Showing papers in "Review of Income and Wealth in 2002"
TL;DR: In this article, empirical evidence on how education is related to income distribution in a panel data set covering a broad range of countries for the period between 1960 and 1990 was presented, showing that higher educational attainment and more equal distribution of education play a significant role in making income distribution more equal.
Abstract: This paper presents empirical evidence on how education is related to income distribution in a panel data set covering a broad range of countries for the period between 1960 and 1990. The findings indicate that educational factors—higher educational attainment and more equal distribution of education —play a significant role in making income distribution more equal. The results also confirm the Kuznets inverted–U curve for the relationship between income level and income inequality. We also find that government social expenditure contributes to more equal distribution of income. However, a significant proportion of cross–country variation in income inequality remains unexplained.
434 citations
TL;DR: This article found that ICT capital appears correlated with the acceleration of average labor productivity (ALP) growth as predicted by a standard production model, but not with total factor productivity growth as these New Economy forces imply.
Abstract: Some observers have raised the possibility that production spillovers and network effects associated with information and communications technology (ICT) are an important part of the “New Economy.” Across U.S. manufacturing industries, however, ICT capital appears correlated with the acceleration of average labor productivity (ALP) growth as predicted by a standard production model, but not with total factor productivity (TFP) growth as these New Economy forces imply. Once one allows for productivity differences across industries, measured TFP growth is uncorrelated with all capital inputs, including ICT capital. This provides little evidence for a New Economy story of ICT-related spillovers or network effects driving TFP growth throughout U.S. manufacturing.
326 citations
TL;DR: In this article, the authors argue that a better index of economic well-being should consider: current effective per capita consumption flows; net societal accumulation of stocks of productive resources; income distribution; and economic security.
Abstract: Per capita gross domestic product (GDP) is a poor indicator of economic well–being. It measures effective consumption poorly (ignoring the value of leisure and of longer life spans) and it also ignores the value of accumulation for the benefit of future generations. Since incomes are uncertain and unequally distributed, the average also does not indicate the likelihood that any particular individual will share in prosperity or the degree of anxiety and insecurity with which individuals contemplate their futures. We argue that a better index of economic well–being should consider: current effective per capita consumption flows; net societal accumulation of stocks of productive resources; income distribution; and economic security. The paper develops such an index of economic well–being for the U.S., U.K., Canada, Australia, Norway and Sweden for the period 1980 to 1999. It compares trends in economic well–being to trends in GDP per person. In every case, growth in economic well–being was less than growth in GDP per capita, although to different degrees in different countries.
200 citations
TL;DR: In this paper, the authors compared income inequality and income mobility in the Scandinavian countries and the United States during 1980-90 and found evidence of greater dispersion of first differences of relative earnings and income.
Abstract: This paper compares income inequality and income mobility in the Scandinavian countries and the United States during 1980–90. The results suggest that inequality is greater in the United States than in the Scandinavian countries and that this inequality ranking of countries remains unchanged when the accounting period of income is extended from one to eleven years. The pattern of mobility turns out to be remarkably similar, in the sense that the proportionate reduction in inequality from extending the accounting period of income is much the same. But we do find evidence of greater dispersion of first differences of relative earnings and income in the United States. Relative income changes are associated with changes in labor market and marital status in all four countries, but the magnitude of such changes are largest in the United States.
162 citations
TL;DR: In this article, the authors explain the motivation for the switch to chain aggregation, and then illustrate the usage of chain-aggregated data with three topical examples, each relating to a different aspect of how information technologies are changing the U.S. economy.
Abstract: In 1996, the U.S. Department of Commerce began using a new method to construct all aggregate “real” series in the National Income and Product Accounts (NIPA). This method is based on the so-called “ideal chain index” pioneered by Irving Fisher. The new methodology has some extremely important implications that are unfamiliar to many practicing empirical economists; as a result, mistaken calculations with NIPA data have become very common. This paper explains the motivation for the switch to chain aggregation, and then illustrates the usage of chain–aggregated data with three topical examples, each relating to a different aspect of how information technologies are changing the U.S. economy.
