Billari, F. C. and H.-P. Kohler. "Patterns of Lowest-Low Fertility in Europe." MPIDR Working Paper WP-2002-040 (August 2002). Abstract: In this paper we conduct descriptive aggregate analyses to revisit the relation between low and lowest-low period fertility on the one, and cohort fertility and key fertility-related behaviors---such as leaving the parental home, marriage and female labor force participation---on the other side. First, we identify a systematic pattern of lowest-low fertility that is characterized by a rapid delay of childbearing, a low progression probability after the first child (but not particularly low levels of first-birth childbearing), and a ``falling behind´´ in cohort fertility at relatively late ages. Second, our analyses show that the cross-country correlations in Europe between the total fertility level on the one side, and the total first marriage rate, the proportion of extramarital births and the female labor force participation rate on the other side have reversed during the period from 1975 to 1999. At the end of the 1990s there is also no longer evidence that divorce levels are negatively associated with fertility levels. Based on these analyses we conclude that the emergence of lowest-low fertility during the 1990s has been accompanied by a disruption or even a reversal of many well-known patterns that have been used to explain cross-country differences in fertility patterns. http://www.demogr.mpg.de/?http://www.demogr.mpg.de/Publications/working.htm
Liddle, B. "Demographic dynamics and sustainability: insights from an integrated, multi-country simulation model." MPIDR Working Paper WP-2002-039 (August 2002). Abstract: We develop a simulation model to assess sustainable development on three levels: economic (by determining production, consumption, investment, direct foreign investment, technology transfer, and international trade), social (by calculating population change, migration flows, and welfare), and environmental (by computing the difference between pollution and remediation). The model follows “representative” countries that differ in their initial endowments (i.e., natural resource endowment, physical and human capital, technology, and population), and thus in their development levels and prospects. In a world with movement of goods, people, and capital, free substitution in production, flexible economic structures, and the ability to upgrade input factors via investment, we find that, rather than the physical capacity of the earth being responsible for unsustainable paths, the initial disparities in circumstances among countries and the complex of internal and international human interrelationships can lead to a “social non sustainability” or continued divergence of outcomes. In our model history matters (the exogenous history implied by different starting conditions as well as the endogenous history that evolves over the simulations) in the ultimate prospects of countries and how they respond to institutions (e.g., free trade). Many of the most important country-specific starting points relate to population: human capital and population size, structure, and rates of change. http://www.demogr.mpg.de/?http://www.demogr.mpg.de/Publications/working.htm
Solis, P. and F. C. Billari. "Structural change and occupational attainment in Monterrey, Mexico." MPIDR Working Paper WP-2002-038 (August 2002). Abstract: Latin American societies have experienced profound economic transformations in recent years. Yet, little is known about the effects of these transformations on occupational attainment and mobility. We study these effects in Monterrey, the third largest city of Mexico. We analyze two stages of men’s process of occupational attainment: the entry into the labor force and subsequent job shifts. Despite short-term negative effects in the 1980s, Monterrey’s labor market upgrading has continued, facilitating upward mobility. However, class of origin remains an important determinant of attainment, labor-market segmentation imposes barriers to mobility, and wages in non-manual occupations have decreased, thus imposing particular characteristics to occupational attainment. http://www.demogr.mpg.de/?http://www.demogr.mpg.de/Publications/working.htm
S. K. Bhaumik and J. B. Nugent. "Does economic uncertainty have an impact on decisions to bear children? Evidence from Eastern Germany." MPIDR Working Paper WP-2002-037 (August 2002). Abstract: Economic agents routinely face various types of economic uncertainty. Seldom have these various forms of uncertainty manifested themselves more sharply than in the transition economies of Central and Eastern Europe. In East Germany, the transition was especially rapid and sharp since East Germany virtually over night made the transition from the Eastern European system to the market economy of Western Germany. Uncertainties increased and many institutional and behavioral adjustments took place in a concentrated period of time. Among the latter was a sharp fall in fertility rates, leading to a growing literature on the explanation for this decline. This paper focuses directly on the link between uncertainty and childbearing decisions and examines the link at the micro level. It develops a stylized overlapping generations model showing that the relationship between economic uncertainty and childbearing decisions is not necessarily monotonic, and hence that the aforementioned inverse relationship is merely a testable hypothesis. It then uses GSOEP data for 1992 and 1996 to estimate the nature of this relationship, and concludes that while this relationship was indeed negative for East German women during these two years, the nature of uncertainty affecting their childbearing decisions differed across the years. http://www.demogr.mpg.de/?http://www.demogr.mpg.de/Publications/working.htm
