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Begin New Search Political Geography United States Author Lant Pritchett

1. Estimating Income / Expenditure Differences across Populations: New Fun with Old Engel's Law

Author:
Lant Pritchett and Marla Spivack
Publication Date:
08-2013
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
How much larger are the consumption possibilities of an urban US household with per capita expenditures of 1,000 US dollars per month than a rural Indonesian household with per capita expenditures of 1,000,000 Indonesian Rupiah per month? Consumers in different markets face widely different consumption possibilities and prices and hence the conversion of incomes or expenditures to truly comparable units of purchasing power is extremely difficult. We propose a simple supplement to existing purchasing power adjusted currency conversions.
Topic:
Development, Economics, Political Economy, Political Theory, Social Stratification, and Socialism/Marxism
Political Geography:
United States and Southeast Asia

2. Income Per Natural: Measuring Development for People rather than Places - Working Paper 143

Author:
Michael Clemens and Lant Pritchett
Publication Date:
03-2008
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
It is easy to learn the average income of a resident of El Salvador or Albania. But there is no systematic source of information on the average income of a Salvadoran or Albanian. We create a first estimate a new statistic: income per natural—the mean annual income of persons born in a given country, regardless of where that person now resides. If income per capita has any interpretation as a welfare measure, exclusive focus on the nationally resident population can lead to substantial errors of the income of the natural population for countries where emigration is an important path to greater welfare. The estimates differ substantially from traditional measures of GDP or GNI per resident, and not just for a handful of tiny countries. Almost 43 million people live in a group of countries whose income per natural collectively is 50% higher than GDP per resident. For 1.1 billion people the difference exceeds 10%. We also show that poverty estimates are very different for national residents and naturals; for example, 26 percent of Haitian naturals who are not poor by the two-dollar-a-day standard live in the United States. These estimates are simply descriptive statistics and do not depend on any assumptions about how much of observed income differences across naturals is selection and how much is a pure location effect. Our conservative, if rough, estimate is that three quarters of this difference represents the effect of international migration on income per natural. This means that departing one's country of birth is today one of the most important sources of poverty reduction for a large portion of the developing world. If economic development is defined as rising human well being, then a residence-neutral measure of well-being emphasizes that crossing international borders is not an alternative to economic development, it is economic development.
Topic:
Demographics, Development, Economics, Migration, Poverty, and Population
Political Geography:
United States and Albania

3. The Place Premium: Wage Differences for Identical Workers across the U.S. Border - Working Paper 148

Author:
Michael Clemens, Lant Pritchett, and Claudio E. Montenegro
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
We compare the wages of workers inside the United States to the wages of observably identical workers outside the United States—controlling for country of birth, country of education, years of education, work experience, sex, and rural-urban residence. This is made possible by new and uniquely rich microdata on the wages of over two million individual formal-sector wage-earners in 43 countries. We then use five independent methods to correct these estimates for unobserved differences between the productivity of migrants and non-migrants, as well as for the wage effects of natural barriers to international movement in the absence of policy barriers. We also introduce a selection model to estimate how migrants' wage gains depend on their position in the distribution of unobserved wage determinants both at the origin and at the destination, as well as the relationship between these positions. For example, in the median wage gap country, a typical Bolivian-born, Bolivian-educated, prime-age urban male formal-sector wage worker with moderate schooling makes 4 times as much in the US as in Bolivia. Following all adjustments for selectivity and compensating differentials we estimate that the wages of a Bolivian worker of equal intrinsic productivity, willing to move, would be higher by a factor of 2.7 solely by working in the United States. While this is the median, this ratio is as high as 8.4 (for Nigeria). We document that (1) for many countries, the wage gaps caused by barriers to movement across international borders are among the largest known forms of wage discrimination; (2) these gaps represent one of the largest remaining price distortions in any global market; and (3) these gaps imply that imply allowing labor mobility can reduce a given household's poverty to a much greater degree than most known in situ antipoverty interventions.
Topic:
Development, Economics, and Industrial Policy
Political Geography:
United States, Nigeria, and Bolivia