This note argues that, from an economic‐statistical point of view, trading gains, as difference between real gross domestic income and real gross domestic product, may be considered as a statistical artifact; that is, trading gains vanish if a particular deflator for the trade balance is chosen.
{"title":"GDP, GDI, and Trading Gains: An Alternative View","authors":"Bert M. Balk","doi":"10.1111/roiw.12694","DOIUrl":"https://doi.org/10.1111/roiw.12694","url":null,"abstract":"This note argues that, from an economic‐statistical point of view, trading gains, as difference between real gross domestic income and real gross domestic product, may be considered as a statistical artifact; that is, trading gains vanish if a particular deflator for the trade balance is chosen.","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":"141194247","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}
Leonardo Lucchetti, Paul Corral, Andrés Ham, Santiago Garriga
This paper introduces, validates, and applies a Least Absolute Shrinkage and Selection Operator with multiple imputation by Predictive Mean Matching (LASSO‐PMM) method to estimate intra‐generational income dynamics from cross‐sectional data. We validate the method using 36 harmonized panel data sets in four Latin American countries and apply it to cross‐section data from 43 countries across the world. Results show that LASSO‐PMM predictions are statistically indistinguishable from actual household poverty rates, mobility indicators, and income or consumption changes. These findings suggest that estimating economic mobility using a LASSO‐PMM approach may accurately approximate actual income dynamics when panel data are unavailable.
{"title":"An application of LASSO and multiple imputation techniques to income dynamics with cross‐sectional data","authors":"Leonardo Lucchetti, Paul Corral, Andrés Ham, Santiago Garriga","doi":"10.1111/roiw.12693","DOIUrl":"https://doi.org/10.1111/roiw.12693","url":null,"abstract":"This paper introduces, validates, and applies a Least Absolute Shrinkage and Selection Operator with multiple imputation by Predictive Mean Matching (LASSO‐PMM) method to estimate intra‐generational income dynamics from cross‐sectional data. We validate the method using 36 harmonized panel data sets in four Latin American countries and apply it to cross‐section data from 43 countries across the world. Results show that LASSO‐PMM predictions are statistically indistinguishable from actual household poverty rates, mobility indicators, and income or consumption changes. These findings suggest that estimating economic mobility using a LASSO‐PMM approach may accurately approximate actual income dynamics when panel data are unavailable.","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":"141194252","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}
Since the work reported in Vermeulen (Review of Income and Wealth, 64(2), 357–387; 2018), a literature has developed using the simple Pareto distribution along with “rich list” information to improve estimates of the upper tail of the wealth distribution measured in surveys. Because the construction of such external data is typically opaque and subject to error, it may be best not to depend exclusively on this approach. This paper develops an alternative approach, using the generalized Pareto distribution (GPD), extending an estimation strategy developed by Castillo and Hadi (Journal of the American Statistical Association, 92(440), 1609–1620; 1997) in a novel way to survey data. The extension allows for addressing imperfections in the effective coverage of the upper tail of the wealth distribution, as well as allowing the imposition of an external measure of aggregate wealth as a constraint. The paper implements the method on Austrian survey data that has weak coverage of wealthy households. The results indicate that even with a range of plausible adjustments for data imperfections, relying only on the survey data to project the upper tail is insufficient to yield implied wealth aggregates in the range implied by aggregate figures. Imposing the implied aggregate as a constraint is necessary. The approach may be particularly useful in comparing survey‐based inequality measures across and within countries and over time, as well as in constructing distributional financial accounts.
