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This paper is a short note on the question of correcting for endogeneity bias in a regression. It also points out errors and omissions in the derivation of this bias in Bourguignon, Ferreira, and Menéndez (2007). We show that some assumptions needed for the derivation are not explicit and even under these assumptions, certain simplifications adopted are not valid. We support our points using simulation experiments. [ABSTRACT FROM AUTHOR]

This paper addresses international inequality in multidimensional well‐being during the last one‐and‐a‐half centuries. Inequality fell in health and education since the late 1920s, due to the globalization of mass schooling and the diffusion of the health transition, but only dropped in population‐weighted terms from 1970 onward for political and civil liberties, as the emergence of authoritarian regimes increased its dispersion since the end of World War I. In terms of augmented human development inequality declined since 1900. These results are at odds with per capita income inequality that rose over time and only shrank from 1990 onward. The gap between the OECD and the Rest of the world accounted only partially for inequality in well‐being since the dispersion within developing regions became its main driver from the mid‐20th century onward. Countries in the middle and lower deciles of the world distribution achieved the largest relative gain over the past century. [ABSTRACT FROM AUTHOR]

This paper analyzes trends in the income, net worth, and homeownership of non‐Hispanic African‐Americans and Hispanics relative to non‐Hispanic whites in the United States from 1989 to 2016 and the reasons for those trends using data from the Survey of Consumer Finances. The wealth gap between African‐American and white families was much the same in 2007 as in 1989 but it lessened considerably for Hispanics. The net worth of both minorities declined sharply relative to that of non‐Hispanic whites from 2007 to 2016 and that decline was due largely to the lower rate of return on wealth of these two groups during the 2007–2010 period and largely due to the larger dissaving of these two groups during the 2010–2016 period. The paper also finds that the wealth gap is much smaller if net worth is augmented by pension wealth and especially by Social Security wealth. [ABSTRACT FROM AUTHOR]

In this paper we provide a framework to measure an individual's multidimensional well‐being and discuss two approaches to measuring inequality in multidimensional well‐being. The framework is used to study inequality in multidimensional well‐being in the United States in the last decade. Using data from the Current Population Survey on three well‐being indicators, namely, income, health, and education, we first compute a multidimensional well‐being index for every individual in the sample and then study inequality of well‐being thus obtained. We find that inequality in well‐being increased between 2010 and 2014 and decreased between 2014 and 2019. We test the sensitivity of our results by using alternative measures of inequality and attaching alternative weights to well‐being indicators. [ABSTRACT FROM AUTHOR]

In this paper, we reassess the impact of inequality on growth. The majority of previous papers have employed (system) GMM estimation. However, recent simulation studies indicate that the problems of GMM when using non‐stationary data such as GDP have been grossly underestimated in applied research. Concerning predetermined regressors such as inequality, GMM is outperformed by a simple least‐squares dummy variable estimator. Additionally, new data have recently become available that not only double the sample size compared to most previous studies, but also address the substantial measurement issues that have plagued past research. Using these new data and an LSDV estimator, we provide an analysis that both accounts for the conditions where inequality is beneficial or detrimental to growth and distinguishes between market‐driven inequality and redistribution. We show that there are situations where market inequality affects growth positively while redistribution is simultaneously beneficial. [ABSTRACT FROM AUTHOR]

This paper provides a novel assessment of how the World Inequality Database (WID) top income adjustment applied by Blanchet, Chancel, and Gethin (2021) to European Union Statistics on Income and Living Conditions (EU‐SILC) data for 26 countries over 2003–2017 for Distributional National Accounts purposes affects inequality in equivalized gross and disposable household income. On average, the Gini is increased by around 2.4 points for both gross and disposable income, with notable differences across countries but limited impact on trends. EU‐SILC countries that rely on administrative register data see relatively small effects on inequality. Comparing with two other recent studies, differences in impacts on measured inequality depend less on the adjustment method and more on whether external data sources are used. [ABSTRACT FROM AUTHOR]

Research suggests that inequalities between generations are most pronounced in the conservative European welfare states. However, it is likely that across all advanced capitalist societies superior earnings opportunities and steady employment are pursued at a later age due to secular labor market trends. In this paper, I examine the variation in generational inequalities across different regimes using data from the Luxembourg Income Study (LIS). The repeated cross‐sectional data allow me to trace the generational changes in income for eight countries, using both Age Period Cohort (APC) and synthetic cohort models. My results suggest that for most countries, cohorts born after 1980 have experienced lower entry‐level earning opportunities, relative to cohorts born between 1960 and 1980. However, synthetic cohort models suggest that while recent generations have suffered from successively worse entry positions, they appear to be "catching up," which suggests that permanent "scarring effects" to lifetime earnings may not be inevitable. [ABSTRACT FROM AUTHOR]

