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":"51 1","pages":""},"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":"69 1","pages":""},"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":"55 1","pages":""},"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}
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":"52 1","pages":""},"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":"29 1","pages":""},"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":"56 1","pages":""},"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}
Understanding of the value and economic contribution of intangible assets is hampered by measurement challenges, which stem from the characteristics of intangibles and weaknesses in survey design. We characterize these challenges with four “F words”—forgotten, fuzzy, framing, and frequency. We establish these characteristics theoretically, with reference to the survey design literature. We then provide a summary of a range of official business surveys that capture data on intangible assets in the UK. Using these sources, we test the (in)consistency and quality of data on intangibles collected through business surveys in the UK, using a range of data sources and microdata linkage. We draw on this research to propose modifications to surveys on intangible investment that might yield superior data in future.
{"title":"The “F Words”: Why Surveying Businesses About Intangibles is so Hard","authors":"Josh Martin","doi":"10.1111/roiw.12666","DOIUrl":"https://doi.org/10.1111/roiw.12666","url":null,"abstract":"Understanding of the value and economic contribution of intangible assets is hampered by measurement challenges, which stem from the characteristics of intangibles and weaknesses in survey design. We characterize these challenges with four “F words”—forgotten, fuzzy, framing, and frequency. We establish these characteristics theoretically, with reference to the survey design literature. We then provide a summary of a range of official business surveys that capture data on intangible assets in the UK. Using these sources, we test the (in)consistency and quality of data on intangibles collected through business surveys in the UK, using a range of data sources and microdata linkage. We draw on this research to propose modifications to surveys on intangible investment that might yield superior data in future.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":"42 1","pages":""},"PeriodicalIF":2.0,"publicationDate":"2024-03-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140199740","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}
We study the intergenerational transmission of welfare benefit receipt in Germany. We first describe the correlation between welfare receipt experienced in the parental household and subsequent own welfare receipt of young adults. In a second step, we investigate whether the observed correlations reflect causal effects of past welfare experience. We use family fixed effects estimations and Gottschalk's (1996) approach and take advantage of the long‐running German Socio‐Economic Panel Survey to contribute to a sparse literature. We find strong positive correlations between parental and own welfare receipt. These patterns do, however, not persist after controlling for unobserved heterogeneities. Therefore, our results suggest that the strong intergenerational correlation of welfare benefit receipt is determined by family background rather than by the experience of parental welfare benefit receipt.
{"title":"Intergenerational Transmission of Welfare Benefit Receipt: Evidence from Germany","authors":"Regina T. Riphahn, Jennifer Feichtmayer","doi":"10.1111/roiw.12680","DOIUrl":"https://doi.org/10.1111/roiw.12680","url":null,"abstract":"We study the intergenerational transmission of welfare benefit receipt in Germany. We first describe the correlation between welfare receipt experienced in the parental household and subsequent own welfare receipt of young adults. In a second step, we investigate whether the observed correlations reflect causal effects of past welfare experience. We use family fixed effects estimations and Gottschalk's (1996) approach and take advantage of the long‐running German Socio‐Economic Panel Survey to contribute to a sparse literature. We find strong positive correlations between parental and own welfare receipt. These patterns do, however, not persist after controlling for unobserved heterogeneities. Therefore, our results suggest that the strong intergenerational correlation of welfare benefit receipt is determined by family background rather than by the experience of parental welfare benefit receipt.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":"133 1","pages":""},"PeriodicalIF":2.0,"publicationDate":"2024-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140199541","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}
The Foster‐Greer‐Thorbecke class of indices and the TIP curve have become classical tools to measure poverty. In this paper we adapt these indices and curve to the income mobility literature and measure downward income mobility considering its three dimensions of incidence, intensity, and inequality. This strategy allows us to incorporate reference dependence, loss aversion and diminishing sensitivity, features emphasized as welfare determinants in Prospect Theory. We propose the use of a class of measures and a Three I's of Downward Mobility curve as a useful graphical device in the income growth framework. Based on this curve we can evaluate the degree of regressivity (or progressivity) of income losses. We provide an empirical illustration for Spain in two recent recession periods. Results show that even if for most households the pandemic shock was not as severe as the Great Recession, some sociodemographic groups had a more similar downward mobility experience in both crises.