Andreev, E. M., V. M. Shkolnikov and A. Z. Begun. "Algorithm for decomposition of differences between aggregate demographic measures and its application to life expectancies, Gini coefficients, health expectancies, parity-progression ratios and total fertility rates." MPIDR Working Paper WP-2002-035 (August 2002). Abstract: A general algorithm for the decomposition of differences between two values of an aggregate demographic measure in respect to age and other dimensions is proposed. It assumes that the aggregate measure is computed from similar matrices of discrete demographic data for two populations under comparison. The algorithm estimates the effects of replacement for each elementary cell of one matrix by respective cell of another matrix. Application of the algorithm easily leads to the known formula for the age-decomposition of differences between two life expectancies. It also allows to develop new formulae for differences between Gini coefficients (measures of inter-individual variability in age at death) and differences between health expectancies. In the latter case, each age-component is split further into effects of mortality and effects of health. The application of the algorithm enables a numerical decomposition of the differences between total fertility rates and between parity progression ratios by age of the mother and parity. Empirical examples are based on mortality data from the USA, the UK, West Germany, and Poland and on fertility data from Russia. http://www.demogr.mpg.de/?http://www.demogr.mpg.de/Publications/working.htm
Stephens, Melvin, Jr. "'3rd of tha Month': Do Social Security Recipients Smooth Consumption Between Checks?" NBER Working Paper No. w9135 (August 2002). Abstract: This paper examines the response of consumption expenditures to the monthly receipt of Social Security checks. Since the amount and arrival date of these checks are known to the recipients, the basic Life-Cycle/Permanent Income Hypothesis (LCPIH) predicts that consumption should not respond to the receipt of these checks. Using daily diary data from the Consumer Expenditure Survey, this paper finds evidence that both the dollar amount and probability of expenditures increase immediately following the receipt of this check. Most relevant to testing the LCPIH, categories of instantaneous consumption expenditure such as food away from home increase on the check arrival date. The response is found primarily amongst households for whom Social Security is the primary source of income. However, the magnitude of the estimated responses are relatively small and do not suggest that the utility losses are large from this non-smoothing behavior. http://www.nber.org/new.html#latest
Neal, Derek. "The Measured Black-White Wage Gap Among Women is Too Small." NBER Working Paper No. w9133 (August 2002). Abstract: Taken as a whole, the literature on black-white wage inequality suggests that racial gaps in potential wages are much larger among men than women, and further that one can accurately assess black-white gaps in potential wages among women without accounting for black-white differences in patterns of female labor supply. This paper challenges both pieces of this conventional wisdom. I provide several estimates of the black-white gap in potential wages for the year 1990 using data from the National Longitudinal Survey of Youth (NLSY), a panel data set that includes persons born between 1957 and 1964. I exploit data on wages and income sources for years before and after 1990 to develop imputation methods that allow me to adjust measures of the black-white wage gap among women for racial differences in selection patterns. Among young adult employed women in 1990, the Census, Current Population Surveys, and NLSY data yield median log wage gaps of -.11, -16, and -.18 respectively. Based on several different imputation procedures, I estimate that the median black-white gap in log potential wages among women in the NLSY is approximately -.25 . http://www.nber.org/new.html#latest