130 citations
TL;DR: In this paper, the authors discuss the possible consequences for measures of economic growth of replacing one set of price indices by another one in the framework of national accounts and point out that the issue of ICT deflators cannot be dealt with in isolation and several other factors have to be taken into account.
Abstract: Methodologies to derive price indices for information and communication technology (ICT) products vary between national statistical offices. This may lead to significant differences in measured price changes for these products and there has been concern about the international comparability of volume growth rates of GDP between several OECD countries. This article discusses the possible consequences for measures of economic growth of replacing one set of price indices by another one in the framework of national accounts. It is argued that the issue of ICT deflators cannot be dealt with in isolation and several other factors have to be taken into account, in particular whether ICT products are final or intermediate products, whether they are imported or domestically produced and whether national accounts are set up with fixed or chain weighted index numbers. Overall, results point to modest effects at the aggregate GDP level but may be more significant when it comes to component measures such as volume growth of investment, or of output in particular industry.
99 citations
TL;DR: The advances made in the production and use of information and communication technology (ICT) during the past decades may have potentially large effects for long term economic growth in many OECD countries as discussed by the authors.
Abstract: The advances made in the production and use of information and communication technology (ICT) during the past decades may have potentially large effects for long term economic growth. Indeed the substantial acceleration in real GDP growth in many OECD countries, but in particular in the United States, during the second half of the 1990s has led to suggestions that a “new economy” has emerged. In this new economy the old economic rules were supposed to have become invalid. For example, traditional concerns about the limits of maximum production capacity might disappear as the marginal costs of producing ICT goods and services are virtually nil. Moreover, the trade-off between inflation and unemployment could be reduced due to a more efficient inventory management.
86 citations
TL;DR: The authors developed the link between poverty and inequality by focussing on a class of poverty indices (some of them well-known) which aggregate normative concerns for absolute and relative deprivation.
Abstract: This paper develops the link between poverty and inequality by focussing on a class of poverty indices (some of them well-known) which aggregate normative concerns for absolute and relative deprivation. The indices are distinguished by a parameter that captures the ethical sensitivity of poverty measurement to “exclusion” or “relative-deprivation” aversion. We also show how the indices can be readily used to predict the impact of growth on poverty. An illustration using LIS data finds that the United States show more relative deprivation than Denmark and Belgium whatever the percentiles considered, but that overall deprivation comparisons of the four countries considered will generally necessarily depend on the intensity of the ethical concern for relative deprivation. The impact of growth on poverty is also seen to depend on the presence of and on the attention granted to concerns over relative deprivation.
59 citations
TL;DR: In this paper, a ten-year panel analysis of the subjective tension between time and income in Germany is presented, and the authors quantify personal and household influences in explaining the working hour tension as one further important economic well-being measure.
Abstract: Individual well–being has its resources by income and time. Though income traditionally is on the focuses of well–being analyses, the connected time dimension is often neglected. One important dimension of individual welfare regarding time and income is the possibility to harmonize desired with actual working hours connected with the income dimension. This paper will analyze this working hour tension by a ten year panel analysis for Germany. Besides descriptive measures of the subjective tension over a decade from the mid 1980s to the mid 1990s, the panel econometric analyses will quantify personal and household influences in explaining the working hour tension as one further important economic well–being measure.
53 citations
TL;DR: In this article, the authors used a Laspeyres quantity index approach to the recently available official physical output data at commodity level, and produced a unique data set for the value added of 17 major industrial branches at 1987 prices for the period 1949-97.
Abstract: The motivation of this study is to test the widely accepted but never tested hypothesis that Chinese official statistics on growth rates may contain serious upward biases. By adopting a Laspeyres quantity index approach to the recently available official physical output data at commodity level, we have constructed an independent output index for Chinese industry, and produced a unique data set for the value added of 17 major industrial branches at 1987 prices for the period 1949–97. This study has, for the first time, systematically tested this hypothesis with supportive results. It implies that any growth accounting study using the official growth rates may have exaggerated the productivity performance of Chinese industry.
