This paper examines the growth performance and income inequality in eight Chinese provinces during the period of 1989-2004 using the China Health and Nutrition Survey data. It shows that income grew for all segments of the population, and as a result, poverty incidence has fallen. However, income growth has been uneven, most rapidly in coastal areas, and among the educated. A decomposition analysis based on household income determination suggests that income growth can largely be attributed to the increase in returns to education and to the shift of employment into secondary and tertiary sectors.

In many poor countries, the recent increases in prices of staple foods raise the real incomes of those selling food, many of whom are relatively poor, while hurting net food consumers, many of whom are also relatively poor. The impacts on poverty will certainly be very diverse, but the average impact on poverty depends upon the balance between these two effects, and can only be determined by looking at real-world data. Results using household data for ten observations on nine low-income countries show that the short-run impacts of higher staple food prices on poverty differ considerably by commodity and by country, but, that poverty increases are much more frequent, and larger, than poverty reductions. The recent large increases in food prices appear likely to raise overall poverty in low income countries substantially.

In the decade leading to the recent commodity boom, which peaked in 2007-08, several resource-rich, low-income countries displayed high rates of gross domestic product (GDP) growth while social indicators did not improve significantly. It is well known that, in itself, the widely tracked GDP may not be the most relevant summary of aggregate economic performance in all places at all times. This note suggests that for countries with significant exhaustible natural resources and important foreign-investor presence, adjusted net national income (aNNI), can usefully complement GDP to assess economic progress.

In the decade leading to the recent commodity boom, which peaked in 2007-08, several resource-rich, low-income countries displayed high rates of gross domestic product (GDP) growth while social indicators did not improve significantly. It is well known that, in itself, the widely tracked GDP may not be the most relevant summary of aggregate economic performance in all places at all times. This note suggests that for countries with significant exhaustible natural resources and important foreign-investor presence, adjusted net national income (aNNI), can usefully complement GDP to assess economic progress.

The international financial crisis has severely affected the value of pension fund assets worldwide. The unfolding global recession will also impose pressures on public pension schemes financed on a pay-as-you-go basis, while limiting the capacity of governments to mitigate both of theses effects. Governments are reacting to these events in different ways. Some are asking whether the balance between funded defined-contribution and unfunded pension schemes should be reconsidered. A few have already taken actions to reverse prior reforms. This note discusses the potential impacts of the financial crisis on fully funded and pay-as-you-go retirement-income systems in World Bank client countries, and identifies key short-and medium-term policy responses.

The coverage of old-age protection systems is a central concern in developing countries. While most countries mandate that workers make contributions to a retirement-savings plan, fewer than ten per cent comply in South Asia and Sub-Saharan Africa, as compared to higher-income OECD countries which cover 80 per cent or more of their workforce. Economic development is the major determinant of coverage protection for retirement systems, with the level of income per capita as an excellent predictor of coverage rates. The note concludes that : a) coverage rates track income levels closely and evasion is driven by the high cost of joining the formal sector; b) pension scheme design can exacerbate the evasion problem; c) a poorly designed and managed scheme should be reformed prior to attempts to expand its coverage; d) extending financial solvency of a pay-as-you-go scheme is not a good rationale for expanding coverage; e) a safety net can help cover the inevitable gaps in a contributory scheme; f) defined contribution schemes tend to provide better incentives for coverage; g) creative approaches to expanding coverage include direct matching contributions for low income workers and finding ways to reduce transaction costs by harnessing existing groups.

This paper addresses policies aimed at closing the rural-urban gap for one of the Millennium Development Goals (MDGs), the under-five mortality rate (U5MR). The paper relies on the Maquette for MDG Simulations (MAMS), a computable general equilibrium model, applied to the database of an archetypical low-income country. The scenarios, which focus on the period 2013-2030, include a "business-as-usual" base scenario and policy scenarios that analyze efforts to raise the rural population up to the urban level in terms of health services or the under-five mortality rate. The policy scenarios are implemented with alternative sources of fiscal space. The results indicate that, if current trends continue, considerable progress for MDGs should be expected by 2030. If the government raises rural health services, then the decline in the rural U5MR would accelerate. If most additional resources come from foreign grants or government efficiency gains, then the repercussions for other development indicators, including poverty reduction...