This paper shows that perceptions of inequality matter for demand for redistribution and investigates how individuals form their perceptions. Using data from the ISSP, we present new evidence on the significant changes of perceptions of inequality for more than 20 countries during the last three decades and how these are not in synch with changes in objective inequality. Rather than indicating misperceptions, these discrepancies reflect a broader view of inequality that for most individuals encompasses poverty, insecurity in the labor markets, availability of public goods in addition to objective income disparities. We then show that these perceptions have much stronger correlation with demand for redistribution than objective inequality, or any of the mentioned contextual variables that mold perceptions. Ideology and self‐interest also contribute to demand for redistribution. Much more than those on the left, right‐leaning individuals adjust their demand for redistribution in line with their inequality perceptions. [ABSTRACT FROM AUTHOR]

This paper examines the distributional implications of inflation on top income shares in 14 advanced economies using data over the period 1920–2016. We use local projections to analyze how top income shares respond to an inflation shock, and panel regressions in which all variables are defined as 5‐year averages to examine the impact of inflation on the position of the top‐one‐percent in the long run. Our findings suggest that inflation reduces the share of national income held by the top 1 percent. Furthermore, we find that inflation shocks and long‐run inflation have similar effects on top income shares. [ABSTRACT FROM AUTHOR]

A small but growing literature is linking well‐being with the value of assets, measured comprehensively. This measure, called comprehensive wealth, has appeared as a leading economic indicator of sustainability by reflecting the potential of future well‐being. Despite the concerns of sustainability for policy interventions at the micro‐level, the existing literature is limited to country‐level estimations. This paper applies the general framework of weak sustainability to measure wealth at the household level. Using data from three rounds of household survey, market prices, and yield data from rural Burkina Faso, we measure wealth, income, and consumption per adult. The results show that wealth has consistently increased over time in contrast to income and consumption which have fluctuated. Wealth is also less unequally distributed. Finally, consumption is found to be more correlated with wealth. This suggests that wealth‐based interventions are more likely to improve well‐being in a sustainable way. [ABSTRACT FROM AUTHOR]

Divergence between the evolution of GDP per capita and the income of a "typical" household as measured in household surveys is giving rise to a range of serious concerns, especially in the USA. This paper investigates the extent of that divergence and the factors that contribute to it across 27 OECD countries, using data from OECD National Accounts and the Luxembourg Income Study. While GDP per capita has risen faster than median household income in most of these countries over the period these data cover, the size of that divergence varied very substantially, with the USA a clear outlier. The paper distinguishes a number of factors contributing to such a divergence, and finds wide variation across countries in the impact of the various factors. Further, both the extent of that divergence and the role of the various contributory factors vary widely over time for most of the countries studied. These findings have serious implications for the monitoring and assessment of changes in household incomes and living standards over time. [ABSTRACT FROM AUTHOR]

An introduction is presented in which the authors discuss various articles within the issue on topics including the comparability of gross domestic product (GDP) estimates in Sub-Saharan Africa, the rise in asset ownership in Africa and the body mass index of adults in Southern Africa.

This paper analyzes assortative mating and its contribution to inequality in France. We first provide descriptive evidence on the statistical association in several socio‐economic attributes of partners. Second, we assess the contribution of assortative mating to earnings inequality between couples. We provide a new method for assessing the contribution of assortative mating to inequality in couple's potential earnings, that accounts for selection bias arising from labor force participation. Our results indicate a strong degree of assortative mating in France. The correlation in earnings is around 0.17 for annual earnings, around 0.35 for full‐time equivalent earnings and up to 0.49 when using multi‐year average earnings. Assortative mating tends to increase inequality among couples. For annual earnings, the effect accounts for 3 to 9 percent of measured inequality. The effect of assortative mating on household potential earnings is much larger and amounts to 10 to 20 percent for observed inequality. [ABSTRACT FROM AUTHOR]