{"title":"CHASING THE TAIL: A GENERALIZED PARETO DISTRIBUTION APPROACH TO ESTIMATING WEALTH INEQUALITY","authors":"Arthur Kennickell","doi":"10.1111/roiw.12696","DOIUrl":"https://doi.org/10.1111/roiw.12696","url":null,"abstract":"Since the work reported in Vermeulen (<jats:italic>Review of Income and Wealth</jats:italic>, 64(2), 357–387; 2018), a literature has developed using the simple Pareto distribution along with “rich list” information to improve estimates of the upper tail of the wealth distribution measured in surveys. Because the construction of such external data is typically opaque and subject to error, it may be best not to depend exclusively on this approach. This paper develops an alternative approach, using the generalized Pareto distribution (GPD), extending an estimation strategy developed by Castillo and Hadi (<jats:italic>Journal of the American Statistical Association</jats:italic>, 92(440), 1609–1620; 1997) in a novel way to survey data. The extension allows for addressing imperfections in the effective coverage of the upper tail of the wealth distribution, as well as allowing the imposition of an external measure of aggregate wealth as a constraint. The paper implements the method on Austrian survey data that has weak coverage of wealthy households. The results indicate that even with a range of plausible adjustments for data imperfections, relying only on the survey data to project the upper tail is insufficient to yield implied wealth aggregates in the range implied by aggregate figures. Imposing the implied aggregate as a constraint is necessary. The approach may be particularly useful in comparing survey‐based inequality measures across and within countries and over time, as well as in constructing distributional financial accounts.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141152985","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}
Many economic analyses require hypothetical but realistic sales and rent prices for properties representative of the housing stock and reflecting current market conditions. To achieve this, we replace subjectively reported prices in a representative household survey in Luxembourg with objectified hedonic imputations informed by observable market data. Thus, we propose a powerful tool for assessing the health and affordability of housing markets, compiling housing‐related statistics and simulating hypothetical scenarios. This approach also enables us to test for the reliability of survey responses. When switching to objectified values, we detect shifts in the wealth distribution, large regional variation in market indicators, and striking affordability concerns: only 18 percent of Luxembourg's renters could theoretically afford to purchase their inhabited dwellings given current market conditions. Further, participants' tendency to mis‐estimate market values strongly correlates with tenure length and type, dwelling type, income, and wealth.
{"title":"OBJECTIVE HOUSING SALES AND RENT PRICES IN REPRESENTATIVE HOUSEHOLD SURVEYS: IMPLICATIONS FOR WEALTH, INEQUALITY, HOUSING MARKET, AND AFFORDABILITY STATISTICS","authors":"M. D. Naidin, S. Waltl, Michael H. Ziegelmeyer","doi":"10.1111/roiw.12692","DOIUrl":"https://doi.org/10.1111/roiw.12692","url":null,"abstract":"Many economic analyses require hypothetical but realistic sales and rent prices for properties representative of the housing stock and reflecting current market conditions. To achieve this, we replace subjectively reported prices in a representative household survey in Luxembourg with objectified hedonic imputations informed by observable market data. Thus, we propose a powerful tool for assessing the health and affordability of housing markets, compiling housing‐related statistics and simulating hypothetical scenarios. This approach also enables us to test for the reliability of survey responses. When switching to objectified values, we detect shifts in the wealth distribution, large regional variation in market indicators, and striking affordability concerns: only 18 percent of Luxembourg's renters could theoretically afford to purchase their inhabited dwellings given current market conditions. Further, participants' tendency to mis‐estimate market values strongly correlates with tenure length and type, dwelling type, income, and wealth.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-05-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140965892","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}
Leo Sveikauskas, Rachel Soloveichik, Corby Garner, Peter B. Meyer, James Bessen, Matthew Russell
Experts in the System of National Accounts (SNA) recently considered whether marketing could be included as a capital asset in the national accounts and later recommended that marketing should be an intangible in the 2025 SNA (IMF, 2022, 2023). This paper prepares macroeconomic measures of the United States marketing stock and develops similar measures within 61 industries. We find that, from 1987 to 2020, marketing capital contributed approximately as much to output growth (0.18 percentage point per year) as R&D (0.15) or software (0.19) did. Software grew more rapidly, but marketing had a larger factor share. Marketing contributes even more to output growth if quality is adjusted to allow for the better targeting associated with digital advertising. There is a close relationship between data flows, software, and digital marketing and national accountants will have to allocate expenditures among these categories.