The author looks at the development and regulation of the fixed income securities market in the United States. The U.S. fixed income market is one of the oldest and most developed debt markets in the world. It is also one of the most heterogeneous, with the four key market segments-government securities, the securities of government-sponsored enterprises, municipal securities, and corporate debt securities-all being relatively large and deep. The author describes the evolution of fixed income market regulation in the United States, discussing both primary and secondary market regulation. She also looks at market integrity issues and the enforcement authority of the U.S. Securities and Exchange Commission, which is broad and has played an important role in the effectiveness of regulation. The author concludes that the fact that the U.S. fixed income market flourished for many years in the absence of regulation must be seen in a broader legal and regulatory context. While the debt market itself may have been unregulated...

Questions about the ultimate size of mineral and energy resource endowments and the degree of fiscal prudence which should be exercised by countries engaged in resource extraction have become central for many developing countries during the recent resource boom. To explore these questions, this paper develops a model of optimal resource extraction and discovery that combines two polar assumptions: (i) that discovering a resource today drives up the cost of future resource discoveries, and (ii) that extracting resources yields knowledge that reduces the cost of discovery. Although the model shows that resource discoveries should be valued at marginal discovery cost in measures of national saving and income, the ultimate size of the resource that can be exploited is the result of the interplay between rising discovery costs and accumulating knowledge. Empirical tests of the model show that the resulting income estimates would be extremely volatile for many extractive economies, owing to the lumpiness of resource discoveries. Two alternative accounting approaches...

Some economists have argued that the process of disintegration of the world economy between the two world wars led to income divergence between the countries. This is in keeping with the view that economic integration leads to income convergence. The paper shows that the view that the period 1919-39 was associated with divergence of incomes among the rich countries is wrong. On the contrary, income convergence continued and even accelerated. Since the mid-19th century, incomes of rich countries tended to converge in peacetime regardless of whether their economies were more or less integrated. This, in turn, implies that it may not be trade and capital and labor flows that matter for income convergence but some other, less easily observable, forces like diffusion of information and technology.

An abundance of natural resources is both an opportunity and a challenge for developing countries. Several resource-rich, low-income countries receive amounts of foreign aid that are similar to or larger than their actual or potential revenues from natural resources. In such countries, the donors may have an opportunity to help a government to use its resource revenues productively and minimize the magnitude of risks created by resource rents. Development of aid instruments tailored for such purposes might be helped by model-based analysis of the effects of foreign aid on resource-rich, low-income economies and its interactions with the flows of natural resource revenues. This paper develops a growth model a la Barro in which the government receives windfalls (from natural resources and foreign aid) and rent-seeking agents contest for public funds. The key conclusion is that making aid countercyclical helps to achieve higher economic growth, and so does conditioning disbursements on enhancement of public capital. Introducing elements of insurance in the design of both aid products financing investments in infrastructure and social services and supporting policy and institutional reforms may help to achieve both of these objectives.

This dissertation analyzes both the economics of the defense contracting process and the impact of total dollar obligations on the economies of U.S. states. Using various econometric techniques, I will estimate relationships across individual contracts, state level output, and income inequality. I will achieve this primarily through the use of a dataset on individual contract obligations. The first essay will catalog the distribution of contracts and isolate aspects of the process that contribute to contract dollar obligations. Accordingly, this study describes several characteristics about individual defense contracts, from 1966-2006: (i) the distribution of contract dollar obligations is extremely rightward skewed, (ii) contracts are unevenly distributed in a geographic sense across the United States, (iii) increased duration of a contract by 10 percent is associated with an increase in costs by 4 percent, (iv) competition does not seem to affect dollar obligations in a substantial way, (v) contract pre-payment financing increases the obligation of contracts from anywhere from 62 to 380 percent over non-financed contracts. The second essay will turn to an aggregate focus, and look the impact of defense spending on state economic output. The analysis in chapter two attempts to estimate the state level fiscal multiplier...

