Download or read book Essays on Inequality and Macroeconomics written by Daniel E. Ortega and published by . This book was released on 2002 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Macroeconomics and Inequality written by Wolfgang Strehl and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Poverty Inequality and Development written by Alain de Janvry and published by Springer Science & Business Media. This book was released on 2006-06-09 with total page 390 pages. Available in PDF, EPUB and Kindle. Book excerpt: This collection of essays honors a remarkable man and his work. Erik Thorbecke has made significant contributions to the microeconomic and the macroeconomic analysis of poverty, inequality and development, ranging from theory to empirics and policy. The essays in this volume display the same range. As a collection they make the fundamental point that deep understanding of these phenomena requires both the micro and the macro perspectives together, utilizing the strengths of each but also the special insights that come when the two are linked together. After an overview section which contains the introductory chapter and a chapter examining the historical roots of Erik Thorbecke's motivations, the essays in this volume are grouped into four parts, each part identifying a major strand of Erik's work—Measurement of Poverty and Inequality, Micro Behavior and Market Failure, SAMs and CGEs, and Institutions and Development. The range of topics covered in the essays, written by leading authorities in their own areas, highlight the extraordinary depth and breadth of Erik Thorbecke's influence in research and policy on poverty, inequality and development. Acknowledgements These papers were presented at a conference in honor of Erik Thorbecke held at Cornell University on October 10-11, 2003. The conference was supported by the funds of the H. E. Babcock Chair in Food, Nutrition and Public Policy, and the T. H. Lee Chair in World Affairs at Cornell University.

Download or read book Inequality and Economic Policy written by Tom Church and published by Hoover Press. This book was released on 2015-12-01 with total page 238 pages. Available in PDF, EPUB and Kindle. Book excerpt: Drawing from a 2014 Hoover Institution Conference on Inequality in honor of Gary Becker, a group of distinguished contributors explore various measures of inequality in America and address the issue of whether or not it is increasing. In looking at this question and examining policy implications, the authors draw on research on human capital and intergenerational mobility. The authors suggest that the emphasis on inequality and redistribution, while not wrong, is nevertheless misplaced, for it may lead us to adopt policies that will disrupt the progress we have made while doing nothing to promote the kind of growth that is essential to national progress.

Download or read book Essays on Macroeconomics and Inequality written by Johannes Wacks and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Inequality Mobility and Segregation written by John A. Bishop and published by Emerald Group Publishing. This book was released on 2012-09-06 with total page 410 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contains 15 papers, which were presented at the Fourth Meeting of the Society for the Study of Economic Inequality, Catania, Sicily, July 2011. This title includes measuring segregation, welfare and liberty, the use of influence functions in distributional analysis, and the axiomatic approach to multidimensional inequality.

Download or read book Essays on Inequality Interest Rates and Macroeconomic Policies written by Ludwig Wilhelm Straub and published by . This book was released on 2018 with total page 284 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters on inequality, interest rates and macroeconomic policies. The first chapter explores the macroeconomic consequences of the recent rise in permanent income inequality. First, I show that in many common macroeconomic models consumption is a linear function of permanent (labor) income. This implies that macroeconomic aggregates are neutral with respect to shifts in the distribution of permanent income. Motivated by this neutrality result, I develop novel approaches to test for linearity in U.S. household panel data. The estimates suggest an elasticity of 0.7, soundly rejecting linearity. I quantify the effects of this deviation from neutrality using a novel non-homothetic precautionary-savings model. In the model, the rise in U.S. permanent labor income inequality since the 1970s caused: (a) a decline in real interest rates of around 1%; (b) an increase in the wealth-to-GDP ratio of around 30%; (c) wealth inequality to rise almost as rapidly as it did in the data. The second chapter, joint with Sebastián Fanelli, develops a theory of foreign exchange interventions in a small open economy with limited capital mobility between home and foreign bond markets. Due to limited capital mobility, the central bank can implement nonzero bond spreads by managing its portfolio. Crucially, spreads are inherently costly as they allow foreign intermediaries to make carry-trade profits. Optimal interventions balance these costs with terms of trade benefits. We show that they lean against the wind of global capital flows to avoid excessive currency appreciation. Due to the convexity of the costs, interventions should be small and spread out, relying on credible promises (forward guidance) of future interventions. By contrast, excessive smoothing of the exchange rate path may create large spreads, inviting costly speculation. Finally, in a multi-country extension of our model, we find that the decentralized equilibrium features too much reserve accumulation and too low world interest rates, highlighting the importance of policy coordination. The third chapter, joint with Iván Werning, reconsiders the well-known Chamley-Judd result, according to which capital should not be taxed in the long run. For the main model in Judd (1985), we prove that the long run tax on capital is positive and significant, whenever the intertemporal elasticity of substitution is below one. The main model in Chamley (1986) imposes an upper bound on capital taxes. We provide conditions under which these constraints bind forever, implying positive long run taxes. When this is not the case, the long-run tax may be zero. However, if preferences are recursive and discounting is locally non-constant (e.g., not additively separable over time), a zero long-run capital tax limit must be accompanied by zero private wealth (zero tax base) or by zero labor taxes (first best). Finally, we explain why the equivalence of a positive capital tax with ever increasing consumption taxes does not provide a firm rationale against capital taxation.

