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  • Author: Brian Levy, Alan Hirsch, Vinothan Naidoo, Musa Nxele
  • Publication Date: 03-2021
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: South Africa's economic and social imbalances can no longer be swept under the rug. The country has three choices: muddle through, endure another surge of ethnopopulism, or pursue inclusive development. South Africa was one of the 1990s iconic cases of democratization. Yet starting in the mid-2000s, the country began to experience a disruptive collision between its strong political institutions and massive economic inequality. The collision intensified across the 2010s, resulting in economic stagnation and increasing threats to institutional integrity. Understanding why this collision occurred and worsened over time is relevant not just for other middle-income countries but also many higher-income democracies wrestling with similar tensions between a declining tolerance for high or rising inequality and institutions that seemed strong in the past but find their legitimacy increasingly being questioned. Ideally, ideas, institutions, and growth all reinforce one another in a virtuous developmental spiral. Ideas offer hope by encouraging cooperation and the pursuit of opportunities for win-win gains. Institutions assure that the bargains underpinning cooperation will be monitored and enforced. Together, ideas and institutions provide credible commitment, which fuels economic growth. However, such a benign scenario does not reckon with the ways in which persistent high inequality, accompanied by unresolved tensions between the distribution of economic and political power, can both put pressure on institutions and quickly change hope into anger. The result can be a cascading set of pressures and an accelerating downward spiral. For the first fifteen years of democracy, South Africa enjoyed the advantages of both effective institutions and a shared willingness of stakeholders believed in the power of cooperation. This enabled the country to move beyond counterproductive conflict and pursue win-win outcomes. Growth began to accelerate, which created new opportunities for expanding the middle class. Increased fiscal space made it possible to broaden access to public services and to social grants, which reduced absolute poverty. There were, however, some stark limitations in what was achieved. Gains for the poorest did little to alter their difficult economic and social realities. Less than a quarter of the total population, including essentially all white South Africans, enjoyed a standard of living that was middle class or better. There was ample reason for the majority of South Africans to feel that, notwithstanding the promises of mutual benefit, the deck remained stacked against them. This increased the vulnerability of South Africa’s political settlement.
  • Topic: Development, Inequality, Institutions
  • Political Geography: South Africa, Africa
  • Author: Lydia Assouad
  • Publication Date: 01-2021
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: To survive its ongoing financial crisis, Lebanon needs a new economic system that addresses massive income inequality. Paired with political and institutional reform, tax reform can help. Over the past three decades, Lebanon’s ruling class—which comprises intertwined political and business elites—has run the country into the ground. To survive its ongoing accumulation of challenges, including the financial crisis that erupted in October 2019, Lebanon requires a revamped state backed by a new economic model with social justice at its core. Tax reform is central to such an endeavor—and to ensuring that the state has the means both to deliver basic services and to tackle poverty and inequality.
  • Topic: Poverty, Inequality, Economic structure, Business , Social Justice, Tax Systems, Elites
  • Political Geography: Middle East, Lebanon
  • Author: Chunbing Xing
  • Publication Date: 06-2021
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: This paper examines the evolution of China’s industrial and occupational structure in the last two decades and its impact on wage inequality. We find that non-routine cognitive and interpersonal tasks have increased, while routine cognitive tasks first increased and then declined. Occupation structural change is accompanying rising wage inequality. The wage premium for educated workers rose sharply in the 1990s and remained high thereafter. Occupations with high routine task intensity are associated with lower wages. While the return to education has become the largest contributor to wage inequality, routine task intensities have yet to play a significant role.
  • Topic: Education, Labor Issues, Employment, Inequality, Work Culture
  • Political Geography: China, Asia
  • Author: Annalena Oppel
  • Publication Date: 06-2021
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: Community or interpersonal support as a critical source of livelihood sustenance in the Global South can exhibit unequal dynamics. An understanding of these practices is primarily tied to the conceptual space of poverty or small communities. Less is known about how social support systems might respond to structural inequalities. I address this by exploring how support practices might be shaped by inequalities in the Namibian context. I draw on primary network data to assess inequality as a social dynamic within the space of support and evaluate whether providing worse-off others corresponds to former discriminatory practices under the apartheid regime. My results suggest that inequality has normalized a sense of support as necessity for black but not white Namibians. More broadly, by recognizing differences in group practices, I evidence that exploring support practices across structural inequalities can enhance insights on the social replication of inter- and intragroup-based inequalities.
