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Author: Rushde Elahi Akbar Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
In this dissertation I analyze the effect of globalization on income inequality and aggregate productivity growth. In the first two chapters I develop a theoretical model to study the effect of international trade and foreign direct investments (FDI) on income inequality. In the model firms with heterogeneous productivity levels hire homogenous workers. The central feature of the model is the rent-sharing mechanism, by which firms share part of their profits with employees. As a result, income varies across workers because more productive firms pay more to their workers. In the first chapter, I focus on the case when all countries are symmetric in their aggregate productivity levels. I find that increased openness to trade increases welfare and at the same time reduces income inequality. At the same time, policies that facilitate FDI, although increase welfare, also lead to greater inequality. I also find that technological progress can result in higher inequality. In the second chapter I extend the model to asymmetric countries, in which one country (North) has greater aggregate productivity than the other country (South). As the two countries liberalize trade, both countries would observe a reduction in inequality, although the reduction is greater in the North and the income inequality differential between the two countries decreases. A unilateral tariff reduction by the South has a similar effect, but North is better off setting lower tariff as it observes lowest inequality compare to other cases. The third chapter analyzes aggregate productivity growth in Chilean manufacturing industry during 1979-96. I first decompose the aggregate growth into three major components: the inter-industry effect, whereby aggregate productivity increases due to expansion of the most productive industries; the intra-industry effect, whereby aggregate productivity increase due to expansion of the most productive firms within an industry; the technological effect, which reflects a symmetric increase in aggregate productivity across all firms and industries. I then estimate the contribution of each of these channels to Chilean aggregate productivity growth and find that technological progress was the major factor of the rapid aggregate productivity growth in Chile, while the contribution of inter-industry and intra-industry effects was minimal.
Author: Rushde Elahi Akbar Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
In this dissertation I analyze the effect of globalization on income inequality and aggregate productivity growth. In the first two chapters I develop a theoretical model to study the effect of international trade and foreign direct investments (FDI) on income inequality. In the model firms with heterogeneous productivity levels hire homogenous workers. The central feature of the model is the rent-sharing mechanism, by which firms share part of their profits with employees. As a result, income varies across workers because more productive firms pay more to their workers. In the first chapter, I focus on the case when all countries are symmetric in their aggregate productivity levels. I find that increased openness to trade increases welfare and at the same time reduces income inequality. At the same time, policies that facilitate FDI, although increase welfare, also lead to greater inequality. I also find that technological progress can result in higher inequality. In the second chapter I extend the model to asymmetric countries, in which one country (North) has greater aggregate productivity than the other country (South). As the two countries liberalize trade, both countries would observe a reduction in inequality, although the reduction is greater in the North and the income inequality differential between the two countries decreases. A unilateral tariff reduction by the South has a similar effect, but North is better off setting lower tariff as it observes lowest inequality compare to other cases. The third chapter analyzes aggregate productivity growth in Chilean manufacturing industry during 1979-96. I first decompose the aggregate growth into three major components: the inter-industry effect, whereby aggregate productivity increases due to expansion of the most productive industries; the intra-industry effect, whereby aggregate productivity increase due to expansion of the most productive firms within an industry; the technological effect, which reflects a symmetric increase in aggregate productivity across all firms and industries. I then estimate the contribution of each of these channels to Chilean aggregate productivity growth and find that technological progress was the major factor of the rapid aggregate productivity growth in Chile, while the contribution of inter-industry and intra-industry effects was minimal.