Greece is the country hit hardest by the crisis and subsequent fiscal consolidation strategies, suffering a cumulative output loss of about 30 percent since 2008. The present paper presents evidence that along with declining average living standards, consumption inequality has seriously grown, fueled primarily by a disproportionate drop in the consumption levels of what can be considered the middle class. Although poverty has not significantly risen in relative terms, it climbs to around 45 percent once the poverty threshold is anchored to pre‐crisis levels. Furthermore, significant indirect tax hikes have further increased inequality in consumption expenditure. The paper also shows that several reforms launched in the name of reducing labor costs, broadening the tax base or rationalizing the targeting of social benefits have had detrimental effects on one of the most vulnerable population groups, namely families with children, thus implying that the social consequences of the crisis will be long‐lasting. [ABSTRACT FROM AUTHOR]

This paper addresses the problem of ranking growth episodes from a microeconomic perspective. While most of the existing criteria, framed in the pro‐poor growth tradition, are either based on anonymous individuals or are used to identify them on the basis of their status in the initial period, this paper proposes new criteria to evaluate growth, which are robust to the choice of the reference period used to identify individuals. Suitable dominance conditions that can be used to rank alternative growth processes are derived by means of an axiomatic approach. Moreover, the theoretical results are used to rank the different growth episodes that have taken place in the past decade in Australia, Germany, Korea, Switzerland, and the U.S. [ABSTRACT FROM AUTHOR]

Recent headlines frequently refer to rising inequality and its implication on economic growth and social welfare. Addressing the latter is difficult and requires more than simply looking at GDP, as Kuznets long ago pointed out. In this paper we focus on the importance of the income measure underlying the inequality measure when examining the relationship between GDP growth and inequality. We create a mapping using Census Bureau household survey data and Bureau of Labor Statistics (BLS) consumer expenditure data to create distributional measures of the Bureau of Economic Analysis (BEA) personal income. We show that for the period 2000-2012, inequality using personal income is substantively lower than inequality measured using Census Bureau money income, and the trends in both inequality and median income are different. This demonstrates the importance of using a measure a national accounts based measure of income when examining the relationships between inequality and growth. [ABSTRACT FROM AUTHOR]

The paper calculates the top income shares in Greece from 1967 (the seizure of power by the military dictatorship) until 2017 (the aftermath of the debt crisis). This long‐run perspective allows for the examination of the relationship between inequality and institutional transformations, namely democracy, finance, and crisis. We find in particular that (a) transition to democracy did not affect the income share of the top decile, whereas social democracy had a significant negative impact; (b) financial development and liberalization substantially increased all top decile shares; and (c) debt crisis, consolidation, and recession increased the share of the upper ranks of the top decile. [ABSTRACT FROM AUTHOR]

This paper reexamines the determinants of redistribution in light of improved data and methods relative to earlier literature. In particular, we use the latest version of the UNU‐WIDER's Income Inequality Database to have the best available estimates of both pre‐ and post‐redistribution inequality for the largest set of countries and periods. We tackle head‐on problems related to model specification that risk generating large biases in estimates because of mechanical associations between the dependent and explanatory variables. The results suggest that the bias in the earlier work can be substantial. The descriptive analysis highlights, in addition, how scarce the data are when it comes to information about the extent of redistribution in developing countries. [ABSTRACT FROM AUTHOR]

In this paper we combine household surveys, national accounts, income tax data and wealth data in order to estimate income concentration in the Middle East for the period 1990–2016. According to our benchmark series, the Middle East appears to be the most unequal region in the world, with a top decile income share as large as 64 percent, compared to 37 percent in Western Europe, 47 percent in the US and 55 percent in Brazil (see Alvaredo et al. 2018). This is due both to enormous inequality between countries (particularly between oil‐rich and population‐rich countries) and to large inequality within countries (which we probably under‐estimate, given the limited access to proper fiscal data). We stress the importance of increasing transparency on income and wealth in the Middle East, as well as the need to develop mechanisms of regional redistribution and investment. [ABSTRACT FROM AUTHOR]

The "alternative", "atypical" or "informal" workforce has grown in developed and developing countries alike. One of the more recent evolutions of informal employment has been of informal employment within formal enterprises. In the interest of flexibility and cost‐reduction, many formal firms increasingly resort to hiring workers on a temporary or informal basis. Alongside, and perhaps, as a result of the persistence and pervasiveness of informal employment, issues relating to inequality have come to the fore. This paper is motivated by these two intertwining aspects of Indian labor market—informality and wage inequality. Using nationally representative sample data, the paper examines trends in wage inequality among various forms of informal workers, overlaying these findings with broader trends in inequality. Using a regression based inequality decomposition, the paper compares the sources of wage inequality across different employment groups and the reasons for differences in wage inequality. [ABSTRACT FROM AUTHOR]

