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Begin New Search Topic Inequality Publication Year within 25 Years

501. Pseudo-wealth Fluctuations and Aggregate Demand Effects

Author:
Martin Guzman and Joseph E. Stiglitz
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
This paper presents a theory of pseudo-wealth in a model that displays aggregate demand externalities. With heterogeneous beliefs and a market for exploiting those differences in beliefs, pseudo-wealth will be created–i.e. the sum of expected wealth of all the individuals will be larger than what it is feasible for the society. Under some conditions, those perceptions will lead to larger levels of consumption of (tradable and non-tradable) goods, leisure, and borrowing than in a world with common beliefs. If those differences in beliefs disappear, pseudo-wealth will disappear, leading to adjustments in behavior that amplify the initial decrease in expected wealth. That is, we provide a simple general equilibrium model in which the destruction of pseudo-wealth amplifies the effects of the initial disturbance, leading to large decreases in economic activity. Importantly, this downturn is not associated with any change in the state variables that describe the economy. More generally, the paper shows that completing markets (in this case by creating a market for bets) may imply lower output both in the present and in the future, raising unsettling questions on criteria for welfare analysis.
Topic:
Markets, Inequality, Finance, Macroeconomics, Welfare, and Wealth
Political Geography:
Global Focus

502. Board Gender Diversity, Audit Fees and Auditor Choice

Author:
Judy Tsui
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Using a sample of U.S. firms spanning 2001-2011, we examine whether female directors (female audit committee members) affect audit quality in terms of audit effort and auditor choice. After correcting for endogeneity and other board, firm and industry characteristics, we find that firms with gender-diverse boards pay higher audit fees and are more likely to choose specialist auditors compared to their peers. Our findings suggest that boards with female directors are likely to demand higher audit quality, ceteris paribus.
Topic:
Economics, Gender Issues, Race, Culture, Inequality, Diversity, Private Sector, and Audit
Political Geography:
Global Focus

503. Top incomes and the glass ceiling

Author:
Tony Atkinson, Alessandra Casarico, Sarah Voitchovsky, Facundo Alvaredo, Jorgen Modalsli, and Jakob Søgaard
Publication Date:
03-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
This paper studies the glass ceiling by analyzing the presence of women at the top of the income distribution using tax record data reported for a sample of countries with individual taxation. Extending most of the associated literature, the glass ceiling is examined in relation to the distribution of total incomes, thereby bringing self-employment and capital income into the picture. We show that female presence at the top of the distribution has increased, but that these changes do not seem to apply to the very top percentiles, especially in Denmark and the UK. When we look at the gradient in income as one moves up the distribution, we note that the difference between men and women has become larger in the UK, but not in Norway, although Norway displays a lower share of women in almost all top percentiles compared to the other countries in our sample. The analysis of the composition of income reveals that in the UK women have more investment income and less earned income, with the proportion from self-employment being similar for men and women over time. More dramatic changes in composition appear for Spain.
Topic:
Gender Issues, Women, Inequality, Income Inequality, Tax Systems, and Glass Ceiling
Political Geography:
Europe

504. Perverse and virtuous feedbacks between inequality and innovation: Which role for public institutions and public investment?

Author:
Alberto Botta
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In this paper, we deal with the complex relationship connecting inequality to innovation, and the ways through which public investment, in particular public participation to R&D initiatives, may affect it. We first stress that multiple different equilibria may exist in the inequality-innovation space. The positive link that part of the economic theory often assumes between (initially) rising inequality and improving innovation performances emerges as only one among many other far less virtuous dynamics. We then analyze the specific case of the US. We put emphasis on the possible perverse effects that the financialization of the US economy may induce on the inequality-innovation nexus. We also note that the US developmental State that is very often neglected by the economic literature may effectively mitigate such undesirable outcomes. According to our interpretation of recent developments in the US economy, the widespread belief in the positive proinnovation effects of fierce cutthroat remuneration systems may prove to be ungrounded.
Topic:
Development, Inequality, Innovation, Financialisation, and Public Investment
Political Geography:
Global Focus

