Showing papers in "Review of Income and Wealth in 1996"
TL;DR: This paper used the Luxembourg Income Study to compare the relative economic well-being of Germans and Americans in the 1980s and found that inequality and the incidence of poverty are greater in the United States than in Germany.
Abstract: German and United States data from the Luxembourg Income Study are used to compare the
relative economic well-being of Germans and Americans in the 1980s. In our analysis we use
both official equivalence scales and consumption-based country-specific equivalence scales
developed for Germany and the United States by Merz et al. (1993). We verify previous studies
that show that inequality and the incidence of poverty are greater in the United States than in
Germany. Overall inequality and poverty levels are found not to be sensitive to the equivalence
scale used. But the official German equivalence scales yields quite different results from those
using all other scales with respect to the relative income and poverty levels of vulnerable groups
within the population, especially older single people.
202 citations
TL;DR: The National Accounting Matrix including Environmental Accounts (NAMEA) as discussed by the authors shows environmental burdens that are consistent with the economic figures in the national accounts and can be used as the core data framework for integrated analyses and forecasts of economic and environmental changes.
Abstract: The National Accounting Matrix including Environmental Accounts (NAMEA) shows environmental burdens that are consistent with the economic figures in the national accounts. In the NAMEA, the existing national accounts matrix has been extended with accounts in physical units. On the basis of the expected contribution of each polluting substance to a particular environmental problem, emissions are converted to theme equivalents. This results in six summary environmental indicators that are directly comparable to the conventional economic aggregates. In addition, this meso-level information system can be used as the core data framework for integrated analyses and forecasts of economic and environmental changes.
144 citations
TL;DR: In this paper, the authors present 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).
Abstract: 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.
103 citations
TL;DR: In this paper, five models of national accounts in a dynamic competitive economy with pollution externalities are constructed: flow pollutants, stock pollutants, fossil fuels and CO2, living resources and acid rain, and household defensive expenditures.
Abstract: Building on the approach of Weitzman, as extended by Hartwick and Maler, five models of national accounts in a dynamic competitive economy with pollution externalities are constructed: flow pollutants, stock pollutants, fossil fuels and CO2, living resources and acid rain, and household defensive expenditures. The results measure welfare rather than national product per se. The general conclusions are that abatement expenditures should be treated as intermediate consumption, that adjustments need to be made for both pollution emissions and natural pollution dissipation processes, that marginal social costs should be used to value emissions, and that the level of environmental services must be valued in measuring welfare. Not only should household defensive expenditures not be subtracted from the welfare measure, under plausible assumptions the adjustment to welfare (as opposed to NNP) includes a value greater than the level of household defensive expenditure.
100 citations
TL;DR: Using an updated, disaggregated dataset covering 60 countries in 1980, this article re-estimates income and price elasticities of demand for services and confirms a wide range of income elasticity estimates (above and below unity) across different types of services.
Abstract: The hypothesis that the demand for services is income-elastic tended to find support in early empirical work Recent studies however, adopting improved methodologies and better international data (based on PPP exchange rates), have challenged this conventional wisdom Using an updated, disaggregated dataset covering 60 countries in 1980 this paper re-estimates income and price elasticities of demand for services It rejects the income-elastic argument overall but confirms a wide range of income elasticity estimates (above and below unity) across different types of services Estimates are also shown to be sensitive to the a priori model of service demand
85 citations
TL;DR: This article examined household saving and portfolio change over the 1980s using newly available data from the 1983 89 panel of the Survey of Consumer Finances, finding that median household wealth rose modestly over the period and while overall wealth inequality increased, households in the top 1 percent of the wealth distribution in 1983 saw their share of total wealth decline.
Abstract: There are few sources of high-quality data on the dynamics of wealth accumulation. This paper uses newly available data from the 1983 89 panel of the Survey of Consumer Finances to examine household saving and portfolio change over the 1980s. Our main findings are as follows. First, median household wealth rose modestly over the period. Second, while overall wealth inequality increased, households in the top 1 percent of the wealth distribution in 1983 saw their share of total wealth decline, probably reflecting turnover among the very wealthy. Third, although age, income, and initial wealth had significant effects in regressions on household saving, a large part of the variation in saving was unexplained. Finally, there were clear life-cycle patterns in the portfolios of assets and liabilities held by households, with younger households acquiring homes, businesses and all types of debts, and older households divesting themselves of these assets and debts.
77 citations
TL;DR: In this article, the authors test the extent to which Russians are now in a modern market economy by analyzing data from nationwide Russian surveys in January, 1992, and April, 1994 and find that modern influences are increasingly important as a determinant of the distribution of money incomes, but not as an influence upon household welfare.