Author: Iqtiaruddin Md Mamun Publisher: ISBN: Category : Languages : en Pages : 220
Book Description
The central theme of this thesis is capital accumulation. The thesis reports that increase in economic growth rate and reduction in income inequality boosts capital accumulation that in turn reduces unemployment. Three essays constitute the thesis. The first essay investigates whether saving has been driven by growth or gowth has been driven by saving using data of Asian Miracle Economies (AME) - India, Indonesia, Singapore, South Korea, and Taiwan - over the period 1870-2011.The second essay explores the effect of income inequality on capital accumulation using the data of 20 OECD countries - Canada, USA, Japan, Australia, New Zealand, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherland, Norway, Portugal, Spain, Sweden, and UK - over the period 1870-2011. The effect of capital accumulation on unemployment in 21 OECD countries - Canada, USA, Japan, Australia, New Zealand, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherland, Norway, Portugal, Spain, Sweden, Switzerland and UK - has been explored in the third essay. Following the neoclassical revival some economists attribute the amazing productivity growth rate in Asian Miracle Economies (AME) to capital accumulation while assign the backseat to the technological progress - the so called Krugman-Young hypothesis in which saving and schooling are independent of growth. However such assumption is questionable as from the perspective of growth accounting using Cobb-Douglas production function, theories of saving and the scenario that in AMEs prior to WWII living standard was close to subsistence level thus leaving less opportunity of saving and only after WWII with the increase in living standard financial saving and education increase it may be shown that saving and education are not exogenous and independent of growth. The first essay addresses this endogeneity and applying a two-way identification strategy and unique data covering the period 1870-2011 for the AMEs finds that financial saving as well as education comes from productivity growth, financial saving has no significant effect on growth but growth is positively related to the change in educational attainment. These results are robust to choice of instrument set, productivity measurement, the choice of growth model, measurement of saving, inclusion of covariates, and to the choice of estimation period. The essay contributes to the literature explaining that productivity growth drives fixed and human capital accumulation as in the growth controversy it has never been asked and the factor accumulation hypothesis never explains from where the savings come and very little work, if any, has investigated whether growth influences education. The findings of the existing empirical literature suggest that the effect of income inequality on savings is either positive or insignificant. The reason for such findings of the existing empirical literature may be that in estimating the coefficient of income inequality on savings the positive feed-back effect from savings to income inequality has not been dealt with adequately. The second essay takes this endogeneity arising from positive feed-back effect of savings to income inequality in to consideration and applies a two-way identification strategy and unique data covering the period 1870-2011 for 20 OECD countries andfinds that income inequality affects savings negatively. The finding is robust to variation in estimation periods, different measures of saving and inequality and the inclusion of important confounding variables such as financial development, growth and education. Following the seminal work of Layard, Nickell, and Jackman (2005) that propounds no linkage between capital accumulation and unemployment based on the assumption of elasticity of substitution between capital and labour equals unity the role of capital accumulation has been deemphasized for long in explaining unemployment. And the emphasis was on labour market deregulation for reducing unemployment as labour market rigidities arising from trade union power; labour taxes, generous welfare benefits, strict employment protection, and other institutional factors were considered to be the main determinants of unemployment. The third essay using the data for the largest number of countries over the longest period of time - 21 OECD countries over the period 1870-2011- with wage push and aggregate demand factors being taken in to account finds that capital accumulation is important in reducing OECD unemployment.
Author: Melanie Seama O'Gorman Publisher: ISBN: 9780494394755 Category : Languages : en Pages : 408
Book Description
This thesis consists of three essays which focus on accounting for the sources of economic inequality in various contexts. The first two essays focus on disparity of agricultural labour productivity across the developing countries, while the third analyzes racial earnings inequality. The main goal of these essays is to shed light on some of the mechanisms which have generated these types of inequality, in order to better design policies for ameliorating them. The first essay is empirical, while the second and third essays construct general equilibrium models so as to quantitatively assess the importance of proposed sources of inequality. The first essay finds that a large proportion of the variation of the level and growth of agricultural labour productivity across a sample of developing countries can be explained by variation in input use across countries. I demonstrate that our understanding of disparity of labour productivity in developing country agriculture can be significantly improved by accounting for variation in the adoption of high-yielding seed varieties and for correlation between input use and technological change across countries. The second essay analyzes the factors which have contributed to agricultural stagnation in Sub-Saharan Africa, despite productivity improvements in agriculture in other developing regions. I construct a quantitative model which can match average Sub-Saharan African trends of agricultural labour productivity, crop yields and input use from 1965 to 2000. The model points to key factors which have constrained agricultural productivity growth over this period, and to the need for diverse yet concerted policies to arrest this stagnation. The third essay presents a quantitative model which sheds light on racial earnings inequality in the U.S., South Africa and Brazil. This model indicates that a large proportion of the racial wage gap in these three countries can be attributed to differential human capital accumulation by race. Most notably, distortions created by the explicit, racially-biased education system which existed in South Africa during Apartheid can explain roughly three quarters of the racial wage gap in South Africa in the early 1990's.
Author: Sakari Heikkinen Publisher: Amsterdam University Press ISBN: Category : Business & Economics Languages : en Pages : 396
Book Description
The quest for economic growth has been one of the great global issues since the Second World War. Indeed, economic growth has also been one of the great themes of the discipline of economic history. The processes and causes of "modern economic growth," using the title of Simon Kuznets' famous book, have puzzled economic historians for at least the last half a century--and they still do, as this collection of essays shows. Over the past 50 years, historical national accounting has become a major tool of economic historians for analyzing the process of economic growth overall. The construction and application of historical national accounts has been one of the most dynamic branches of economic history. This volume contains a series of articles by members of the international network that has, in the past quarter of a century, continued and elaborated upon the research program that emerged as a result of the ground breaking research by Clark. Kuznets, Solow, and Swan. In the 1980s the network became rather well organized--for example, as a result of the stimulating influence of Angus Maddison and his colleagues at Groningen University--which resulted in series of workshops and conferences, as well as sessions at several international economic history congresses (Milan, 1994; Madrid, 1998; Buenos Aires, 2002). The aim of this volume is to evaluate the current state of the field, present new findings and analytical tools, and to reevaluate the research agenda of the network.
