Society for the Study of Economic Inequality: working papers

Top 25 Working Papers by Total File Downloads

1 The effects of Fair Trade on marginalised producers: an impact analysis on Kenyan farmers


Leonardo Becchetti and Marco Costantino


2 GDP growth rate and population

Ivan O. Kitov


3 Poverty among minorities in the United States: Explaining the racial poverty gap for Blacks and Latinos

Carlos Gradín


4 Inflation, unemployment, labor force change in the USA

Ivan O. Kitov


5 Microsimulation as a Tool for Evaluating Redistribution Policies

François J. Bourguignon and Amedeo Spadaro


6 Theil, Inequality Indices and Decomposition

Frank Alan Cowell


7 Inequality of opportunities vs. inequality of outcomes: Are Western societies all alike?

Arnaud Lefranc, Nicolas Pistolesi and Alain Trannoy


8 The effects of inequality on growth: a survey of the theoretical and empirical literature

Christophe Ehrhart


9 The measurement of gender wage discrimination: The distributional approach revisited

Coral del Rio Otero, Carlos Gradín and Olga Cantó


10 A model for microeconomic and macroeconomic development

Ivan O. Kitov


11 Evolution of the personal income distribution in the USA: High incomes

Ivan O. Kitov


12 Modelling the overall personal income distribution in the USA from 1994 to 2002

Ivan O. Kitov


13 On analysing the world distribution of income

Anthony B. Atkinson and Andrea Brandolini


14 Modeling the evolution of Gini coefficient for personal incomes in the USA between 1947 and 2005

Ivan O. Kitov


15 All types of inequality are not created equal: divergent impacts of inequality on economic growth

Stephanie Seguino


16 The demand for socially responsible products: empirical evidence from a pilot study on fair trade consumers

Leonardo Becchetti and Furio Camillo Rosati


17 Poverty and Time

Walter Bossert, Satya R. Chakravarty and D’Ambrosio, Conchita (Conchita D'Ambrosio)


18 The Household Wealth Distribution in Spain: The Role of Housing and Financial Wealth

Francisco Azpitarte


19 Reconsidering the Environmental Kuznets Curve hypothesis: the trade off between environment and welfare

Nicola Cantore


20 Recent trends in income inequality in Latin America

Leonardo C. Gasparini, Guillermo Cruces and Leopoldo Tornarolli


21 Measuring Bipolarization, Inequality, Welfare and Poverty

Juan Gabriel Rodríguez


22 Modelling the age-dependent personal income distribution in the USA

Ivan O. Kitov


23 Multidimensional Poverty Measures from an Information Theory Perspective

Maria Ana Lugo and Esfandiar Maasoumi


23 Inequality Decompositions ?A Reconciliation

Frank Alan Cowell and Carlo Vittorio Fiorio


25 Changes in poverty and the stability of income distribution in Argentina: evidence from the 1990s via decompositions

Florencia Lopez Boo

Japan - my scenario of consumer price fall was too optimistic

I've found a new projection of labor force in Japan between 2010 and 2050. It says that the rate of labor force participation will be decreasing together with the depopulation of Japan. This means that the level of labor force will be falling much faster than it was used in my recent prediction. Considering the multiplication factor of 1.4, the rate of CPI inflation will reach -1% per year on average in 2020. By 2050, it will reach almost 2% per year (1.89%). The overall drop in consumer prices will be more than 2/3 by 2050.  This fall will be accompanied by the decrease in real GDP at a rate of 1% per year and the debt rise to 500% of GDP.

VOX's opened a debate: What’s the use of economics?

VOX has opened a new discussion "What’s the use of economics?"  moderated by Richard Baldwin.


It would be helpful to have opinions from professionals from the hard sciences. We know about the overall opinion of the economic profession - the role of economics has dramatically increased after the crisis [:)]. We  know the opinion of the general public - "failed once again".  But only the approach adopted in the hard sciences can reshape economics in a way appropriate for the safe usage by the society. Currently, economics is irrelevant what makes it agressive and dangerous for the ustainability of the economy and society. It is time to put the economic studies in the  bounds of quantiative responsibility. Otherwise, it will fail again and again ...

This is the announcement and invitation to participate the discussion

Economics is under fire both from outside and inside the profession for irrelevance, arrogance, and more. This new Vox debate focuses on two questions: What’s the use of economics? How should we be teaching it to the next generation?

To participate in this debate, please email your commentary to debates@voxeu.org

Lead CommentariesRecent CommentariesPopular Commentaries
Diane Coyle, 18 September 2012
What’s the use of economics? A new Vox debate


Andrew G Haldane, 28 September 2012

What have the economists ever done for us?

Political Calculations on recession in 2013

Ironman @ Political Calculations presented a measure which might indicate recession in 2013: the number of publicly-traded U.S. companies acting to cut their dividend payments each month.
A year ago, we presented a different measure showing a hightened probability of recession.
It seems that the change in populaiton is the reason for the companies to cut dividents.

Exploring Japan: on dismal perspectives of consumer prices

In this post, we continue to validate our predictions of the rate of consumer price inflation (CPI) in Japan by the estimate for 2011. The Japan Bureau of Statistics has estimated the rate of CPI inflation as -0.3%. Now we have an estimate of labour force for 2011 and are able to compare the observed and predicted  figures.  