Abstract: The transformation of a non-market to a market economy ought to change fundamentally the significance of money incomes for welfare. Whereas in a stressful non-market economy such as the former Soviet Union, non-monetized resources could substitute for money income and promote welfare, in a modern market economy money income should be a good proxy for household welfare. This article tests the extent to which Russians are now in a modern market economy by analyzing data from nationwide Russian surveys in January, 1992, and April, 1994. Modern influences are increasingly important as a determinant of the distribution of money incomes, but not as an influence upon household welfare. The “randomness” of temporary disruptions of welfare is in accord with Rawlsian principles of equity.
76 citations
TL;DR: This article provided new estimates of the distribution of extended income among non-elderly, one-family households in the U.K. by combining household money income data and valuations of household production time.
Abstract: This paper provides new estimates of the distribution of extended income amongst non-elderly, one-family households in the U.K. by combining household money income data and valuations of household production time. Extended income is substantially more equal than money income and extending the income definition changes income relativities significantly between families with and without earners and between married couple families and singles. There is a substantial literature arguing in favour of measures of household economic resources which incorporate valuations of household production. Empirical analysis of these extended income measures using U.K. data is rare, however. This paper aims to go some way towards filling this gap by providing new estimates of the distribution of extended income amongst non-elderly, onefamily households. Measures of extended income are derived by combining household money income data and valuations of imputed household production time. Since there is no U.K. data set which has satisfactory information about both household time use and household income, we have to use data matching methods. We estimate models of household time use with data from the 1987 Social Change and Economic Life (SCEL) time budget survey, and use the estimates to impute time use to respondents to the 1986 Family Expenditure Survey (FES). We show that extended income is substantially more equal than money income and that extending the income definition changes income relativities significantly between families with and without earners and between married couple families and singles.
61 citations
TL;DR: In this article, the authors explored how the unequal sharing of resources could potentially affect the measurement of poverty and found that if there is significant intra-household inequality of this type, as some writers have suggested, then conventional methods of poverty measurement will likely lead to a serious under-estimate of the incidence and intensity of female (male) poverty.
Abstract: Most empirical studies of poverty assume an equal sharing of resources between all household members. There is a growing body of research indicating that this assumption is not realistic. This paper explores how the unequal sharing of resources could potentially affect the measurement of poverty. Simulations based on micro-data from two countries (Italy and the U.S.A.) are carried out under the assumption that women “lose” and men and children “gain” because of unequal sharing in the household. Our findings suggest that if there is significant intra-household inequality of this type, as some writers have suggested, then conventional methods of poverty measurement will likely to lead to a serious under-estimate (over-estimate) of the incidence and intensity of female (male) poverty.
60 citations
TL;DR: This paper analyzed how inequality in Before and After Government income has changed in Germany since reunification using the 1990 through 1992 waves of the German Socio-economic Panel and found that massive public transfers from west to east have narrowed the east-west income gap, substantially offset the rise in income inequality from private sources, and lowered overall inequality in the western states.
Abstract: This paper analyzes how inequality in Before and After Government income has changed in Germany since reunification using the 1990 through 1992 waves of the German Socio-Economic Panel. A Theil decomposable inequality index is used to measure inequality in Germany and in its eastern and western states. Massive public transfers from west to east have narrowed the east-west income gap, substantially offset the rise in income inequality from private sources, and lowered overall inequality in the western states. The net result of this policy has been a drop in After Government income inequality in Germany between 1990 and 1992.
49 citations
TL;DR: In this paper, a measure for spatial autocorrelation among price relatives with respect to three measures of relative location is proposed. But it is not used to measure the extent of this interrelationship.
Abstract: Data from the International Comparison Programme (ICP) generate a number of analyses examining price and quantity relationships across countries. Although geographic location is sometimes evoked to explain differences across observations, it is seldom used to measure the extent of this interrelationship. Using ICP Phase V benchmark studies (Summers and Heston, 1991) at the level of household consumption for approximately 64 countries and 23 aggregate headings in 1985, this paper introduces such a measure, testing for spatial autocorrelation among price relatives with respect to three different measures of relative location: the pairwise existence of a common boundary, the distance between capital cities and the amount of trade between two countries.
TL;DR: In this paper, the authors compared the living standards of the elderly vis-a-vis the rest of the population in EU countries in the late 1980s using the data of Household Budget Surveys.