  • Topic: Economics, Race, Inequality, Social Networks
  • Political Geography: Africa, Namibia
  • Author: Nathan Babb
  • Publication Date: 05-2021
  • Content Type: Working Paper
  • Institution: School of Public and International Affairs, Princeton University
  • Abstract: This paper explores the ethnoracial segregation trends of New Orleans, Louisiana between the years 2000, 2010, and 2018. It studies the effect of Hurricane Katrina—which struck in August 2005—on population figures and racial composition within two geographic units of study in Orleans parish: neighborhoods and census tract block groups. Since Hurricane Katrina, White residents have returned in larger numbers than Black residents, and particularly so in neighborhoods that were predominantly Black before the storm. In 2019, New Orleans had 100,000 fewer people than before the storm—nearly the same as the number of Black residents who have not returned. Using a Gibbs-Martin index, which measures racial diversity, the paper finds that decreases in population at the census block group level are associated with racial “diversifying.” This trend invites a conversation on the normative interpretations of racial heterogenization, its causes, and its consequences: who bears the costs of increased “diversity” and what is the historical backdrop it operates under?
  • Topic: Race, Natural Disasters, Governance, Inequality, Domestic Policy, Disaster Management , Segregation
  • Political Geography: North America, United States of America
  • Author: Marie Hyland, Simeon Djankov, Pinelopi Koujianou Goldberg
  • Publication Date: 03-2021
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: reater legal equality between men and women is associated with a narrower gender gap in opportunities and outcomes, fewer female workers in positions of vulnerable employment, and greater political representation for women. While legal equality is on average associated with better outcomes for women, the experience of individual countries may differ significantly from this average trend, depending on the countries’ stage of development (as proxied by per capita GDP). Case studies from the Democratic Republic of the Congo, India, and Spain demonstrate this deviation. Especially in developing countries, legislative measures may not necessarily translate into actual empowerment, due mainly to deeply entrenched social norms, which render legal reforms ineffective. Women are more likely than men to be in vulnerable employment in low- and lower-middle-income economies but less likely than men to be in vulnerable employment in upper-middle- and high-income economies. Analysis of a 50-year panel of gendered laws in 190 countries reveals that country attributes that do not vary or change only slowly over time—such as a country’s legal origin, form of government, geographic characteristics, and dominant religion—explain a very large portion of the variation across countries. This finding suggests that the path to legal equality between men and women may be a long and arduous one. Nevertheless, the data also show that the past five decades have seen considerable progress toward legal gender equality. Gendered laws do evolve, suggesting a role for legal reforms in women’s economic empowerment.
  • Topic: Gender Issues, Law, Women, Inequality, Economy
  • Political Geography: Africa, Europe, South Asia, India, Democratic Republic of the Congo, Spain
  • Author: Zsolt Darvas
  • Publication Date: 03-2021
  • Content Type: Working Paper
  • Institution: Bruegel
  • Abstract: GDP contractions are typically associated with within-country income inequality increases. While official income inequality data for 2020 will not be available for about two years, the already available employment data for 2020 shows that the difference between highly-educated and low-educated people in terms of job losses is correlated with the economic shock from the COVID-19 pandemic, suggesting that the depth of the economic recession is related to the increase in within-country income inequality in 2020. Scenarios based on historical patterns of recessions and within-country income inequality increases suggest relatively small increases in global income inequality in 2020. Factors mitigating global inequality increases in 2020 include larger GDP per-capita declines in richer advanced countries than in poorer emerging and developing countries, and the positive GDP growth of China, which suggests that within-country inequality in the world’s most populous country might have not changed much in 2020. In contrast, it is quite likely there was a significant increase in European Union income inequality in 2020, partly reversing the decline during the previous decades.
  • Topic: Poverty, European Union, Employment, Inequality, COVID-19
  • Political Geography: Europe
  • Author: Mario Negre
  • Publication Date: 01-2021
  • Content Type: Working Paper
  • Institution: German Development Institute (DIE)
  • Abstract: With inequality reduction now being officially and broadly recognised as a key development objective with its own Sustainable Development Goal (SDG 10), there is a need for simple, economical and quick methodologies with which to focus on this area and assess progress. This paper presents such a methodology, which allows a rough assessment of the potential impacts of development cooperation on income, consumption and wealth inequality. This is important, as a rigorous causal analysis of the contribution development cooperation makes to reducing a partner country’s inequality is complex and costly. First, the relative contribution of targeted development cooperation programmes and projects to the economies of partner countries tends to be small (though admittedly not in all cases). Second, a myriad of factors contribute to changes in inequality in any given country, and assessing the impact of all of them is a complex, imprecise, time-consuming and resource-intensive exercise.
