Accounting for Changing Earnings Inequality in Costa Rica, 1980–99

After declining from the mid-1970s to the mid-1980s, inequality in monthly earnings in Costa Rica stabilised from 1987 to 1992 and then increased from 1992 to 1999. In this article, we use recently developed techniques to measure the extent to which these changes in earnings inequality were the result of changes associated with the distributions of personal and workplace characteristics of workers or the earnings differences associated with those characteristics. We present evidence that the most important cause of the fall in inequality prior to 1987 was a decline in returns to education. Inequality stopped falling in Costa Rica in the 1990s in part because returns to education stopped falling. The most important cause of rising inequality in monthly earnings in the 1990s was an increase in the proportion of workers working a non-standard work week (part-time or over-time).     

Rising Inequality in Mexico: Household Characteristics and Regional Effects

We use an empirical framework to identify the contributions of microeconomic factors to the sharp rise in household (per capita) income inequality in Mexico between 1984 and 1994. Results indicate that changes in returns to household characteristics, in particular changes in returns to education, are responsible for about half of the increase in the Gini coefficient. The deteriorating conditions in rural areas relative to the urban areas and of the southern region relative to other regions account for another fourth of the increase in the Gini.     

Who Gains More from Education? A Comparative Analysis of Business,Farm and Wage Workers in India

The economics literature on returns to education has focused largely on wage workers, thereby ignoring a sizable section of the workforce which is self-employed. This paper presents the estimates of private returns to education for business, farm and wage workers in India using a nationally representative household survey. The paper addresses the sample-selectivity issue arising due to endogenous sector allocation in the earnings equation using the multinomial-selection approach. Our results show that the average rate of return to education is higher for wage workers followed by business and farm workers. Focusing only on wage workers would provide an overestimate of returns by 30 per cent for business workers and by 40–50 per cent for farm workers. Further, the profile of returns across the education ladder varies perceptibly for the three type of workers with higher education being more rewarding for wage workers.     

Changes in human capital and earnings inequality: Recent evidence from Brazil 1

Abstract

This paper estimates changes in the rates of return to human capital across the earnings distribution using data from over a 10-year period for Brazil. It uses these estimates to simulate the separate impacts of changes in returns to skills and changes in the supply of skills on earnings inequality. Evidence points strongly to growing inequality in rates of return to education in Brazil. This finding suggests that recent macroeconomic and trade reforms have been of most benefit to the skilled rather than the unskilled. Supporting evidence points to an improved competitiveness in the labour market, with workers increasingly rewarded for productivity. However, although increases in returns to education are more pronounced at the top of the earnings distribution, this did not in practice led to increased inequality. This is because levels of education and other labour market-rewarded endowments have increased and offset the rate of return effect. Appropriate education policy is therefore an essential partner for macroeconomic and trade reform if a developing economy is to avoid worsening income inequality.     

Self-employment earnings and returns to education in rural Peru

This article estimates the returns to education for households who derive part of their income from household based non-farm self-employment ventures in rural Peru. While education is an individual level variable, earnings are observed at the household level. This asymmetry complicates both the estimation and the interpretation of the returns to education. This article is the first jointly to incorporate three channels through which education affects household earnings. Education affects earnings through the marginal productivity of labour (worker effect), labour allocation across activities (between-activity allocative effect) and its production externality effect (spillover effect). The results suggest that the between-activity allocative effects of education dominate the returns. This article also makes novel use of economic geography to proxy for the role that access to markets plays in determining these returns. In particular, altitude is a strong predictor of activity choice and the returns to education in this mountainous country.     

Regional inequalities,economic growth and liberalisation: A study of the Indian economy

In this article we examine the pattern of regional inequalities in India during 1970–92. Trend analysis shows that inter‐state inequality is rising in India in almost every sphere of economic activity, particularly in the unorganised industry.     

The Bang for the Birr: Public Expenditures and Rural Welfare in Ethiopia

This article explores the impact of different types of public spending on rural household welfare in Ethiopia. The analysis reveals that public spending on road infrastructure is characterised by relatively high, but regionally strongly concentrated, returns in terms of rural household welfare. This is quite in contrast to the returns to public expenditures in education, which have attributes of much wider reach but less intensity. Public investments in agriculture show results that are low in magnitude and in statistical significance, mostly due to a poor link between public expenditures in agriculture and productivity in the sector.     

