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The present study identifies economic, political, and institutional variables that influence the distribution of personal incomes in the Eurozone countries facing severe fiscal imbalances, namely Greece, Italy, Portugal, and Spain. Crucially, this paper is the first to investigate the effect of the corrective arm of the Stability and Growth Pact, the so-called Excessive Deficit Procedure (EDP), on the income distribution of the aforementioned economies, where EDP was imposed over a long time period. The empirical results of this study show that (i) EDP impact depends on the specific mix of policy measures undertaken and that (ii) a high public debt does not reflect the existence of common factors shaping income distribution in the four Southern European economies. The share of labor income in total income, constitutes a significant determinant of income inequality. However, we find that the relationship between labor share and income inequality is also country-specific, depending on the intrinsic characteristics of each individual economic system. [ABSTRACT FROM AUTHOR]

Widely, 12-month or 4-quarter average indicators, such as monetary poverty rates, are computed from repeated cross sections of household surveys and interpreted as annual. This is a valid interpretation only when individuals do not change their status within the year; for instance, those observed as poor in the month they are interviewed stay poor the other 11 months. First, we demonstrate that such misinterpretation affects the calculation of several labor market, inequality, and monetary poverty measures. Then, we propose several methods to accurately annualize sub-annual data. Some methods rely on ancillary questions often included in household surveys while others require econometric techniques such as predictive mean matching. Using data for Colombia, we apply the methods to compute annual measures of labor participation, occupation, per capita labor income, average per capita household income, the Gini coefficients of labor income and per-capita household income, and moderate and extreme monetary poverty indices (headcount, gap, and severity). We show that differences with respect to the usual calculations based on monthly averages can be substantial. [ABSTRACT FROM AUTHOR]

This paper studies the effects of mining intensity and presence on Peru's mining districts' welfare from 2004 to 2019. A pooled cross-section regression is used which is constructed from different sources and two sets of comparisons are made: the first compare districts with and without mining presence within mining provinces, and the second compares districts with and without mining presence without the constraint of being within mining provinces. The primary dependent variables included in the model are income inequality, labor income, and poverty rate. In mining districts, inequality has increased, but labor income has increased, and poverty has decreased compared to non-mining districts. However, once control for province-fixed effects and clustered by standard errors at the district level, the significance of inequality is lost, while the impacts on labor income and poverty remain. The transmission mechanisms are human capital, employment, and redistributive policies. Also the mining presence has had positive effects on labor income in other sectors such as construction and commerce; Finally, the labor incomes of unskilled workers increases but not the labor incomes of skilled workers, and it has negatively impacted informal employment. [ABSTRACT FROM AUTHOR]

The article examines the relationship between the level of demand of income groups of the population and labor income. The influence of demand of various income groups of the population on production parameters has been investigated. As a calculation tool, input–output tables with an expanded total cost coefficient matrix by adding elements of wages and household consumption to it have been used. The conclusion has been substantiated that the growth of income and demand in low-income groups of the population has the greatest effect on production in the real sector, and in high-income groups of the population—on the products of the service sector. Large-scale sectors of the economy have been identified, the activities of which are most influenced by the demand of certain income groups, taking into account the induced effects that form in the economy. It has been noted that the growth in demand in low-income groups of the population is most reflected in the incomes of high-income groups of the population. It has been shown that even relatively modest structural shifts in the volume of wages by decile groups can lead to tangible structural and total changes in output. The analysis of the impact on production volumes of changes in the qualification structure of employment, reflecting smaller differences in the response of sectors of the economy to changes in demand of different qualification groups of workers than income groups, has been carried out. [ABSTRACT FROM AUTHOR]