{"title":"Marketing, Other Intangibles, and Output Growth in 61 United States Industries","authors":"Leo Sveikauskas, Rachel Soloveichik, Corby Garner, Peter B. Meyer, James Bessen, Matthew Russell","doi":"10.1111/roiw.12678","DOIUrl":"https://doi.org/10.1111/roiw.12678","url":null,"abstract":"Experts in the System of National Accounts (SNA) recently considered whether marketing could be included as a capital asset in the national accounts and later recommended that marketing should be an intangible in the 2025 SNA (IMF, 2022, 2023). This paper prepares macroeconomic measures of the United States marketing stock and develops similar measures within 61 industries. We find that, from 1987 to 2020, marketing capital contributed approximately as much to output growth (0.18 percentage point per year) as R&D (0.15) or software (0.19) did. Software grew more rapidly, but marketing had a larger factor share. Marketing contributes even more to output growth if quality is adjusted to allow for the better targeting associated with digital advertising. There is a close relationship between data flows, software, and digital marketing and national accountants will have to allocate expenditures among these categories.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140972073","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}
Lin Tian, Alessandra Guariglia, Nicholas Horsewood
We are the first to investigate how health shocks relate to cash holdings. Using three waves of the China Health and Retirement Longitudinal Study over the period 2013–2018, we document that, for middle‐aged and elderly people living in rural China, the onset of an acute health condition is associated with a 3.0 percentage point higher probability of holding only cash as a safe asset, and a 2.3 percentage point higher proportion of safe assets held in the form of cash. These results are robust to using different samples and estimation methods. We also find that ex‐post reimbursement of medical expenses and lack of bank accessibility may drive the association between health shocks and cash holdings.
{"title":"Cash holdings and health shocks","authors":"Lin Tian, Alessandra Guariglia, Nicholas Horsewood","doi":"10.1111/roiw.12689","DOIUrl":"https://doi.org/10.1111/roiw.12689","url":null,"abstract":"We are the first to investigate how health shocks relate to cash holdings. Using three waves of the China Health and Retirement Longitudinal Study over the period 2013–2018, we document that, for middle‐aged and elderly people living in rural China, the onset of an acute health condition is associated with a 3.0 percentage point higher probability of holding only cash as a safe asset, and a 2.3 percentage point higher proportion of safe assets held in the form of cash. These results are robust to using different samples and estimation methods. We also find that ex‐post reimbursement of medical expenses and lack of bank accessibility may drive the association between health shocks and cash holdings.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141004243","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}
As part of continuing effort to research statistical methods for producing timely and accurate early estimates of national accounts statistics, this paper evaluates the ability of individual nowcasting and forecast combination techniques to reduce revisions in the first or advance estimates of U.S. quarterly personal consumption of services at the most detailed component level. At such a level, designated indicators for advance estimates are those directly relevant to the detailed components. Using the same indicators that were used in routine compilations, we show in a real time setting that nowcasting methods are able to reduce revisions in the advance estimates in over 90 percent of the detailed components, and the upper bound of the reductions reached over 60 percent. We evaluate the performances of all methods by comparing their root mean squared revisions for each component. Our study suggests that nowcasting techniques are potentially a powerful tool to reduce revisions in the early estimates in the national account statistics at the most detailed level.
{"title":"Nowcasting of advance estimates of personal consumption of Services in the U.S. National Economic Accounts: Individual vs forecasting combination approach","authors":"Baoline Chen, Kyle Hood","doi":"10.1111/roiw.12684","DOIUrl":"https://doi.org/10.1111/roiw.12684","url":null,"abstract":"As part of continuing effort to research statistical methods for producing timely and accurate early estimates of national accounts statistics, this paper evaluates the ability of individual nowcasting and forecast combination techniques to reduce revisions in the first or advance estimates of U.S. quarterly personal consumption of services at the most detailed component level. At such a level, designated indicators for advance estimates are those directly relevant to the detailed components. Using the same indicators that were used in routine compilations, we show in a real time setting that nowcasting methods are able to reduce revisions in the advance estimates in over 90 percent of the detailed components, and the upper bound of the reductions reached over 60 percent. We evaluate the performances of all methods by comparing their root mean squared revisions for each component. Our study suggests that nowcasting techniques are potentially a powerful tool to reduce revisions in the early estimates in the national account statistics at the most detailed level.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-04-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140812110","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 reviews advanced‐economy productivity developments in recent decades. We focus primarily on the facts about, and explanations for, the mid‐2000s labor‐productivity slowdown in large European countries and the United States. Slower total factor productivity (TFP) growth was the proximate cause of the slowdown. This conclusion is robust to measurement challenges including the role of intangible assets, rankings of productivity levels, and data revisions. We contrast two main narratives for the stagnating TFP frontier: The shock of the Global Financial Crisis; and a common slowdown in TFP trends. Distinguishing these two empirically is hard, but the pre‐recession timing of the U.S. slowdown suggests an important role for the common‐trend explanation. We also discuss the unusual pattern of labor productivity growth since the start of the Covid‐19 pandemic. Although it is early, there is little evidence so far that the large pandemic shock has changed the slow pre‐pandemic trajectory of labor‐productivity growth.
