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  • 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: Sungbae An, Minsoo Han, Subin Kim, Jinhee Lee
  • Publication Date: 03-2021
  • Content Type: Policy Brief
  • Institution: Korea Institute for International Economic Policy (KIEP)
  • Abstract: The decline in labor share is recognized as a global phenomenon. Concerns have been raised that this trend will exacerbate the income inequality between business owners as capitalists and households as the labor suppliers, prompting a decline in household income and consumption, which are major driving forces for sustainable growth. Meanwhile, various policy measures have been introduced to raise the labor share, with the aim of correcting inequality and boosting growth. This study explores the determinants of labor share and analyzes the effects of these factors on the economy and social welfare, offering various interpretations and policy alternatives according to economic conditions.
  • Topic: Labor Issues, Inequality, Economy, Business , Welfare
  • Political Geography: Asia, Korea
  • 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: Wang Feng
  • Publication Date: 11-2020
  • Content Type: Video
  • Institution: Weatherhead East Asian Institute, Columbia University
  • Abstract: On October 7, 2020, Wang Feng, Professor of Sociology at UC Irvine joined Columbia's Qin Gao, Professor of Social Policy and Social Work and director of the China Center for Social Policy for an event: "Public Transfers and Inequality in China." With expanded fiscal capacity and rising concerns over economic inequality, the Chinese government in the last decade and a half has vastly rebuilt and expanded its social welfare regime. Using the National Transfer Accounts (NTA) methodology and both micro-level survey data and macro-level government statistics, this study examines the distribution of public transfers in education, health care and pension across generations and income groups in 2014 and compare it with those in 2010. While per capita public transfers in absolute terms remained in favor of higher-income groups and the elderly in 2014, as in 2010, the gap in receiving public transfers between the rich and the poor was reduced notably in this short time period. Public transfers also became more progressive in relative terms, with the bottom income group receiving much higher public transfers relative to their per capita household income than the wealthier groups. These results reveal that although the unequal distribution of public transfers continues and it in part results from the fragmented program design and the legacies of socialist inequalities, China’s expanded social welfare programs have contributed to narrowing the vast income inequality in this country.
  • Topic: Economics, Government, Inequality, Welfare
  • Political Geography: China, Asia
  • 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
  • Author: Carlos Gradín, Binbin Wu
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: United Nations University
  • Abstract: We analyse income and expenditure distribution in China in a comparative perspective with India. These countries represent extreme cases in the relationship of inequality to both wellbeing indicators. Income is more highly concentrated than expenditure in India, especially at the top of the distribution. Both types of inequality are similar in China, although expenditure is more unequally distributed than income in urban areas. China has a much stronger correlation in individual ranks and levels between the two wellbeing distributions. As a result, expenditure inequality is higher in China than in India, but income inequality much lower. This results partially from differences in population composition, such as China being more urbanized and having smaller households, but mostly from differences in conditional income distributions, especially by attained education of the household head. We show that hybrid measures of wellbeing combining income and expenditure can be useful for such cross-country comparison.
  • Topic: Inequality, Income Inequality, Consumerism
  • Political Geography: China, South Asia, India, Asia
  • Author: Scott Morris, Gailyn Portelance
  • Publication Date: 01-2019
  • Content Type: Working Paper
  • Institution: Center for Global Development
  • Abstract: Under the World Bank’s 2018 capital agreement, borrowing countries are expected to gradually reduce their portfolios once a base income threshold—the Graduation Discussion Income (GDI)—is reached. However, the agreement also affirms the case for ongoing lending to these countries. One justification is tied to external value beyond the borrowing country’s borders (global public goods, or GPGs). Another is tied to building capacity within the borrowing country, which can mean a focus on sub-regions where poverty remains high and capacity weak. In this paper, we examine World Bank graduation policies and lending through the lens of China, which maintains a large portfolio of World Bank projects. China currently exceeds the GDI thresholds for IBRD borrowing at the national level, while income inequality within the country leaves many noncoastal provinces below the GDI per capita threshold. Aggregate and provincial-level analysis of World Bank lending in China shows that less than half of China’s portfolio comprises activities clearly linked to GPGs, while a slight majority of projects are based in provinces with per capita income below the GDI threshold. A substantial number of World Bank projects in China focus on climate change mitigation and transportation infrastructure construction, while a smaller number relate to capacity building. Overall, we find evidence that China’s borrowing is broadly consistent with the 2018 principles of institutional capacity strengthening and GPG-related engagement, although significant areas of bank engagement do not appear to fall within the parameters of these principles.