China has maintained great economic growth in the past and reached the status of a middle-income country. Meanwhile, the relationships among environmental pollution, environmental regulation, and economic growth have attracted wide attention. In addition, some studies have shown that economic growth is not balanced in the division of income between labor and capital, and this has become one of the most important issues in China. The conflict over the environment and income distribution is supposed to cause social welfare loss; therefore, we want to examine the impact of environmental pollution and environmental governance on labor income share. Our empirical results show that the relationship between environmental pollution and share of labor income is positive at the present stage. However, the relationship is not linear but rather an inverted-U shape in the long run. In addition, we tested the effects of environmental regulation on labor income share and found an inverted-U-shaped relationship. Although growing concern about environmental pollution adds to the pressure on the government, our statistical results suggest that there is no perfect way to resolve environmental problems. Additionally, labor unions are expected to play a different role in income distribution. [ABSTRACT FROM AUTHOR]

This paper examines the optimal portfolio choice in the presence of risky labor income, retirement horizon and shadow costs of incomplete information and short sales. The optimal allocation to stocks is larger for employed investors than for retired investors within idiosyncratic labor income risk, incomplete information and short sales. Investors' willingness to save is increased when increasing idiosyncratic labor income risk in the presence of incomplete information and short sales, while it is decreased when retired investors still keep partial of their income flow. Hence, they reduce their stock portfolio allocation towards the level of retired investors. The presence of a positive correlation between labor income and stock returns reduces stockholdings below the level of retired investors within the assumptions of the existence of shadow costs of incomplete information. Our results generalize previous findings in the literature by accounting for the additional impact of information costs and short sales constraints. [ABSTRACT FROM AUTHOR]

We study an optimal job-switching and consumption/investment problem of an infinitely-lived economic agent who exhibits constant relative risk aversion. We consider two kinds of jobs, one of which allows the agent to receive higher income but makes him suffer higher level of utility loss than the other. The job-switching opportunities are reversible in the sense that one can move from the current job to the other at any time. We provide the closed form solution for the optimal job-switching and consumption/investment policies by using the dynamic programming approach, and show various properties of the solution. We compare the optimal consumption/investment policies to those without job-switching opportunities. As a special case of our problem, we also compare the solution in the case where the agent has a reversible retirement option with that in the case where he has an irreversible retirement option. [ABSTRACT FROM AUTHOR]

This paper analyzes how increased offshoring affects labor income risk. Dealing with the variability of incomes, it is therefore distinct from a large number of studies explaining the level effects of globalization on income in the labor market. It provides an assessment that directly connects labor income risk and offshoring trends in a panel setting at the industry level using German data. Importantly, we distinguish between transitory and permanent risk to individual income. Permanent income risk is defined as the variance of unpredictable shocks to income that do not fade out over time. Different from transitory short-term fluctuations, it has a particular welfare relevance. Our findings suggest that, at the industry level, permanent labor income risk decreases with offshoring. This effect is particularly strong for offshoring to low-income destinations. [ABSTRACT FROM AUTHOR]

In this paper, we study an optimal consumption-leisure, investment, insurance and retirement choice problem of an infinitely lived economic agent with constant elasticity of substitution (CES) preferences. We incorporate random insurable losses that are independent of risky asset returns (negative monetary shocks) and impose short-sale constraint on the risky asset to formulate this optimal choice model. When the wealth process is subject to insurable negative monetary shocks produced by a general marked point process, the challenge is to derive an optimal allocation of the agent's wealth between a portfolio investment and an insurance (costly) strategy. Without imposing the level of insurance to be within interval $$\left[ {0,1} \right]$$; we capture the agent's instantaneous preferences for consumption and leisure via CES preference, while integrating the optimal consumption-leisure-work tradeoffs, the optimal portfolio selection, optimal level of insurance and his/her optimal retirement time. We use the Martingale technique to formulate the optimization problem and solve the optimal policies of the agent by applying the variational inequality arising from the dual functions of the optimal stopping times. Our results demonstrate that a lack of insurance against large negative monetary shocks is positively correlated with lower participation rate in the equity market and high savings rates when short-sale constraint is binding. The optimal retirement time is characterized as the first time when his/her wealth exceeds a critical level of wealth. [ABSTRACT FROM AUTHOR]