many advertisers assumed the philosophical relativism as the framework for fundamental concepts. The ethical problems have not been equated with objectivity and the realist approach is appointed as a solution.     

Why Do Small States Receive More Federal Money? U.S. Senate Representation and the Allocation of Federal Budget

Empirical research on the geographic distribution of U.S. federal spending shows that small states receive disproportionately more dollars per capita. This evidence, often regarded as the consequence of Senate malapportionment, in reality conflates the effects of state population size with that of state population growth. Analyzing outlays for the period 1978–2002, this study shows that properly controlling for population dynamics provides more reasonable estimates of small‐state advantage and solves a number of puzzling peculiarities of previous research. We also show that states with fast‐growing population loose federal spending to the advantage of slow‐growing ones independently of whether they are large or small. The two population effects vary substantially across spending programs. Small states enjoy some advantage in defense spending, whereas fast‐growing ones are penalized in the allocation of federal grants, particularly those administered by formulas limiting budgetary adjustments. Hence, a large part of the inverse relationship between spending and population appears to be driven by mechanisms of budgetary inertia, which are compatible with incrementalist theories of budget allocation.