Gray, Wayne B. and Ronald J. Shadbegian. "Optimal Pollution Abatement - Whose Benefits Matter, and How Much?" NBER Working Paper No. w9125 (August 2002). Abstract: We examine measures of environmental regulatory activity (inspections and enforcement actions) and levels of air and water pollution at approximately 300 U.S. pulp and paper mills, using data for 1985-1997. We find that levels of air and water pollution emissions are affected both by the benefits from pollution abatement and by the characteristics of the people exposed to the pollution. The results suggest substantial differences in the weights assigned to different types of people: the benefits received by out-of-state people seem to count only half as much as benefits received in-state, although their weight increases if the bordering state's Congressional delegation is strongly pro-environment. Some variables are also associated with greater regulatory activity being directed towards the plant, but those results are less consistent with our hypotheses than the pollution emissions results. One set of results was consistently contrary to expectations: plants with more nonwhites nearby emit less pollution. Some of our results might be due to endogenous sorting of people based on pollution levels, but an attempt to examine this using the local population turnover rate found evidence of sorting for only one of four pollutants. http://www.nber.org/new.html#latest
McMillan, Margaret, Dani Rodrik, and Karen Horn Welch. "When Economic Reform Goes Wrong: Cashews in Mozambique." NBER Working Paper No. w9117 (August 2002). Abstract: Mozambique liberalized its cashew sector in the early 1990s in response to pressure from the World Bank. Opponents of the reform have argued that the policy did little to benefit poor cashew farmers while bankrupting factories in urban areas. Using a welfare-theoretic framework, we analyze the available evidence and provide an accounting of the distributional and efficiency consequences of the reform. We estimate that the direct benefits from reducing restrictions on raw cashew exports were of the order $6.6 million annually, or about 0.14% of Mozambique GDP. However, these benefits were largely offset by the costs of unemployment in the urban areas. The net gain to farmers was probably no greater than $5.3 million, or $5.30 per year for the average cashew-growing household. Inadequate attention to economic structure and to political economy seems to account for these disappointing outcomes. http://www.nber.org/new.html#latest
Duranton, Gilles and Diego Puga. "From Sectoral to Functional Urban Specialization." NBER Working Paper No. w9112 (August 2002). Abstract: Striking evidence is presented of a previously unremarked transformation of urban structure from mainly sectoral to mainly functional specialization. We offer an explanation showing that this transformation is inextricably interrelated with changes in firms' organization. A greater variety of business services for headquarters and of sector-specific intermediates for production plants within a city reduces costs, while congestion increases with city size. A fall in the costs of remote management leads to a transformation of the equilibrium urban and industrial structure. Cities shift from specializing by sector -- with integrated headquarters and plants -- to specializing mainly by function -- with headquarters and business services clustered in larger cities, and plants clustered in smaller cities. http://www.nber.org/new.html#latest
Black, Sandra E. and Elizabeth Brainerd. "Importing Equality? The Impact of Globalization on Gender Discrimination." NBER Working Paper No. w9110 (August 2002). Abstract: While researchers have long held that discrimination cannot endure in an increasingly competitive environment, there has been little work testing this dynamic process. This paper tests the hypothesis (based on Becker 1957) that increased competition resulting from globalization in the 1980s forced employers to reduce costly discrimination against women. The empirical strategy exploits differences in market structure across industries to identify the impact of trade on the gender wage gap: because concentrated industries face little competitive pressure to reduce discrimination, an increase in competition from increased trade should lead to a reduction in the gender wage gap. We compare the change in the residual gender wage gap between 1976 and 1993 in concentrated versus competitive manufacturing industries, using the latter as a control for changes in the gender wage gap that are unrelated to competitive pressures. We find that increased competition through trade did contribute to the relative improvement in female wages in concentrated relative to competitive industries, suggesting that, at least in this sense, trade may benefit women by reducing firms' ability to discriminate. http://www.nber.org/new.html#latest