{"title":"The Productivity Slowdown in Advanced Economies: Common Shocks or Common Trends?","authors":"John Fernald, Robert Inklaar, Dimitrije Ruzic","doi":"10.1111/roiw.12690","DOIUrl":"https://doi.org/10.1111/roiw.12690","url":null,"abstract":"This paper reviews advanced‐economy productivity developments in recent decades. We focus primarily on the facts about, and explanations for, the mid‐2000s labor‐productivity slowdown in large European countries and the United States. Slower total factor productivity (TFP) growth was the proximate cause of the slowdown. This conclusion is robust to measurement challenges including the role of intangible assets, rankings of productivity levels, and data revisions. We contrast two main narratives for the stagnating TFP frontier: The shock of the Global Financial Crisis; and a common slowdown in TFP trends. Distinguishing these two empirically is hard, but the pre‐recession timing of the U.S. slowdown suggests an important role for the common‐trend explanation. We also discuss the unusual pattern of labor productivity growth since the start of the Covid‐19 pandemic. Although it is early, there is little evidence so far that the large pandemic shock has changed the slow pre‐pandemic trajectory of labor‐productivity growth.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-04-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140804737","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}
David Loschiavo, Federico Tullio, Antonietta di Salvatore
We provide an analysis of the financial fragilities of Italian households in the 2000–2020 period, using data from the Survey on Household Income and Wealth. We comment on the recent trends of financial ill‐being, using different poverty measures, and we provide a descriptive analysis of the fragile households' characteristics. Then, we model persistence in the dynamics of the poverty statuses using different specifications of the dynamic random‐effects probit model to account for observed and latent individual heterogeneity and endogeneity of the initial conditions. A strong state dependence is found in all the considered poverty statuses, with financial and liquidity poverty being the most persistent.
{"title":"Measuring Households' Financial Fragilities: An analysis at the intersection of income, financial wealth, and debt†","authors":"David Loschiavo, Federico Tullio, Antonietta di Salvatore","doi":"10.1111/roiw.12691","DOIUrl":"https://doi.org/10.1111/roiw.12691","url":null,"abstract":"We provide an analysis of the financial fragilities of Italian households in the 2000–2020 period, using data from the Survey on Household Income and Wealth. We comment on the recent trends of financial ill‐being, using different poverty measures, and we provide a descriptive analysis of the fragile households' characteristics. Then, we model persistence in the dynamics of the poverty statuses using different specifications of the dynamic random‐effects probit model to account for observed and latent individual heterogeneity and endogeneity of the initial conditions. A strong state dependence is found in all the considered poverty statuses, with financial and liquidity poverty being the most persistent.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-04-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140609055","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}
J. Bracco, Matías Ciaschi, Leonardo Gasparini, M. Marchionni, Guido Neidhöfer
The shock of the COVID‐19 pandemic affected the human capital formation of children and youths. As a consequence of this disruption, the pandemic is likely to imply permanent lower levels of human capital. This paper provides new evidence on the impact of COVID‐19 and school closures on education in Latin America by exploiting harmonized microdata from a large set of national household surveys carried out in 2020, during the pandemic. In addition, the paper uses microsimulations to assess the potential effect of changes in human capital due to the COVID‐19 crisis on future income distributions. The findings show that the pandemic is likely to have significant long‐run consequences in terms of incomes and poverty if strong compensatory measures are not taken soon.
{"title":"The Impact of COVID‐19 on Education in Latin America: Long‐Run Implications for Poverty and Inequality","authors":"J. Bracco, Matías Ciaschi, Leonardo Gasparini, M. Marchionni, Guido Neidhöfer","doi":"10.1111/roiw.12687","DOIUrl":"https://doi.org/10.1111/roiw.12687","url":null,"abstract":"The shock of the COVID‐19 pandemic affected the human capital formation of children and youths. As a consequence of this disruption, the pandemic is likely to imply permanent lower levels of human capital. This paper provides new evidence on the impact of COVID‐19 and school closures on education in Latin America by exploiting harmonized microdata from a large set of national household surveys carried out in 2020, during the pandemic. In addition, the paper uses microsimulations to assess the potential effect of changes in human capital due to the COVID‐19 crisis on future income distributions. The findings show that the pandemic is likely to have significant long‐run consequences in terms of incomes and poverty if strong compensatory measures are not taken soon.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2024-03-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140377848","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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