nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒01‒18
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. Accelerating poverty reduction in a less poor world : the roles of growth and inequality By Olinto, Pedro; Lara Ibarra, Gabriel; Saavedra-Chanduvi, Jaime
  2. Measurement of inequality of opportunity based on counterfactuals By Dirk Van de gaer; Xavier Ramos
  3. An Axiomatic Approach to the Measurement of Corruption: Theory and Applications By James Foster, Andrew W. Horowitz and Fabio Méndez
  4. Counting and Multidimensional Poverty Measurement (Revised and Updated) By Sabina Alkire and James E. Foster
  5. Redistribution through Charity and Optimal Taxation when People are Concerned with Social Status By Aronsson, Thomas; Johansson-Stenman, Olof; Wendner, Ronald
  6. Multidimensional Poverty in Sudan and South Sudan By Paola Ballon and Jean-Yves Duclos
  7. Polarization and the Decline of the Middle Class: Canada and the US By James Foster and Michael C. Wolfson
  8. Collective Bargaining Systems and Macroeconomic and Microeconomic Flexibility: The Quest for Appropriate Institutional Forms in Advanced Economies By Addison, John T.

  1. By: Olinto, Pedro; Lara Ibarra, Gabriel; Saavedra-Chanduvi, Jaime
    Abstract: This paper re-examines the roles of changes in income and inequality in poverty reduction. The study provides estimates of the relative effects of inequality reduction versus growth promotion in reducing poverty for countries with different levels of initial poverty. The analysis uses country panel-data for 1980-2010. The results indicate that, as countries become less poor, inequality-reducing policies are likely to become relatively more effective for poverty reduction than growth-promoting policies. The results indicate that the growth elasticity of poverty reduction either increases or remains constant with the level of initial poverty. Nevertheless, the results also strongly indicate that, as poverty declines, the inequality elasticity of poverty reduction increases faster. Therefore, if the marginal cost of reducing inequality relative to the marginal cost of increasing growth does not increase with lower poverty levels, to accelerate poverty reduction, greater emphasis should be given to equity rather than growth as countries attain higher levels of development.
    Keywords: Achieving Shared Growth,Regional Economic Development,Rural Poverty Reduction,Inequality,Services&Transfers to Poor
    Date: 2014–05–01
  2. By: Dirk Van de gaer (Department of Social Economics, Ghent University, Belgium); Xavier Ramos (Depart Econ Aplicada, Universitat Autonoma de Barcelona, Spain)
    Abstract: The theoretical literature on inequality of opportunity formulates basic properties that measures of inequality of opportunity should have. Standard methods for the measurement of inequality of opportunity require the construction of counterfactual outcome distributions through statistical methods. We show that, when standard parametric procedures are used to construct the counterfactuals, the specification used determines whether the resulting measures of inequality of opportunity satisfy the basic properties.
    Keywords: Counterfactuals, inequality measurement, opportunities.
    Date: 2015–12
  3. By: James Foster, Andrew W. Horowitz and Fabio Méndez
    Abstract: In this paper we demonstrate that the axiomatic measurement approach developed in the poverty and inequality literature can be usefully applied to the measurement of corruption. We develop a conceptual framework for organizing corruption data and discuss several objective, aggregate corruption measures consistent with axiomatic requirements. We then provide an empirical application of the methodology and estimate the respective corruption measures for a sample of over 25 countries during the year 2000. Our empirical analysis reveals significant discrepancies between the country rankings generated by these measures and those provided by the Corruption Perception Index (CPI) from Transparency International. To our knowledge, this paper represents a first analysis of corruption measurement using an axiomatic framework. Creation-Date: 2009-05
  4. By: Sabina Alkire and James E. Foster
    Abstract: This paper proposes a new methodology for multidimensional poverty measurement consisting of an identification method Ïk that extends the traditional intersection and union approaches, and a class of poverty measures Ma. Our identification step employs two forms of cutoff: one within each dimension to determine whether a person is deprived in that dimension, and a second across dimensions that identifies the poor by “counting†the dimensions in which a person is deprived. The aggregation step employs the FGT measures, appropriately adjusted to account for multidimensionality. The axioms are presented as joint restrictions on identification and the measures, and the methodology satisfies a range of desirable properties including decomposability. The identification method is particularly well suited for use with ordinal data, as is the first of our measures, the adjusted headcount ratio. We present some dominance results and an interpretation of the adjusted headcount ratio as a measure of unfreedom. Examples from the US and Indonesia illustrate our methodology. Creation-Date: 2009-12
  5. By: Aronsson, Thomas (Department of Economics, Umeå University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, University of Gothenburg, Sweden); Wendner, Ronald (Department of Economics, University of Graz, Austria)
    Abstract: This paper deals with tax policy responses to charitable giving based on a model of optimal redistributive income taxation. The major contribution is the simultaneous treatment of (i) warm-glow and stigma effects of charitable donations; (ii) that the warm glow of giving and stigma of receiving charity may to some extent depend on relative comparisons; and (iii) that people are also concerned with their relative consumption more generally. Whether charity should be taxed or supported turns out to largely depend on the relative strengths of the warm glow of giving and the stigma of receiving charity, respectively, and on the positional externalities caused by charitable donations. In addition, imposing stigma on the mimicker (via a relaxation of the self-selection constraint) strengthens the case for subsidizing charity. We also consider a case where the government is unable to target the charitable giving through a direct tax instrument, and examine how the optimal marginal income tax structure is adjusted in response to charitable giving.