505. How Money Drives US Congressional Elections: More Evidence

Author:
Thomas Ferguson, Paul Jorgenson, and Jie Chen
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The protesters who swirled into parks, churches, and town squares around the world in the fall of 2011 to challenge the primacy of the “1%” hammered relentlessly on one theme above all others: that economic inequality has deep roots in the political system. Many social scientists and intellectuals who have picked up from where the Occupy movement left off share this conviction; they, too, have broken with the taboos that for so long segmented discussions of politics from economics. Piketty, in his monumental study, for example, avows that income distribution is a basically a question of “political economy” not pure economics. Stiglitz in The Price of Inequality is equally forthright – “increasingly, and especially in the United States, it seems that the political system is more akin to ‘one dollar one vote’ than to ‘one person one vote.’”
Topic:
Government, Politics, Science and Technology, History, Elections, Inequality, and Money
Political Geography:
North America and United States of America

506. Austeritarianism in Europe: What Options for Resistance?

Author:
Richard Hyman
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In much of Europe, the social rights and social protections won in the first post-war decades, by labour movements in particular, have subsequently been seriously eroded, and are further threatened by neoliberal austerity. Efforts to resist have been largely unsuccessful; but is an effective fight-back possible? In this paper I first outline the role of the European Union (EU) as a key driver of the recommodification of labour, through its growing emphasis on market ‘freedoms’ as an overriding priority, and on ‘competitiveness’ as the central policy objective for national governments. I discuss how this orientation has been reinforced by the economic crisis, and the ensuing pursuit of austerity and the imposition of ‘new economic governance’. I then survey a range of forms of protest and opposition: trade union action, ‘new’ social movements and engagement in the formal political arena. I suggest that a nuanced evaluation of success and failure is necessary. In conclusion I propose that the articulation of different forms of resistance – cross-nationally and between different actors – is essential in order to stem the neoliberal hegemony.
Topic:
Race, Science and Technology, History, Culture, Inequality, Finance, Ethics, Philosophy, Macroeconomics, and Austerity
Political Geography:
Europe

507. A New Rational Expectations Hypothesis: What Can Economists Really Know About the Future?

Author:
Roman Frydman and Michael Goldberg
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
John Muth proposed the Rational Expectations Hypothesis (REH) to represent how the market (an aggregate of its participants) understands and forecasts outcomes. REH imposes internal consistency between the market’s forecasts and “the relevant economic theory” (Muth 1961, p. 316). In implementing REH, economists have relied on a class of models that rest on a key premise: an economist can ignore the importance of quantitative changes in the economy’s structure that he himself could not specify ex ante with a probabilistic rule. In the early 1970s, Robert Lucas pointed out that once such models are upheld as “the relevant economic theory,” it follows on purely logical grounds that REH models represent rational forecasting and its implications for market outcomes. There is ample evidence that quantitative structural change is an important driver of outcomes in real-world markets, most notably those for assets. The evidence also shows that this change often is triggered by historical events that are not exact repetitions of similar events in the past, for example, the appointment of a new Federal Reserve chair or company CEO. The timing of these events may be unknown, and their quantitative impact on the economy’s structure depends on the extent of their novelty and the particular historical context in which they occur. As such, no one can fully anticipate — even in probabilistic terms — the structural change triggered by such events.
Topic:
Economics, Inequality, Microeconomics, and Behavior
Political Geography:
Global Focus

508. Discrimination, Social Identity, and Coordination: An Experiment

Author:
Vessela Daskalova
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
This paper presents an experiment investigating the effect of social identity on hiring decisions. The question is whether people discriminate between own and other group candidate This paper presents an experiment investigating the effect of social identity on hiring decisions. The question is whether people discriminate between own and other group candidates. Key features of the experiment are: First, to consider whether they do so in individual, as well as in joint decisions; Second, to document whether the identity of the co‐decision maker matters in joint decisions. Substantial discrimination occurs in both individual and joint decision‐making situations. In joint decisions, decision makers discriminate when deciding with someone from their own group, but not when deciding with someone from the other group.
Topic:
Economics, Race, Employment, Inequality, Discrimination, Job Creation, Social Order, and Identity
Political Geography:
Global Focus