The distribution of income in Russia changed significantly over the past 25 years. This paper examines the factors that have been driving the fall in inequality and poverty over two recent decades in the Russian Federation. Changes in earnings from public and private sectors and pensions have been the main sources of changes in the income distribution between 1994 and 2015. Falling inequality and poverty were the result of a decrease in the dispersion of private sector earnings and an increase in the levels of pensions and public sector earnings. Neither the evolution of socio‐demographic characteristics nor the level or structure of employment alone had big impacts. [ABSTRACT FROM AUTHOR]

We do not need to and should not have to choose amongst income, consumption, or wealth as the superior measure of well‐being. All three individually and jointly determine well‐being. We are the first to study inequality in three conjoint dimensions for the same households, using income, consumption, and wealth from the 1989–2016 Surveys of Consumer Finances (SCF). The paper focuses on two questions. What does inequality in two and three dimensions look like? Has inequality in multiple dimensions increased by less, by more, or by about the same as inequality in any one dimension? We find an increase in inequality in two dimensions and in three dimensions, with a faster increase in multi‐dimensional inequality than in one‐dimensional inequality. Viewing inequality through one dimension greatly understates the level and the growth in inequality in two and three dimensions. The U.S. is becoming more economically unequal than is generally understood. [ABSTRACT FROM AUTHOR]

This paper estimates the impact of Tunisia's tax and transfer system on inequality and poverty and assesses the benefits from public spending on education and health. Results show that Tunisia's redistributive fiscal policy reduces inequality and extreme poverty significantly. However, based on the national poverty line, the headcount ratio increases, implying that a large number of the poor people pay more in taxes than they receive in cash transfers and subsidies. This is due to a relatively high burden of personal income taxes and social security contributions for low‐income households. [ABSTRACT FROM AUTHOR]

This paper examines the distribution of income and consumption in the U.S. using one dataset that obtains measures of both income and consumption from the same set of individuals. We develop a set of inequality measures that show the increase in inequality during the past 27 years using the 1984-2011 Consumer Expenditure Survey. We find that the trends in income and consumption inequality are similar between 1984 and 2006, and diverge during and after the Great Recession. For the entire 27-year period we find that consumption inequality increases almost as much as does income inequality. [ABSTRACT FROM AUTHOR]

This paper provides empirical evidence on the long run effects of tax policy on income concentration in Switzerland. As Swiss cantons enjoy considerable autonomy with respect to income taxation, it is possible to study the impact of the cantonal income tax burden, as well as the influence of tax competition, on cantonal top income shares. Using panel regressions covering all Swiss cantons from 1917 to 2009 we find the expected negative effect of the tax burden on the cantonal top income share. Further, we find evidence that tax competition is a driving force behind the income shares of the top 1, 0.5 and 0.1 percent. Lower tax rates in neighbor cantons induce competitive pressure and ceteris paribus reduce top income shares in a canton. For the very top incomes tax competition seems to be an issue of the last 30 years. [ABSTRACT FROM AUTHOR]

Housing should always be included in the construction of the welfare aggregate for welfare analysis. However, assigning a value to the flow of services from dwellings is problematic. Many households own the dwelling in which they live, making this value unobserved; others receive free housing or face prices lower than those at the market. Over the last decades, several estimation techniques have been proposed and implemented by practitioners to overcome this issue. This paper provides a review of methods commonly used to impute rent and discusses the relative advantages and disadvantages of each. We find no consensus on which imputation method is the most appropriate for welfare analysis, as well as a lack of evidence regarding the distributional impact of including rents in the welfare aggregate, particularly in developing countries. Moreover, practices for imputing rents vary across countries, calling for the future development of a unified framework. [ABSTRACT FROM AUTHOR]

An extensive literature has analyzed the economic effects of transition patterns in Central and Eastern European and former Soviet Union countries. With few recent exceptions, analysis of the impacts of speed and sequencing of reforms has not concerned the dynamics of income inequality. In this paper we analyze the heterogeneous effects of transition reforms on inequality by explicitly considering their speed and sequencing. To this aim we identify eight transition models in which the 27 countries considered are classified. The dynamic panel-data analysis for the period 1989-2009 reveals that balanced transition patterns, which favored a coordination of reforms especially in specific fields, were relatively less pro-inequality. [ABSTRACT FROM AUTHOR]

