New Economics Papers
on Economics of Happiness
Issue of 2007‒07‒27
three papers chosen by

  1. Poverty Reduction by Decentralisation: A Case for Rural Panchyats in Tamil Nadu By Sivagnanam, K. Jothi
  2. Is the Welfare State Self-destructive? A Study of Government Benefit Morale By Heinemann, Friedrich
  3. Openness and Inequality in Developing Countries: A New Look at the Evidence By Gourdon, Julien

  1. By: Sivagnanam, K. Jothi
    Abstract: An attempt has been made in this paper to study the linkage between decentralisation and poverty reduction with special reference to panchayati raj institutions in Tamil Nadu. The policy implication of the study emphasises that the process of decentralisation should be designed and implemented so as to achieve required reduction in poverty. In the globalised era, decentralization has attracted significant interest in recent years. Decentralization is being seen as one of the missing institutional link between economic growth and distributive justice. Decentralisation is linked to poverty reduction in many ways. While decentralization has become a development strategy of many developing countries, its linkage to poverty reduction in particular has been the subject of recent time. In India, where social and rural sector are still backward and further affected by the ongoing liberalisation, privatisation and globalisation process, even high growth rates and innumerable poverty eradication schemes of the union as well as the state governments have failed to ensure distributive justice and left millions in sustained deprivation. Panchayati raj institutions could be a promising institutional link to combat poverty in terms of efficient designing and effective targeting.
    Keywords: Poverty Reduction; Decentralisation; Rural Panchayats; Tamil Nadu
    JEL: I38 R51 H75
    Date: 2007–07–22
  2. By: Heinemann, Friedrich
    Abstract: Assar Lindbeck has pointed to the problem that generous welfare state institutions may in the long-run undermine those social norms which limit the costs and incentives effects of the welfare state and thus guarantee its viability. This study is the first to assess the empirical validity of Lindbeck’s notion by assessing the long-run link between the welfare state and social norms with regard to the honest take-up of government benefits. Based on the results of four waves of the World Value Surveys the determinants of benefit morale – defined as the reluctance to claim government benefits without legal entitlement – are analysed. Besides a standard list of the respondents’ individual characteristics, macroeconomic indicators describing a country’s long-run welfare state and labour market history are included. The results support the empirical validity of Lindbeck’s theory: An increase of government benefits and unemployment is in the long-run associated with deteriorating welfare state ethics.
    Keywords: benefit morale, tax morale, welfare state reforms
    JEL: I30 I38 Z13
    Date: 2007
  3. By: Gourdon, Julien
    Abstract: Integration to world markets is expected to help developing countries to access prosperity. At the same time, increasing opportunities to trade are likely to affect income distribution and whether or not increasing openness to trade is accompanied by a reduction or an increase inequality is highly controversial. This paper brings new evidence on this issue in using a data set covering a large sample of developing countries and a model with improved controls for omitted variables and a new index of trade openness. Trade liberalization increases inequality in countries that relatively well-endowed in capital. Our model assumes that it might be fruitful to breakdown unskilled labor into non-educated and primary-educated as suggested by Wood (1994). The results show that trade liberalization increases inequality in highly educated abundant countries whereas it decreases inequality in primary educated abundant countries. However it increases inequality in non educated abundant countries, suggesting that this part of population does not benefit from trade openness since it is not included in export oriented sectors.
    Keywords: International Trade; Income Distribution; Poverty
    JEL: F11 F16 D3
    Date: 2006–12

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