Download or read book Essays on Wealth Inequality and Macroeconomics written by Rodolfo Erasmo Oviedo Moguel and published by . This book was released on 2018 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: The role of credit on wealth inequality in the USA: 1980 - 2012. In the USA, the share of total household wealth held by the richest 1% increased from 23.5 % in 1980 to 41.8% in 2012. A sharp reduction in the saving rate of the bottom 90% accounts for approximately 40% of this change. I construct a quantitative model that, under a reasonable calibration, is able to replicate this fact. I then use the model to decompose the total variation among some of the most likely candidates: (i) changes in credit conditions, (ii) increase in the concentration and riskiness of labor income and, (iii) reforms to the tax code. This decomposition exercise shows that, in the context of my model, the relaxation of the borrowing constraint explains approximately 45% of the increase in the share of wealth going to the top 1%. I also show that, in the absence of the credit constraint, the exogenous changes under (ii) and (iii) would have brought about a counterfactual increase in the aggregate saving rate. The effect of housing on the distribution of wealth in the USA. Wealth inequality increased dramatically in the previous 40 years. We construct a heterogeneous agent model with two types of assets: housing and productive capital and evaluate the effect of the observed increase in the price of housing on the saving behavior of different groups and hence on the wealth distribution. A percentage of the equity in housing can be posted as collateral to issue non-mortgage debt and the increase in the price of housing effectively relaxed the borrowing constraints and increased the permanent income of households. The result is an increase in Non-Mortgage debt for the households that were originally constrained in line with the findings of Mian and Sufi (2014).

Download or read book Essays on the Macroeconomics of Inequality written by Zsofia Luca Barany and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis contains three essays on the macroeconomics of inequality. The first chapter analyses the effects of minimum wages on inequality. While there has been intense debate in the empirical literature about the effects of minimum wages on inequality in the US, its general equilibrium effects have been given little attention. In order to quantify the full effects of a decreasing minimum wage on inequality, I build a dynamic general equilibrium model, based on a two-sector growth model where the supply of high-skilled workers and the direction of technical change are endogenous. I find that a permanent reduction in the minimum wage leads to an expansion of low-skilled employment, which increases the incentives to acquire skills, thus changing the composition and size of high-skilled employment. These permanent changes in the supply of labour alter the investment ow into R & D, thereby decreasing the skill-bias of technology. The reduction in the minimum wage has spill-over effects on the entire distribution, affecting upper-tail inequality. Through a calibration exercise, I find that a 30 percent reduction in the real value of the minimum wage, as in the early 1980s, accounts for 15 percent of the subsequent rise in the skill premium, 18.5 percent of the increase in overall inequality, 45 percent of the increase in inequality in the bottom half, and 7 percent of the rise in inequality at the top half of the wage distribution. In the second chapter, I construct a model, where the supply of skills and the skill premium can increase jointly, as occurred in the US over the past few decades. I high- light the importance of the joint determination of the direction of technical change and skill formation. There is a positive feedback between these two variables. Technological progress is driven by profit oriented R & D firms, where profits are increasing in the amount of labour that is able to use these technologies. Therefore, when the supply of high-skilled 3labour increases, technology endogenously becomes more skill-biased. A more skill-biased technology leads to a higher skill premium, which increases the incentives to acquire educa- tion, and the supply of high-skilled labour rises. During the transition to the steady state, both quantities increase simultaneously. I map the dependence of the transition path of the economy on the initial skill supply and relative technology between the high- and the low-skilled sector. I find that, contrary to the previous literature, the skill premium and the skill supply can increase jointly even if the bias of technology is weak. In the third chapter, I relate the degree of progressivity of the income tax scheme to the prevailing income inequality in the society. I find that, consistent with the data, more unequal societies implement more progressive income tax systems. I build a model of political coalition formation, where different income groups have to agree on a tax scheme to finance the public good. I show that, the greater income inequality is, i.e. the further away the rich are from the rest of the population, the less able they are to credibly commit to participating in a coalition. Therefore, as income inequality rises, the rich are increasingly excluded from the design of the income tax scheme. Consequently, the rich bear a larger fraction of the public good, and the tax system becomes more progressive.