This paper examines the measurement of social welfare, poverty, and inequality, taking into account features that have been found to be important welfare determinants in behavioral economics. Most notably, we incorporate reference-dependence, loss aversion, and diminishing sensitivity-aspects emphasized in Prospect Theory-to social welfare measurement. We suggest a new notion of equivalent income, the income level with which the individual would be as well off, evaluated using a standard concave utility function, as he actually is, evaluated with a reference-dependent utility function. We examine the differences between standard poverty and inequality measures based on observed income and measures that are calculated based on equivalent income. These differences are illustrated using household-level panel data from Russia and Vietnam. [ABSTRACT FROM AUTHOR]

This paper investigates the effect of shifting taxes from labor income to consumption on labor supply and the distribution of income in Germany. We simulate stepwise increases in the value-added tax (VAT) rate, which are compensated by revenue-neutral reductions in income-related taxes. We differentiate between the personal income tax (PIT) and social security contributions (SSC). Based on a dual data base and a microsimulation model of household labor supply behavior, we find a regressive impact of such a tax shift in the short run. When accounting for labor supply adjustments, the adverse distributional impact persists for PIT reductions, while the overall effects on inequality and progressivity become lower when payroll taxes are reduced. This is partly due to increases in aggregate labor supply, resulting from higher work incentives. [ABSTRACT FROM AUTHOR]

The EU-wide survey ' Statistics on Income and Living Conditions' ( EU- SILC) is extremely important for international social science research and policy advice. It is therefore crucial to ensure that the data are of the highest quality and international comparability. This paper is aimed at identifying unexpected developments in income levels, income mobility, and inequality in the EU- SILC data between 2005 and 2009. We examine the consistency of EU- SILC by comparing cross-sectional results with findings based on two-year longitudinal samples. Although the data represent similar populations, for several countries the results of this comparison differ widely. One important outcome is the high degree of variability over time in countries that obtain their income information from register data. This suggests methodological challenges in the clear designation of new subsample members, in the reweighting of the data, in imputation of missing values, and in other areas. [ABSTRACT FROM AUTHOR]

We examine socioeconomic heterogeneity in children's time use using diary data from two waves of a nationally representative longitudinal cohort study in Ireland. Children from disadvantaged households spend significantly less time reading, doing homework, and engaging in physical exercise and sport than their counterparts, and more time engaging in unstructured play. Though most gaps are relatively small at age 9, they widen considerably by age 13. This pattern is similar for girls and boys. Parental education appears to be a more important factor in family investment decisions about children's time use than household income. Given the important role of extra‐curricular activities in promoting cognitive and non‐cognitive skill development, the systematic differences in children's time use we document in this paper may contribute to cumulative disadvantage and widening skill gaps through adolescence and into adulthood. [ABSTRACT FROM AUTHOR]

This paper scrutinizes the conventional wisdom about trends in UK income inequality and also places contemporary inequality in a much longer historical perspective. We combine household survey and income tax data to provide better coverage of all income ranges from the bottom to the very top (and make our estimates available to other researchers). We make a case for studying distributions of income between tax units (i.e. not assuming the full income sharing that goes with the use of the household as the unit of analysis) for reasons of principle as well as data harmonization. We present evidence that income inequality in the UK is as least as high today as it was just before the start of World War 2. [ABSTRACT FROM AUTHOR]

The "alternative", "atypical" or "informal" workforce has grown in developed and developing countries alike. One of the more recent evolutions of informal employment has been of informal employment within formal enterprises. In the interest of flexibility and cost‐reduction, many formal firms increasingly resort to hiring workers on a temporary or informal basis. Alongside, and perhaps, as a result of the persistence and pervasiveness of informal employment, issues relating to inequality have come to the fore. This paper is motivated by these two intertwining aspects of Indian labor market—informality and wage inequality. Using nationally representative sample data, the paper examines trends in wage inequality among various forms of informal workers, overlaying these findings with broader trends in inequality. Using a regression based inequality decomposition, the paper compares the sources of wage inequality across different employment groups and the reasons for differences in wage inequality. [ABSTRACT FROM AUTHOR]