Abstract: The paper compares the living standards of the elderly vis-a-vis the rest of the population in EU countries in the late 1980s using the data of Household Budget Surveys. Elderly and non-elderly are compared in terms of consumption expenditure, income and non-monetary indicators of welfare. The results show that in all EU countries the non-elderly are better-off than the elderly. In some countries the differences in the living standards of the two groups are marginal, whereas in others they are substantial. These differences tend to be larger in the Southern European EU countries (with the exception of Spain) and smaller in the Northern European EU countries (with the exception of the U.K.).
TL;DR: In this article, the authors present multilateral comparisons of output, productivity and purchasing power parities in manufacturing, for 1975 and 1987, for two multilateral approaches, namely the Geary-Khamis method and the generalized Theil-Tornqvist method based on the EKS procedure.
Abstract: This paper presents multilateral comparisons of output, productivity and purchasing power parities in manufacturing, for 1975 and 1987. Two multilateral approaches are considered, namely the Geary-Khamis method and the generalized Theil-Tornqvist method based on the EKS procedure. The paper discusses the problem of lack of additive consistency of the generalized Theil-Tornqvist index and the absence of constant price comparisons within this framework. Some procedures that lead to near additive consistency are proposed. The empirical results show that multilateralization does not substantially affect the results and that both the Geary-Khamis and the generalized Theil-Tornqvist index give results comparable to the binary comparisons.
TL;DR: In this article, a longitudinal scrutiny of the development of pension policy in Finland and evaluates the impacts that the shift from a marginal to an institutional welfare state imposed on economic well-being among the elderly.
Abstract: This study offers a longitudinal scrutiny of the development of pension policy in Finland and evaluates the impacts that the shift from a “marginal” to an “institutional” welfare state imposed on economic well-being among the elderly. The data that are used stem from household budget surveys from 1966 to 1990. During that period, average income of the elderly doubled in real terms, legislated pensions replaced other sources of income, the traditional cycle of poverty, where the elderly had a higher risk of poverty, disappeared, and income differences between the elderly diminished.
TL;DR: In this paper, the issues involved in calculating a value added index in order to measure real value added at the industry level are examined, and a recommendation for an appropriate index to use when calculating industry real-value added is made.
Abstract: This paper examines issues involved in calculating a value added index in order to measure real value added at the industry level. Three methods of calculating real value added are considered; the Laspeyres double-deflation method recommended by the United Nations System of Nation Accounts, the commonly used single-deflation method, and the double-deflation Divisia method. Actual data are employed to clarify and illustrate the issues involved, and the paper concludes with a recommendation for an appropriate index to use when calculating industry real value added.
TL;DR: Auerbach et al. as mentioned in this paper presented a set of generational for Australia, following the approach developed in the U.S. by Auerbach, Gokhale and Kotlikoff, to estimate intergenerational redistribution related to policy changes in the area of public retirement pensions.
Abstract: This paper presents a set of generational for Australia, following the approach developed in the U. S. by Auerbach, Gokhale and Kotlikoff. In Contrast to the Auerbach et al., results for the U. S., the generational accounts presented here do not imply that a disproportionately high fiscal burden will have to be borne by future generations in Australia. In the paper, generational accounts are used to estimate intergenerational redistribution related to policy changes in the area of public retirement pensions.
TL;DR: In this article, the authors compare SNA economic production and welfare to total production, investment and consumption within the Walrasian framework of usefulness and costliness, and demonstrate the usefulness of the SNA as a fundamental, initial, welfare indicator.
Abstract: Few economic relationships have been as scrutinized as that between SNA measures of national product, investment and consumption, and welfare. The present paper contrasts SNA economic production and welfare to total production and welfare within the Walrasian framework of usefulness and costliness. An evaluation of deductions and additions to the SNA made by Nordhaus-Tobin, Zolotas, Richard and Nancy Ruggles, Kendrick, Eisner and Jorgenson-Fraumeni, in their research on extended product and income accounts and improved indicators of welfare reveals numerous unresolved analytical and measurement issues; and reaffirms the usefulness of the SNA as a fundamental, initial, welfare indicator.
TL;DR: In this paper, the authors take a look at recent developments, internationally, in the field of service sector statistics, particularly with respect to prices, with particular reference to data required for national accounts, and including reflections on some initial work on the collection of price information.
Abstract: Despite the growing importance of the service sector in the economies of most countries, the range of statistical information available falls well short of requirements. This paper outlines international developments in this area and describes what has been done in the United Kingdom to fill some of the gaps, essentially for the national accounts, including collection of monthly or quarterly turnover and price data, and also the derivation of quarterly estimates of current price GDP by industry. The paper also looks briefly at certain aspects relating to the use of the new data.