  • Topic: Development, International Cooperation, Inequality, Sustainable Development Goals
  • Political Geography: Global Focus
  • Author: Benjamin Crost
  • Publication Date: 03-2021
  • Content Type: Working Paper
  • Institution: Empirical Studies of Conflict Project (ESOC)
  • Abstract: This paper provides evidence that adverse economic conditions contributed to the rise of anti-democratic extremism in the United States. A state-level analysis shows that increases in the unemployment rate during the Great Recession led to a large increase in the number of anti democratic extremist groups. The effect is concentrated in states with high pre-existing racial resentment, as proxied by racist web searches, and strongest for the male unemployment rate and the white unemployment rate. If unemployment had remained at its pre-recession level, the increase in anti-democratic groups between 2007 and 2010 could have been reduced by more than 60%.
  • Topic: Economics, Democracy, Inequality, Far Right, Economic Inequality, Political Extremism
  • Political Geography: United States
  • Author: Saskia Brechenmacher, Caroline Hubbard
  • Publication Date: 03-2020
  • Content Type: Working Paper
  • Institution: Carnegie Endowment for International Peace
  • Abstract: Political parties around the world face a crisis in public confidence. Many citizens view them as inaccessible and unresponsive to their concerns. Parties pose specific challenges for women, who face both formal and informal barriers to participation, including opaque nomination procedures, violence, and parties with hypermasculine cultures. The formation of new parties during periods of political transition represents a potential opportunity to break these patterns. Transitions can be openings to transform the broader political, legal, and social barriers to an inclusive kind of politics. In these moments of flux, the development of new party branches and rules, as well as the renegotiation of broader institutional frameworks, can enable women and other marginalized groups to push for greater political representation within party structures. What factors influence the level of gender inclusion in processes of party development? This question is central for policymakers, advocates, and practitioners seeking to support inclusive democracy and gender equality in transitional societies and beyond. To shed light on this topic, this study investigates gender inclusion in three types of party formation that commonly unfold during political transitions: a social movement to a party (as exemplified by Ennahda in Tunisia); an armed movement to a party (as illustrated by the African National Congress [ANC] in South Africa); and a dominant party to a breakaway party (as shown by the Mouvement du Peuple pour le Progrès [MPP] in Burkina Faso).
  • Topic: Gender Issues, Women, Inequality, Political Parties
  • Political Geography: Africa, South Africa, North Africa, Tunisia, Burkina Faso
  • Author: Ricardo Hausmann, Ulrich Schetter
  • Publication Date: 07-2020
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: In this paper, we develop a heterogeneous agent general equilibrium framework to analyze optimal joint policies of a lockdown and transfer payments in times of a pandemic. In our model, the effectiveness of a lockdown in mitigating the pandemic depends on endogenous compliance. A more stringent lockdown deepens the recession which implies that poorer parts of society find it harder to subsist. This reduces their compliance with the lockdown, and may cause deprivation of the very poor, giving rise to an excruciating trade-off between saving lives from the pandemic and from deprivation. Lump-sum transfers help mitigate this trade-off. We identify and discuss key trade-offs involved and provide comparative statics for optimal policy. We show that, ceteris paribus, the optimal lockdown is stricter for more severe pandemics and in richer countries. We then consider a government borrowing constraint and show that limited fiscal space lowers the optimal lockdown and welfare, and increases the aggregate death burden during the pandemic. We finally discuss distributional consequences and the political economy of fighting a pandemic.