Why are some countries characterized by more income redistribution than others? Based mainly on Trans‐Atlantic comparisons, the literature has referred to dissimilarities in preferences for redistribution. In this article, we extend this literature by focusing on multiple dimensions of redistributive preferences and adding Japan to the comparison. More precisely, using data for France, the US, and Japan from ISSP 2009, we apply cross‐sectional regression models and the Blinder–Oaxaca decomposition technique to address two distinct questions about preferences for redistribution—the role of government in reducing income gaps and tax progressivity. We find that each of these dimensions are related to different mechanisms: i.e. one depends more on individuals' specific situations, such as income/wealth and social beliefs, as stressed in the literature, whereas the other depends more on an unobservable but common factor within a country, such as the historical and cultural background of each society. [ABSTRACT FROM AUTHOR]

This article surveys the literature on the relationship between corporate income taxation and inequality through the lens of the recent book The triumph of injustice—How the rich dodge taxes and how to make them pay by Saez and Zucman (2019). First, we analyze the nexus between corporate taxation and inequality by reviewing both studies that highlight the curbing effect of corporate tax on inequality, and by examining studies claiming that more corporate taxation might paradoxically raise personal inequality. Then we proceed by identifying current practices in taxing multinational entities, and provide an overview of the latest estimates on nations' missing fiscal revenues. Finally, we discuss the policy proposals put forward by Saez and Zucman (2019) to reform corporate taxation at the global level through the introduction of a global corporate minimum tax. [ABSTRACT FROM AUTHOR]

This paper proposes a method to decompose changes in income inequality into the contributions of policy changes, wage rate changes, and population changes while considering labor supply reactions. Using data from the Socio‐Economic Panel (SOEP), this method is applied to decompose the increase in income inequality in Germany from 2002 to 2011, a period that saw tax reductions and a controversial overhaul of the transfer system. The simulations show that tax and transfer reforms have had an inequality‐reducing effect as measured by the mean log deviation and the Gini coefficient. For the Gini, these effects are offset by labor supply reactions. In contrast, policy changes explain part of the increase in the ratio between the 90th and the 50th income percentiles. Changes in wage rates have led to a decrease in income inequality. Thus, the increase in inequality was due to changes in the population. [ABSTRACT FROM AUTHOR]

Similar looking Lorenz curves can imply very different income density functions and potentially lead to wrong policy implications regarding inequality. This paper derives a relation between a Lorenz curve and the modality of its underlying income density: given a parametric Lorenz curve, it is the sign of its third derivative which indicates whether the density is unimodal or zeromodal (i.e., downward-sloping). The density modality of several important Lorenz curves such as the Pareto, Weibull, Singh- Maddala parametrizations and hierarchical families of Lorenz curves are discussed. A Lorenz curve performance comparison with Monte Carlo simulations and data from the UNU- WIDER World Income Inequality Database underlines the relevance of the theoretical result: curve-fitting based on criteria such as mean squared error or the Gini difference might lead to a Lorenz curve implying an incorrectly-shaped density function. It is therefore important to take into account the modality when selecting a parametric Lorenz curve. [ABSTRACT FROM AUTHOR]

We use panel data from three waves of a large representative population survey carried out between June and November 2020 to assess in what regards and to what extent different groups of the German population are affected by the COVID‐19 crisis. Using common factor analysis, we show that people's lives are mainly affected in two ways: First, a notable fraction of the population is concerned that they or their family members and friends may get infected with the coronavirus. Second, many people suffer from socio‐economic consequences of the crisis, including a discontinuation of employment, a decrease in household income, and worries about financial troubles. Regressing these two factors on several socio‐demographic characteristics reveals that especially the socio‐economic consequences vary across population groups. Self‐employed persons, marginally employed workers, low‐income households, and families with children appear to be burdened overproportionally. [ABSTRACT FROM AUTHOR]

This paper addresses the impact of a subsidy-an increase in someone's income-on generalized Gini inequality indices. We show that for any distribution of income there exists a 'pivotal individual' such that an increment given to an individual poorer (resp. richer) than himself, decreases (resp. increases) inequality. We characterize the pivotal individual for relative and absolute Gini indices. We show that normative prescriptions about the preferred level of inequality aversion can also be formulated in terms of the pivotal, namely the richest individual that we find just to compensate. [ABSTRACT FROM AUTHOR]

