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11. The Decline of Employment Protection and the Rise of Precarious Work

Author:
Anne Marie Brady
Publication Date:
09-2019
Content Type:
Special Report
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
By 1989, the employment landscape in the United States and Europe had changed significantly from the immediate post-Second World War decades. Between 1960 and 1973, the unemployment rate as a percentage of the total labor force averaged two percent or below in Western Europe’s big economies and 4.8 percent in the United States, but between 1990 and 1995, the average unemployment rate in the United States was 6.4 percent and between 7 and 10.7 percent in Germany, France, and the United Kindgom.1
Topic:
International Political Economy, Employment, and Income Inequality
Political Geography:
Global Focus

12. Living with the Neighbors: The Effect of Venezuelan Forced Migration on Wages in Colombia

Author:
Leonardo Peñaloza Pacheco
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
The aim of this paper is to estimate the causal effect of the migration of Venezuelans to Colombia on the Colombian real wage, since 2016. In the second semester of 2016, the borders between Colombia and Venezuela were reopened after a year of being closed due to a political crisis between the two countries; this re-opening is exploited as an identification strategy. Using data from the Unidad Administrativa Especial de Migraci´on Colombia and the Registro Administrativo de Migrantes Venezolanos in Colombia, it is estimated that the migratory flow of Venezuelans to Colombia increased the Economically Active Population of the border areas of La Guajira and Norte de Santander by approximately 10% and 15%, since its reopening. Differences-in-differences methodology and Synthetic Control Method are implemented and the results show that the increase in labor supply in these regions that resulted from the migratory flow generated a decline in real hourly wages of approximately 6%-9% on average. This decrease in real wages appears to be greater for men as compared to women. There is also evidence of a greater drop in real wages among people with lower levels of qualification and in conditions of informal employment.
Topic:
Economics, Migration, Political Economy, Labor Issues, Employment, and Income Inequality
Political Geography:
Colombia, Latin America, and Venezuela

13. Intra-Household Inequality and Child Welfare in Argentina

Author:
Miriam Berges, Federico Perali, Martina Menon, and Lucía Echeverria
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
Are two parents and single parents allocating household resources to children in the same way? Which factors affect intra-household inequality? Do mothers re-distribute more income to children as they are more empowered? We focus on child welfare in the context of two parent and single parent families, which is relevant for policy recommendation. We model households behavior in a collective framework, which allows us to understand the rule governing the allocation process between adults and children. Using consumption data from Argentina from three consecutive expenditures surveys (1996, 2004 and 2012) we analyze intra-household behavior over three different socio-economic contexts. We estimate a collective quadratic demand system following a structural approach to identify the fraction of total household expenditure that is devoted to children and adults, exploiting the observability of assignable goods. We provide the first evidence of intra-household inequality and individual poverty levels for Argentina. Our results indicate that family structure matters in the intra-household distribution. We find a positive gender bias in expenditure when children are females for both types of families, and we document that children fare better when mothers have a higher bargaining power in the allocation process, measured by their employment status. Further, we find several features of intra-household behavior which are persistent in time.
Topic:
Economics, Political Economy, Children, Income Inequality, Child Poverty, and Family
Political Geography:
Argentina and Latin America

14. The Forgotten Americans: An Economic Agenda for a Divided Nation, Isabel Sawhill

Author:
Mark Joseph Stelzner
Publication Date:
07-2019
Content Type:
Journal Article
Journal:
Political Science Quarterly
Institution:
Academy of Political Science
Abstract:
Income inequality in the United States has been increasing rapidly over the last 40 years. This, paired with weak economic growth, means that many Americans have been left behind. In her book, Forgotten Americans: An Economic Agenda for a Divided Nation, Isabel Sawhill proposes a “radical centrist” response of promoting social responsibility, increased vocational and private sector training, and social insurance reform. While inequality is an important issue that needs an immediate response, Sawhill misdiagnoses both the economic and political roots of inequality and proposes a narrow solution that ironically is not radical but parallels much of the policy that created current inequality and Trumpism.
Topic:
Income Inequality, Economy, Book Review, and Donald Trump
Political Geography:
North America and United States of America

