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1. Income Segregation and Intergenerational Mobility Across Colleges in the United States

Author:
Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, and Danny Yagan
Publication Date:
02-2020
Content Type:
Research Paper
Institution:
Watson Institute for International and Public Affairs at Brown University
Abstract:
We construct publicly available statistics on parents’ incomes and students’ earnings outcomes for each college in the U.S. using de-identified data from tax records. These statistics reveal that the degree of parental income segregation across colleges is very high, similar to that across neighborhoods. Differences in post-college earnings between children from low- and high-income families are much smaller among students who attend the same college than across colleges. Colleges with the best earnings outcomes predominantly enroll students from high-income families, although a few mid-tier public colleges have both low parent income levels and high student earnings. Linking these income data to SAT and ACT scores, we simulate how changes in the allocation of students to colleges affects segregation and intergenerational mobility. Equalizing application, admission, and matriculation rates across parental income groups conditional on test scores would reduce segregation substantially, primarily by increasing the representation of middle-class students at more selective colleges. However, it would have little impact on the fraction of low-income students at elite private colleges because there are relatively few students from low-income families with sufficiently high SAT/ACT scores. Differences in parental income distributions across colleges could be eliminated by giving low and middle-income students a sliding-scale preference in the application and admissions process similar to that implicitly given to legacy students at elite private colleges. Assuming that 80% of observational differences in students’ earnings conditional on test scores, race, and parental income are due to colleges’ causal effects – a strong assumption, but one consistent with prior work – such changes could reduce intergenerational income persistence among college students by about 25%. We conclude that changing how students are allocated to colleges could substantially reduce segregation and increase intergenerational mobility, even without changing colleges’ educational programs
Topic:
Income Inequality, Economic Inequality, Higher Education, and Economic Mobility
Political Geography:
North America and United States of America

2. Capital, Inequality, and Compulsory Savings: Australia’s Superannuation System in the Context of Piketty

Author:
Brody Viney
Publication Date:
05-2020
Content Type:
Journal Article
Journal:
Woodrow Wilson School Journal of Public and International Affairs
Institution:
Woodrow Wilson School of Public and International Affairs, Princeton University
Abstract:
A fundamental aspect of economic inequality, highlighted by Thomas Piketty’s Capital in the Twenty-first Century, is the unequal distribution of capital ownership (wealth). This not only undermines the welfare of individuals with low wealth, but exacerbates the distributional consequences of a declining labor share of income. However, policy responses to wealth inequality remain underdeveloped. This paper considers how policies that increase the private savings of low- and middle-income individuals can complement more traditional taxation and redistribution approaches. As a case study, it explores the distributional effects of Australia’s superannuation system, a private retirement savings scheme that sets a compulsory minimum savings rate for all employees. Superannuation has contributed to a more equal distribution of wealth in Australia, particularly by offsetting declines in other kinds of wealth among those at the low end of the distribution. However, loopholes have also allowed high-income individuals to use the system to save in a low-tax environment. Further work is needed to investigate the effects of compulsory savings rates on those with very low incomes.
Topic:
Labor Issues, Capitalism, Tax Systems, and Economic Inequality
Political Geography:
Australia and Asia-Pacific

3. Gendered laws and women in the workforce

Author:
Marie Hyland, Simeon Djankov, and Pinelopi Koujianou Goldberg
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper provides the first global look at how gender discrimination by the law affects women’s economic opportunity and charts the evolution of legal inequalities over five decades. Using the World Bank’s newly constructed Women, Business and the Law database, it documents large and persistent gender inequalities, especially with regard to pay and treatment of parenthood. The paper finds positive correlations between more equal laws pertaining to women in the workforce and more equal labor market outcomes, such as higher female labor force participation and a smaller wage gap between men and women.
Topic:
Gender Issues, Labor Issues, Women, Inequality, and Economic Inequality
Political Geography:
Global Focus

4. Women scaling the corporate ladder: Progress steady but slow globally

Author:
Soyoung Han and Marcus Noland
Publication Date:
05-2020
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Despite steady progress, women remain grossly underrepresented in corporate leadership worldwide. The share of women executive officers and board members increased between 1997 and 2017, but progress was not uniform. Partly in response to gender quotas, the shares of female board members have risen rapidly in some countries while lagging elsewhere. This Policy Brief reports results derived from the financial records of about 62,000 publicly listed firms in 58 economies over 1997–2017, which together account for more than 92 percent of global GDP. The authors conclude that if, as emerging evidence in the literature indicates, gender diversity contributes to superior firm performance, then progress in this area could help boost productivity globally. Policymakers and corporate leaders should consider supportive public and private policies, including more gender-neutral tracking in education, firm protocols that encourage gender balance in hiring and promotion, enforceable antidiscrimination laws, public support for readily available and affordable high-quality childcare and maternity and paternity leave, and quotas.
Topic:
Gender Issues, Women, Economic Inequality, and Private Sector
Political Geography:
Global Focus

5. Distributional National Accounts (DINA) for Austria, 2004-2016

Author:
Stefan Jestl and Emanuel List
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper constructs distributional national accounts for Austria for the period 2004-2016. We enrich survey data with tabulated tax data and make it fully consistent with national accounts data. The comprehensive dataset allows us to analyse the distribution of macroeconomic growth across the income distribution and to explore the evolution of income inequality in pre-tax income over time. Our results suggest that the distribution of growth has changed over time, which had considerable repercussions on inequality. Inequality started to decline at the very beginning of the economic and financial crisis in 2007, however it has increased again after 2012. We further provide novel insights into the evolution of capital income for top income groups and explore redistribution mechanisms that operated in Austria. Government spending was found to play a key role for redistributive effects across the income distribution. In particular, the transfer system redistributes pre-tax income to a large extent.
Topic:
Migration, Labor Issues, and Economic Inequality
Political Geography:
Europe and Austria