We have been following inflation in Japan since 2005 when our first paper on the Japanese economy was published and covered the period through 2003. We have revisited inflation in Japan in 2010 and confirmed the predictions of deflation as expressed by the negative GDP deflator. In this blog, we also reported on deflation (both CPI and GDP deflator) several times.  

The case of Japan is the best illustration of our concept linking inflation to the change in labour force. (In a sense, all developed countries stay on the brink of deflation because of the threat of falling labour force.) Therefore we do not suggest the liquidity trap in Japan or any mistakes in monetary policy (inflation does not depend on monetary policy as our model shows.). The evolution of inflation is completely driven by the change in labour force. This is an unfortunate situation for Japan since the level of labour force can only fall in the long run due to the decreasing working age population.   

Previously, we carried out an estimation of empirical relationship between the change rate of labour force, dlnLF(t)/dt, and inflation, p(t).  

First, we test the existence of a link between inflation and labour force. Because of the structural (likely related to definition and measurement procedure) break in the 1980s, we have chosen the period after 1982 for linear regression. By varying the lag between the labour force and inflation one can obtain the best-fit coefficients for the prediction of CPI inflation, p(t),  according to the following relationship (updated with new data since 2009): 

p(t) = 1.39dlnLF(t-t₀)/dt + 0.0004                                (1)

where the time lag t₀=0 years; standard errors for both coefficients are shown in brackets.  Figure 1 (upper panel) depicts this best-fit case. (The period after 2003 is highlighted.) There is no time lag between the inflation series and the labour force change series in Japan. Free term in (1), defining the level of price inflation in the absence of labour force change, is statistically undistinguishable from zero.

A more precise and reliable method to compare observed and predicted inflation consists in the comparison of cumulative curves. Short-term oscillations and uncorrelated noise in data as induced by inaccurate measurements and the inevitable bias in all definitions should be smoothed out in cumulative curves. Any actual deviation between two cumulative curves persists in time if measured values are not matched by the defining relationship.

The predicted cumulative values shown in the lower panel of Figure 1 are very sensitive to the free term in (1). For Japan, the cumulative curves are characterized by complex shapes. There are periods of intensive inflation and a deflationary period. The labour force change, defining the predicted inflation curve, follows all the turns in the measured cumulative inflation.

One can conclude that relationship (1) is valid and the labour force change is the driving force of inflation. Statistically, the evolution of the overall level of consumer prices in Japan is fully defined by the change in labour force. Hence, no other variable or process can affect the change in price. Otherwise, the statistically reliable link would not exist.  

Having the projection of labour force borrowed from the National Institute of Population and Social Security Research, one can predict the future of CPI inflation in Japan. It will be decreasing to the level of -1% per year in 2050.  

Conclusion: invite immigrants and start a baby boom today! Otherwise, the level of consumer prices in 2050 will be a half of that of today.  

 

Figure 1. Measured inflation (CPI) and that predicted from the change rate of labour force. Upper panel:  Annual curves. Lower panel: Cumulative curves between 1982 and 2011. A good agreement between the cumulative curves illustrates the predictive power of our model.

 

Figure 2. Scatter plot: predicted vs. measured rate of CPI inflation.

Figure 3. Projection of the labour force evolution between 2005 and 2050.

Figure 4. The rate of CPI inflation in Japan through 2050.

Oil price in 2012-2013

This is a revision to our oil price prediction as based on the difference between the overall PPI and the index of crude oil. Figure 1 compares our previous prediction in May 2011 with actual oil price in 2011 and 2012. In August 2011, the predicted price was a bit higher than the measured one. We expected the price to fall by approximately $5 per month to the level of ~$70 by December 2011. In reality, the price reflected from the high bound of the expected price (dashed line) and grew during the end of 2011. This effect reflects the high level of price volatility during short time intervals. Since February 2012, the price has been returning to the expected price range which expresses the slow fall through 2016, with the uncertainty bounds for the long-term trend in oil price shown in Figure 1. The level of oil price in 2016 is expected between $30 and $60 per barrel.

Here we confirm the oil price trend and its bounds. Red squares show our prediction of oil price through February 2013. Despite local fluctuations, the trend is negative and will bring the price to $45 (±$15) per barrel in 2016.  

Figure 1. The evolution of oil price since 2001 as estimated from the differnce of the overall PPI and the PPI of crude petroleum.

CPI and core CPI. A half-year report

We have been routinely reporting on the difference between the headline and core CPI since 2008. Figure 1 illustrates our general finding that this deference can be well approximated be a set of linear trends. The last trend likely finished in 2009. That’s why we expected a new trend to evolve since 2010 into the late 2010s.

The U.S. Bureau of Labor Statistics has reported the estimates of various consumer price indices for August 2012. Figure 2 shows the predicted trend and the actual difference since 2010. The difference has been fluctuating around zero between June 2011 and  January 2012 and then showed a turn to the predicted trend.  Essentially, the zero difference suggests that the core and headline CPI are practically equal and evolve at the same monthly rate, i.e. the joint price index of energy and food has been following the price index of all other good and services (the core CPI) one-to-one.

Currently, the price index of energy slowly falls together with oil price. We expect them to fall deeper and thus the headline CPI to decelerate a bit together with energy. If the core CPI will retain its current cohesion with the headline CPI, we will have a period of very low inflation in all goods and services less energy and food. 

Figure 1. Two trends in the difference between the healine and core CPI.

Figure 2. The evolution of the difference between the core and headline CPI since 2002.