15. Financial Market Integration and Income Inequality

Author:
Jae Wook Jung and Kyunghun Kim
Publication Date:
07-2018
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Benefits of financial market integration include cheaper and alternative op-tions of saving and borrowing for households and entrepreneurs. In the global financial market, asset choices for households widen so that individu-als can manage their idiosyncratic income risk more effectively. On the other hand, financial market integration makes investors who hold foreign assets more vulnerable to global financial shocks. In the recent financial crisis, finan-cial market distress which initially arose in the U.S. had an enormous impact on the peripheral countries. This example shows that the strong shock prop-agation occurs via integrated financial markets. The existing literature shows that financial market integration has a sizable impact not only on business cycles in the short run, but also on economic growth in the long run. However, there has been little attention to income distribution, specifically in related to the financial market integration. In this paper, we fill the void in the literature by focusing on the following two styl-ized facts: income inequality has been exacerbated in most countries over the past two decades, and the financial market has been integrated across coun-tries during the same period. In particular, we answer three research questions to investigate the relationship between the two facts. First, how does financial market integration affect income inequality? Second, how do financial market integration and financial market development interact to change income ine-quality? Third, what components do theoretical model need to explain the interaction effect of financial market development and integration on income inequality? We test hypotheses that the effect of financial market openness on inequality is conditional on the level of domestic financial market development when the financial market opens. An empirical study with panel data comprised of 174 countries for the period 1995-2017 finds that the overall effect of finan-cial integration on income inequality is nonlinear. Financial market integration creates the intensive and extensive margins of credit supply which may de-pend on the development level of financial market disproportionally. This paper uncovers a novel empirical evidence that financial market integration and financial market development interact to change income inequality. When other things are controlled, the effect of financial market integration on in-come inequality depends on financial market development. In a country with underdeveloped financial market, income inequality gets worse as financial market opens. On the other hand, when financial market is highly developed, the effect of financial market openness on income inequality is mostly insig-nificant in a statistical sense. The results are still valid with different measures of financial market development, integration, and income inequality. We check that the results are robust as an endogeneity issue among financial market development and integration is controlled. We also suggest some important structures for the conventional economic model to account for our empirical finding as theoretical implications. Based on these implications, extensions of the conventional small open economy model with financial constraints having suggested components such as het-erogeneous holdings of foreign assets across income and asset levels and entrepreneurial shocks will be necessary to understand an interaction of fi-nancial market openness and domestic market development on the distribu-tion of income in a country. Our finding also echoes that studying an eco-nomic mechanism in which economic growth, financial market outcomes, and inequality are endogenously determined.
Topic:
Development, Income Inequality, Financial Markets, Economic growth, and Integration
Political Geography:
Global Focus

16. Using wage boards to raise pay

Author:
Arindrajit Dube
Publication Date:
12-2018
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
During the past 40 years, the United States has experienced a sharp and sustained rise in wage and income inequality. The high level of inequality in the United States reflects both a disconnect between (1) average wages and productivity, and (2) top and bottom wages.
Topic:
Economics, Labor Issues, Income Inequality, Labor Policies, Wage Subsidies, Economic Policy, and Economic Theory
Political Geography:
United States

17. Infrastructure, Gender and Violence: Women and Slum Sanitation Inequalities in Delhi

Author:
Susan Esme Chaplin and Reetika Kalita
Publication Date:
10-2017
Content Type:
Special Report
Institution:
Centre for Policy Research, India
Abstract:
In Delhi, as in many other Indian cities, millions of men, women and children who live in slums and informal settlements haveto daily confront the lack of adequate sanitation facilities. These sanitation inequalities have a greater impact on the health and socioeconomic status of women and girls because of their greater social vulnerability to sexual violence; there is also the role played by biology in their need for privacy, safety and cleanliness. Men and boys, on the other hand, tend to use public urinals and open defecation (OD) sites generally more frequently, because their need for privacy during these sanitation activities is not such a cause for concern. In addition, women and girls are forced every day to risk using precarious spaces for their sanitation activities that may expose them to gender-based violence and harassment and not satisfy their biological and socio-cultural needs. These urban sanitation inequalities also negatively impact the time women have available for paid employment as well as their daily domestic responsibilities, as they have to spend each morning queuing for toilets or getting up earlier to go with other women to OD sites. For adolescent girls this can often mean being late for school, which threatens their education and future life choices. India failed to meet Millennium Development Goal No. 7 (adopted by the United Nations in 2000) relating to halving the proportion of people without access to basic sanitation. In terms of toilet usage across India, the Census 2011 found that 81 percent of urban households had a private toilet or latrine. But when it came to slum households, only 66 percent had a toilet, meaning that 34 percent had to either use a community or public toilet or resort to OD (Ministry of Housing and Urban Poverty Alleviation & National Buildings Organisations 2013, p. 60). In reality, there are an estimated 41 million urban dwellers still practising OD because of a lack of access to improved sanitation (WaterAid 2016). OD is a compulsion, not a choice, and creates particular risks and imposes a variety of harms upon women and children that men and boys do not suffer. Who or what is responsible for such socioeconomic consequences of the lack of adequate sanitation infrastructure in Indian cities which perpetuate gender inequalities? How do harms like gender-based violence impact the everyday lives of women and girls living in slums in particular? This project report examines these issues using the notion of infrastructural violence and then examines the harms and suffering caused by a lack of sanitation infrastructure in two long-established localities in Delhi: Mangolpuri and Kusumpur Pahari. Mangolpuri is a resettlement colony in the northwest region of Delhi with an estimated population of more than 350,000. It is interspersed with eight JJCs clusters of varying sizes. Kusumpur Pahari is located in the heart of south Delhi, near Jawaharlal Nehru University, and now has five blocks of JJCs and an estimated population of nearly 50,000.
Topic:
Development, Gender Issues, Health, Children, Women, Income Inequality, and Sanitation
Political Geography:
South Asia, India, and Asia