This paper measures trends in global interpersonal inequality during 1975-2010 using data from the most recent version of the World Income Inequality Database (WIID). The picture that emerges using 'absolute,' and even 'centrist' measures of inequality, is very different from the results obtained using standard 'relative' inequality measures such as the Gini coefficient or Coefficient of Variation. Relative global inequality has declined substantially over the decades. In contrast, 'absolute' inequality, as captured by the Standard Deviation and Absolute Gini, has increased considerably and unabated. Like these 'absolute' measures, our 'centrist' inequality indicators, the Krtscha measure and an intermediate Gini, also register a pronounced increase in global inequality, albeit, in the case of the latter, with a decline during 2005 to 2010. A critical question posed by our findings is whether increased levels of inequality according to absolute and centrist measures are inevitable at today's per capita income levels. Our analysis suggests that it is not possible for absolute inequality to return to 1975 levels without further convergence in mean incomes among countries. Inequality, as captured by centrist measures such as the Krtscha, could return to 1975 levels, at today's domestic and global per capita income levels, but this would require quite dramatic structural reforms to reduce domestic inequality levels in most countries. [ABSTRACT FROM AUTHOR]

This paper estimates the level and distribution of household wealth globally, as well as for regions and countries, for the period 2000-2014. The data used are mainly from household surveys and national accounts balance sheets, covering about two thirds of the world's population and over 95% of global household wealth. Lists of the most wealthy published in the media are used to adjust the upper tail. Wealth levels and distributions are imputed for countries without data. Estimated global household wealth stood at USD 251 trillion in 2014, having grown from USD 117 trillion in the year 2000. Wealth per adult in 2014 was USD 53,000. The estimated Gini coefficient of global wealth was 92.2% in 2014 and the share of the top 10% was 88.3%. Wealth inequality fell from 2000 to 2007, with the share of the top 10% falling from 89.4% to 86.5%, before rising steadily to 2014. From 2000 to 2008 the share of financial assets in gross wealth, an important driver of wealth inequality, fell from 55.2% to 50.2%, before climbing to 55.0% in 2014. Household debt rose from 13.6% of gross assets in 2000 to 16.0% in 2008, and has since fallen to 13.9%. [ABSTRACT FROM AUTHOR]

Many low- and middle-income countries are achieving good rates of economic growth, while high inequality remains a priority concern. Some countries meanwhile have low growth, high inequality, and pervasive poverty-often linked to their fragility. There is now active debate on how countries should set themselves goals for achieving both absolute poverty reduction and lower inequality. But policy action needs to be better served by analysis and data. [ABSTRACT FROM AUTHOR]

This paper studies the distributional impact of commodity price shocks over the short and the very long run. Using a GARCH model, we find that Australia experienced more volatility than many commodity exporting developing countries over the periods 1865-1940 and 1960-2008. We conduct cointegration tests to assess the commodity price shock inequality nexus. A single equation error correction model suggests that commodity price shocks increase the income share of the top 1, 0.05, and 0.01 percent in the short run. The very top end of the income distribution benefits from commodity booms disproportionately more than the rest of the society. The short run effect is mainly driven by wool and mining and not agricultural commodities. A sustained increase in the price of renewables (wool) reduces inequality whereas the same for non-renewable resources (minerals) increases inequality. We expect that the initial distribution of land and mineral resources explains the asymmetric result. [ABSTRACT FROM AUTHOR]

'Business climate indexes' characterize state economic policies, and are often used to try to influence economic policy debate. However, they are also useful in research as summaries of a large number of state policies that cannot be studied simultaneously. Prior research found that business climate indexes focused on productivity and quality of life do not predict economic growth, while indexes emphasizing taxes and costs of doing business indicate that low-tax, low-cost states have faster growth of employment, wages, and output. In this paper, we study the relationship between these two categories of business climate indexes and the promotion of equality or inequality. We do not find that the productivity/quality-of-life indexes predict more equitable outcomes, although some of the policies underlying them suggest they might. We do find, however, that the same tax-and-cost-related indexes that are associated with higher economic growth are also associated with increases in inequality. [ABSTRACT FROM AUTHOR]

This paper provides a normative framework for the assessment of the distributional incidence of growth. By removing the anonymity axiom, such framework is able to evaluate the individual income changes over time and the reshuffling of individuals along the income distribution that are determined by the pattern of income growth. We adopt a rank dependent social welfare function expressed in terms of initial rank and individual income change and we obtain partial and complete dominance conditions over different growth paths. These dominance conditions account for the different components determining the overall impact of growth, that is the size of growth and its vertical and horizontal incidence. We then provide an empirical application for Italy: this analysis shows the distributional impact of the recent economic crisis suffered by the Italian populaltion. [ABSTRACT FROM AUTHOR]

