Peter B. Meyer, Joe Piacentini, Harley Frazis, Michael Schultz, Leo Sveikauskas
This paper reviews the economic literature on how the COVID‐19 pandemic and responses to it affected income inequality throughout the world. Inequality had been rising long before the pandemic. The COVID shock affected employment, income, and education differently for various occupations and population groups. The pandemic initially disrupted lower‐paid, service‐sector employment, particularly affecting women and lower‐income groups. Government policies in response to the pandemic mitigated income losses. School and day‐care closures disrupted the work of parents, especially mothers. These effects have generally ended. Lasting changes in work patterns, consumer demand, and production will tend to benefit higher‐income groups and to erode opportunities for some less advantaged workers, increasing income inequality over the long run. Opportunities for remote work, especially for highly paid workers, have increased permanently. School disruptions have particularly affected lower‐income students, which will tend to increase inequality among future workers.
{"title":"The Effect of the Covid‐19 Pandemic on Inequality","authors":"Peter B. Meyer, Joe Piacentini, Harley Frazis, Michael Schultz, Leo Sveikauskas","doi":"10.1111/roiw.12707","DOIUrl":"https://doi.org/10.1111/roiw.12707","url":null,"abstract":"This paper reviews the economic literature on how the COVID‐19 pandemic and responses to it affected income inequality throughout the world. Inequality had been rising long before the pandemic. The COVID shock affected employment, income, and education differently for various occupations and population groups. The pandemic initially disrupted lower‐paid, service‐sector employment, particularly affecting women and lower‐income groups. Government policies in response to the pandemic mitigated income losses. School and day‐care closures disrupted the work of parents, especially mothers. These effects have generally ended. Lasting changes in work patterns, consumer demand, and production will tend to benefit higher‐income groups and to erode opportunities for some less advantaged workers, increasing income inequality over the long run. Opportunities for remote work, especially for highly paid workers, have increased permanently. School disruptions have particularly affected lower‐income students, which will tend to increase inequality among future workers.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142212977","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Luís Clemente‐Casinhas, Alexandra Ferreira‐Lopes, Luís Filipe Martins
We assess the predictors of intergenerational mobility in income and education for a sample of 137 countries, between 1960 and 2018, using the World Bank's Global Database on Intergenerational Mobility (GDIM). The Rigorous LASSO and the Random Forest and Gradient Boosting algorithms are considered, to avoid the consequences of an ad‐hoc model selection in our high dimensionality context. We obtain variable importance plots and analyze the relationships between mobility and its predictors through Shapley values. Results show that intergenerational income mobility is expected to be positively predicted by the parental average education, the share of married individuals and negatively predicted by the share of children that have completed less than primary education, the growth rate of population density, and inequality. Mobility in education is expected to have a positive relationship with the adult literacy, government expenditures on primary education, and the stock of migrants. The unemployment and poverty rates matter for income mobility, although the direction of their relationship is not clear. The same occurs for education mobility and the growth rate of real GDP per capita, the degree of urbanization, the share of female population, and income mobility. Income mobility is found to be greater for the 1960s cohort. Countries belonging to the Latin America and Caribbean region present lower mobility in income and education. We find a positive relationship between predicted income mobility and observed mobility in education.
{"title":"Using machine learning to unveil the predictors of intergenerational mobility","authors":"Luís Clemente‐Casinhas, Alexandra Ferreira‐Lopes, Luís Filipe Martins","doi":"10.1111/roiw.12710","DOIUrl":"https://doi.org/10.1111/roiw.12710","url":null,"abstract":"We assess the predictors of intergenerational mobility in income and education for a sample of 137 countries, between 1960 and 2018, using the World Bank's Global Database on Intergenerational Mobility (GDIM). The Rigorous LASSO and the Random Forest and Gradient Boosting algorithms are considered, to avoid the consequences of an <jats:italic>ad‐hoc</jats:italic> model selection in our high dimensionality context. We obtain variable importance plots and analyze the relationships between mobility and its predictors through Shapley values. Results show that intergenerational income mobility is expected to be positively predicted by the parental average education, the share of married individuals and negatively predicted by the share of children that have completed less than primary education, the growth rate of population density, and inequality. Mobility in education is expected to have a positive relationship with the adult literacy, government expenditures on primary education, and the stock of migrants. The unemployment and poverty rates matter for income mobility, although the direction of their relationship is not clear. The same occurs for education mobility and the growth rate of real GDP <jats:italic>per capita</jats:italic>, the degree of urbanization, the share of female population, and income mobility. Income mobility is found to be greater for the 1960s cohort. Countries belonging to the Latin America and Caribbean region present lower mobility in income and education. We find a positive relationship between predicted income mobility and observed mobility in education.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142212978","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper addresses the lack of data and limited statistical capacity in the Middle East and North Africa, particularly amid Lebanon's economic collapse. We apply a novel data augmentation technique to analyze poverty when traditional income data are limited or unavailable. By adapting existing methods, we recover continuous income distributions from interval data and derive dominance conditions for such data, accounting for non‐response. The proposed approach enables robustness checks by estimating the bounds of admissible cumulative distribution functions. Our empirical analysis uses Lebanese data to perform first‐order dominance tests on these bounds, highlighting the importance of the approach. We demonstrate how alternative data sources can be leveraged for essential poverty analysis.
