nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒07‒05
seven papers chosen by
Maximo Rossi
University of the Republic

  1. The distribution of income in Central America By Tim H. Gindling; Juan Diego Trejos
  2. Labour's Record on Cash Transfers, Poverty, Inequality and the Lifecycle 1997 - 2010 By John Hills
  3. Taxation and Inequality in the Americas: Changing the Fiscal Contract? By Richard M. Bird; Eric M. Zolt
  4. A review of the literature on subjective poverty in Europe: a focus on data sources By Elisabetta Santarelli
  5. Trends in Health, Education and Income in the United States, 1820-2000 By Hoyt Bleakley; Dora Costa; Adriana Lleras-Muney
  6. Intergenerational Transfer, Human Capital and Long-term Growth in China under the One Child Policy By Xi Zhu; John Whalley; Xiliang Zhao
  7. The Impact of China's Demographic Transition on Economic Growth and Income Distribution: CGE Modeling with Top-Down Micro-Simulation By Wang, Xinxin; Chen, Kevin; Huang, Zuhui

  1. By: Tim H. Gindling (UMBC); Juan Diego Trejos (Universidad de Costa Rica)
    Abstract: We document changes in income and earnings inequality in the five Central American countries from the early 1990s to 2009. In the 1990s Costa Rica had the most equal distribution of income in Central America, and one of the most equal distributions of income in Latin America. At the other extreme, Guatemala, Honduras and Nicaragua were among the most unequal countries in Latin America. Inequality in El Salvador was between these extremes. Then, in the first decade of the 21st century inequality in El Salvador and Nicaragua decreased while inequality in Costa Rica, Guatemala and Honduras increased. By 2009 levels of inequality in El Salvador and Nicaragua were similar to those in Costa Rica. In this paper, we examine why income and earning inequality differs between the five Central American countries, and why inequality decreased in El Salvador and Nicaragua but increased in Costa Rica, Guatemala and Honduras
    Keywords: income inequality, Central America, labour income.
    JEL: O15 J31 O54
    Date: 2013–02
  2. By: John Hills
    Keywords: social policy, benefits, distributions of economic outcomes, income poverty, tax and benefit policy, wealth inequality
    Date: 2013–07
  3. By: Richard M. Bird (University of Toronto); Eric M. Zolt
    Abstract: Times change. In the words of an old English ballad, some things seem to have “turned upside down” in recent years. Since 2000, Latin America has become less unequal, with lower levels of poverty and likely greater economic mobility (Lustig, Lopez-Calvo and Ortiz-Juarez 2012), assisted in part by more progressive fiscal policy (Mahon 2012). In contrast, the United States has become more unequal (Piketty and Saez 2003, 2013), while poverty has remained relatively constant (U.S. Census Bureau 2012), economic mobility has likely declined (Hungerford 2008), and tax and spending policies have become less effective in reducing inequality (Harris and Sammartino 2011). This chapter examines whether the tide has really changed in Latin America or in the United States, and, if it has, what may lie ahead for these two regions of the Americas? Do recent events portend fortune or misery? Although the primary cause of the more equal income distribution in Latin America is probably the sharp increase in growth and employment following the challenging political and economic decade of the 1990s (Gasparini and Lustig 2011), fiscal policy played at least some role. Indeed, recent Latin American experience suggests that the pessimism prevalent since the 1970s about the extent to which taxation can affect income distribution has perhaps been misguided. Economic, social and political changes can and do give rise to new norms and power configurations, which sometimes result in important changes in the social and fiscal contract underlying governance structures.
    Date: 2013–05–04
  4. By: Elisabetta Santarelli (Department of Metodi e modelli per l'economia, il territorio e la finanza MEMOTEF - Sapienza University of Rome (Italy))
    Abstract: The debate on the measurement of income, poverty and social exclusion in Europe has increased significantly in recent years. Poverty is a complex and multidimensional phenomenon and, according to the definition used, various measures to assess poverty are calculated and different poverty sizes are obtained. The aim of this work is to make a review of the literature on the most used approaches to measure poverty, with a special focus on the subjective perception of poverty. Then, a set of comparable data sources suitable for self-perceived poverty analysis at EU level are illustrated with some reflections on their potentials and pitfalls.
    Keywords: subjective poverty, household and individual surveys, socioeconomic data sources.
    JEL: D31 I32
  5. By: Hoyt Bleakley; Dora Costa; Adriana Lleras-Muney
    Abstract: We document the correlations between early childhood health (as proxied by height) and educational attainment and investigate the labor market and wealth returns to height for United States cohorts born between 1820 and 1990. The 19th century was characterized by low investments in height and education, a small correlation between height and education, and positive but small returns for both height and education. The relationship between height and education was stronger in the 20th century and stronger in the first part of the 20th century than later on (when both investments in education and height stalled), but never as strong as in developing countries. The labor market and wealth returns to height and education also were higher in the 20th compared to the 19th century. We relate our findings to the theory of human capital formation and speculate that the greater importance of physical labor in the 19th century economy, which raised the opportunity cost of schooling, may have depressed the height-education relationship relative to the 20th century. Our findings are consistent with an increasing importance of cognitive abilities acquired in early childhood.
    JEL: I0
    Date: 2013–06
  6. By: Xi Zhu; John Whalley; Xiliang Zhao
    Abstract: We argue that the demographic changes caused by the one child policy (OCP) may not harm China's long-term growth. This attributes to the higher human capital induced by the intergenerational transfer arrangement under China’s poor-functioning formal social security system. Parents raise their children and depend on them for support when they reach an advanced age. The decrease in the number of children prompted by the OCP resulted in parents investing more in their children’s educations to ensure retirement consumption. In addition, decreased childcare costs strengthen educational investment through an income effect. Using a calibrated model, a benchmark with the OCP is compared to three counterfactual experiments without the OCP. The output under the OCP is expected to be about 4 percent higher than it would be without the OCP in 2025 under moderate estimates. The output gain comes from a greatly increased educational investment driven by fewer children (11.4 years of schooling rather than 8.1). Our model sheds new light on the prospects of China's long-term growth by emphasizing the OCP's growth enhancing role through human capital formation under the intergenerational transfer arrangement.
    JEL: J13 O11 O53
    Date: 2013–06
  7. By: Wang, Xinxin; Chen, Kevin; Huang, Zuhui
    Abstract: Demographic transition due to population aging is an emerging issue throughout the developing world, and especially in China, which has undergone demographic transition more rapidly than most industrial economies. This paper quantifies the economic and distributional effects in the context of demographic transition using the integrated recursive dynamic computable general equilibrium (CGE) model with top-down behavioral micro-simulation. The results show that the population aging slow down China’s economy growth rate due to the exhausted of demographic dividend with high cost of labor force. The consequences from the poverty and inequality index indicate that population aging has a negative impact to the reduction of poverty while it is positive as refers to the equality during the process of demographic transition. The average age within a household has a noticeable contribution to total inequality. These findings suggest that measures for stimulating the second demographic dividend should be carried out to promote the economic growth as well as the reduction of poverty. The inequality within the same household groups while with different household age should be put more emphasize on. What’s more, the social pension system should be improved, especially in rural China
    Keywords: Demographic Transition, Economic Growth, Income Distribution, CGE model, Community/Rural/Urban Development, International Development,
    Date: 2013

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