Exact optimal paths are calculated for a closed economy with human made capital, non-renewable resource depletion and exogenous technical progress in production, hyperbolic utility discounting, and (possibly) hyperbolic technical progress. On its optimal path, generally, welfare-equivalent income > wealth equivalent income > Sefton-Weale income > NNP, with possibly dramatic differences among these measures; and sustainable income can be greater, equal or less than NNP. This supports the view that there can be no best, exact definition of income. For low enough discounting, growth is optimal even when technical progress is zero. A particular discount rate makes all income measures and consumption constant and (except NNP) equal; and zero technical progress then gives the Solow (1974) maxim in as a special case. General problems with calculating sustainable income when there is technical progress are discussed, and the optimal path is time-consistent if the discount rate can depend on the economy’s stocks and absolute time.; yes

It has been argued that consumption is a more appropriate measure of household well-being than income or earnings. Using four Household Expenditures Surveys collected by the Australian Bureau of Statistics between 1975 and 1993, we examine trends in consumption inequality among Australian households and compare consumption inequality with income inequality. We find that consumption is much more equal than income. Further, while both income and consumption inequality rose by statistically and economically significant amounts over the period covered by our survey, consumption inequality rose by much less. For example, the Gini coefficient for equivalent gross income inequality rose by 0.043 (17%) while the Gini coefficient for equivalent nondurable consumption rose by 0.019 (9%). We discuss possible interpretations for these differences. Through a series of specification checks we are able to rule out several ways in which the result might be spurious, or an artefact of our methodological choices. One interpretation of the results is that some income inequality in Australia reflects transitory fluctuations which households can smooth, and that some of the growth in income inequality over the study period reflects an increase in these transitory fluctuations.; no

OBJECTIVE: To describe socioeconomic inequalities regarding the use, expenditures and the income committed to the purchase of medicines. METHODS: A cross-sectional population-based study was carried out with 1,720 adults living in the urban area of Florianópolis, Southern Brazil, in 2009. Cluster sampling was adopted and census tracts were the primary sampling units. Use of medicines and the expenditures incurred in their purchase in the past 30 days were investigated through interviews. Use, expenditures and the income committed concerning medicines were analyzed according to per capita family income, self-reported skin color, age and sex, adjusting for the complex sample. RESULTS: The prevalence of medicine use was 76.5% (95%CI: 73.8; 79.3), higher among women and in older individuals. The mean expenditure on medicine was R$ 46.70, with higher values among women, whites, older individuals and among richer people. While 3.1% of the richest committed more than 15% of their income to purchasing medicine, that figure reached 9.6% in the poorest group. The proportion of people that had to buy medicines after an unsuccessful attempt to obtain them in the public health system was higher among the poor (11.0%), women (10.2%) and the elderly (11.1%). A large part of the adults bought medicines contained in the National List of Essential Medicines (19.9%) or in the Municipal List of Essential Medicines (28.6%)...

Many Central and Eastern European countries are adopting flat tax schemes in order to boost their economies and tax revenues. Though there are signs that some countries do manage to improve on both fronts, it is in general hard to distinguish the behavioral response to tax changes from the effect of increased tax enforcement. This paper addresses this gap by estimating the elasticity of taxable income in Hungary, one of the outliers in terms of not having a flat tax scheme. We analyze taxpayer behavior using a medium-scale tax reform episode in 2005, which changed marginal and average tax rates but kept enforcement constant. We employ a Tax and Financial Control Office (APEH) panel dataset between 2004 and 2005 with roughly 215,000 taxpayers. Our results suggest a relatively small but highly significant tax price elasticity of about 0.06 for the population earning above the minimum wage (around 70% of all taxpayers). This number increases to around 0.3 when we focus on the upper 20% of the income distribution, with some income groups exhibiting even higher elasticities (0.45). We first demonstrate that such an elasticity substantially modifies the response of government revenues to the 2004-2005 tax changes, and then quantify the impact of a hypothetical flat income tax scheme. Our calculations indicate that though there is room for a parallel improvement of budget revenues and after-tax income...