Looking Past the Indian Calorie Debate: What is Happening to Nutrition Transition in India

We utilise large national household datasets for 1993–1994, 2004–2005 and 2011–2012 to analyse factors influencing changing patterns in per capita calorie consumption in India. Our study findings demonstrate the significance of the disease environment in which people live, with those living in healthy areas having lower calorie consumption than those living in less healthy ones. Calorie intake has been falling in India, but the study findings reveal that fat calorie intake has been rising successively over time among the rural and poorer urban sub-populations raising concerns for policy-makers that non-communicable diseases are expected to rise for these vulnerable population groups.     

Wealth Inequality,Educational Environment and School Enrolment: Evidence from Mexico

Using data from the extended section of the 2010 Mexican census (2.9 million households), we study how school enrolment is associated with wealth inequality and with the educational environment the child is exposed to at the household and municipal levels. We provide robust evidence of wealth inequality as a negative predictor of school enrolment for children in primary, secondary and high school age ranges while a positive role is played by the educational environment. Through the introduction of interaction terms, we account for how economic and educational variables are intertwined at both the household and the municipal level, and we are able to illustrate the considerable heterogeneity in the role of adult education for households at different standards of living.     

An Unconditional Quantile Regression Based Decomposition of Spatial Welfare Inequalities in Ghana

Ghana has witnessed tremendous economic growth since the 1990s and attained the Millennium Development Goals target of halving poverty. This notwithstanding, inequality in Ghana increased over the same period, suggesting growth benefits were not equitably distributed. This study provides evidence on the determinants of household consumption expenditure and factors that explain rural-urban welfare gaps between 1998 and 2013. The study employs an unconditional quantile regression and recently proposed decomposition technique based on re-centred influence functions. We find significant spatial differences in consumption expenditure across selected quantiles, with rural-urban inequalities driven largely by differences in returns to households’ endowments.     

Impact of Internal In-Migration on Income Inequality in Receiving Areas: A District Level Study of South Africa

The impact of internal migration on regional income inequality of the receiving areas has hitherto gone largely unstudied. This dearth of literature is especially surprising because income inequality and in-migration into urban centres of growth are two issues that many developing economies are faced with and tackling these issues effectively involves understanding the interactions between these two related phenomena. This study is therefore a first attempt to analyse the impact of internal in-migration on receiving areas and is placed in the context of South Africa. Based on a conceptual analysis, the study argues that in-migration into the formal sector of the receiving areas will in general reduce inequality while in-migration into the informal or unemployed sector increases inequality. Using individual panel data the study further tests empirically at the district level the impact of in-migration and finds that rising urban inequality in urban areas can be attributed at least in part to rural-urban migration. This works through both the wage as well as employment channel. The employment channel can be said to have a stronger impact than the wage channel as indicated by the coefficients estimated through our system GMM regression analysis.     

Microeconomic Determinants of Income Inequality in Rural Pakistan

Inequality matters for poverty reduction. However, it is often unclear what policy could do to change the distribution of income as to date there is little quantitative evidence about the household characteristics that determine the level of income inequality and its changes over time. This paper sets out to identify these determinants by adapting a regression-based inequality decomposition technique and applying it to panel data from rural Pakistan. Land ownership is key to explaining the level of inequality, but not its changes. In contrast, higher education drives changes, but not the level of inequality. Household location affects both, reflecting growing differences in market access across regions.     

Industrial Wage Inequality in Latin America in Global Perspective, 1900–2000

Standard economic theories of wage inequality focus on the factor-biased nature of technological change and globalization. This paper examines the long-run development of industrial wage inequality in Latin America from a global comparative perspective. We find that wage inequality was comparatively modest during the first half of the twentieth century, but rising much faster during the post-war era than in other industrial countries. In-depth analyses of wage inequality trends in Argentina, Brazil, and Chile confirm this pattern, but also reveal notable country peculiarities. In Argentina and Chile, trend breaks coincided with large political–institutional shocks while in Brazil, wage inequality increased unabated under the wage regulation policies of successive post-war administrations. We argue that without taking national policies with respect to education and the labor market into account, economic theory cannot explain “Latin American” patterns of wage inequality.     