52 citations
TL;DR: The authors compare the well-being of young children in Canada, Norway and the United States using Sen's (1992) "functionings" perspective, finding that Canadian and U.S. children are statistically indistinguishable for three outcomes.
Abstract: The goal of this paper is to compare the well–being of young children in Canada, Norway and the United States using Sen’s (1992) “functionings” perspective. We compare children cross–nationally in terms of ten “functionings” (low birth–weight; asthma; accidents; activity limitation; trouble concentrating; disobedience at school; bullying; anxiety; lying; hyperactivity). If we compare young children in Canada and the U.S. in terms of their functionings, there is not a clear ranking overall. Canadian children are better off for four of nine comparable outcomes; U.S. children are better off for two outcomes; Canadian and U.S. children are statistically indistinguishable for three outcomes. If we compare child functionings in Canada or the U.S. with those experienced in Norway, it is clear that Norwegian children fare better. There is not a single case in which children in either Canada or the U.S. have better outcomes than Norwegian children.
TL;DR: In this paper, grade correspondence analysis (GCA) is investigated as a tool to improve the matching process of independent data sources, and the most successful methods are then employed to enhance data from the Family Resources Survey and the synthetic dataset is used as a microsimulation model database.
Abstract: The analysis of the distributional impact of fiscal policy proposals often requires information on household expenditures and incomes. It is unusual to have one data source with information on both and this problem is generally overcome with statistical matching of independent data sources. In this paper Grade Correspondence Analysis (GCA) is investigated as a tool to improve the matching process. GCA draws out the relationships between the common variables to enable the sample to be partitioned into more homogeneous groups, prior to matching. An evaluation is conducted using the UK Family Expenditure Survey, which is unusual in containing both income and expenditure at a detailed level of disaggregation. Imputed expenditures are compared with actual expenditures through the use of indirect tax simulations. The most successful methods are then employed to enhance data from the Family Resources Survey and the synthetic dataset is used as a microsimulation model database.
TL;DR: In this paper, the equivalence scales in an intertemporal setting with uncertainty are discussed, where subjective data on satisfaction with life and satisfaction with income are used to represent the welfare level.
Abstract: Equivalence scales provide answers to questions like how much a household with four children needs to spend compared to a household with two children or how much a childless couple needs to spend compared to a single person household to attain the same welfare level. These are important questions for child allowances, social benefits and to assess the cost of children over the life-cycle for example. The latter is also interesting from a theoretical point of view, especially if future events are allowed to be uncertain. We discuss equivalence scales in an intertemporal setting with uncertainty. To estimate equivalence scales we use subjective data on satisfaction with life and satisfaction with income to represent the welfare level. Because satisfaction is measured on a discrete scale we use limited dependent variable models in estimation. The results are based on a panel from German households (GSOEP). Using satisfaction with life data we find that larger households do not need any additional income to be as satisfied with their life as a couple. Using satisfaction with income, however, indicates that an increase in the household size leads to a significant drop in the satisfaction with their income. This result is used to compute equivalence scales.
TL;DR: In this article, the authors developed three measures of structural change on the basis of U.S. data: changes in occupational composition, changes in input-output technical coefficients, and changes in capital coefficients.
Abstract: I develop three measures of structural change on the basis of U.S. data: changes in occupational composition, changes in input–output technical coefficients, and changes in capital coefficients. Using pooled cross-section, time-series data for 44 industries over the period from 1970 to 1990, I find that computer investment per worker has had a positive and significant effect on the degree of occupational change and changes in input and capital coefficients.
TL;DR: Using a money-based cointegration approach and a new measure of broad money, this paper exploited Egypt's intimate economic links with the U.K. to provide the first continuous estimates of GDP for the period 1886-1945.