Burns, Andrew and Jaromir Cekota. "Coping with population ageing in Hungary." Economics Department Working Paper 328 (14 August 2002). Abstract: This paper examines economic challenges posed by the combination of an ageing and declining population in Hungary and develops policy-oriented recommendations for addressing them. The authors identify the scale and specific properties of the demographic problem in Hungary where the population started to decline earlier than in any other OECD country. Public support for the elderly is provided by the social-security pension system and the healthcare system. While the former was reformed with partial success in the late 1990s, the latter developed less successfully, threatening to generate massive deficits in the long run. Projections indicate that even the public pension system may become unsustainable, unless the authorities restore the parameters of the original reform and encourage successfully higher labour force participation. In this context, measures to improve employability of the numerically strong and growing Roma minority are particularly pertinent. The healthcare sector needs to be reformed radically for its efficiency to be appreciably enhanced; such reform should be complemented by an increased scope for private provision and financing of health services. http://www.oecd.org/EN/documents/0,,EN-documents-0-nodirectorate-no-10-no-0,00.html
Casey, Bernard and Atsuhiro Yamada. "Getting Older, Getting Poorer? A Study of the Earnings, Pensions, Assets and Living Arrangements of Older People in Nine Countries." Labour Market and Social Policy Occasional Paper No. 60 (14 August 2002). http://www.oecd.org/EN/documents/0,,EN-documents-0-nodirectorate-no-10-no-0,00.html
Kniesner, Thomas J. and W. Kip Viscusi. "Economic Position Does Not Matter: A Cost-Benefit Analysis." CPR Working Paper Series No. 46 (September 2002). Abstract: The current debate over cost-benefit concerns in agencies’ evaluations of government regulations is not so much whether to consider costs and benefits at all but rather what belongs in the estimated costs and benefits. Overlaid is the long-standing belief that the distribution of costs and benefits needs some consideration in policy evaluations. In a recent article in the University of Chicago Law Review, Robert Frank and Cass Sunstein proposed a relatively simple method for adding distributional concerns to policy evaluation that enlarges the typically constructed estimates of the individual’s willingness to pay for safer jobs or safer products. One might pay more for safety if it were the result of a government regulation that mandated greater safety across-the-board. Frank and Sunstein argue, that the reason for enlarging current estimates is that someone who takes a safer job or buys a safer product gives up wages or pays a higher price, which then moves him or her down in the ladder of income left over to buy other things. Alternatively, a worker who is given a safer job via a government regulation will have no relative income consequences if all workers have lower pay. We show that when considering the core of the Frank and Sunstein proposal carefully one concludes that current regulatory evaluations should be left alone because there is no reason to believe that relative positional effects can be well identified quantitatively, are important to personal decisions in general, or are important to well constructed cost-benefit calculations of government regulations. One of the practical problems with trying to consider relative position of income and consumption when estimating willingness to pay is that there is no unique way to ascertain from a statistical model the person’s actual social reference group. A researcher must specify ex ante a reference group and then net out the behavioral effects of a possibly incorrectly attributed reference group’s behavior on the individual. There is no well-established result from survey data for a typical person’s economic reference group. Moreover, the econometric literature generally finds that reference group or social interaction effects are unlikely to be identified uniquely or are small and easily ignored, perhaps because the relative positional effects of workplace or product safety offset possible reference group effects on income. To some extent Frank and Sunstein’s recommended increase in the value of willingness to pay for safety used in current regulatory evaluations is already considered. Regulatory evaluations often include a pessimistic and an optimistic value of likely benefits, and Frank and Sunstein’s suggested revised value of willingness to pay is still below the optimistic case that carefully formulated cost-benefit studies use. It is easy to show that almost doubling the estimated value of a statistical life would have an inconsequential effect on the economic desirability of a broad set of regulatory policies. Finally, we argue that the most important refinements one could make in the area of regulatory evaluation would be for agencies involved to adhere more to the framework of what is generally considered a carefully done cost-benefit study and for agencies to make greater actual use of appropriately done cost-benefit studies when recommending regulations. http://www-cpr.maxwell.syr.edu/cprwps/wpslst.htm
Raffalovich, Lawrence E., Nancy A. Denton, and Glenn D. Deane. "Racial Disparities in Housing Value Appreciation: Six Metropolitan Areas, 1980-1990." Working Paper #2002-2. http://www.albany.edu/csda/workpap.html