6. Explaining Wellbeing and Inequality in Cameroon: A Regression-Based Decomposition

Publication Date:
01-2020
Content Type:
Research Paper
Institution:
African Economic Research Consortium (AERC)
Abstract:
This study sets out to estimate the determinants of household economic wellbeing and to evaluate the relative contributions of regressed-income sources in explaining measured inequality. In particular, a regression-based decomposition approach informed by the Shapley value, the instrumental variables econometric method, and the 2007 Cameroon household consumption survey, was used. This approach provides a flexible way to accommodate variables in a multivariate context. The results indicate that the household stock of education, age, credit, being bilingual, radio and electricity influence wellbeing positively, while rural, land and dependency had a negative impact on wellbeing. Results also show that rural, credit, bilingualism, education, age, dependency and land, in that order, are the main contributors to measured income inequality, meanwhile, the constant term, media and electricity are inequality reducing. These findings have policy implications for the ongoing drive to scale down both inequality and poverty in Cameroon.
Topic:
Development, Economics, Poverty, Inequality, Economic Inequality, and Economic Policy
Political Geography:
Africa and Cameroon

7. The Universal Basic Income Debate After the Covid-19 Pandemic: Has Its Time Come?

Author:
Ezgi Seçkiner Bingöl
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
Turkish Economic and Social Studies Foundation (TESEV)
Abstract:
Universal basic income, which denotes a country allocating a regular unconditional cash grant to all its citizens, is back on the debate stage following the Covid-19 pandemic. This brief evaluates universal basic income together with the pandemic and focuses on examples of countries where basic income has been implemented. How can the universal basic income debate be grounded in Turkey in line with these examples? How can universal basic income acquire a position within Turkey’s social assistances regime, or can it even be positioned as an alternative to it? Is universal basic income possible in Turkey? This brief aims to discuss these questions.
Topic:
Public Policy, Economic Inequality, Universal Basic Income, COVID-19, and Health Crisis
Political Geography:
Turkey, Middle East, and Mediterranean

8. The Impact of Income Inequality on Household Indebtedness in Euro Area Countries

Author:
Stefan Jestl
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper examines the impact of income inequality on consumption-related household indebtedness at the household level. Using the first wave of the Eurosystem Household Finance and Consumption Survey data, the analysis sheds light on heterogeneous effects across euro area countries. The results suggest a positive impact of income inequality on consumption-related household indebtedness in a small sample of countries. We further employ a multilevel regression model to also take country’s macroeconomic characteristics into account, such as credit market and welfare state design. In this setting, we find an overall positive impact of income inequality on consumption-related household indebtedness.
Topic:
Economics, Inequality, Economic Inequality, and Macroeconomics
Political Geography:
Europe

9. Consumption Inequality in Botswana: The Decomposition of the Gini Coefficient of Consumer Expenditures

Author:
Lillian Mookodi
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Botswana Institute for Development Policy Analysis
Abstract:
This paper applies the Lerman and Yitzhaki (1985) inequality decomposition approach on food and non-food expenditures on the 2009/10 Botswana Core Welfare Indicator Survey; and the 2015/16 Multi Topic Indicator Survey datasets with an objective to see how overall inequality translates into inequality within each expenditure component. To test for a robustness of our results, we apply a simple bootstrap procedure to obtain the means, standard errors and confidence intervals for the component Gini coefficients estimates. The decomposition analysis results show that overall inequality based on the Gini coefficient of consumption expenditure within the groups has increased between the two periods from 0.498 to 0.533. These results suggest that this rise in overall expenditure inequality is due to the increased burden in the household budget of non-food spending, which tends to be more unequal than food spending. The consumption expenditure is very unequal on non-food items like recreation and hotels; health; education and transport. On one hand, lower Gini coefficients are observed for food; and clothing and footwear; these commodities are considered as necessities among others. This paper finally offers some possible policy measures to curb this consumption expenditure inequality.
Topic:
Economics, Developing World, Inequality, and Economic Inequality
Political Geography:
Africa and Botswana

10. The Battle of Ideas in the Question for Wealth and Prosperity in Brazil: Policy Proposals of a Right-Wing Government

Author:
Monica Arruda De Almeida
Publication Date:
05-2019
Content Type:
Special Report
Institution:
Georgetown Journal of International Affairs
Abstract:
Brazil’s income inequality is among the world’s worst. The country’s unemployment rate is currently 13 percent, compared to 4.6 percent in 2012, and the number of Brazilians in poverty or extreme poverty is now close to 30 percent, a far cry from 2014 when that number was less than 10 percent of the population. Brazil has one of the highest tax rates in Latin America—with tax revenue equal to 33 percent of GDP, against the regional average of 20 percent—but it is also notorious for its poor performance with respect to the ease of paying taxes and opening a business: the country ranks 184 and 140, respectively, out of 190 countries in the World Bank’s 2019 Doing Business Report. It is surprising, therefore, that Jair Bolsonaro, a conservative politician from the Social Liberal Party (PSL), was elected to the country’s highest office without meaningfully addressing his administration’s plans to solve the nation’s social injustices and other economic issues. Instead, Bolsonaro campaigned mostly on strengthening public security and fighting corruption, the two areas on which the former army captain built his reputation during his almost thirty years as a congressman. During the campaign, Bolsonaro recruited Paulo Guedes, a Chicago School-trained economist to be his Minister of the Economy. Guedes was tasked with building a “dream team” of experts that would design a plan to further liberalize the economy and turn Brazil into a much friendlier place to conduct business.
Topic:
Corruption, Government, Poverty, Economy, Social Policy, and Economic Inequality
Political Geography:
Brazil and South America