Abstract: The stagnation of Egyptian living standards in the first half of the 20th century has been widely presumed in economic history. However, this conventional wisdom is partially based on a fragmented body of evidence on aggregate output. In particular, no estimates of national income exist for any extended period prior to World War II. Using a money-based cointegration approach and a new measure of broad money, we exploit Egypt’s intimate economic links with the U.K. to provide the first continuous estimates of GDP for the period 1886–1945. Our estimates are consistent with trends in agriculture and other stylized facts about the Egyptian economy in the late 19th and early 20th century. The empirical results provide qualified support to the conventional wisdom about Egypt’s growth performance in addition to offering a detailed characterization of output cycles.
TL;DR: In this paper, the development of income inequality in Sweden up to 1998 is described and analyzed using yearly data focusing on the 1990s when average income fell rapidly and unemployment sky rocketed.
Abstract: The development of income inequality in Sweden up to 1998 is described and analyzed using yearly data focusing on the 1990s when average income fell rapidly and unemployment sky rocketed. Inequality in equivalent disposable income increased during the 1990s as during most of the 1980s. Decomposing total inequality by population groups and studying the earnings of full–time workers shows that while many groups experienced drops in income during the 1990s, some large groups did not. Examples of the latter are pensioners and full–time workers. Young adults and recent immigrants are examples of the former. Decomposing the Gini–coefficient by income source indicates that forces leading to increased inequality during the 1990s differed from those at play during the 1980s.
TL;DR: The authors discusses the five main problems with current price estimates of China's Gross Domestic Product (GDP) and concludes that these problems have some impact on the structure of China’s GDP, but limited impact on China's total size of GDP.
Abstract: This paper discusses the five main problems with current price estimates of China’s Gross Domestic Product (GDP). These are the measurement of housing services, fiscal subsidies, welfare services provided within enterprises, rural industry and livestock products. The paper gives the possible ranges of error arising from problems in these areas and shows their quantitative impact on GDP estimates. The paper concludes that these problems have some impact on the structure of China’s GDP, but limited impact on the total size of China’s GDP. The official estimates, therefore, provide a reasonably accurate measure of the size of China’s current price GDP.
TL;DR: In this article, the authors investigated the magnitude of the mismasurement that occurs when only a few education categories are used in the construction of a constant quality index for labor input and found that the error resulting from the omission of information on education is relatively small.
Abstract: This paper investigates the magnitude of the mismeasurement that occurs when only a few education categories are used in the construction of a constant quality index for labor input. By employing a very comprehensive data set it is found that the error resulting from the omission of information on education is relatively small. The empirical results are thus supportive of the current state of practice of constructing indices of constant quality labor input.
TL;DR: In this article, the authors evaluate the contribution of information and communication technologies (ICT) to the growth of value added during the past 15 years in France, using traditional growth accounting methods to assess the relative size of two types of contribution.
Abstract: In this article we evaluate the contribution of information and communication technologies (ICT) to the growth of value added during the past 15 years in France. Following North American studies, we use traditional growth accounting methods to assess the relative size of two types of contribution: on the one hand the effect of the use of information technologies (IT) on growth due to the accumulation of IT capital taking place within all industries; on the other hand the contribution of the production of ICT to growth due to the strong total factor productivity (TFP) gains achieved in the industries producing ICT. We use individual company data aggregated by industry, which provide us with a measure of the firm's computer stock and makes a detailed investigation possible.
TL;DR: In this paper, a methodology for constructing asset accounts for a commercial fishery in which the stock, harvest, and effort level are out of sustainable equilibrium is presented, based on the framework used by the U.S. Department of Commerce Bureau of Economic Analysis in its preliminary Integrated Economic and Environmental Accounts and follows methodologies recommended by the National Research Council committee constituted to review those efforts.
Abstract: This paper demonstrates a methodology for constructing asset accounts for a commercial fishery in which the stock, harvest, and effort level are out of sustainable equilibrium. The paper adopts the framework used by the U.S. Department of Commerce Bureau of Economic Analysis in its preliminary 1993 Integrated Economic and Environmental Accounts and follows methodologies recommended by the National Research Council committee constituted to review those efforts. The accounts were constructed for the period 1985 to 1995 for the Atlantic sea scallop fishery, a significant commercial fishery, using information obtained with the cooperation of the National Marine Fisheries Service from existing databases constructed for management purposes. No significant additional data collection was required for the purpose of this study. Differences between the net rent and user cost values of the stocks over this period indicate the inefficient exploitation of immature scallop populations.