Kespichayawattana, Jiraporn, and Mark VanLandingham. "Health Impacts of Co-residence with and Caregiving to Persons with HIV/AIDS on Older Parents in Thailand." PSC Research Report 02-527 (September 2002). Abstract: An emerging literature indicates that parents are main caregivers to persons with HIV and AIDS (PHAs) in Thailand, especially during the late stages of illness. Very little research has examined whether and to what extent this caregiving role affects the physical and psychological health of older persons who give such care, especially in Thailand and other developing countries, where most infections occur. This paper explores these potential health impacts of caregiving for 394 households having older parents who had a child die of AIDS versus 376 households with older persons who did not, based upon original survey data collected during 2000 in three provinces (from 3 sub-regions) in Thailand. We supplement these survey data with qualitative data resulting from 18 in-depth interviews of older persons who had lost an adult child to AIDS. We find that large proportions of older persons with PHA children provide a variety of time consuming and strenuous caregiving services to them. Mothers shoulder most of this burden. Mothers who have had a child die from AIDS reported lower levels of overall happiness than mothers who did not. Mothers and fathers of PHAs who died report lower levels of overall happiness now compared to 3 years ago (before the time of the death of their child) with respect to parents from households that did not experience an adult child death. Many AIDS parents experienced anxiety, insomnia, fatigue, muscle strain, and head and stomach aches during the time they cared for their ill children, and many experienced these problems often. http://www.psc.isr.umich.edu/pubs/series.html#rr
Wu, Xiaogang. "Embracing the Market: Entry to Self-Employment in Transitional China, 1978 -1996." PSC Research Report 02-526 (August 2002). Abstract: This paper introduces labor market transition as an intervening process by which the overarching institutional transition to a market economy alters social stratification outcome. Rather than directly address income distribution, it examines the pattern of workers' entry to self-employment in reform-era China (1978-1996), focusing on rural-urban differences and the temporal trend. Analyses of data from a national representative survey in China show that education, party membership and cadre status all deter urban workers' entry to self-employment, while education promotes rural workers' entry to self-employment. As marketization proceeds, the rate of entry to self-employment increases in both rural and urban China, but urban workers are increasingly more likely to take advantages of new market opportunities. In urban China, college graduates and cadres are still less likely to be involved in self-employment, but they are becoming more likely to do so in the later phase of reform. The diversity of transition scenarios is attributed to the variations in concrete institutional environments.. http://www.psc.isr.umich.edu/pubs/series.html#rr
Romani, John H., and Barbara A. Anderson. "Development, Health and the Environment: Factors Influencing Infant and Child Survival in South Africa." PSC Research Report 02-525 (August 2002). Abstract: A central objective of economic and social development programs is improving the health status of the population. Good health is viewed not only as important in its own right, but healthy populations are seen as having a greater potential for productive economic activity that contributes directly to poverty reduction. Since a common measure of the health status of a society is its infant mortality rate, infant and child survival takes on a special importance for families, communities and countries in the developing world. When the new South African government came to power in 1994 it made improvement of maternal and child health a major priority. Analysis of data from the 1994 October Household Survey showed that for African children, access to clean water was the most important factor in survival. For Coloured children, almost all of whom had clean water, sanitation played a key role in survival. Since improvements in infant and child health are related to the conditions of life, it is relevant to examine changes in the lives of South Africans. Between 1994 and 1999 some things improved for rural Africans, the most disadvantaged group. The percentage with electricity in their residences increased. The percentage of rural Africans with clean water increased from 51% to 61%. Although this increase is substantial, it falls short of the pace of change that many had expected. There was virtually no change in sanitation. The nature of health care facilities is also relevant to infant and child health. Many new clinics have been constructed and facilities have been upgraded, but there are continuing deficiencies in the public clinics. While 80% of the South African population uses public clinics for their health care, the 20% of the South