{"title":"Monitoring Poverty in a Data‐Deprived Environment: The Case of Lebanon","authors":"Paul Makdissi, Walid Marrouch, Myra Yazbeck","doi":"10.1111/roiw.12708","DOIUrl":"https://doi.org/10.1111/roiw.12708","url":null,"abstract":"This paper addresses the lack of data and limited statistical capacity in the Middle East and North Africa, particularly amid Lebanon's economic collapse. We apply a novel data augmentation technique to analyze poverty when traditional income data are limited or unavailable. By adapting existing methods, we recover continuous income distributions from interval data and derive dominance conditions for such data, accounting for non‐response. The proposed approach enables robustness checks by estimating the bounds of admissible cumulative distribution functions. Our empirical analysis uses Lebanese data to perform first‐order dominance tests on these bounds, highlighting the importance of the approach. We demonstrate how alternative data sources can be leveraged for essential poverty analysis.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-07-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141744533","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Relying on low frequency econometric methods, a new simple procedure to assess international income convergence is introduced. It implements the long‐run forecasting definition and discards short‐ and medium‐term information contents of the data as these may produce misleading evidence. Robustness to non‐stationarities is achieved using first differences of (logged) per capita incomes. Application to a selected sample of 90 different countries provides mixed but generally more positive evidence than most previous studies. Nevertheless, it casts many doubts on the inevitability of income convergence, at least in practically relevant time frames and as a worldwide phenomenon.
{"title":"Assessing Income Convergence with a Long‐run Forecasting Approach: Some New Results","authors":"Artur Silva Lopes","doi":"10.1111/roiw.12702","DOIUrl":"https://doi.org/10.1111/roiw.12702","url":null,"abstract":"Relying on low frequency econometric methods, a new simple procedure to assess international income convergence is introduced. It implements the long‐run forecasting definition and discards short‐ and medium‐term information contents of the data as these may produce misleading evidence. Robustness to non‐stationarities is achieved using first differences of (logged) per capita incomes. Application to a selected sample of 90 different countries provides mixed but generally more positive evidence than most previous studies. Nevertheless, it casts many doubts on the inevitability of income convergence, at least in practically relevant time frames and as a worldwide phenomenon.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-07-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141611839","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the factors that shape earnings inequality, using administrative matched employer‐employee data from the Italian Social Security Institute (INPS), between 1990 and 2021. It reveals that inequality in annual earnings rose steadily over time according to various measures, such as the Gini index, the interquartile ranges, and the variance. When exploring the mechanisms behind such an increase, it shows that the rise in inequality is driven by the quantity of work, which varied heterogeneously across workers, as atypical contracts (e.g., part‐time and fixed‐term) became widespread in the economy. We compare these measures based on the annual compensation of workers with those based on full‐time equivalent weekly wages, which display a much less dispersed evolution over time, except during the double‐dip recession in 2008–2012. Finally, we document a large persistence, increasing over time, in disadvantaged positions both in the short‐ and in the long‐run.