509. Social Institutions and Gender Inequality in Fragile States: Are They Relevant for the Post-MDG Debate?

Author:
Boris Branisa and Carolina Cardona
Publication Date:
01-2015
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
We focus on an issue that appears particularly relevant for fragile states and which has received little attention: social institutions related to gender inequality, defined as societal practices and legal norms that frame gender roles and the distribution of power between men and women in the family, market, and social and political life. We show empirically that fragile states perform worse than other non-fragile developing countries when considering these social institutions. We suggest that a special set of indicators reflecting social institutions related to gender inequality in both fragile states and non-fragile states should be considered in the post-MDG agenda.
Topic:
Development, Inequality, Millennium Development Goals, Fragile States, and Institutions
Political Geography:
Global Focus

510. A Relationship and a Practice: On the French Sociology of Credit

Author:
Laure Lacan and Jeanne Lazarus
Publication Date:
02-2015
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
This paper aims to describe the social studies of credit developed in France over the past dozen years. We argue that this French sociology of credit, mostly centered on France, can be useful for researchers analyzing other countries, with other institutional particularities, because it proposes a specific method and a specific way to raise questions: credit is mostly understood as a result of social interactions embedded in organizational and legal structures. French researchers also deeply analyze the consequences of the organization of the credit market for inequalities, social stratification, and people’s life experiences. The first part of the paper focuses on works that have examined credit as a social test, looking at the institutional, technical, and social frameworks of money lending. Then, credit is understood as a sociological experiment: how is it integrated into household economies? How do people use forms of credit? Finally, the third part concentrates on credit failure, when a bank loan becomes a debt. This aspect is mostly framed in French sociology as “over-indebtedness,” which is an administrative and a social category. Throughout the paper, we address credit as both a relationship and a practice. This approach is heuristic, as we seek to demonstrate, because it enables us to show that credit is a social and political issue.
Topic:
Debt, Economics, Sociology, Inequality, and Credit
Political Geography:
Europe and France

511. Politics in the Interest of Capital: A Not-So-Organized Combat

Author:
Cornelia Woll
Publication Date:
07-2015
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The rise in inequality has been explained with reference to organized groups and the lobbying of the financial sector. This article argues that the image of politics as organized combat is contradicted by empirical evidence on lobbying in the United States, and does not travel well to Europe. The power of finance does not operate through organized political influence. Rather, politics in the interest of capital unfolds as a structural feature of advanced economies over time. Tellingly, at the height of the financial crisis, one of the most promising strategies of institutions seeking government support was not organizing for combat, but collective inaction. Our challenge, then, is to explain how the power of finance has built up and is playing out in creating inequality. A more structural, less agency-focused perspective highlights how the rise of finance has been supported by actors that few would accuse of being finance-friendly, such as the European center-left parties and consumers. Reconceptualizing the power of finance has important implications for political solutions to rising inequality.
Topic:
Economics, Politics, Inequality, Finance, and Capital
Political Geography:
Europe

512. South Africa’s Emerging Black Middle Class: A Harbinger of Political Change?

Author:
Robert Mattes
Publication Date:
12-2014
Content Type:
Working Paper
Institution:
Afrobarometer
Abstract:
South Africa has seen a significant increase in the size of its black middle class in the post-apartheid period, but the attitudinal consequences of indicators of the middle class, as of 2011, are inconsistent and modest in size. While members of the middle class are no more likely to hold democratic values than other black South Africans, they are more likely to want government to secure higher-order, rather than basic, survival needs. They are less likely to identify with the governing African National Congress, to turn out to vote, or to voice their concerns by contacting officials or joining collective action. At the same time, intra-class racial differences between middle-class black respondents, on one hand, and middle-class white, coloured, and Indian respondents, on the other, are still substantial.
Topic:
Race, Inequality, Diversity, Class, and Middle Class
Political Geography:
Africa and South Africa

513. Health, Social Policy, and Inclusive Growth in MENA

Author:
Randa Alami
Publication Date:
04-2014
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper takes stock of the current status of health sectors in MENA. From the narrow perspective of national aggregate indicators, as with most middle income countries, the region has seen significant achievements. Yet, health sectors face systemic challenges, and suffer from significant and persistent inequities in health outcomes, access, delivery, and distribution of health services. Out of pocket spending levels are amongst the highest in the world, and are driven by: privatisation, poor social protection and insurance coverage, and the inability to respond to the epidemiological transition. Consequently, the financial burden of healthcare forces significant swathes of the population into poverty, or to forgo healthcare altogether. Sectoral policies have been piecemeal and short‐termist, with a clear neglect of public health sectors. These deficiencies are more evident if MENA is benchmarked against many of their peers, or against the international consensus of Universal Health Care (UHC). To achieve inclusive growth, MENA must reverse the disinvestment in public health, and the central importance of health and health equity to development must be reinstated. By the same token, MENA countries must follow UHC centred strategies, which have a good track record in tackling similar challenges in other middle income countries. While part of the difficulties may lie in financing, the lack of political commitment and weak institutional capabilities have also been serious obstacles. Sectoral reforms must target these failures, and governments need to play a more central role in covering the poor and regulating the sector.
Topic:
Health, Privatization, Inequality, Welfare, and Social Services
Political Geography:
Africa, Middle East, and North Africa