African population who use private health care obtain services on a par with the best available anywhere in the world. Compounding the task of meeting this challenge is the HIV/AIDS epidemic and its impact on the allocation of resources among competing development initiatives. One issue is the proportion of the overall budget devoted to health programs. Increasing health expenditures could limit investments in other areas that affect infant and child survival. A second matter is the proportion of Department of Health resources allocated to HIV/AIDS. Malaria continues to be a problem, and there have been recent outbreaks of cholera. Over 1/3 of the nation's children are not fully immunized. Shifting resources from these areas could create greater future problems for the public's health. It is, however, in the interests of those concerned about child and infant health to argue that everything in this area is directly related to the HIV/AIDS epidemic. This strategy places those involved in a favorable position in relation to external and internal donors with specialized interests in HIV/AIDS. It further strengthens the push to give priority in internal public budgeting to such programs because of their centrality in dealing with HIV/AIDS. Somewhat overlooked are some other realities. The decision in 1994 to alter the structure and processes of governance as a first step in reform of South African society meant that the reordering of economic and social conditions would occur within a democratic framework. Decisions now require extensive negotiations with numerous stakeholders. This has led to an increased politicization of the decision-making processes as well as slower progress towards the goal of a more equitable society. While this is neither unexpected nor undesirable, the task of dealing with the fundamental issues of sustainable development has been made more complicated. A growing impatience with what has been accomplished is one consequence of this earlier decision. This is not to suggest that what was done was inappropriate. Rather it is to note that choices lead to consequences that become part of the new context in which economic and social development will take place. The emerging concern with the lack of immediate improvement in economic and social conditions as reflected in the continued presence of high levels of income inequality along with increased pressures to meet special interests are central elements in this new context. Those responsible for governance must take care that resources are allocated in a manner that recognizes the inter-relatedness of the economic and social development processes. Only in this fashion can both the particular needs of child and infant health be met as well as those of the country as a whole. Dataset used: October Household Surveys (OHS), South Africa, 1994-1999. http://www.psc.isr.umich.edu/pubs/series.html#rr
Psacharopoulos, George and Harry Anthony Patrinos. "Returns to Investment in Education: A Further Update." Working Paper No. 2881 (September 1, 2002). Abstract: Returns to investment in education based on human capital theory have been estimated since the late 1950s. In the 40-plus year history of estimates of returns to investment in education, there have been several reviews of the empirical results in attempts to establish patterns. Many more estimates from a wide variety of countries, including over time evidence, and estimates based on new econometric techniques, reaffirm the importance of human capital theory. Psacharopoulos and Patrinos review and present the latest estimates and patterns as found in the literature at the turn of the century. However, because the availability of rate of return estimates has grown exponentially, the authors include a new section on the need for selectivity in comparing returns to investment in education and establishing related patterns. This paper—a product of the Education Sector Unit, Latin America and the Caribbean Region—is part of a larger effort in the region to document the benefits of investments in education. http://econ.worldbank.org/resource.php?type=5
Alva, Soumya, Edmundo Murrugarra, and Pierella Paci. "The Hidden Costs of Ethnic Conflict: Decomposing Trends in Educational Outcomes of Young Kosovars." Working Paper No. 2880 (August 20, 2002). Abstract: Alva, Murrugarra, and Paci examine the impact of ethnic segmentation in education on educational outcomes. Between 1991 and the late 1990s, the Albanian Kosovar population received education services in an informal system parallel to the official one. Using the 2000 Kosovo LSMS Survey data, the authors exploit cohort differences in exposure to the parallel system to estimate its effects among Albanian youth. The first (untreated) cohort includes individuals who entered secondary education before 1991 when the “parallel” education system was initiated. The second (treated) cohort includes individuals who entered secondary school in the last ten years under the ethnically segmented education system. To disentangle the effects of the changing system and