Author: Ms.Era Dabla-Norris Publisher: International Monetary Fund ISBN: 1513547437 Category : Business & Economics Languages : en Pages : 39
Book Description
This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.
Author: Philipp Grübener Publisher: ISBN: Category : Equality Languages : en Pages : 191
Book Description
This thesis contains four independent essays in heterogeneous agent macroeconomics. They explore the sources of income inequality and income risk and study the optimal design of public redistribution and insurance. The first chapter, joint with Filip Rozsypal, studies the origins of idiosyncratic earnings risk in frictional labor markets, with a particular focus on the role of firms for worker earnings risk. First, using administrative matched employer-employee data from Denmark, we document key properties of the worker earnings growth distribution, the firm revenue growth distribution, and their joint distribution. The worker earnings and firm revenue growth distributions exhibit strong deviations from normality, in particular excess kurtosis, with many workers and firms experiencing very small changes to their earnings/revenues, but a significant minority experiencing very large changes. Large earnings losses are more likely for workers in firms with negative revenue growth, driven both by separations to unemployment and earnings losses on the job. Second, we develop a model framework consistent with the data, with four key features: i) frictional labor markets and on the job search to capture unemployment risk and wage growth through a job ladder, ii) multi-worker firms to capture gross and net worker flows, iii) risk averse workers such that earnings risk matters, and iv) contracting with two-sided limited commitment because earnings of job stayers are changing infrequently in the data. Third, we use the model to explore policies designed to mitigate earnings fluctuations. The second chapter, joint with Annika Bacher and Lukas Nord, studies one particular private insurance margin against individual income risk only available to couples, which is the so called added worker effect. Specifically, we study how this intra-household insurance against individual job loss through increased spousal labor market participation varies over the life cycle. We show in U.S. data that the added worker effect is much stronger for young than for old households. A stochastic life cycle model of two-member households with job search in a frictional labor market is capable of replicating this finding. The model suggests that a lower added worker effect for the old is driven primarily by better insurance through asset holdings. Human capital differences between employed young and old contribute to the difference but are quantitatively less important, while differences in job arrival rates play a limited role. In the third chapter, joint with Axelle Ferriere, Gaston Navarro, and Oliko Vardishvili, we study optimal redistribution, taking into account not just the large income and wealth inequality in the data, but also the distribution of income risk that is key in the first two chapters. The U.S. fiscal system redistributes through a rich set of taxes and transfers, the latter accounting for a large part of the income of the poor. Motivated by this, we study the optimal joint design of transfers and income taxes. Within a simple heterogeneous-household framework, we derive analytical results on the optimal relationship between transfers and tax progressivity. Higher transfers are associated with lower optimal income tax progressivity. Redistribution is achieved with generous transfers while efficiency is preserved via a lower progressivity of income taxes. As such, the optimal tax-and-transfer system features larger progressivity of average than of marginal tax rates. We then quantify the optimal tax-and-transfer system in a rich incomplete-market model with realistic distributions of income, wealth, and income risk. The model features a novel flexible functional form for progressive income taxes and means-tested transfers. Relative to the current U.S. fiscal system, the optimal policy consists of more generous means-tested transfers, which phase-out at a slower rate. These larger transfers are financed with higher tax rates, but the taxes are not more progressive than the current system. The fourth chapter, joint with Axelle Ferriere and Dominik Sachs, also studies optimal redistribution, but instead of considering a stationary environment it analyzes the dynamics of the equity-efficiency trade-off along the growth path. To do so, we incorporate the optimal income taxation problem into a state-of-the-art multi-sector structural change general equilibrium model with non-homothetic preferences. We identify two key opposing forces. First, long-run productivity growth allows households to shift their consumption expenditures away from necessities. This implies a reduction in the dispersion of marginal utilities, and therefore calls for a welfare state that declines along the growth path. Yet, economic growth is also systematically associated with an increase in the skill premium, which raises inequality and the desire to redistribute. We quantitatively analyze these opposing forces for two countries: the U.S. from 1950 to 2010, and China from 1989 to 2009. Optimal redistribution decreases at early stages of development, as the role of non-homotheticities prevails. At later stages of development the rising income inequality dominates and the welfare state should become more generous.
Author: Rushde Elahi Akbar
Author: Rushde Elahi Akbar
Author: Iqtiaruddin Md Mamun
Author: Robert James Gordon
Author: Melanie Seama O'Gorman
Author: Delphin Kamanda Espoir
Author: Sakari Heikkinen
Author: David Gallusser
Author: Ms.Era Dabla-Norris
Author: Liang Shao
Author: Philipp Grübener