514. What Happens to Wage Elasticities When We Strip Playometrics? Revisiting Married Women Labour Supply Model

Author:
Duo Qin, Sophie van Huellen, and Qing-Chao Wang
Publication Date:
12-2014
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper sheds new light on the well-known phenomenon of dwindling wage elasticities for married women in the US over the recent decades. Results of a novel model experiment approach via sample data ordering unveil considerable heterogeneity across different wage groups. Yet surprisingly constant wage elasticity estimates are revealed within certain wage groups over time as well as across two widely used US data sources, the Current Population Survey (CPS) and the Panel Study of Income Dynamics (PSID). These findings refute the assumed presence of a single-valued aggregate wage elasticity for working wives. Although women’s responsiveness to wages remains largely unchanged over time, we find that the composition of working women into different wage groups has changed considerably, resulting in decreasing wage elasticity estimates at the aggregate level. All these findings were methodologically impossible to acquire had we not dismantled and discarded the stereotyped endogeneity-backed instrumental variable route, which hitherto blocked the way towards sample data ordering.
Topic:
Gender Issues, Labor Issues, Inequality, Discrimination, and Wage Growth
Political Geography:
Global Focus

515. Estimating the Gender Gap of Adults’ Education and Health in Bhutan

Author:
Eleanore Ardemagni
Publication Date:
03-2014
Content Type:
Journal Article
Journal:
Journal of Bhutan Studies
Institution:
Centre for Bhutan & GNH Studies (CBS)
Abstract:
Several studies in developing countries suggest that narrowing the gender gap in education and health has both economic and social benefits. Bhutan is an important country to study gender because, traditionally and by law, women and men enjoy equal status. This paper explores the gender gap in formal education and mental and physical health among adults in Bhutan. The 2010 cross-sectional survey data collected for Gross National Happiness (GNH) Indicators by the Centre for Bhutan Studies (CBS) in all the 20 districts of Bhutan (n=6510 individuals) was used. It regressed formal education and various indicators of health against gender, region, age, income, and religion. Then the differences in levels of schooling and health between women and men in the eastern region, which is reputed to be the most remote and least developed region are examined. The gender gap persists. Men have 27% more years of schooling than women, 4.80 fewer reported sick days during the previous 30 days, 1.63 fewer negative emotions, and a 10% lower probability of reporting mental distress than women. Men in the eastern region are 6% less likely to be educated than women of their same region. However, men in the eastern region are 7% less likely to report having a stressful life than women of their own region. Despite the tradition of gender equality and the laws supporting gender equity in Bhutan, this study finds that women lag behind men in schooling and health. The country needs to implement policies to narrow the gender gap.
Topic:
Health, Inequality, Gender, and Adult Education
Political Geography:
South Asia and Bhutan

516. Is Poverty a binding constraint on Agricultural Growth in Rural Malawi?

Author:
Mirriam Muhome‐Matita and Ephraim Wadonda Chirwa
Publication Date:
07-2013
Content Type:
Policy Brief
Institution:
African Economic Research Consortium (AERC)
Abstract:
Agriculture remains the most important sector in sub‐Saharan Africa and is a dominant form of livelihood for a majority of the population that resides in the rural areas. In Malawi, agriculture accounts for 35 percent of GDP and generates more than 80 percent of foreign exchange. In addition, agriculture is the most important occupation for 71 percent of the rural population in which crop production accounts for 74 percent of all rural incomes. However, agriculture has failed to get Africa out of poverty, and most countries are experiencing low agricultural growth, rapid population growth, weak foreign exchange earnings and high transaction costs (World Bank, 2008). In Malawi, for a long time, economic growth has been erratic (see figure 1) with huge swings and poverty has remained high. For instance, the annual growth rates in per capita gross domestic product averaged ‐2.1 percent in the 1980‐84 period, ‐2.7 percent in 1990‐94 period, 3.8 percent in 1995‐99 and ‐0.2 percent in the 2000‐05 period.
Topic:
Agriculture, Development, Economics, Political Economy, Poverty, GDP, Inequality, Economic Growth, and Macroeconomics
Political Geography:
Africa and Malawi