economic environment, and the changes in the characteristics of the population, a Oaxaca-type decomposition is used. The results suggest that the past decade of ethnic tension has claimed a substantial toll on the educational outcomes of young male Albanian Kosovars. In addition to declines in enrollment rates in secondary education, those who are enrolled are expected to complete one less year of education. However, secondary school enrollment for girls increased during the parallel system, but with a sharp decline in the expected number of years completed. This paper—a product of the Human Development Sector Unit, Europe and Central Asia Region—is part of a larger effort in the region to examine poverty and social service delivery issues. http://econ.worldbank.org/resource.php?type=5
Ravallion, Martin. "Externalities in Rural Development: Evidence for China." Working Paper No. 2879 (August 20, 2002). Abstract: Ravallion tests for external effects of local economic activity on consumption and income growth at the farm-household level using panel data from four provinces of post-reform rural China. The tests allow for nonstationary fixed effects in the consumption growth process. Evidence is found of geographic externalities, stemming from spillover effects of the level and composition of local economic activity and private returns to local human and physical infrastructure endowments. The results suggest an explanation for rural underdevelopment arising from underinvestment in certain externality-generating activities, of which agricultural development emerges as the most important. This paper—a product of the Poverty Team, Development Research Group—is part of a larger effort in the group to better understand the causes of poverty. http://econ.worldbank.org/resource.php?type=5
Milanovic, Branko. "Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Budget Surveys." Working Paper No. 2876 (August 20, 2002). Abstract: The effects of globalization on income distribution in rich and poor countries are a matter of controversy. While international trade theory in its most abstract formulation implies that increased trade and foreign investment should make income distribution more equal in poor countries and less equal in rich countries, finding these effects has proved elusive. Milanovic presents another attempt to discern the effects of globalization by using data from household budget surveys and looking at the impact of openness and foreign direct investment on relative income shares of low and high deciles. The author finds some evidence that at very low average income levels, it is the rich who benefit from openness. As income levels rise to those of countries such as Chile, Colombia, or Czech Republic, for example, the situation changes, and it is the relative income of the poor and the middle class that rises compared with the rich. It seems that openness makes income distribution worse before making it better—or differently in that the effect of openness on a country’s income distribution depends on the country’s initial income level. This paper—a product of the Poverty Team, Development Research Group—is part of a larger effort in the group to study the effects of globalization. The study was funded by the Bank’s Research Support Budget under the research project “World Income Distribution” (RPO 684-84). http://econ.worldbank.org/resource.php?type=5
Gradstein, Mark and Branko Milanovic. "Does Liberté=Egalité? A Survey of the Empirical Links between Democracy and Inequality." Working Paper No. 2875 (August 20, 2002). Abstract: The effect of the distribution of political rights on income inequality has been studied both theoretically and empirically. Gradstein and Milanovic review the existing literature and, in particular, the available empirical evidence. The literature suggests that formal exclusion from the political process through restrictions on the voting franchise appears to have caused a high degree of economic inequality. And democratization in the form of franchise expansion has typically led to an expansion in redistribution, at least in the small sample of episodes studied. In a less pronounced way, albeit more emphatically compared with the ambiguous results of earlier research, recent evidence indicates an inverse relationship between other measures of democracy, based on civil liberties and political rights, and inequality. The transition experience of Eastern European countries, however, seems to some extent go against these conclusions. This opens possible new vistas for research, namely the need to incorporate the length of democratic experience and the role played by ideology and social values. This paper—a product of the Poverty Team, Development Research Group—is part of a larger effort in the group to study the effects of inequality and poverty in the world. The study was funded by the Bank’s Research Support Budget under the research project “Democracy and Redistribution” (RPO 683-01). http://econ.worldbank.org/resource.php?type=5
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