Download or read book Essays on Macroeconomics with Heterogeneity and Inequality written by Zhigang Ge and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract Chapter 1. Heterogeneous Entrepreneurial Ability and Wealth Inequality Models with entrepreneurship can reproduce high wealth concentration at the top. The key assumption is the borrowing constraint, that is, households are unable to borrow enough assets to start a business or invest optimally in the business. However, some empirical evidences show that borrowing constraint does not matter for the majority of households in the US. This paper seeks to generate high wealth concentration at the top without assuming borrowing constraint. The baseline model that introduces heterogeneity in entrepreneurial ability is able to match the wealth distribution while the model assuming same entrepreneurial ability fails. Besides wealth distribution, the baseline model generates other moments that are consistent with the data. Chapter 2. Taxing Top Earners: The Role of Entrepreneurs This paper studies the optimal top marginal income tax rate in a quantitative framework with entrepreneurial choice, financing constraints, and realistic earnings and wealth distributions. I find that the revenue-maximizing top tax rate is approximately 41 percent -- close to the recent levels in the US. In contrast, when calibrated with only workers to match realistic earnings and wealth distributions, the model predicts a revenue-maximizing top tax rate of 81 percent -- close to the established view. There are two channels through which the baseline model has a lower revenue-maximizing top tax rate. First, the wealth distribution channel: increasing the top tax rate decreases wealth accumulation and leads to a less skewed wealth distribution in the long run (there are more top entrepreneurs with low wealth and less top entrepreneurs with high wealth). With financing constraints, there is a similar change in the business earnings distribution, implying a fall in the average business earnings at the top. Second, the general equilibrium effect on labor earnings of workers: in the model with entrepreneurs, increasing the top tax rate reduces the capital stock much more than labor supply, which decreases the capital-labor ratio and thus the equilibrium wage rate in the model economy. Finally, I find that the welfare-maximizing top marginal income tax rate is close to the revenue-maximizing one. Chapter 3. Household Heterogeneity and Consumption Amplification Macroeconomic models with household heterogeneity in wealth can generate larger consumption response to aggregate shocks compared to a representative-agent economy. In other words, there is consumption amplification associated with wealth heterogeneity. However, I find that in a Krusell-Smith type real business cycle (RBC) model, this amplification effect is only significant at the onset of a recession and gradually dies out as the recession proceeds. The finding is of interest because part of the motivation for the widely adoption of models with wealth heterogeneity is their different and empirically plausible implications for consumption dynamics compared with representative-agent models. I then introduce household heterogeneity in housing and find that the model with housing has more persistent amplification effect on consumption during the recession.

Download or read book Essays on the Macroeconomic Effects of Inequality written by Guzmán González-Torres Fernández and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation explores the aggregate allocational effects of different forms of economic inequality. Its three chapters study how an uneven distribution of production factors and financial resources, coupled with different forms of bureaucratic hurdles to the development of business ideas, financial constraints, or credit shocks, can affect the distribution and productivity of firms, the composition of the demand for goods and services, or the creation of valuable worker-firm matches in an economy. Even though it becomes clear throughout the dissertation that eliminating as many frictions in the firm-creation process, putting in place different redistribution policies, and alleviating financial frictions in an economy all have great effects on the aggregate economy that were not completely understood in previous theories, the welfare effects of such policies remain a subject for study in future work.