{"title":"The increase in earnings inequality in Italy: The role and persistence of atypical contracts","authors":"Domenico Depalo, Salvatore Lattanzio","doi":"10.1111/roiw.12709","DOIUrl":"https://doi.org/10.1111/roiw.12709","url":null,"abstract":"This paper investigates the factors that shape earnings inequality, using administrative matched employer‐employee data from the Italian Social Security Institute (INPS), between 1990 and 2021. It reveals that inequality in annual earnings rose steadily over time according to various measures, such as the Gini index, the interquartile ranges, and the variance. When exploring the mechanisms behind such an increase, it shows that the rise in inequality is driven by the quantity of work, which varied heterogeneously across workers, as atypical contracts (e.g., part‐time and fixed‐term) became widespread in the economy. We compare these measures based on the annual compensation of workers with those based on full‐time equivalent weekly wages, which display a much less dispersed evolution over time, except during the double‐dip recession in 2008–2012. Finally, we document a large persistence, increasing over time, in disadvantaged positions both in the short‐ and in the long‐run.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-07-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141575170","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Investment in intangible assets as a share of business sector GDP has increased rapidly across advanced market economies during the past several decades, and this explosion in intangible capital has been matched by a huge increase in related research on how rising intangible intensity has affected economic activity, the structure of the economy, and financial markets. These developments provide the backdrop for this survey essay—a summary of a keynote address delivered at the ESCoE‐IARIW conference on intangible assets held in London in 2021—written from the perspective of someone involved in intangibles research since the early 2000s. The essay selectively reviews work by researchers inside and outside National Statistical Offices (mostly on the measurement side) to highlight how far the measurement community has come since the early 2000s and to offer a perspective on key measurement research questions for the future to highlight the road ahead.
{"title":"INTANGIBLES: HOW FAR WE HAVE COME AND THE ROAD AHEAD","authors":"Daniel E. Sichel","doi":"10.1111/roiw.12706","DOIUrl":"https://doi.org/10.1111/roiw.12706","url":null,"abstract":"Investment in intangible assets as a share of business sector GDP has increased rapidly across advanced market economies during the past several decades, and this explosion in intangible capital has been matched by a huge increase in related research on how rising intangible intensity has affected economic activity, the structure of the economy, and financial markets. These developments provide the backdrop for this survey essay—a summary of a keynote address delivered at the ESCoE‐IARIW conference on intangible assets held in London in 2021—written from the perspective of someone involved in intangibles research since the early 2000s. The essay selectively reviews work by researchers inside and outside National Statistical Offices (mostly on the measurement side) to highlight how far the measurement community has come since the early 2000s and to offer a perspective on key measurement research questions for the future to highlight the road ahead.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141575177","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper constructs and compares consumer price indexes (CPI) using weighting methods that differentially incorporate inflation disparities across households. Plutocratic CPIs, commonly used by statistical agencies, weight households based on their total expenditure, while democratic CPIs equally weight households to better represent average consumer experiences. I estimate democratic versions of the Bureau of Labor Statistics' CPI and Chained CPI (C‐CPI) for all urban consumers using the Lowe and Törnqvist formulas, respectively. From December 2002 to June 2021, the democratic CPI‐U exceeds its plutocratic counterpart by approximately 0.08 percentage points per year, on average, while the democratic C‐CPI‐U surpasses the plutocratic by 0.19 percentage points per year. The results indicate a negative correlation between inflation and household expenditure level over the study period. I also find weight frequency to be more important than index formula for explaining why larger differences occur for the C‐CPI‐U.
{"title":"Democratic Aggregation: Issues and Implications for Consumer Price Indexes","authors":"Robert S. Martin","doi":"10.1111/roiw.12703","DOIUrl":"https://doi.org/10.1111/roiw.12703","url":null,"abstract":"This paper constructs and compares consumer price indexes (CPI) using weighting methods that differentially incorporate inflation disparities across households. Plutocratic CPIs, commonly used by statistical agencies, weight households based on their total expenditure, while democratic CPIs equally weight households to better represent average consumer experiences. I estimate democratic versions of the Bureau of Labor Statistics' CPI and Chained CPI (C‐CPI) for all urban consumers using the Lowe and Törnqvist formulas, respectively. From December 2002 to June 2021, the democratic CPI‐U exceeds its plutocratic counterpart by approximately 0.08 percentage points per year, on average, while the democratic C‐CPI‐U surpasses the plutocratic by 0.19 percentage points per year. The results indicate a negative correlation between inflation and household expenditure level over the study period. I also find weight frequency to be more important than index formula for explaining why larger differences occur for the C‐CPI‐U.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141551080","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Recent work on wealth inequality using the capitalization method wherein aggregate wealth totals are distributed proportionately to property income like dividends motivates concern about whether rates of return on assets vary across the income or wealth distribution. Here I use accrued capital gains and imputed rent on homes estimated from the Survey of Consumer Finances to address this issue. Both capital gains and imputed rent form part of total income. I find strong econometric evidence that returns vary directly with wealth level and are considerably higher for very wealthy compared to poorer households. However, I do not find evidence that higher income households receive higher returns once controlling for overall market house price trends. Returns are also strongly related to overall market house price movements, suggesting that timing the market is a key determinant. However, paradoxically, adding housing returns to baseline household wealth reduces overall wealth inequality.