TL;DR: In this paper, the authors explore how annual earnings mobility offsets annual earnings inequality, using matched CPS data, and assess the (positive or negative) contribution to offsetting of each pattern in mobility.
Abstract: This paper explores how annual earnings mobility offsets annual earnings inequality, using matched CPS data. Mobility in the economy is estimated using nonparametric quantile regression, for which we adapt state–of–the–art smoothing techniques. Mobility is measured through the churning process (changes in earnings given initial earnings) in order to identify different mobility patterns for different earnings groups. For instance, upward mobility in high earners is far weaker than its converse, downward mobility for low earners. We assess the (positive or negative) contribution to offsetting of each pattern in mobility. Innovations in our approach also allow us to identify trends and minute changes in mobility, and to pinpoint which changes in mobility have offset the increases in inequality observed over the decades.
TL;DR: In this article, the authors investigated the effect of finding work by one of the household members on the probability of escaping from poverty in the Netherlands, and found that finding a job by the head of a household increases the chance of leaving poverty with 22 percent points.
Abstract: This paper investigates the effect of finding work by one of the household members on the probability of escaping from poverty in the Netherlands. For households with non-active heads, finding work by the head of the household is the most important (investigated) event connected with exiting poverty, nearly a third of all poverty endings. However, finding a job by the head of the household does not guarantee one leaving poverty. In practice, the success rate yields 25 percent. A multivariate analysis shows that finding a job by the head of the household increases the chance of leaving poverty with 22 percent points. So, some exits from poverty are a result of other factors or are due to selectivity of the job-finders. This difference is much larger when partners or (adult) children find jobs.
TL;DR: Merz and Ehling as discussed by the authors reviewed a book called "Time Use -Research, Data and Policy" by Joachim Merz and Manfred Ehling and published it in 2013.
Abstract: Book reviewed in this article:
Joachim Merz and Manfred Ehling (eds.), Time Use –Research, Data and Policy
TL;DR: In this article, the effects of the German unemployment compensation system on aggregate savings and the distribution of wealth were studied in a general equilibrium 60-period OLG model, and they showed that both aggregate saving and wealth equality are a monotone decreasing function of unemployment benefits.
Abstract: The effects of the German unemployment compensation system on aggregate savings and the distribution of wealth are studied in a general equilibrium 60–period OLG model. The distribution of wealth is derived as an endogenous function of the parameters characterizing the unemployment compensation system, which comprises unemployment insurance (Arbeitslosengeld), unemployment assistance (Arbeitslosenhilfe), and welfare payments (Sozialhilfe), the latter two being subject to a means test. As our main results: (i) both aggregate savings and wealth equality are a monotone decreasing function of unemployment benefits; (ii) optimal unemployment compensation declines over the spell of unemployment; (iii) asset–based means tests are shown to reduce welfare if the allowable wealth level is below the average wealth in the economy.
TL;DR: In this article, the authors investigated income transfers between dynastic families caused by a public pension system using Japanese data, and presented simulation results based on a model in which intergenerational altruism works, and income distribution exists between and within generations.
Abstract: This paper investigates income transfers between dynastic families caused by a public pension system Using Japanese data, we present simulation results based on a model in which intergenerational altruism works, and income distribution exists between and within generations The growth rates of income and population, as well as the formulation for the determination of the contribution rate and the payment rate, are crucial to determine both the qualitative and quantitative effects Especially, under negative income growth over generations, pay–as–you–go public pensions can cause negative income redistribution
TL;DR: Maddison as mentioned in this paper reviewed the book The World Economy, A Millennial Perspective, a book reviewed in this article:==================\/\/\/\/\/\/£££€££ £££$££/$££•££
Abstract: Book reviewed in this article:
Angus Maddison, The World Economy, A Millennial Perspective