The labor income share in national income is a good indicator of the extent to which the working classes are able to reap the fruits of economic growth or, conversely, bear the burden of economic stagnation. This paper aims to reconstruct the labor income share of Argentina, Brazil and Mexico in a three-sector framework, including the rural, the urban formal and the urban informal sectors. We find that in all three countries the share of labor earnings peaked in the middle of the 20th century. Fluctuations in the Brazilian and Mexican labor income shares were large, with a sharp decline in the post-1961 and post-1976 periods, respectively. In Argentina, the labor income shares tended to be more constant at levels around 50 per cent, testifying to a more stable and egalitarian distribution of income.; La cuota del ingreso del trabajo en la renta nacional es un buen indicador sobre el grado en el que las clases trabajadoras han sido capaces de beneficiarse de los frutos del crecimiento económico o, al contrario, sufrir la carga del estancamiento. Este artículo tiene como objetivo reconstruir la cuota del ingreso del trabajo en Argentina, Brasil y México en un contexto de tres sectores, incluyendo el rural, el formal urbano y el informal urbano. Se aprecia que en los tres países la cuota del ingreso del trabajo llega a su máximo hacia mitad del siglo XX. Las fluctuaciones de este ingreso en el caso de Brasil y México fueron muy amplias...

Experience shows that there is often ample room for more effective and efficient use of investment tax incentives in low-income countries. Tax incentives generally rank low in investment climate surveys in low-income countries, and there are many examples in which they are reported to be redundant, that is, investment will have been undertaken even without them. And their fiscal cost can be high, reducing opportunities for much-needed public spending on infrastructure, public services or social support, or requiring higher taxes on other activities. This paper responds to a request of the G20 Development Working Group for an exploration of options for low-income countries’ effective and efficient use of tax incentives for investment. To that end, it develops principles for the design and governance of tax incentives and provides guidance on good practices in these areas. Since much of the pressure to offer incentives stems from an awareness of those offered by other countries, the paper also discusses options for international coordination to address the risk of mutually damaging spillovers from such tax competition. Finally...

When individuals’ utility is a convex combination of their income and their concern at having a low relative income (the weights attached to income and to the concern at having a low relative income sum up to one), the maximization of aggregate utility yields an equal income distribution. This alignment of utilitarianism and egalitarianism is obtained for any number of individuals, and for general utility functions that are convex combinations of a power function of income and the concern at having a low relative income. The alignment can also hold when the weights sum up to a number different than one.

This report examines distributism, which is a lesser known economic philosophy that emphasizes shared worker ownership, community development and subsidiarity. Its history, principles, and applications are discussed in brief. The key component of a distributive society is the family unit. Strong family units lead to strong communities, which are important because distributist principles can only be applied to communities, and success prevails in the strongest ones. Branching off from this, the topic of family income sharing is introduced as a method of assisting and promoting families in society. A wide range of literature has been examined to get a so lid idea of distributism, and relating it back to the more famous economic systems of communism and capitalism. Reallife models where distributism is practiced are also examined - namely Mondragon and Maleny. Mondragon, especially, is an excellent, renowned example of real-life distributism and an ideal reference point on how to set up the framework of a cooperative. Various family-related statistics are used to draw conclusions on current population demographics, fertility rates and the desire to have children. These conclusions have been used to stress on the case for families and why they matter in society. The welfare payments families get from the Government are identified...