Labour Market Impacts of School Expenditure and Class Size: Evidence from China

This study is a first attempt to estimate the impact of school resources on students’ subsequent labour market earnings in China. Combining unprecedented school data from the early 1950s to the 1990s with household survey data in the 2000s, this paper documents that expenditure-per-pupil, a proxy measure of school resources (or quality) has a significant impact on the level of subsequent earnings through its influence on education returns. The positive effect calls for policy intervention aimed at improving education, to be based on the perceived economic return to the quantity as well as the quality components of education.     

The Impact of Bt Cotton on Poor Households in Rural India

The impact of genetically modified (GM) crops on the poor in developing countries is still the subject of controversy. While previous studies have examined direct productivity effects of Bacillus thuringiensis (Bt) cotton and other GM crops, little is known about wider socioeconomic outcomes. We use a microeconomic modelling approach and comprehensive survey data from India to analyse welfare and distribution effects in a typical village economy. Bt cotton adoption increases returns to labour, especially for hired female workers. Likewise, aggregate household incomes rise, including for poor and vulnerable farmers. Hence, Bt cotton contributes to poverty reduction and rural development.     

Does Access to Formal Finance Matter for Welfare and Inequality? Micro Level Evidence from Nigeria

Using a treatment effects model, decomposition techniques and representative household data from Nigeria, we study the welfare and inequality implications of access to formal finance. While improving household welfare, formal access to finance increases inter-household inequalities, despite ameliorating the inequality enhancing effect of urban residence and enhancing the inequality ameliorating effect of greater educational attainment. The positive effect of access to formal finance on inequality is smaller than the effect of unobserved household characteristics, indicating that welfare and equality enhancing strategies should follow a holistic approach as opposed to one focusing on one isolated policy variable at a time.     

Cultural Effects and Savings: Evidence from Immigrants to the United Arab Emirates

This study attempts to investigate the effects of cultural origin on the saving behaviour of immigrants in the United Arab Emirates (UAE). Using household survey data covering 3206 households, savings rates are found to be remarkably different across households from different countries/regions. Immigrants from developing countries appear to be uniform in terms of average household size, age, education and occupation. However, immigrants from Pakistan and India are found to have higher average savings rates than those from Arab countries, although they have relatively lower incomes. This suggests strong cultural effects on savings, a proposition that is generally supported by the econometric findings of this research.     

How irresponsible are rising powers?

Rising powers like Brazil, China and India have recently made significant gains in their capabilities as states. Therefore many IR scholars are claiming that these powers must now contribute more to the provision of global public goods like a clean environment, free trade and human rights. This article will argue that reasonably democratic international political discourses are another global public good whose greater supply is sorely needed and that rising powers are having a positive impact on the creation of such discourses. Thus rising powers are not behaving as irresponsibly as many IR scholars assume.     

The Role of Empowerment in Agricultural Production: Evidence from Rural Households in Niger

We use new household and individual level WEAI data from the Tahoua region of Niger and estimate a variable coefficient Cobb-Douglas production function in which traditional inputs interact with two human capital variables – empowerment and formal education. Our estimation results reveal that human capital matters for productivity. So much so that it can be considered as technology-changing, significantly affecting a household’s production technology by enhancing returns to equipment. In fact, differentiating households by their status as dual or primary with only an adult female or male reveals that the productivity elasticity of empowerment is large for dual households in which women are the least empowered. Enhancing the empowerment of women in this group of households, by increasing their leadership skills or tenure security, would yield important productivity gains.     

Household Saving Behaviour in an Extended Life Cycle Model: A Comparative Study of China and India

This paper examines the determinants of household saving in China and India over the last few decades using the life cycle model, with appropriate modifications to account for the expected benefits of pension saving. Consistent with the predictions made in the life cycle model, higher income growth promotes more household saving, and higher age dependency does the opposite. An increase in the inflation rate appears to encourage household saving. Interestingly, the evidence suggests that an increase in expected pension benefits tends to discourage household saving in China in the long run, but the reverse is found in India.