JOEI

Starting from January 1, 2008, Journal of Economic Inequality has become the official journal of ECINEQ.

 

Browse past volumes and issues

 

 

Original Paper, Pages 775-788
Intergenerational mobility in the Netherlands: models, outcomes and trends
Marco Colagrossi, Andrea Geraci, Gianluca Mazzarella

We reconstruct the genealogical tree of all individuals ever appearing in Dutch municipalities records starting in 1995. Combining microdata from tax authorities with education records we compute a measure of permanent income as well as education. We estimate the degree of intergenerational persistence in education and income in the population and across time, showing that it is higher than what previous estimates would suggest, albeit it appears to be decreasing. Finally, exploiting information on the education of grandparents, we estimate a model of intergenerational mobility in which endowments are transmitted through a latent factor. Estimates suggest an even higher persistence.

 

Original Paper, Pages 789-814
Intergenerational income mobility: New evidence from the UK
Bertha Rohenkohl

Using a new dataset combining the British Household Panel Survey (BHPS) and Understanding Society (UKHLS), this paper examines the current state of intergenerational income mobility in the UK. This extends previous evidence in several directions, with a focus on younger cohorts of individuals born between 1973 and 1992. I find evidence of considerable intergenerational persistence in the transmission of resources at the household level with an intergenerational elasticity of 0.26 and a rank coefficient of 0.30. This picture of mobility remains at the individual level and under a range of robustness tests that address traditional methodological concerns. While mobility is relatively low at the national level, I find meaningful differences in income mobility rates across the country. More generally, regions with lower income in the North of England display substantially lower levels of both relative and absolute income mobility than regions in the South.

 

Original Paper, Pages 815-834
Traces of the past in income inequality
Ozan Eksi

The cumulative effect on income inequality of structural economic changes can only be observed in years. We discuss the implications of this point for the empirical approach to the inequality data through a simple linear regression setting. We show that determinants of inequality can only be found by (i) specifying a dynamic model, or (ii) using the average of changes in within-cohort inequalities as the dependent variable. The results obtained with the US and UK data show that these two methods deliver similar results, which significantly differ from those obtained through standard static regression analyses.

 

Original Paper, Pages 835-866
Fair crack of the whip? The distribution of augmented wealth in Australia from 2002 to 2018
Maximilian Longmuir

The omission of pension wealth potentially distorts the international comparison of wealth distributions. Private pension wealth is often included in households’ wealth portfolios, while public pension claims are not. Augmented wealth, the sum of net worth and pension wealth, resolves this limitation by including the present value of social security pension wealth. This article provides a detailed analysis of augmented wealth in Australia between 2002 and 2018, capturing the establishment of the compulsory private pension scheme, Superannuation, which was introduced in 1992. Augmented wealth is slightly less equally distributed in Australia than in Germany or Switzerland but more equal than in the United States. The article also explores the relationship between Superannuation dissaving rates and the means-tested public pension scheme, Age Pension, and its distributional implications.

 

Original Paper, Pages 867-897
A novel approach to measure poverty based on calorie deprivation – Evidence from household-level data
Kalyani Mangalika Lakmini Rathu Manannalage, Shyama Ratnasiri, Andreas Chai

While many alternative poverty measures have been found in the development literature based on income, consumption, or combinations of the two, direct consumption-based measures are rarely found. This study develops a consumption-based deprivation index to measure poverty using household-level calorie consumption data from Sri Lanka. As cereal consumption forms a significant share of the diet in many developing countries, deprivation is measured as the average shortfall from the population’s saturation level of cereal calorie consumption. The results show that expenditure-based deprivation measures tend to overestimate consumption-based calorie deprivation. This study also found that there has been a slow decline in calorie deprivation compared to traditional poverty estimates from 2006 to 2016 in Sri Lanka. Further, the results revealed notable differences in calorie deprivation by gender, ethnicity, education, occupation, and income group of the head of the household and by sub-national location of the household. Overall, this study provides valuable insights into understanding calorie deprivation and suggests direct intervention strategies in Sri Lanka and other developing countries.