Download or read book Essays in Macroeconomic Models of Wealth Inequality written by Mohsen Mohaghegh and published by . This book was released on 2019 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: After calibration, I show that wealth concentration in the benchmark economy matches the data in 2007. Since risk of default depends on the idiosyncratic characteristics of entrepreneurs, their optimal borrowing decision -which determines the scale of operation in their firms- increase the concentration of wealth in the equilibrium.

Download or read book Essays in Macroeconomics written by Mariano Federico De Francesco and published by . This book was released on 2010 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This dissertation contains three essays. The first essay presents new empirical regularities on cross-country differences on wage inequality. The second essay develops a theory of labor compensation that hinges on the ability of individuals to leverage their knowledge across different occupations, and explores the theoretical and quantitative implications of barriers to entrepreneurship on wage inequality. The last essay investigates the effect of openness to trade on innovative activity"--Abstract.

Download or read book Essays in Quantitative Macroeconomics written by Philipp Grübener and published by . This book was released on 2021 with total page 191 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis contains four independent essays in heterogeneous agent macroeconomics. They explore the sources of income inequality and income risk and study the optimal design of public redistribution and insurance. The first chapter, joint with Filip Rozsypal, studies the origins of idiosyncratic earnings risk in frictional labor markets, with a particular focus on the role of firms for worker earnings risk. First, using administrative matched employer-employee data from Denmark, we document key properties of the worker earnings growth distribution, the firm revenue growth distribution, and their joint distribution. The worker earnings and firm revenue growth distributions exhibit strong deviations from normality, in particular excess kurtosis, with many workers and firms experiencing very small changes to their earnings/revenues, but a significant minority experiencing very large changes. Large earnings losses are more likely for workers in firms with negative revenue growth, driven both by separations to unemployment and earnings losses on the job. Second, we develop a model framework consistent with the data, with four key features: i) frictional labor markets and on the job search to capture unemployment risk and wage growth through a job ladder, ii) multi-worker firms to capture gross and net worker flows, iii) risk averse workers such that earnings risk matters, and iv) contracting with two-sided limited commitment because earnings of job stayers are changing infrequently in the data. Third, we use the model to explore policies designed to mitigate earnings fluctuations. The second chapter, joint with Annika Bacher and Lukas Nord, studies one particular private insurance margin against individual income risk only available to couples, which is the so called added worker effect. Specifically, we study how this intra-household insurance against individual job loss through increased spousal labor market participation varies over the life cycle. We show in U.S. data that the added worker effect is much stronger for young than for old households. A stochastic life cycle model of two-member households with job search in a frictional labor market is capable of replicating this finding. The model suggests that a lower added worker effect for the old is driven primarily by better insurance through asset holdings. Human capital differences between employed young and old contribute to the difference but are quantitatively less important, while differences in job arrival rates play a limited role. In the third chapter, joint with Axelle Ferriere, Gaston Navarro, and Oliko Vardishvili, we study optimal redistribution, taking into account not just the large income and wealth inequality in the data, but also the distribution of income risk that is key in the first two chapters. The U.S. fiscal system redistributes through a rich set of taxes and transfers, the latter accounting for a large part of the income of the poor. Motivated by this, we study the optimal joint design of transfers and income taxes. Within a simple heterogeneous-household framework, we derive analytical results on the optimal relationship between transfers and tax progressivity. Higher transfers are associated with lower optimal income tax progressivity. Redistribution is achieved with generous transfers while efficiency is preserved via a lower progressivity of income taxes. As such, the optimal tax-and-transfer system features larger progressivity of average than of marginal tax rates. We then quantify the optimal tax-and-transfer system in a rich incomplete-market model with realistic distributions of income, wealth, and income risk. The model features a novel flexible functional form for progressive income taxes and means-tested transfers. Relative to the current U.S. fiscal system, the optimal policy consists of more generous means-tested transfers, which phase-out at a slower rate. These larger transfers are financed with higher tax rates, but the taxes are not more progressive than the current system. The fourth chapter, joint with Axelle Ferriere and Dominik Sachs, also studies optimal redistribution, but instead of considering a stationary environment it analyzes the dynamics of the equity-efficiency trade-off along the growth path. To do so, we incorporate the optimal income taxation problem into a state-of-the-art multi-sector structural change general equilibrium model with non-homothetic preferences. We identify two key opposing forces. First, long-run productivity growth allows households to shift their consumption expenditures away from necessities. This implies a reduction in the dispersion of marginal utilities, and therefore calls for a welfare state that declines along the growth path. Yet, economic growth is also systematically associated with an increase in the skill premium, which raises inequality and the desire to redistribute. We quantitatively analyze these opposing forces for two countries: the U.S. from 1950 to 2010, and China from 1989 to 2009. Optimal redistribution decreases at early stages of development, as the role of non-homotheticities prevails. At later stages of development the rising income inequality dominates and the welfare state should become more generous.