    Keywords: Conspicuous consumption; conspicuous charitable giving; optimal income taxation; warm glow; stigma
    JEL: D03 D62 H21 H23
    Date: 2016–01–08
  6. By: Paola Ballon and Jean-Yves Duclos
    Abstract: This paper assesses multidimensional poverty in Sudan and South Sudan. We use the National Baseline Household Surveys (NBHS) of 2009 to measure poverty incidence in education, consumption, access to public assets and possession of private assets across these two countries. We differentiate between children/teenagers aged six to fourteen years and adults aged fifteen years or older. We apply a counting method for measuring multidimensional poverty at the individual level and perform dominance tests to check for the robustness of the poverty comparisons. Our findings show regional and sub-population differences in the unidimensional and multidimensional poverty status of people in Sudan and South Sudan. Poverty in Sudan is generally less severe than in South Sudan, with a pattern showing (i) lesser unidimensional incidence of poverty; (ii) lower multidimensional poverty indices and prevalence, but similar breadth, in Sudan than in South Sudan, both for adults and children. This pattern also points towards Khartoum and Western Equatoria as the states with the least poverty, and Northern Darfur, and Warap as the states with the greatest poverty, both for adults and children, in Sudan and South Sudan, respectively. Policy intended at reducing poverty in each of the two countries should recognize the poverty profile differences across age groups, geographical areas and dimensions.
    Date: 2015–04
  7. By: James Foster and Michael C. Wolfson
    Abstract: Several recent studies have suggested that the distribution of income (earnings, jobs) is becoming more polarized. Much of the evidence presented in support of this view consists of demonstrating that the population share in an arbitrarily chosen middle income class has fallen. However, such evidence can be criticized as being range-specific - depending on the particular cutoffs selected. In this paper we propose a range-free approach to measuring the middle class and polarization, based on partial orderings. The approach yields two polarization curves which, like the Lorenz curve in inequality analysis, signal unambiguous increases in polarization. It also leads to an intuitive new index of polarization that is shown to be closely related to the Gini coefficient. We apply the new methodology to income and earnings data from the US and Canada, and find that polarization is on the rise in the US but is stable or declining in Canada. A cross-country comparison reveals the US to be unambiguously more polarized than Canada. Creation-Date: 2009-08
  8. By: Addison, John T. (University of South Carolina)
    Abstract: This paper addresses the design of the machinery of collective bargaining from the perspective of the needs of microeconomic and macroeconomic flexibility. In the former context, greater attention is given over to enterprise flexibility than external adjustment. In the latter context, close attention is paid to changes in collective bargaining along the dimensions of bargaining coverage, structure, and coordination, drawing on Visser’s (2013) welcome update of national collective bargaining institutions; on the basis of which, and recent theoretical developments, specific support is adduced for the German, contemporary Scandinavian, and British models. The role of trust in securing micro and macro flexibility also receives attention, leading to the suggestion that the polder or Dutch model might also be expected to populate the firmament of favored collective bargaining arrangements. The paper concludes with a discussion of the policy implications raised by two developments that have been linked to the retreat of collective bargaining, namely heightened earnings dispersion and a shortfall in worker voice.
    Keywords: micro/macro flexibility, collective bargaining, growth, stabilization, voice, bargaining coverage/structure/coordination, inequality, decentralization, pacts, social pacts, trust, unemployment
    JEL: D02 E02 E24 E25 E61 J48 J50 J51 J52 J53 J58 P51
    Date: 2015–12

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