  • Topic: Development, Government, Political Economy, Inequality, Economic Growth, Fiscal Policy, Pandemic, COVID-19
  • Political Geography: Global Focus
  • Author: Ina Ganguli, Ricardo Hausmann, Martina Viarengo
  • Publication Date: 04-2020
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: We examine gender gaps in career dynamics in the legal sector using rich panel data from one of the largest global law firms in the world. The law firm studied is representative of multinational law firms and operates in 23 countries. The sample includes countries at different stages of development. We document the cross-country variation in gender gaps and how these gaps have changed over time. We show that while there is gender parity at the entry level in most countries by the end of the period examined, there are persistent raw gender gaps at the top of the organization across all countries. We observe significant heterogeneity among countries in terms of gender gaps in promotions and wages, but the gaps that exist appear to be declining over the period studied. We also observe that women are more likely to report exiting the firm for family and work-life balance reasons, while men report leaving for career advancement. Finally, we show that various measures of national institutions and culture appear to play a role in the differential labor-market outcomes of men and women.
  • Topic: Gender Issues, Labor Issues, Women, Employment, Inequality, Human Capital, Legal Sector
  • Political Geography: Global Focus
  • Author: Marie Hyland, Simeon Djankov, Pinelopi Koujianou Goldberg
  • Publication Date: 05-2020
  • Content Type: Working Paper
  • Institution: Peterson Institute for International Economics
  • Abstract: This paper provides the first global look at how gender discrimination by the law affects women’s economic opportunity and charts the evolution of legal inequalities over five decades. Using the World Bank’s newly constructed Women, Business and the Law database, it documents large and persistent gender inequalities, especially with regard to pay and treatment of parenthood. The paper finds positive correlations between more equal laws pertaining to women in the workforce and more equal labor market outcomes, such as higher female labor force participation and a smaller wage gap between men and women.
  • Topic: Gender Issues, Labor Issues, Women, Inequality, Economic Inequality
  • Political Geography: Global Focus
  • Author: Tobias Arbogast
  • Publication Date: 04-2020
  • Content Type: Working Paper
  • Institution: Max Planck Institute for the Study of Societies
  • Abstract: This paper examines the ownership structure of eurozone public debt and the distribu- tional consequences thereof. Through both a comparative perspective and an explorative case study of Italy, this paper asks two research questions. Firstly, it asks who holds gov- ernment debt in Spain, France, Germany, and Italy. I focus in on Italy to provide, to the author’s knowledge, the first highly disaggregated view of the holding structure of public debt. Secondly, for Italy I study distributional effects by examining who benefits from the interest received on government debt. This is accomplished through an investigation of the various stakeholders associated with public debt. Results indicate that most of the public debt is held by private and public financial institutions but rarely directly by households. Both direct and indirect beneficiaries of the interest received on government bonds in Italy turn out to be largely wealthy households, reflecting the unequal ownership of wealth more generally. However, prominent public financial institutions are also significant beneficiaries, which likely ameliorates a possible regressive distributional effect of the public debt hold- ing structure. The paper discusses the results with an eye on inequality and contributes to further study of the political economy of public debt.
  • Topic: Debt, Inequality, Financial Institutions , Public Debt
  • Political Geography: France, Germany, Spain, Italy
  • Author: Ruth Dukes, Wolfgang Streeck
  • Publication Date: 11-2020
  • Content Type: Working Paper
  • Institution: Max Planck Institute for the Study of Societies
  • Abstract: This paper revisits the notions of contract and status found in classical sociology, legal theory, and labour law. Adopting an historical perspective, it explores the fragmentation of the status of industrial citizenship during the neoliberal period and discusses the enduring usefulness of the status/contract distinction in analyzing current trends in the regulation of working relations, including the spread of “gig” or platform-mediated work. Elements of status, it is argued, must always be present if work is to be performed and paid for as the parties require it. Claims to the contrary – for example, that the gig economy creates a labour market without search frictions and only minimal transaction costs: contracts without status – assume an undersocialized model of (monadic) social action that has no basis in the reality of social life (Durkheim, Weber). Still, status may come in a variety of forms that are more or less desirable from the perspective of workers, businesses, and society at large. The paper traces what it conceives as the privatization of status via contracts between employers and workers under the pressure of marketization and dominated by corporate hierarchies. Towards the end of the twentieth century, sociologists observed the division of workers into two groups or classes – core (with relatively well-paid and secure employment) and peripheral (low-paid and insecure). Thirty years later, gross inequalities of wealth and conceptions of the neoliberal self as ever-improving, ever-perfectible, are combining to create novel forms of status not fully anticipated by the literature.