  • Topic: Poverty, Infrastructure, World Bank, Inequality
  • Political Geography: China, Asia
  • Author: Sasiwimon W. Paweenawat
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: Using a two-stage estimation of matched worker-industry data from 2000 to 2011, this study investigates the impact of global value chain (GVC) integration on wages and the skill premium in 32 industries in Thailand, a country with recent heavy involvement in GVCs. This study employs foreign value added in both final and intermediate goods exports as a proxy for the degree of industry integration in GVCs and applies a panel fixed effects estimation on constructed panel data to investigate its relationship with wages. The main finding indicates that a higher level of industry integration with GVCs leads to higher wages and a higher skill premium, confirming the positive effect of GVC involvement on wages and the complementary effect of high demand for skilled workers in GVC-oriented industries in Thailand. Workers in industries with positions close to the end of the value chain (downstream position) will earn a higher wage than those working in the upstream position. These results have significant policy implications. The Thai government should not only attempt to increase industry involvement in GVCs overall, but also aim to lift industries to higher positions in the GVC to gain the most benefits for Thai workers and the country overall.
  • Topic: Labor Issues, Inequality, Wage Subsidies, Global Value Chains
  • Political Geography: Asia, Thailand
  • Author: Cassey Lee
  • Publication Date: 12-2019
  • Content Type: Working Paper
  • Institution: Economic Research Institute for ASEAN and East Asia (ERIA)
  • Abstract: The economic development of Malaysia has been strongly driven and shaped by globalisation, from the pre-colonial to the post-independence period. The country has harnessed trade, foreign capital, and foreign labour to grow and has transformed its economy from one that was highly dependent on primary commodities (tin and rubber) into one driven by manufactured exports. The impact of globalisation on the Malaysian economy has changed through the various phases of its development experience. The early phases of the country’s engagement with globalisation reduced poverty and inequality. In later stages, excessive dependence on low-skilled foreign labour, although beneficial initially, may have compromised the competitiveness of the economy. Malaysia’s multi-ethnic society has also posed considerable challenges in the balancing of domestic needs and benefits with greater engagement with globalisation. The openness of the Malaysian economy has also made it vulnerable to global economic shocks.
  • Topic: Globalization, International Trade and Finance, Inequality, Economic Development
  • Political Geography: Malaysia, Asia
  • Author: Servaas Storm
  • Publication Date: 02-2019
  • Content Type: Working Paper
  • Institution: Institute for New Economic Thinking (INET)
  • Abstract: Strong labor protections for ordinary workers are often portrayed as a ‘luxury developing countries cannot afford’. No study has been more influential in propagating this perversity trope in the context of the Indian economy than the QJE article of Besley and Burgess (2004). Their article provides econometric evidence that pro-worker regulation resulted in lower output, employment, investment and productivity in India’s registered manufacturing sector. This paper reviews existing critiques of Besley and Burgess (2004), which highlight conceptual and measurement errors and uncover econometric weaknesses. The paper takes a step beyond these: it reports a failure to replicate Besley and Burgess’ findings and demonstrate the nonrobustness of their results. My deconstruction is not only about the econometrics, however. I show that Besley and Burgess’ findings are not just inconsistent with their theoretical priors, but also internally contradictory and empirically implausible, taxing any person’s capacity for belief. The paper, written by two ‘useful economists’, exhibits a gratuitous empiricism in which priors trump evidence. On all counts, it fails the test of being useful to the purpose of ‘evidence-based’ public policy advice.mp Evidence and Progress Gets Stalled
  • Topic: Economics, Political Economy, Labor Issues, Inequality, Labor Policies
  • Political Geography: India, Asia