The growth in the importance of the services sector in economic activity in most industrialized countries has increased the range of statistical information now collected in this area. Increasing demand from businesses has also been an important factor in the development of these statistics. Nonetheless, the range of data available still falls well short of requirements in scope, frequency and quality. This is true of both annual and short-period information.
This paper begins by taking a look at recent developments, internationally, in the field of service sector statistics. It then considers how service sector statistics are evolving in the U.K. with particular reference to data required for national accounts, and including reflections on some initial work on the collection of price information. There follows some brief discussion of the various approaches to the measurement of the movement in constant price value added, together with a description of some recent work in the U.K. on deriving an equivalent quarterly current price series. Finally, a short section considers possible future developments in the U.K., particularly with respect to prices.
TL;DR: This paper used interviews with 135 married couple households in Missoula, Montana to estimate household production functions directly, considering their characteristics, and compared them with previous indirectly estimated functions, concluding that endogeneity and a previous lack of output and capital data are not insurmountable problems.
Abstract: This paper estimates household production functions directly, considers their characteristics, and compares them with previous indirectly estimated functions. Interviews with 135 Missoula, Montana area married couple households provided the data. The results suggest that endogeneity and a previous lack of output and capital data which led to the use of the indirect methodology are not insurmountable problems. The results tend to confirm the feasibility of directly measuring household outputs since the production function results are reasonable. Directly estimated household production functions offer the possibilities for estimation of short-term household output changes and testing hypotheses about households' economic behavior.
TL;DR: In this article, it was shown that the generalized Stuvel (1957) indices satisfy the Eichhorn and Voeller (1983) axioms for price and quantity indices, and if one also requires that the indices be linearly homogeneous in current period prices and quantities then the only admissible indices are those of Laspeyres and Paasche.
Abstract: In the National Accounts framework a frequent use is made of value, price, and quantity indices. Three requirements appear to be of vital importance. (i) For each aggregate the price index multiplied by the quantity index must be equal to the value index. (ii) The indices must be consistent-in-aggregation (which means something more than that a single-step calculation yields the same outcome as a two-or-more-step calculation). (iii) The indices must satisfy the equality test (defined in this paper). In this paper it is shown that the only indices satisfying these three requirements are the generalized Stuvel (1957) indices. These indices satisfy the Eichhorn and Voeller (1983) axioms for price and quantity indices. However, if one also requires that the indices be linearly homogeneous in current period prices and quantities then the only admissible indices are those of Laspeyres and Paasche.
TL;DR: In this article, the authors consider the distributional consequences at a national level in Russia during the initial phase of market reforms between the mid-1980s and the early 1990s and estimate that poverty increased with 18.5 percent of the population on incomes lying below the official subsistence level at the end of 1992.
Abstract: We consider the distributional consequences at a national level in Russia during the initial phase of market reforms between the mid-1980s and the early 1990s. Although the incomes of many individuals changed favourably under the reforms during this period, average real household per capita income declined between 1985 and 1992. In particular during the first year of major reform in 1992 households at the lower end of the income distribution seemed to incur the largest fall in income. As a consequence there was a rise in measured income inequality. The Gini coefficient, estimated by various researchers to have been around 27 percent between the late 1960s and early 1990s. we estimate to have increased to 32.2 percent by the end of 1992. We also estimate that poverty increased with 18.5 percent of the population on incomes lying below the official subsistence level at the end of 1992.
TL;DR: In this article, the authors present the results of attempts to estimate FISIM (Financial Intermediation Services Indirectly Measured) for France and the U.K.
Abstract: The 1993 SNA proposes a revised treatment of the output of financial intermediaries which treats intermediation services in part as a component of final demand, so that GDP is higher than the 1968 SNA suggests. In this paper we present the results of attempts to estimate FISIM (Financial Intermediation Services Indirectly Measured) for France and the U.K. The French study uses a reference rate calculated to ensure that no imputation is made with respect to own funds, while the U.K. study relies on a market interest rate. Both studies present an allocation of intermediation services by industry as well as by category of demand. The adjustments to GDP are of similar magnitudes in both countries.
TL;DR: This paper examined four alternative measures of the average duration of unemployment with the intention of illustrating the biases inherent in the average incomplete duration of employment, a statistic that is often the only one reported by many statistical agencies.