福斯特-格里尔-特贝克指数和 TIP 曲线已成为衡量贫困的经典工具。在本文中，我们将这些指数和曲线与收入流动性文献相结合，并从发生率、强度和不平等三个维度来衡量收入向下流动性。通过这一策略，我们可以将参考依赖、损失厌恶和敏感性递减这些前景理论中强调的福利决定因素纳入其中。我们建议在收入增长框架中使用一类衡量标准和三 I 向下流动曲线作为有用的图表工具。根据这条曲线，我们可以评估收入损失的倒退（或进步）程度。我们提供了西班牙最近两次经济衰退时期的经验说明。结果显示，即使对大多数家庭来说，大流行病的冲击不如大衰退严重，但在两次危机中，一些社会人口群体的向下流动经历更为相似。
{"title":"The three I's of downward income mobility: A directional subgroup decomposable measure","authors":"Elena Bárcena‐Martín, Olga Cantó","doi":"10.1111/roiw.12686","DOIUrl":"https://doi.org/10.1111/roiw.12686","url":null,"abstract":"The Foster‐Greer‐Thorbecke class of indices and the TIP curve have become classical tools to measure poverty. In this paper we adapt these indices and curve to the income mobility literature and measure downward income mobility considering its three dimensions of incidence, intensity, and inequality. This strategy allows us to incorporate reference dependence, loss aversion and diminishing sensitivity, features emphasized as welfare determinants in Prospect Theory. We propose the use of a class of measures and a Three I's of Downward Mobility curve as a useful graphical device in the income growth framework. Based on this curve we can evaluate the degree of regressivity (or progressivity) of income losses. We provide an empirical illustration for Spain in two recent recession periods. Results show that even if for most households the pandemic shock was not as severe as the Great Recession, some sociodemographic groups had a more similar downward mobility experience in both crises.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":"23 1","pages":""},"PeriodicalIF":2.0,"publicationDate":"2024-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140153521","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}
Nicola Amendola, Giulia Mancini, Silvia Redaelli, Giovanni Vecchi
We investigate the effect that seemingly minor features of the implementation of cost-of-living adjustments have on the distribution of household expenditures, by developing an analytical framework that is consistent with standard consumer theory, and mindful of data limitations faced by practitioners. The main result is at odds with common sense: even when multiple price indices are available (e.g., a food Consumer Price Index and a non-food one), it turns out that using a single price index (e.g., the total Consumer Price Index), to adjust the consumption aggregate is recommended. The practice of adjusting subcomponents of consumption separately (food with a food index and nonfood with a nonfood index) can lead to a systematic bias in the welfare measure, and consequently in poverty and inequality measures. Using Iran's 2019 Household Expenditures and Income Survey, we find that the bias manifests as a systematic underestimation of urban poverty and overestimation of rural poverty.
{"title":"Deflation by Expenditure Components: A Harmless Adjustment?","authors":"Nicola Amendola, Giulia Mancini, Silvia Redaelli, Giovanni Vecchi","doi":"10.1111/roiw.12685","DOIUrl":"https://doi.org/10.1111/roiw.12685","url":null,"abstract":"We investigate the effect that seemingly minor features of the implementation of cost-of-living adjustments have on the distribution of household expenditures, by developing an analytical framework that is consistent with standard consumer theory, and mindful of data limitations faced by practitioners. The main result is at odds with common sense: even when multiple price indices are available (e.g., a food Consumer Price Index and a non-food one), it turns out that using a single price index (e.g., the total Consumer Price Index), to adjust the consumption aggregate is recommended. The practice of adjusting subcomponents of consumption separately (food with a food index and nonfood with a nonfood index) can lead to a systematic bias in the welfare measure, and consequently in poverty and inequality measures. Using Iran's 2019 Household Expenditures and Income Survey, we find that the bias manifests as a systematic underestimation of urban poverty and overestimation of rural poverty.","PeriodicalId":47853,"journal":{"name":"Review of Income and Wealth","volume":"42 1","pages":""},"PeriodicalIF":2.0,"publicationDate":"2024-03-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140105174","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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