Download or read book Essays on Macroeconomics and Finance with Search Frictions and Inequality written by Gaston Chaumont and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two chapters. The first chapter, written jointly with Shouyong Shi, studies a directed search equilibrium with risk-averse workers who can search on the job and accumulate non-contingent assets at an exogenous rate of return and under a borrowing limit. Search outcomes affect earnings and wealth accumulation. In turn, wealth and earnings affect search decisions by changing the optimal tradeoff between the wage and the matching probability. The calibrated model yields sizable inequality in wages and wealth among homogeneous workers. Wealth significantly reduces a worker's transition rates from unemployment to employment and from one job to another. The interaction between search and wealth provides important self-insurance as it reduces the pass-through of earnings inequality into consumption by more than 60%, relative to the model without wealth accumulation. We also study the dynamic welfare effects of changes in the unemployment insurance (UI) benefit. Keeping UI's duration fixed, we find that welfare is maximized with a replacement rate of about 20% instead of the baseline 50%, together with lower taxes on wages to finance the lower expenditures on UI.The second chapter studies the interactions between default risk and the liquidity of the secondary market for sovereign bonds. The secondary market for sovereign bonds is illiquid and the liquidity is endogenous. Such endogenous liquidity has important effects on the credit spread and the probability of default. To study equilibrium implications of such liquidity, I integrate directed search in the secondary market into a macro model of sovereign default. The model generates liquidity endogenously because investors in the secondary market face a trade-off between the transaction costs and the trading probability. This trade-off varies with the aggregate state of the economy, creating a time-varying liquidity premium over the business cycle. I show that trade flows in the secondary market significantly affect the price of sovereign bonds and amplify the effect of default risk on credit spreads. The importance of liquidity in the secondary market increases when the economic conditions of the issuing country worsen. Illiquidity increases with default risk and accounts for a sizable fraction of credit spreads, ranging from 10% to 50%.

Download or read book Essays on Income Risk and Inequality written by Karl Harmenberg and published by . This book was released on 2018 with total page 193 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Economic Reforms Growth and Inequality in Latin America written by Gustavo Indart and published by Routledge. This book was released on 2019-06-04 with total page 341 pages. Available in PDF, EPUB and Kindle. Book excerpt: Originally published in 2004. Growth, income distribution, and labour markets are issues of pivotal importance in the Latin American context. Examining unique theoretical issues and the empirical evidence, this book provides a critical analysis of the key elements of income distribution determinants, labour market functions, trade policies, and their interrelations. As the advance of globalization becomes seemingly unstoppable, this book provides an important reappraisal of the impact of this new phenomenon, and in particular, the pernicious impact it may have on income growth and distribution. The key objective of the volume is to integrate more fully the analysis of trade and labour market economists, in order to better understand the labour market and income distribution implications of globalization and international integration. Forty years after the early calls to appropriately investigate the micro foundations of macroeconomics, the separation of the two at the policy level is more damaging than ever before - particularly for developing regions; this volume therefore makes an important contribution at the theoretical and policy levels by bringing together macroeconomic and microeconomic analyses.