Many policy design issues depend crucially on the nature of the idiosyncratic risks to labour income. The earning dynamics literature has typically relied on an implicit or explicit assumption that earnings shocks are log-normally distributed. This column challenges conventional knowledge by bringing in new evidence from a very large administrative dataset on US workers. It presents evidence suggesting income shocks exhibit substantial deviations from log-normality, and that shock persistence depends on income levels as well as the size and sign of the shock.
Fatih Guvenen, Fatih Karahan, Serdar Ozkan, Jae Song, Wednesday, April 29, 2015
Tony Atkinson, Salvatore Morelli, Wednesday, March 26, 2014
Inequality – long ignored – is now centre stage in debate about economic policy around the globe. This column introduces the Chartbook of Economic Inequality, a summary of long-run changes in economic inequality for 25 countries over more than 100 years.
Robert C Feenstra, Robert Inklaar, Marcel Timmer, Monday, September 2, 2013
Why some countries are richer than others is among the most difficult and important questions in economics. Yet, the Penn World Table, widely used to compare living standards across countries, has faced criticism in recent years. This column discusses how the new version of the tables both addresses these criticisms and provides a wider range of tools that will help researchers gain insight into why income differs across countries.
Sambit Bhattacharyya, Jeffrey G. Williamson, Saturday, August 10, 2013
What distributional effect do natural-resource booms have on wealth, income and economic power? Using Australia as a case study, this column argues that resource booms tend to exacerbate inequality. The distributional impact of commodity-price shocks in Australia yield important lessons for primary producers from the developmental south, and it’s important for resource-rich developing countries to design appropriate policies to tackle this inequality.
Diego Comin, Martí Mestieri, Tuesday, May 28, 2013
Cross-country inequality is persistent. This column draws on economic history to explain the mechanisms by which dramatic cross-country differences in income emerge. We can reduce inequality through policies that facilitate the penetration of new technologies in poor and middle-income countries. Such policies can go a long way towards reducing existing cross-country income disparities.
Markus Brückner, Mark Gradstein, Thursday, April 4, 2013
Average income per capita is strongly correlated with more schooling, but this relationship is more complex than it appears. This column presents new research showing that a large part of the correlation is attributed to the causal effect of economic prosperity on the formation of human capital via schooling.
Pierre-Richard Agénor, Otaviano Canuto, Michael Jelenic, Friday, December 21, 2012
Many of the emerging economies of the last two decades are now ensnared by ‘the middle-income trap’, in which middle-income countries don’t quite push through to high income status. This column presents recent research suggesting that, if governments act early and decisively to improve access to advanced infrastructure, enhance the protection of property rights, and reform labour markets, trapped economies – like their East Asian counterparts in the 1990s – can push on through.
Tullio Jappelli, Luigi Pistaferri, Friday, April 2, 2010
How does consumption respond to a change in income – whether expected or unexpected, temporary or permanent? This column reviews evidence from diverse sources and suggests that if financial market arrangements and liquidity constraints are binding, even changes in income that are predictable can have a significant effect on consumption. This supports the idea that tax changes can have a considerable impact on expenditure.
Andrew E. Clark, Friday, April 2, 2010
Andrew Clark of the Paris School of Economics talks to Romesh Vaitilingam about his research on the relationship between income and health, which examines changes in the health and health behaviours (smoking and drinking) of British people who win prizes in the national lottery. The interview was recorded at the Royal Economic Society’s annual conference at the University of Surrey in March 2010.
Jonathan Guryan, Erik Hurst, Melissa S. Kearney, Saturday, July 5, 2008
Everyone knows that educated people earn more, smoke less, are less likely to be obese and live longer. This column discusses recent research that shows more educated parents also spend more time with their kids – a result ripe with implications for the inter-generational persistence of income and health inequalities.
Daron Acemoglu, Simon Johnson, James A Robinson, Pierre Yared, Monday, August 20, 2007
Why are some societies democratic, others not? Why do some societies develop modern effective nation states, while others do not? Why do some societies experience revolutions, while others undertake more gradual change? And finally, why are some relatively prosperous, while others are not?