517. Welfare Analysis of Changing Food Prices: A Nonparametric Examination of Export Ban on Rice in India (pdf)

Author:
Ben Groom and Mehroosh Tak
Publication Date:
01-2013
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
During the world food crisis of 2007-08, the price of staples soared rapidly. Higher food price impacts poor households more as they spend approximately three quarters of their income on food. Together rice and wheat provide more than 50% of the calorific intake in India. Apart from providing food security, millions of poor and small farmers depend on rice for their livelihoods. Using Indian Consumer Household Expenditure surveys for the years 2007-08 and 2009-10 the paper analyses the welfare generated by a ban on export of rice by the Indian government. The paper finds that the net impact of the ban on export of rice was positive, as it was able to cushion the Indian population (87% of whom are net consumers) from the adverse effects of the crisis. It also found that the poor in India aren’t homogeneous in nature. The majority of the rice-producing households that stand to gain from increased prices are relatively poor farmers. At the same time, the poor households that do not cultivate rice are most affected by price increase, as their budget share of rice is higher than richer households, who are more resilient to price rise. In particular, the wage labourers are affected significantly.
Topic:
Agriculture, Poverty, Food Security, Inequality, Exports, and Welfare
Political Geography:
India and Asia

518. A Note on Credit Allocation, Income Distribution, and the Circuit of Capital (pdf)

Author:
Paulo dos Santos
Publication Date:
08-2013
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This note considers the relationship between credit allocation and the aggregate, class distribution of income in the Circuit of Capital. Production and consumption credit inject means of purchase in different locations in the monetary circuits of capitalist reproduction. On the basis of comparative-dynamic analysis of the properties of steady-state evolutions, the note shows that production credit increases the wage share in total income, while consumption credit increases profit shares. These findings hold in general for any evolution in which sectoral revenue- elasticities of outlays measure less than unity. The note also motivates a new endogenous approach to the aggregate distribution of income, and offers new analytical tools facilitating work based on demand-constrained models of the Circuit of Capital.
Topic:
Inequality, Income Inequality, Economic Theory, Credit, and Capital
Political Geography:
Global Focus

519. Financing Water in Africa

Author:
Kate Bayliss
Publication Date:
08-2013
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
Despite repeated policy initiatives from donors and governments, the human and economic cost of continued lack of access to safe water and sanitation in sub‐Saharan Africa remains high. This paper shows that a radical reorientation of policy is needed to achieve a significant increase in investment finance in order to raise access levels. Rather than continuing to pursue policies that have failed for the past two decades, such as bringing in the private sector and raising prices to cost recovery levels, attention needs to shift to wider aspects of domestic revenue mobilization to support public investment.
Topic:
Privatization, Water, Inequality, Investment, and Private Sector
Political Geography:
Africa

520. An Equitable Allocation of the Constituency Development Fund

Author:
Frank Kakungu
Publication Date:
12-2013
Content Type:
Policy Brief
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
The disbursement of an equal quantum of funding per constituency has equity concerns because constituencies are not equal. This favours smaller, least populated constituencies against greatly populated and or the poorest – where needs are greatest. The blanket allocation of Constituency Development Fund (CDFs) across the country, without recourse to policy targets underscores national failure to address important policy concerns. This is unfortunately the case in Zambia. In this report, we devised a model that reallocates resources based on the socio-economic conditions prevailing in constituencies. The research developed a composite index of material and social deprivation using data from the Census 2010. Furthermore, the study evaluates the distribution of deprivation in constituencies and considers ways in which deprivation index can contribute to discussions relating to public resource allocation of the CDF. The research results has potential usages beyond the CDF reallocation, it informs decision-makers on resource allocation and planning and budgeting activities.
Topic:
Development, Poverty, Governance, and Inequality
Political Geography:
Africa and Zambia