Progress in narrowing black-white earnings differences has been far from continuous, with some of the apparent progress resulting from labor force withdrawal among lower-skilled African Americans. This paper documents racial and ethnic differences in male earnings from 1950 through 2010 using data from the decennial census and American Community Surveys. Emphasis is given to annual rather than weekly or hourly earnings. We take a quantile approach, providing evidence on medians and other percentiles of the distribution. Treatment of imputed earnings greatly affects measured outcomes. Hispanic men have exhibited earnings growth similar to white men over several decades. Black men have been left behind economically due in large part to increased joblessness, a process exacerbated by weak labor market conditions. By 2010, joblessness had risen to over 40 percent and the median black-white earnings gap was the largest in at least 60 years. [ABSTRACT FROM AUTHOR]

C1-class interpolation methods that preserve monotonicity and convexity and are thus suitable for the estimation of the Lorenz curve from grouped data are not widely known. Instead, parametric models are usually applied for such estimation. Parametric models, however, have difficulty in accurately approximating every part of income/expenditure distributions. This paper proposes two types of C1-class shape-preserving interpolation methods. One is a piecewise rational polynomial interpolation (proposed independently by Stineman and Delbourgo) that enables consistent interpolation of the concentration curves for income/expenditure components, attaining approximately the same accuracy as that of the existing methods when applied to decile-grouped data or to more detailed aggregation. Another is a Hybrid interpolation that employs pieces of curves derived from parametric models on end intervals. Empirical comparisons show that the Hybrid interpolation (with the assistance of parametric models for class-boundary estimation) outperforms the existing methods even when applied to quintile-grouped data without class boundaries. [ABSTRACT FROM AUTHOR]

This paper conceptualizes intergenerational occupational mobility between the farm and non-farm sectors in five African countries, measures it using nationally representative household survey data, and analyzes its determinants through a comparative method based on pooled logit regressions. We first analyze intergenerational gross mobility. Until the end of the 1980s, intergenerational flows toward the non-farm sector are high in Côte d' Ivoire and Guinea, flows toward the farm sector are more often observed in Ghana and Uganda, and Madagascar displays less mobility in either direction. The pace of change in occupational structures and the magnitude of labor income dualism between the farm and non-farm sectors appear to explain those differences. We then net out structural change across generations and establish the first measurement of intergenerational net mobility in those five African countries. Ghana and Uganda stand out as relatively more fluid societies. Côte d' Ivoire and Guinea come next while Madagascar shows a particularly high reproduction of occupations. Educational mobility accounts for the Madagascar exception to a large extent, but not for the differences between the other countries. Spatial dualism of employment, i.e. the geographic segregation of farm and non-farm jobs, accounts for most of those remaining differences. We argue that the main determinants of intergenerational mobility, namely income and employment dualisms, likely reflect a historical legacy of different colonial administrations. [ABSTRACT FROM AUTHOR]

It is well accepted that a country's GDP may not fully reflect its level of well-being. In recent years, happiness has emerged as an alternative indicator of well-being, and research has mainly focused on determining the level of happiness. While it is important to look at the level, the distribution of happiness is also a salient aspect in any evaluation of inequality. There has been a growing interest in the distribution of happiness, although the ordinal nature of the data makes the use of standard inequality measures problematic. Our paper contributes to the literature by exploring the distributions for the U. S. from 1972 to 2010. Based on new methods developed for ordinal data, we are able to overcome the problems associated with ordinality and obtain unambiguous rankings of happiness distributions. We also compute the level of happiness inequality using existing measures based on median centred approaches. Further, we decompose the median based inequality measures of happiness by gender, race, and region. [ABSTRACT FROM AUTHOR]

Relative deprivation, shame, and social exclusion can matter to the welfare of people everywhere. The paper argues that such social effects on welfare call for a reconsideration of how we assess global poverty. We argue for using a weakly-relative measure as the upper-bound complement to the lower-bound provided by a standard absolute measure. New estimates of poverty are presented. The absolute line is $1.25 a day at 2005 prices, while the relative line rises with the mean, at a gradient of 1:2 above $1.25 a day, consistently with national poverty lines. We find that the incidence of both absolute and weakly-relative poverty in the developing world has been falling since the 1990s, but more slowly for the relative measure. While the number of absolutely poor has fallen, the number of relatively poor has changed little since the 1990s, and is higher in 2008 than 1981. [ABSTRACT FROM AUTHOR]