  • Topic: Democracy, Inequality, Citizenship, Private Sector, Industry
  • Political Geography: Global Focus
  • Author: Diego Sánchez-Ancochea
  • Publication Date: 05-2020
  • Content Type: Working Paper
  • Institution: Kellogg Institute for International Studies
  • Abstract: This paper studies the determinants of income inequality in Latin America over the long run, comparing them with explanations of why the whole region is unequal. I first show how land inequality can account for differences between Latin America and other parts of the world but how it does not explain within-region differences. Using qualitative comparative analysis, I then consider how political institution and actors interact with the economic structure (i.e., type of export specialization) and with the ethnic composition of the population. The paper has several findings. A low indigenous/afrodescendant population is a necessary condition for relatively low inequality. I identify two sufficient-condition paths, both of which include the role of democracy, political equality, and a small indigenous and afrodescendant population. The first path also includes a favorable export specialization, while the second one includes the presence of leftist presidents instead. The paper calls for more explicit comparisons between our analytical models for the whole region and our explanations of between-country differences. Hopefully, the paper can also trigger more research on how the interactions between ethnicity, politics, and the export structure shape inequality in Latin America.
  • Topic: Civil Society, Development, Political Economy, Poverty, Race, Social Movement, Democracy, Inequality, Ethnicity
  • Political Geography: Latin America
  • Author: Bhashkar Mazumder, Maria Rosales-Rueda, Margaret Triyana
  • Publication Date: 12-2020
  • Content Type: Working Paper
  • Institution: Kellogg Institute for International Studies
  • Abstract: We analyze the long-run and intergenerational effects of a large-scale school building project (INPRES) that took place in Indonesia between 1974 and 1979. Specifically, we link the geographic rollout of INPRES to longitudinal data from the Indonesian Family Life Survey covering two generations. We find that individuals exposed to the program have better health later in life along multiple measures. We also find that the children of those exposed experience improved health and educational outcomes and that these effects are generally stronger for maternal exposure than paternal exposure. We find some evidence that household resources, neighborhood quality, and assortative mating may explain a portion of our results. Our findings highlight the importance of considering the long-run and multigenerational benefits when evaluating the costs and benefits of social interventions in a middle-income country.
  • Topic: Education, Health, Poverty, Inequality, Economic Growth, Economic Development
  • Political Geography: Indonesia, Asia
  • Author: Aspen Institute
  • Publication Date: 02-2020
  • Content Type: Working Paper
  • Institution: Aspen Institute
  • Abstract: This is the second annual report for the American Talent Initiative, highlighting it has achieved more than 40 percent of the progress needed to realize its goal to enroll 50,000 additional lower-income students at high-graduation rate institutions across the country. This report also centers on the impact that an equity-focused, comprehensive strategy can have on institutions’ ability to enroll and graduate more of these talented students.
  • Topic: Education, Inequality, Income Inequality, Higher Education
  • Political Geography: North America, United States of America
  • Author: Peter Petri, Meenal Banga
  • Publication Date: 01-2020
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: The unprecedented rise in global interdependence since World War II, especially since the 1970s, has been very productive. World gross domestic product (GDP) growth increased from around 2% per year in the 1970s to 4% per year before the global financial crisis. Globalisation helped to lift a billion people from extreme poverty and improved the lives of billions more. The United States also gained an estimated 11%–19% of its annual GDP. Yet many Americans are concerned about the fairness of these gains. We review evidence of increasing wage inequality and stubborn unemployment effects, even though, on balance, technological change has had a much greater impact on these outcomes than globalisation. Barriers against globalisation do not offer solutions to inequality – they reduce the size of the economic pie without necessarily improving its distribution. Policies should focus on redistributing gains from growth, increasing the productivity of all workers, and helping affected communities adapt socially and economically to rapid change.
  • Topic: Globalization, Financial Crisis, Inequality, Economic Growth
  • Political Geography: United States, North America
  • Author: Kimty Seng
  • Publication Date: 09-2020
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: This study analyses the effects of financial inclusion on poverty in terms of household income per capita in Cambodia, with data from the FinScope Survey carried out in 2015. The analysis describes the effects via financial literacy, accounting for endogenous selection bias resulting from unobserved confounders and for structural differences between users and non-users of financial services in terms of income functions. The findings suggest that the use of financial services is very likely to make a great contribution to reducing household budget deficits and poverty if the users, female in particular, have at least basic financial knowledge.
  • Topic: Poverty, Inequality, Finance, Financial Services
  • Political Geography: Asia, Cambodia