Abstract: Four alternative measures of the average duration of unemployment are examined with the intention of illustrating: (1) the biases inherent in the average incomplete duration of unemployment, a statistic that is often the only one reported by many statistical agencies; and (2) the robustness of the average complete duration of unemployment to a host of assumptions underlying its derivation by non-parametric methods. Canadian data are employed, but the results offer a guide to the construction of the average complete duration of unemployment that may have broader applications.
TL;DR: In this paper, the authors compared relative poverty in urban Russia at the end of the Soviet era (using microdata for the town of Taganrog) is compared to relative poverty of Sweden, finding that the extent of relative poverty was rather similar in the two societies, but that differences in the structure of poverty existed.
Abstract: Relative poverty in urban Russia at the end of the Soviet era (using microdata for the town of Taganrog) is compared to relative poverty in Sweden. The results indicate that the extent of relative poverty was rather similar in the two societies, but also that differences in the structure of poverty existed. In urban Russia characteristics of the household head leading to a high risk of poverty were advanced age, a limited education and being female. Swedish poverty was concentrated to households with a young head.
TL;DR: In this paper, an absolute interpretation of equivalent income is argued as the value to persons of consumption well-being after household economies, and guidance is suggested on the choice of equivalence scales, and for the measurement of wellbeing and inequality.
Abstract: Household economies translate goods into well-being through production, co-operation, and distribution. Between market goods to households and well-being to persons, value is added. Income is a measure of goods, consumption well-being is measured by equivalent income. An absolute interpretation of equivalent income is argued as the value to persons of consumption well-being after household economies. Guidance is suggested on the choice of equivalence scales, and for the measurement of well-being and inequality.
TL;DR: In this paper, the main explanation for food price difference is the extent of protection of agricultural products at the farm level, and a second important influence is the level of VAT on food.
Abstract: Prices of food vary greatly among the developed countries, and some countries' food prices have been consistently far above the OECD average. The main explanation for food price difference is the extent of protection of agricultural products at the farm level. A second important influence is the level of VAT on food. A third is deviations of aggregate country price levels from the levels that would be predicted from their per capita incomes, presumably because of omitted characteristics of the countries' economies, such as, possibly, inefficient or monopolistic service sectors. In addition, there are occasional episodes of high or low price levels due to temporary factors affecting exchange rates.
The degree of protection of agricultural products is treated both as an exogenous factor and as an endogenous one. In the latter case, it is explained by climatic conditions and, presumably, the political influence of the agricultural sector or a general desire to retain an agricultural sector despite poor growing conditions.
TL;DR: In this paper, the authors recalculate output for the United States, adjusting for transactional activities and nonmarket production for the period 1950-89, and find that due to relatively rapid growth in transactional activity, GNP over-estimates output growth in the 1950s; because there was slow expansion of transactional transactions in the early 1970s, the GNP understates actual output.
Abstract: Measures of national product can be misleading because there is nonmarket production. There are also distortions due to transactional activities, which are expenditures to support transactions, not actual output consumed. For 1950–89, this study recalculates output for the United States, adjusting for transactional activities and nonmarket production. Due to relatively rapid growth in transactional activities, GNP overstates output growth in the 1950s; because there was slow expansion of transactional activities in the early 1970s, GNP understates actual output. Since 1974, increases in transactional activities and shifts to market production lead GNP to exaggerate improvement of “actual” output per capita.
TL;DR: In this article, the Paasche annual chain index was applied to the Italian GDP figures between 1861 and 1989 and compared with product at constant prices, except for war periods, the most striking differences are concentrated into periods of marked changes in relative prices and the new index modifies the temporal pattern of the growth trend by accentuating, without altering the periodization, cyclical fluctuations.
Abstract: The construction and application of a Paasche annual chain index to the Italian GDP figures between 1861 and 1989 is the subject of this article Comparison with product at constant prices shows, except for war periods, a revaluation of GDP in favour of the annual chain index of around 010 percent The most striking differences are concentrated into periods of marked changes in relative prices, and the new index modifies the temporal pattern of the growth trend by accentuating, without altering the periodization, cyclical fluctuations
TL;DR: The authors examined trends in income distribution during the 1970s and 1980s and attempted to ascertain the source of the changes in income inequality through a decomposition of the Gini coefficient by factor income source.
Abstract: The paper examines Puerto Rican trends in income distribution during the 1970s and 1980s, then attempts to ascertain the source of the changes in income inequality through a decomposition of the Gini coefficient by factor income source. The study finds that poverty and inequality declined unambiguously during the twenty-year period. The source of the fall in income concentration was found to have been tied, not to changes in the distribution or share of earned income, but to that of unearned income, particularly transfers. These appear to have also accounted for the decline in poverty.