{"title":"Heterogenous Rates of Return on Homes: Do The Rich Do Better?","authors":"Edward N. Wolff","doi":"10.1111/roiw.12704","DOIUrl":"https://doi.org/10.1111/roiw.12704","url":null,"abstract":"Recent work on wealth inequality using the capitalization method wherein aggregate wealth totals are distributed proportionately to property income like dividends motivates concern about whether rates of return on assets vary across the income or wealth distribution. Here I use accrued capital gains and imputed rent on homes estimated from the Survey of Consumer Finances to address this issue. Both capital gains and imputed rent form part of total income. I find strong econometric evidence that returns vary directly with wealth level and are considerably higher for very wealthy compared to poorer households. However, I do not find evidence that higher income households receive higher returns once controlling for overall market house price trends. Returns are also strongly related to overall market house price movements, suggesting that timing the market is a key determinant. However, paradoxically, adding housing returns to baseline household wealth reduces overall wealth inequality.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-07-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141522456","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper I use household survey and administrative tax microdata to describe earnings inequality in South Africa over the period 1993–2020. I find that earnings inequality is very high but has been stable, or even declined by some measures, and earnings increases have been largest at the bottom of the earnings distribution. Previous findings of increasing earnings or wage inequality in South Africa from 2010 onwards come from one set of household surveys. I show that the publicly available data from these surveys include poor‐quality earnings imputations and that non‐public data without these imputations provide more sensible trends in earnings and earnings inequality. Comparisons between tax and survey data also show that earnings inequality in the tax data is generally higher than in the more comparable households survey and that earnings in the surveys is under‐captured far down the formal sector earnings distribution.
{"title":"Earnings and Earnings Inequality in South Africa: Evidence from Household Survey and Administrative Tax Microdata from 1993 to 2020","authors":"Andrew Kerr","doi":"10.1111/roiw.12695","DOIUrl":"https://doi.org/10.1111/roiw.12695","url":null,"abstract":"In this paper I use household survey and administrative tax microdata to describe earnings inequality in South Africa over the period 1993–2020. I find that earnings inequality is very high but has been stable, or even declined by some measures, and earnings increases have been largest at the bottom of the earnings distribution. Previous findings of increasing earnings or wage inequality in South Africa from 2010 onwards come from one set of household surveys. I show that the publicly available data from these surveys include poor‐quality earnings imputations and that non‐public data without these imputations provide more sensible trends in earnings and earnings inequality. Comparisons between tax and survey data also show that earnings inequality in the tax data is generally higher than in the more comparable households survey and that earnings in the surveys is under‐captured far down the formal sector earnings distribution.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-05-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194394","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper embeds a structural model of private wealth accumulation over the life cycle within a dynamic microsimulation model designed for long‐run projections of pensions. In such an environment, the optimal savings path results from consumption smoothing and bequests motives, on top of the mortality risk. Preferences are estimated based on a longitudinal wealth survey through a method of simulated moments. Simulations issued from these estimations replicate quite well a private wealth that is more concentrated than labor income. They enable us to compute “augmented” standards of living including capital income, hence to quantify both the countervailing role played by private wealth to earnings dropout after retirement and the impact of the mortality risk in this regard.
{"title":"Private Wealth Over the Life Cycle: A Meeting Between Microsimulation and Structural Approaches","authors":"Lino Galiana, Lionel Wilner","doi":"10.1111/roiw.12697","DOIUrl":"https://doi.org/10.1111/roiw.12697","url":null,"abstract":"This paper embeds a structural model of private wealth accumulation over the life cycle within a dynamic microsimulation model designed for long‐run projections of pensions. In such an environment, the optimal savings path results from consumption smoothing and bequests motives, on top of the mortality risk. Preferences are estimated based on a longitudinal wealth survey through a method of simulated moments. Simulations issued from these estimations replicate quite well a private wealth that is more concentrated than labor income. They enable us to compute “augmented” standards of living including capital income, hence to quantify both the countervailing role played by private wealth to earnings dropout after retirement and the impact of the mortality risk in this regard.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-05-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194103","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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