18. The Impact of the Tax System and Social Expenditure on the Distribution of Income and Poverty in Latin America

Author:
Nora Lustig
Publication Date:
03-2017
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper presents results on the impact of fiscal policy on inequality and poverty in sixteen Latin American countries around 2010. The countries that redistribute the most are Argentina, Brazil, Costa Rica and Uruguay, and the least, Guatemala, Honduras and Peru. At higher social spending, greater redistribution is achieved, but countries with a similar level of social spending show different levels of redistribution which suggests that other factors such as the composition and targeting of the expenditures are involved in determining the redistributive effect beyond its size. Fiscal policy reduces extreme poverty in twelve countries. However, the incidence of poverty after taxes, subsidies and monetary transfers is higher than the pre-fisc poverty rate in Bolivia, Guatemala, Honduras, and Nicaragua, even when fiscal policy does reduce inequality. Expenditure on pre-school and primary education is equalizing and pro-poor in all countries. Spending on secondary education is equalizing in all countries and also pro-poor in some countries but not all. Expenditure on tertiary education is never pro-poor, but it is equalizing, with the exception of Guatemala, where it is regressive and unequalizing and in Venezuela, where its redistributive effect is zero. Health spending is always equalizing but it is pro-poor only in Argentina, Brazil, Chile, Costa Rica, Ecuador, the Dominican Republic, Uruguay and Venezuela.
Topic:
Civil Society, Poverty, Capitalism, and Income Inequality
Political Geography:
Latin America

19. The Impact of Taxes and Social Spending on Inequality and Poverty in El Salvador

Author:
Nora Lustig, Margarita Beneke, and José Andrés Oliva
Publication Date:
01-2017
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
We conducted a fiscal impact study to estimate the effect of taxes, social spending, and subsidies on inequality and poverty in El Salvador, using the methodology of the Commitment to Equity project. Taxes are progressive, but given their volume, their impact is limited. Direct transfers are concentrated on poor households, but their budget is small so their effect is limited; a significant portion of the subsidies goes to households in the upper income deciles, so although their budget is greater, their impact is low. The component that has the greatest effect on inequality is spending on education and health. Therefore, the impact of fiscal policy is limited and low when compared with other countries with a similar level of per capita income. There is room for improvement using current resources.
Topic:
International Trade and Finance, Poverty, and Income Inequality
Political Geography:
El Salvador

20. Women in Pakistan's Urban Informal Economy

Author:
Ammar A. Malik, Hadia Majid, Husnain Fateh, and Iromi Perera
Publication Date:
01-2016
Content Type:
Research Paper
Institution:
Urban Institute
Abstract:
In rapidly urbanizing developing countries, the prevalence large-scale informality within urban economies increases social vulnerabilities, stifles worker productivity and dampens regional economic growth. With the prospect of better jobs attracting millions into cities each year, rising urban poverty levels are encouraging international nonprofits to allocate greater resources toward urban programs. Our fieldwork in Pakistan reveals that above all else, urban informal workers require improvements in public service delivery, skillset development and collective bargaining capacity. We propose implementing future urban programs through an iterative learning, adaptation and implementation approach allowing nonprofits to leverage greater impact from finite resources.
Topic:
Gender Issues, Labor Issues, Women, Income Inequality, International Development, Economic growth, Family, and Cities
Political Geography:
Pakistan and South Asia