 

Original Paper, Pages 899-924
Assumption-light and computationally cheap inference on inequality measures by sample splitting: the Student t approach
Catarina Midões, Denis de Crombrugghe

Inference on inequality indices remains challenging, even in large samples. Heavy right tails in income and wealth distributions hinder the quality and threaten the validity of asymptotic approximations to finite sample distributions. Attempts to improve on asymptotic approximations by bootstrap techniques or permutation tests are only partial successes. We evaluate a different approach to robust inference, relying on Student t statistics obtained from split samples. This relatively simple ‘t-based’ approach requires no consistent variance estimators, no random sampling of populations, and only mild distributional assumptions. We compare its performance with that of refined bootstrap and permutation techniques. We find that the more complex bootstrap methods still have the edge in one-sample tests, where the t-approach suffers from a negative skew. In two-sample comparisons though, the t-approach offers advantages: it is undersized while bootstrap tests and permutation tests are often oversized. In certain circumstances it is less powerful than permutation tests and bootstrap tests, but for large samples, this difference dissipates. It is also more generally applicable than permutation tests and easily generates confidence intervals. These differences are illustrated with an empirical application using two different sources of household data from the Russian Federation

 

Original Paper, Pages 925-954
Combined and distributional effects of EPL reduction and hiring incentives: an assessment using the Italian “Jobs Act”
Chiara Ardito, Fabio Berton, Lia Pacelli

After two decades of labour market reforms at the margin, the great recession created political scope to reduce the employment protection still benefitting the workers on open-ended contracts. To support employment levels, these policies have generally been combined with generous employment subsidies. While the theoretical and empirical literature on the two interventions taken in isolation appear generally abundant, almost nothing is known when they come combined. Analogously, no evidence is available on their distributional effects. This paper aims to fill these two gaps by means of counterfactual models estimated on high-frequency employer-employee-linked Italian data. Taking advantage of the quasi-experimental conditions created by the reforms enforced in Italy in 2015, we fit a (non-linear) difference-in-differences strategy into a competing risks duration model. We find prompt sensitivity of small firms to the incentives, while the large ones waited until they were combined with lower firing costs. Small firms substitute temporary for permanent employment, while larger ones do not seem inclined to forego fixed-term contracts, possibly for a probationary period. The reforms have benefitted domestic workers over foreigners, prime-age and older individuals over the young, and those with higher human capital. No gender effects emerge. Small firms operating in non-innovative sectors carry the bulk of heterogeneity effects. Finally, analysis on duration of newly activated open-ended contracts reveals a transitory effect, as separations jumped once the subsidies came to an end.

 

Original Paper, Pages 955-970
What drives regional economic inequalities in Tunisia? Evidence from unconditional quantile decomposition analysis
Hatem Jemmali

The paper analyzes the urban-rural, littoral-inland, as well as metropolitan-nonmetropolitan inequalities across the entire welfare distribution. It draws on micro-data from two nationally representative surveys to investigate the structure and dynamics of regional consumption inequality in Tunisia. The analysis covers the five years before the 2011’s revolution. It reveals low and stable levels of welfare inequality between inland and littoral regions, but high and growing inequalities along rural–urban and nonmetropolitan-metropolitan lines. Consistent with earlier studies, these results shed light on an urban and metropolitan bias. Regional inequalities are found to be much higher at the top end and the bottom than at the middle of the welfare distribution in both 2005 and 2010. Using the unconditional quantile decomposition, we decompose the distributional welfare differentials among different regions into endowment effects, explained by differences in households’ demographic and general characteristics and return effects attributable to unequal returns to these covariates. We find that differences in households’ endowments such as demographic composition, standards of living, and human capital, dominate the return effects and contribute more to the regional disparities throughout the welfare distribution