Well-Being, Labor Market Institutions and Income Distribution Across Countries

Paper Session

Friday, Jan. 6, 2017 8:00 AM – 10:00 AM

Sheraton Grand Chicago, Michigan AB
Hosted By: Association for Comparative Economic Studies
  • Chair: Josef C. Brada, Arizona State University

Preferences for Redistribution in Transition Countries

John E. Anderson
,
University of Nebraska-Lincoln
Shafiun N. Shimul
,
University of Nebraska-Lincoln

Abstract

In this paper we analyze the attitudes of residents of transition countries with speci…c focus on whether they have a strong taste for income redistribution. We implement emprical strategies to test the implications of the basic theoretical models in the literature regarding preferences for redistribution. Empirical models of survey respondent’s preference for redistribution, willingness to pay for welfare programs, and preferences for inequality as a work incentive are estimated. Particular focus is placed on testing the prospect of upward mobility (POUM) hypothesis which holds that people below the median, expecting their future income to be higher than their current income, have less desire for redistribution. Evidence presented in this paper indicates that POUM generally describes the attitudes of survey respondents in transition countries. Data used in this study are from the European Bank for Reconstruction and Development (EBRD) Life in Transition Survey (LITS II) for the year 2010).

Who Got What, Then and Now? A Fifty Year Overview From the Global Consumption and Income Project

Arjun Jayadev
,
University of Massachusetts-Boston
Rahul Lahoti
,
University of Goettingen
Sanjay Reddy
,
New School

Abstract

Using newly comprehensive data and tools from the Global Consumption and Income Project (GCIP), covering most of the world and five decades, we present a portrait of the changing global distribution of consumption and income and discuss its implications for our understanding of inequality, poverty, inclusivity of growth and development, world economic welfare, and the emergence of a global ‘middle class’. We show how regional distributions of income and consumption have evolved very differently over time. We also undertake sensitivity analysis to quantify the impact of various choices made in database construction and analysis. We find that levels of consumption and income have increased across the distribution, that the global distribution has become more relatively equal due to falling inter-country relative inequality, and that by some measures global poverty has declined greatly but by others it has hardly declined at all, even over the fifty years. The global middle class has grown markedly in certain countries but only slightly worldwide. Most of the marked changes have occurred after 1990. China’s rapid economic growth is by far the most important factor underlying almost all of them, notwithstanding sharply increasing inequalities within the country. Most improvements outside of China are associated with rapid developing country growth after 2000, and are of unknown durability. Country-experiences vary widely; there is for instance some evidence of ‘inequality convergence’ with previously more equal countries becoming less equal over time and the obverse. We provide support for previous findings (e.g. the replacement of the global ‘twin peaks’ by a unimodal distribution) but also arrive at some conclusions that overthrow old ‘stylized facts’ (e.g. that the Sub-Saharan African countries, and not Latin American ones, have the highest levels of inequality in the world, when measured using standardized surveys). The GCIP

Collective Bargaining and Takeover Activity Around the World

Farooq M. Ahmad
,
IESEG School of Management
Thomas Lambert
,
Erasmus University Rotterdam

Abstract

Our results highlight the importance of collective bargaining on the pattern of takeover activity in 46 countries from the early 1990s. We find that the size and dynamics of takeover markets within industries increase in countries with powerful labor unions and high coverage of bargaining coordination. Further analyses show that collective bargaining enhances takeover activity because potential acquirers have greater gain opportunities sourced from the reappropriation of employee rents. In addition, we show that the negative effect of tighter employment legislations on takeovers found in prior works is largely offset by the effect of collective bargaining. Our results provide new insights into the real effects of employment protection in the context of takeovers.

How Does Health Affect Economic Growth? A Comparative Analysis of Countries by Levels of Economic Development

Inas Rashad Kelly
,
City University of New York-Queens College and NBER
Dhaval Dave
,
Bentley University and NBER
Nadia Doytch
,
City University of New York-Brooklyn College and Graduate Center

Abstract

The WHO views obesity as a significant risk to population health. Evidence suggests that obesity reduces labor-market attachment, worker productivity, and earnings. This link at the micro-level may translate into adverse effects on economic growth at the macro-level. Few studies have evaluated how obesity impacts economic growth across and within countries. This sparse evidence base reflects the lack of consistent data across a broad spectrum of countries and timespan, as well as the empirical difficulties in bypassing endogeneity bias relating to unobserved selection and potential reverse causality between bodyweight and GDP. We address both of these challenges by assembling a comprehensive panel of data spanning 126 countries over 30 years, and presenting, to the best of our knowledge, the first empirical study of economic growth and obesity correcting for the endogeneity concerns. We apply GMM methods to first-differenced data to cope with time-invariant country-specific heterogeneity and potential reverse causality. These models control for a large vector of growth inputs, including investment, openness, and institutions. We further assess heterogeneity in the relationship across levels of development. To parse out the link between BMI and adverse health and how this affects growth, we also evaluate the effects of higher cholesterol and glucose levels within a country. Finally, we analyze the extent to which educational attainment is mediating any adverse effects of obesity on growth. Preliminary estimates indicate that obesity has modest direct negative effects on growth. However, we also find that obesity is associated with lower human capital acquisition, and hence the direct and indirect adverse effects on economic growth are sizeable. These estimates vary based on levels of economic development.
Discussant(s)
Maxim Boycko
,
Harvard University
Albert Berry
,
University of Toronto
Andrew Ellul
,
Indiana University
Resul Cesur
,
University of Connecticut
JEL Classifications
  • I3 - Welfare, Well-Being, and Poverty
  • J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining