INDEX

Note: Page numbers followed by b indicate boxes, / indicate figures and t indicate tables.

A

Absolute income hypothesis, 1502—1504 Accumulation model, 1468

Active labor market policies (ALMP), 1620, 2112-2116

Actual vs.

Agglomeration economies, 1848, 1867

Aggregate inherited wealth, 1327, 1331

Aggregator function, xxvii-xxviii

Aiyagari economy, 1278

Aiyagari model, 1242-1246

Aiyagari problem, 1279-1280

All the Ginis (ATG) data set, 1745

ALMP. See Active labor market policies (ALMP) Americans with Disabilities Act (ADA), 1448-1449

Anchored income poverty rates, 2122, 2124t

Anglo-Saxon-style

negative income taxes, 2099-2100 tax credits, 2100

Annual earnings

dispersion, 1551-1552

distribution, 1537-1538,1545-1546,1554/, 1555 full-time employees, 1586t

and hourly wages, 1660

Annual Social and Economic Supplement

(ASEC), 2151

Antipoverty policy

distributive justice, 1969-1970 economic crisis, 2120-2126 economic development, 1968-1969 first poverty enlightenment, 1979-1984 generic issues, 2028-2031

health and education, 1985

information campaigns, 2043 microfinance schemes, 2040-2041

moral weaknesses, 1984-1985 philosophical and economic thinking, 1970 policy incentives, schooling, 2037-2039 poor-area development programs, 2041-2043 Poor Laws, 1985-1987

progressive market economy, 2010-2018 schooling, 1988-1990, 2034-2037

second poverty enlightenment, 1994-2010 socialism, 1990-1991

social research, 1991-1994

state-contingent transfers, 2031-2032 utilitarianism, 1987-1988

utility of poverty, 1974-1979, 2018-2028 wages, 2044

wealth dynamics, 1971-1974

workfare, 2032-2034

working class diets, 1984

Asian tax systems, 1875

Assets, 1240

effect, 1860

non-state-contingent, 1241

Autarky, 1285, 1285t

Automatic adjustments indicators, 2155-2157

B

Balance sheet adjustment recession, 1859

Bankruptcy laws, 1279-1281

Bargaining models, 1386-1388

Bargaining power, xlviii

shocks, 1260

Bargaining theory, 1387

Barro-Lee dataset, 1927

Basic income scheme, 2029-2030

Basket of goods approach, 2066-2067

Behavioral changes

individual reactions, 2167-2169

labor supply models, 2169-2172

Behavioral microsimulation, 2201

Behavioral tax-benefit mode, 2170, 2170f Bequest-in-the-utility-function models, 1345-1347 Between-group inequality, 1624-1634, 1625/,

1626/ 1630b, 1633/

Borrowing limits, wealth distribution, 1274-1279, 1275t, 1276/

Brain drain hypothesis, 1870

Brain gain hypothesis, 1870

Breadwinner model, single-earner, 1536-1537

British

earnings dispersion, 1580, 1581f

earnings inequality, 1580

British Household Panel Survey (BHPS), 2150

British Second Reform Act of 1868, 1897 Business cycle

inequality and, 1256-1264

models, financial market frictions in, 1264

C

Canada

earnings dispersion, 1580, 1581f

earnings inequality, 1580

Canonical model, 1606-1607

Capital-to-labor ratio, 1853 Captured democracy

British Second Reform Act, 1897

de facto power, 1895

de jure constitutional provisions, 1896 political system, 1895

redistributive constraints, 1897

taxation, 1896-1897

Case poverty, 2002-2003

Cash public social expenditure, 2081, 2082f

Cash transfers, inactive working-age population at-risk-of poverty rate, 2090 income drop, 2089 labor market policies, 2093

minimum income protection, 2089

minimum wages, 2092, 2093f

MIPI dataset, 2090

social safety net, 2090, 2091f

social spending, 2088

social transfer spending, 2091-2092 unemployment benefits, 2088-2089 unemployment/disability insurance, 2088 CES.

benefit packages, 2095

care, 1667

contingent incomes, 2157, 2165-2166

labor, 2036

Child poverty, 2072, 2180-2181, 2182f

child cash transfers, 2094-2095

Child Poverty Act 2010, liv

Chronic health problems, 1478

Classification of Individual Consumption by

Purpose (COICOP), 2194

Cobb-Douglas function, 1248, 1257

Coefficient of democracy, 1920

Collective labor supply model, 1405-1406

Collective model, 1374-1379

Collective model, empirical findings, 1403-1415 first-generation models, 1403, 1404, 1408 identification of sharing rule, 1404-1409, 1413-1415

over time and sharing rule, 1409-1410 revealed preference restrictions, 1413-1415

Collective model, identification, 1391-1400

Cobb-Douglas example, 1396-1400 comparisons between families, 1400-1401 under exclusion, 1399-1400 general case, 1396, 1398-1399 global restrictions, 1395

Hicks’s aggregation theorem, 1392-1393 household demand, 1397-1398 local identification, 1393-1394 market equilibrium, 1402 private goods, 1393-1395

public goods, 1395-1396

result, 1391-1393

sharing rule, 1393-1395

Conditional cash transfers (CCTS), 1874

Conditional sharing rule (CSR), 1380

Constant elasticity of substitution (CES), 1265

Constant relative risk-aversion (CRRA) preferences, 1238

Contingent markets, 1278

Country balance sheets, 1308

CPS. See Current Population Survey (CPS)

Credit score, 1281-1282

Credit shock, 1263, 1264f

Cross-country comparisons, 2179-2182

Cross-country differentials, 1734, 1810t

Cross-country regression techniques, 1860, 1868

Cross-country studies

All the Ginis data set, 1745 chartbook of economic inequality data, 1747 Deininger-Squire data set, 1743-1744

EU statistics, 1741-1742

GINI inequality and poverty dataset, 1747

International Labor Organization database, 1747 Luxembourg Income Study, 1741

OECD data, 1742-1743

PovCal database, 1746

SociiDmetro-BID, 1746

strategies, 1739—1740

SWIID database, 1748-1749

TRANS-MONEE database, 1746-1747 University of Texas Inequality Project, 1748 UNU-WIDER database, 1744-1745

World Development Indicators, 1746

World Top Incomes Database, 1748

WYD data set, 1745-1746

CSR.

Current Population Survey (CPS), 1233

D

Data and descriptive statistics dichotomous variable, 1914 national income statistics, 1915 nondemocracy and democracy, 1916-1917,

1916t

political institutions, 1914

political rights, 1913-1914

Standardized World Inequality Indicators

Database, 1915-1916

World Top Incomes Database, 1915 worldwide average democracy, 1917, 1917f Data heterogeneity implications, xxxvii-xxxix Data on inequality

care with data, xxxi-xxxii

checklist of questions, xxxiv-xxxvii, xxxiv-xxxv, xxxv-xxxvi, xxxix-xli

international databases, xxxiii

relation with national accounts, xxxvi-xxxvii source of data, xxxvi

Data splicing method, 1754

Decomposing static policy effects

disposable income, 2161

end-period income level, 2161 headcount poverty ratio, 2162-2163 household income, 2159-2160 hypothetical tax-benefit reforms, 2160 monetary parameters, 2160-2161 money-metric policy parameters, 2161-2162 price-indexation, 2163

Shorrocks-Shapley approach, 2163-2164 sociodemographic characteristics, 2160 tax-benefit models, 2159

Defined benefits (DB), 2102-2103

Deininger-Squire data set, 1743-1744

Democracy

captured, 1895-1897

cross-national regressions, 1889

data and descriptive statistics, 1913-1917 dependent variable, 1957 disenfranchisement, 1909

econometric specification, 1910-1913 economic and political forces, 1901 economic opportunities, 1901

education, 1905-1907

effect on taxes, 1918-1927

Freedom House index, 1956-1957

global economy, 1889-1890

health outcomes, 1907-1908 heterogeneity, 1889-1890, 1943-1953 inequality, 1889, 1904-1905, 1928-1935 manufacturing wages, 1955-1956, 1956t,

1957, 1958t

market opportunities, 1897-1898 measures, 1959-1960

Meltzer-Richard model, 1887-1888 middle class bias, 1898-1901

OECD countries, 1887

political system, 1886

public good provision, 1908-1909 redistributive and equalizing effects, 1890-1892 right-wing political party, 1894-1895

Rodrik’s data generating model, 1955

secondary school enrollment, 1889

social mobility, 1894

structural transformation, 1892-1894, 1935-1943 taxes and redistribution, 1902-1904

tax revenues, 1888-1889

voting technology, 1908

welfare expenditures, 1909

Dependent variable, income inequality definition, 1750-1751

reliability, 1752-1755

variability, 1751-1752

Deterministic neoclassical growth model, 1237

DI.

Dictionary of Occupational Titles (DOT) classifications, 1609-1610

Director’s law, 1888

Disability Discrimination Act (UK, 1996), 1448-1449

Disability insurance (DI), 1449-1451, 1459,

1467, 1474

Distribution factors, 1377—1378

Distribution of earnings

concentration and skewness, 1235t

U.S. economy, 1233—1235, 1234t

Distribution of wealth, l—liii

Dual-earner, 1546

households, 1553

Dynamic model

joint decisions, 1488

microsimulation, 2196—2198

DYNASIM, 2196

E

Earned income tax credit (EITC), 1489-1490, 2088, 2099

Earnings

distribution, 1540-1561

negative, 1233

risks, steady-state equilibria, 1285-1286, 1286/

stationary theories of, 1241-1246

stochastic representation, 1242

Earnings dispersion, 1266

British, 1580

Canada, 1580, 1581/

Germany, 1580, 1581/

United Kingdom, 1580, 1581/

Earnings inequality

Canada, 1582, 1582/

cross-sectional approach, 1643-1648, 1644t, 1646f 1648/

decomposition, 1635t

effects of institutions on, 1638t

European countries, 1585-1592, 1586/, 1586t, 1587t, 1588f, 1589/, 1591/

evolution, 1583

Germany, 1582, 1582/

Iceland, 1585-1592, 1586/ 1586t, 1587t, 1588f, 1589/ 1591/

labor market, US, 1608

LMIs and, 1642t

longitudinal/pseudo-longitudinal approach, 1648-1653, 1649t, 1650/, 1652t, 1655/

Norway, 1585-1592, 1586/, 1586t, 1587t, 1588/, 1589/, 1591/

OECD countries, 1583-1585, 1584/, 1585/ short-run, 1583-1585, 1585/

United Kingdom, 1582, 1582/

United States, 1573-1579, 1575/, 1576/, 1578/, 1579/, 1585-1592, 1586/, 1586t, 1587t, 1588/, 1589/, 1591/

Earnings inequality theories, 1246-1256, 1606-1612

human capital investments (see Human capital investments)

prices of skills, 1251-1252

search and inequality, 1252-1253 workers’ choice of occupation, 1254-1256 ECHP. See European Community Household Panel (ECHP) survey

Econometric specification

country fixed effects, 1911 dynamic panel model, 1912-1913 forward orthogonal differences, 1912 GDP ratio, 1910-1911 generalized method of moments, 1912 inequality measures, 1913 mean-reverting dynamics and persistent effects, 1911

tax revenue, 1910-1911

Economic consequences, early-life ill-health, 1466-1468

Economic crisis, 1858-1861

Economic determination, health inequality, 1476-1478

causal effects, 1482-1489 causality tests, 1478-1482 reverse causality, 1485

Economic impact, estimation, 1467

Economic inequality, health determination, 1436-1476, 1499-1500

absolute income hypothesis, 1502-1504 cognitive capabilities, 1460-1462 economic consequences, 1466-1468 education, 1462-1465 empirical challenges, 1504-1505 fetal origins hypothesis, 1465-1466, 1468 health capabilities, 1460-1462 hypothesis, 1500-1502 income inequality hypothesis, 1505-1511 noncognitive capabilities, 1461-1462 relative income hypothesis, 1502-1504, 1512 Economic inheritance flow, 1342 Economic Opportunity Act of 1964, 2003 Economic slowdown, 1859 Economic theory, xli-liii distribution of wealth, l—liii endogenous technological change, xlvi—xlvii race between technology/globalization and education, xliif, xli—xliii

steady states and transitional dynamics, xliii—xlvi supply and demand, xlviii

Education, 2112—2116 econometric work, 1906 identification strategy, 1906 lagged democracy, 1907 secondary-school gross enrollment rates, 1906 social spending, 1905—1906 spending decisions, 1907 sub-Saharan Africa, 1906

EITC.

Employment rates, United Kingdom, 1545-1546, 1546f

Endogenous financial markets, 1279-1281

Endogenous growth models, 1347

Engel's Law, 1991

England's PoorLaws, 1977-1979

Entrepreneurial net worth, 1264

Entropy-type measures of inequality, 1750

EPL theory. See Employment protection legislation (EPL) theory

Equilibrium models, 1388-1390

Euler equation, 1239-1240, 1273

EUROMOD, 2147-2148, 2180

European antipoverty policy, 2070

European Community Household Panel (ECHP) survey, 1571, 2069-2070

European countries, household employment, 1544, 1545f

European Union Statistics on Income and Living Conditions (EU-SILC), 1741-1742, 2069-2070

Expenditure switching, 1863

Ex post inequality, 1241

Extended income, 2192-2196

F

Factor-price national income, 1350-1351, 1350f Factor shares determination, 1258-1263

Family annual earnings distribution vs. individual annual earnings distribution, 1555

Family earnings distribution (1980 to 2005), Canadian development, 1557

Female-wage differentials, 1864

Fetal origins hypothesis, 1465-1466, 1468 Financial accelerator

and inequality, 1264

model, 1264

Financial constraints, 1274, 1282, 1294

Financial crises, 1859

Financial development, long-run growth and, 1282-1283

Financial market

frictions, 1264, 1273

heterogeneity, 1287

imperfections, 1272 inequality and, 1272-1288

and investment possibilities, 1272-1274

Financial shocks, 1260-1263

First poverty enlightenment

balance of trade, 1982

basic income scheme, 1983 deprivations, 1979-1980

French Revolution, 1980-1981 hard-working poor people, 1983-1984 human institutions, 1981

illiteracy, 1983

local religious organizations, 1982 noncompetitive market processes, 1979 promotional antipoverty policies,

1982-1983

redistributive taxation, 1983

social contract approach, 1981

Fiscal devaluation, 2195-2196

Fiscal flow, 1339-1340

Fiscal retrenchment, 1860

Fixed-effects methodology, 1737

Fixed effects models, 1485, 1490, 1505 Flow of Funds balance sheets, 1319-1320 Food-for-Education Program, 2037-2038 Forecasting, income distribution, 2178 Foreign direct investment (FDI), 1857 Foreign markets, 1868-1869

Freedom House of Polity III, 1905

Full-gross wage, 1565-1566

Full-time-working single-earner households, 1546-1547

G

Gastil index, 1903

Gender inequality, 1862-1865

General equilibrium, and impact of competition,

1268-1269

Generalized sharing rule (GSR), 1380-1381

Germany

earnings dispersion, 1580, 1581f

wage inequality, 1610-1611

Gini coefficient, 1846-1847, 1871-1872, xxii-xxiii disposable income, 2074-2075, 2076f

Gini index, 1585, 1633-1634

GINI Inequality and Poverty Database, 1747, 1752

Global imbalances, 1283-1288

Globalization, 1283, 1284, 1733-1734

financial flows, 1848

gender inequality, 1862-1865 international migration, 1869-1872

national and global policy responses, 1873-1876 remittances, 1869-1872

trade openness, 1865-1869

Global policy, 1873-1876

Government budget constraint, 1891, 1898-1899

Government revenue, 1922-1924, 1923t, 1924f Grameen Bank (GB), 2040-2041

Grand inequality regression equation (GIRE), 1734, 1735-1739

Granger causality analysis, 1482-1485

Great Depression, 1283

Gross wages, 1565-1566

Group-based lending scheme, 2040-2041

GSR.

H

Hansen overidentification test, 1922, 1928

Harrod-Domar-Solow steady-state formula, 1344

Head Start program, 2039

Health

behavior, wealth effects, 1479t, 1483t dynamic evolution, 1457

effects on labor market, 1444t, 14451

gradient in income, 1427

and household income, 1470-1471

and income, 1422-1423, 1425-1436,

1426f 1508t

income inequality to, 1423 multidimensionality, 1437-1438

and occupation, 1468-1470

and wealth, 1471-1473

Health and Retirement Study (HRS), 1443-1447, 1455, 1456, 1472-1473

Health and wages, 1437-1447 discrimination, 1439-1441 estimated effects, 1437-1438 evidence, 1442-1447 nonpecuniary benefits, 1441-1442 nonwage costs, 1441-1442 nutrition, 1438, 1439 productivity, 1437-1439

Health and work, 1447-1459

disability insurance, 1449-1451, 1459 evidence, 1453-1459

incapacity, 1448-1449

involuntary unemployment, 1448-1449

life expectancy, 1452

preferences, 1451-1452

Health-capital model, 1477, 1490

Health determination, economic inequality, 1436-1476, 1499-1500

absolute income hypothesis, 1502-1504 cognitive capabilities, 1460-1462 economic consequences, 1466-1468 education, 1462-1465

empirical challenges, 1504-1505

fetal origins hypothesis, 1465-1466, 1468 health capabilities, 1460-1462 hypothesis, 1500-1502

income inequality hypothesis, 1505-1511 noncognitive capabilities, 1461-1462 relative income hypothesis, 1502-1504, 1512 Health disparity, 1427

Health inequality, economic determination, 1476-1478

causal effects, 1482-1489

causality tests, 1478-1482

reverse causality, 1485 Hecksher-Ohlin (H-O) model, 1847 Heterogeneity of income distributions, xxxvii-xxxix

Heterogeneous firms, 1856

Hicks’s aggregation theorem, 1392-1393 High-income countries, 1492-1496, 1501f High-income economies, 1447, 1473-1474 High-income labor, 1847

High top tax rates, 1614

High-variability economy, 1286

Horizon effect, 1452

Hourly wages

dispersion, 1581f

distribution, 1543—1544

inequality, 1576/, 1588—1590 percentage changes, 1578f rate, 1660

Household

behavior model, 1370, 1373, 1378—1386 composition effects, 2157

decision making model, 1374—1375 demand, 1391, 1397-1398 disposable income, 2181/ domestic production, 1384-1386 earnings distribution, 1553 employment, European countries, 1544, 1545f equivalent income, 1429f formation, 1546-1547 labor supply, 1540, 1655-1656 per capita income, 1427, 1428f total earnings vs. individual wages, 1553, 1554f Household incomes, 1544-1547

distribution, 1547-1561

and earnings, 1670-1713, 1670t

health and, 1470-1471

impact of ill-health on, 1474-1475

inequality, decompositions, 1553-1560

tax treatment, 1667

HRS. See Health and Retirement Study (HRS)

Human capital investments, 1247-1250

interact with skill-biased technical change, 1271-1272

vs. learning by doing, 1250-1251 Humphrey-Hawkins Full Employment and

Balanced Growth Act of 1978, lix-lx

I

Identification, collective model, 1391-1400

Cobb-Douglas example, 1396-1400 comparisons between families, 1400-1401 under exclusion, 1399-1400

general case, 1396, 1398-1399

global restrictions, 1395

Hicks’s aggregation theorem, 1392-1393 household demand, 1397-1398 local identification, 1393-1394 market equilibrium, 1402 private goods and sharing rule, 1393-1395 public goods, 1395-1396

result, 1391-1393

Immediate post-war theories

East Asia, 1851

export pessimism, 1850 global economy, 1852 globalization and inequality, 1849 import substitution strategies, 1850-1851 labor scarcity, 1850 land reforms, 1852

multisector planning models, 1850-1851 open economy, 1849-1850 outward-oriented policies, 1851-1852 pure closed economy, 1849 trade and investment, 1850

Income-based poverty research, 2068-2069 Income effects

on child health, 1492-1497, 1494t high-income countries, evidence from, 1492-1496 low-and middle-income countries, evidence from, 1496-1497

on medical care, 1491

Income elasticity, 1491

Income equivalent approach, xxviii

Income inequality, 2120-2122

of capabilities, xxix

components, 1625f cross-country studies (see Cross-country studies) data on (see Data on inequality) decompositions, 1429f

defined, xxvii-xxviii

different facets of, xxi-xxxi

economics literature, 1731-1732 factors to, 1432

grand inequality regression equation, 1735-1739 to health, 1423

high-income countries, 1501f income (see Income inequality) individual-level evidence, 15081 life expectancy and, 1501f measures and variability, 1750-1755 monetary, xxi-xxv

multidimensional, xxvii-xxviii research questions, 1732-1734 spatial, xxiv

United States from 1913, xixf using life satisfaction, xxviii-xxix

Income poverty rates

EU countries, 2077-2078, 2078t

OECD countries, 2073, 2074t, 2075t

Income tax

vs. administrative statistics, 2207-2210 on labor supply, 1794 microsimulation estimation, 2185 negative, 2077, 2127 redistributive effects, 1792 returns and capitalize, 1319-1320 revenues in the US, 2156

Income thresholds, 2065-2066

Indirect taxes, 2192-2196

Individual annual earnings distribution vs. family annual earnings distribution, 1555

Individual incomes, 1544-1547

Inequality

between-group, 1624-1634, 1625/ 1626/ 1630b, 1633/

and business cycle, 1256-1264 consumption expenditure, 1846 democracy, 1895-1897, 1904-1905, 1928-1935 Europe vs. United States, 1325-1326 evolution of, 1551 ex post, 1241 extended Human Development Index, xxvii-xxviii

financial accelerator and, 1264 and financial markets, 1272-1288 gender (see Gender inequality) international migration, 1869-1872 low frequency movements, 1265-1272 macromodels of, 1236-1256 market opportunities, 1897-1898 measurement, 1562-1565 middle class bias, 1898-1901 Netherland, 1425-1427 political economy of, 1288-1295 skill-biased technical change, 1269-1272 spatial, 1865-1869

within-group, 1634-1643, 1635t, 1638t, 1642t

Inequality dynamics, 1256-1272

Inequality index derivation, 1296-1297

Inequality of opportunities, xxix-xxxi Inheritance flow

Europe, 1339, 1339/

vs. mortality rate, 1336, 1336/ national income ratio, 1334-1337

vs. saving flow, 1333-1334

Inheritance stock-aggregate wealth ratio, 1337-1339

Inherited wealth

basic notions and definitions, 1327-1328

Britain, 1339-1340

France, 1334-1339

Germany, 1340 inheritance flows vs. saving flows, 1333-1334 Kotlikoff-Summers-Modigliani controversy, 1328-1330

limitations of KSM definitions, 1330-1331

PPVR definition, 1331-1332

Sweden, 1341

United States, 1342

Inter-American Development Bank, 1746 International financial institutions (IFIs), 2015 International Labor Organization (ILO) database, 1747

International Microsimulation Association (IMA), 2146

International migration, 1869-1872

Intrahousehold allocation determinants, 1386-1390

Intrahousehold inequality

and children, 1410-1412

between individuals, 1370-1373 over time and sharing rule, 1409-1410

Inverted U hypothesis, 2011

Investment possibilities, financial markets and, 1272-1274

Involuntary unemployment, 1448-1449

J

Justification bias, 1453

K

Kaitz index, 1562-1563

Kotlikoff-Summers-Modigliani (KSM) controversy, 1328-1331

L

Labor

households, 1540-1542, 1541/

inputs, demand and supply, 1606-1612 relations quality, 1603

share’s reduction, 1265-1266

Labor Force Survey (LFS), 2177-2178

Labor market, 2112-2116

earnings inequality, 1608

imperfect competition in, 1606

model, 1252

outcomes, health effects on, 14441, 1445t

policies theory, 1620

regulations, 1603

status, 2174-2176

Labormarketinstitutions (LMIs), 1536-1537, 1538, 1547-1561, 1601-1606

between-group inequality and, 1624-1634, 1625/ 1626f 1630b, 1633/

cross-sectional approach, 1643-1648

data sources and descriptive statistics, 1665-1669, 1668t, 1669t

defining and analyzing, 1596-1601

empirical assessment, 1623-1655 gross earnings inequality, 1644t, 1652t, 1654t longitudinal/pseudo-longitudinal approach, 1648-1653, 1649t, 1650/ 1652t, 1655/

recent theories based on, 1612-1622

role, 1593-1596

wage dispersion and, 1670-1713

wage inequality and, 1623-1655

within-group inequality and, 1634-1643, 1635t, 1638t, 1642t

Labor supply, 1610

changes, 2166-2167

models, 1405-1406, 2145

Latin American economies, 1874

Legal origin theory, 1601-1603

Lewis-Kuznets model, 1854

Lewis turning point, 1857

Liberalization, 1287

Life course model, 1468

Life-cycle income analysis model (LIAM), 2198

Life expectancy, 1452

and income inequality, 1501/

Lifetime redistribution, 2196-2198

Living Standards Measurement Study (LSMS), 2008 LMIs. See Labor market institutions (LMIs)

Local social welfare offices, 2187

Longitudinal data tracking household income, 2068-2069

Long-run growth, and financial development, 1282-1283

Lorenz curves, 1233, xxiii/, xxii-xxiii

Lower-income economies, 1474

Low-variability economy, 1285, 1285t, 1286 Low-wage employment, 1564-1565, 1565/ Luxembourg Income Study (LIS), 1741, 2005, 2065-2066

M

Macro-and micro-based regression methodology, 1738

Macroeconomics

effects, 2172-2174

panel approach, 1737

policy, 2145-2146

statistics, 2182-2186

volatility, 1858-1859

Macromodels of inequality, 1236-1256

Mahatma Gandhi National Rural Employment Guarantee Act in 2005, lix-lx

Marginal effective tax rates (METR), 2153-2154, 2165

Market

equilibrium, 1402

opportunities, 1897-1898

value national wealth, 1309

Marriage market, 1470

Material deprivation rate, European countries, 2122, 2125t

Mean log deviation, 1585

Means-tested transfer payments, 2028-2029 Median voter theorem, 1893

Medical care, income effects, 1491

Meltzer-Richard model, 1887-1888 Microeconometric analysis, 2113-2114

Microfinance schemes, 2040-2041 Microsimulation

academic communities, 2200-2201

behavioral, 2143-2144, 2201

challenges and limitations, 2182-2192 collaborative approach, 2204-2205 data and methodological developments, 2202-2203

dynamic model, 2143-2144

economic literature, 2144-2146

EUROMOD, 2147-2148

extended income, 2192-2196

household incomes, 2149

income distribution, 2142, 2150-2157

indirect taxes, 2192-2196

lifetime redistribution, 2196-2198

Microsimulation (Continued)

public policy, 2142—2143

redistribution, 2150—2157

social and economic policies, 2142—2143 static model, 2143—2144

statistical reliability indicators, 2149

subnational and supranational modeling, 2198-2200

tax-benefit model, 2143

Millennium Development Goals (MDGs), 2009-2010, liv

Minimum income protection indicators (MIPI), 2090

Minimum wage legislation, 2033

Minimum wage theory, 1615-1618, 1665 Minority poverty, 2002

MMWI. See Money Metric Welfare Index (MMWI)

Mobility-impeding disability, 1437-1438 Modified Director's Law, 1900

Monetary inequality, xxi-xxv

Money Metric Welfare Index (MMWI), 1381-1382, 1400

Multidimensional inequality measurement, xxvii-xxviii

Multiple-earner households, 1546, 1553 Multiplicative random shocks models, 1355-1356

N

Nash bargaining, 1387-1388

Nash equilibrium, 1281

National policy, 1873-1876

National poverty reduction target, 2070

National vs. foreign wealth, 1318-1319, 1318f

National wealth-national income ratio, 1310

Neoclassical model, 1237-1238

Net-of-depreciation income, 1309

Net-of-tax rate of return, 1343-1344

Net worth

entrepreneurial, 1264

in U.S. economy, 1234t

New economic geography, 1867

Nonagricultural share

GDP, 1936, 1939t

population, 1936, 1937t

Noncash social spending

household surveys, 2110

insurance premium, 2110-2111 intergenerational accounting, 2111-2112 market price, 2110

relative income poverty threshold, 2111

social expenditure, 2108

Noncooperative bargaining model, 1387-1388

Nondemocracy, 1888

Nonmonetary indicators, 2069-2070

Non-state-contingent assets, 1241

Non-take-up model, 2186-2190

Nonwage costs, 1441-1442

North American Free Trade Agreement (NAFTA), 1868

Nowcasting, income distribution, 2176-2178

O

Occupation, health and, 1468-1470

Occupation-specific shocks, 1255

OECD income distribution database (IDD), 1742-1743

Ordinary least square (OLS) regression, 1736-1737 Overlapping generations models, 1238-1241, 1272 Own-wage elasticities, 2171, 2171f

P

Panel Study of Income Dynamics (PSID), 1244, 1245, 1285, 1443-1447, 1455

Paradox of redistribution, 2083

Parental leave, 1640-1641, 1667

Pareto distribution, 1856

Pareto efficiency, 1374

Participation tax rates (PTR), 2165

Pathways model, 1467

Pauperism, 1976

Pay-as-you-go social security pension wealth, 1309

Pensions

defined benefits, 2102-2103

dimensions of governance, 2102 financial sustainability issues, 2106

Gini coefficient, 2107-2108

old-age and survivor benefits, 2107-2108 old-age poverty, 2102-2103

policies, 1488-1489

poverty risk, 2104-2105, 2105f redistributive effects, 2108

social safety net transfers, 2105-2106

social security, 2105

wages, 2103-2104

Per capita income, household, 1427, 1428f

Pigou-Dalton principle, xxviii

Policy

change effects, 2158-2182

to date, impact, liv-lvii

objectives, liv

prospects for future, lvii-lviii

swaps, 2164-2165

thinking outside the box, liχf, lviii-lxi

Political economy

forces, 1294

of inequality, 1288-1295

Political insider mechanism, 1601-1603

Politicalpower theory, 1601-1603

Politicoeconomic complementarity, 1601-1603

Politico-economy theory, 1291

Poor-area development programs, 2041-2043 Population health-income inequality, 1506t, 1507t Post-policy income, 1898

Post-tax income, 1891

PovCal database, 1746

Poverty

antipoverty policy, 2064-2065

child, 2094-2095

conceptualizing and measuring, 2065-2071 economic crisis, 2064

income inequality and economic crisis, 2120-2122

intergenerational transmission, 2116-2120 in-work, 2096-2102

maps, 2041-2042, 2199-2200

measurement, 1994

noncash social spending, 2108-2112 rediscovery, America, 2001-2004 relative and subjective, 2004-2007 trends, 2072-2073

welfare state (see Welfare state)

Poverty gap, 2067-2068

Poverty traps, 1273-1274

Prediction, income distribution, 2174-2178

Preferred tax rate, 1291, 1292-1293, 1293/ Preston curve, 1500

Private commodities, 1379-1382

Private-goods and sharing rule, 1378-1379, 1393-1396

Private vs. government wealth, 1317-1318, 1318/

Private wealth-national income ratio, 1310, 1315,

1316/ 1317, 1317/

Productivity shocks, 1259-1260, 1259/

Progresa program, 2037-2038

Progressive market economy antitrade policies, 2016-2017 distributional dynamics, 2011 distribution-neutral growth, 2012-2013 external trade, 2016 financial underdevelopment, 2012 geographic disparities, 2016 globalization, 2013 income fare, 2015-2016 industrial policies, 2018

international financial institutions, 2015 inverted U hypothesis, 2011 macroeconomic stability, 2018 neoclassical growth theory, 2013 nontrade protection policy, 2017-2018 post-independence policies, 2013-2014 poverty reduction, 2014 price indices, 2012 relative poverty measures, 2010 trade policies, 2017 wages, 2010-2011

PSID. See Panel Study of Income Dynamics (PSID) PTR. See Participation tax rates (PTR) Public commodities, 1379-1382

Public goods, identification, 1395-1396 Publicly financed workhouses, 1976

Q

QUAIDS demand system, 1414

R

Rawls's Principles of Justice, 1998-2001 Redistribution

constraints, 1895-1897 equalizing effects, democracy, 1890-1892 social protection (see Social protection and redistribution)

taxes, 1294, 1902-1904

tax-transfer policies, 1733-1734

Reform Act 1832, 1893-1894

Reform policy, 2179 Regression methodology, 1736-1739 Relative deprivation, 1504, 2006 Relative income hypothesis, 1502-1504, 1508t, 1512

Relative income poverty thresholds, 2071 Relative position hypothesis, 1504

Relative prices and sectoral effects, 1859

Reliability assessment, microsimulation, 2190—2192 Remittances, 1869—1872

Retirement-income systems, 2102, 2103f Revenu de Solidarite Active (RSA) scheme, 2087 Revenue-neutral reforms, 2191—2192

Reverse causality, 1485, 1505 ReviewofEconomicDynamics (RED) (2010), 1556-1557, 1580

Reweighting approach, 2174-2175

Rich world’s poverty rediscovery, 2007-2010

Risk aversion, 1292-1294, 1293f

Risk neutrality, 1291-1292

S

SAH. See Self-assessed health (SAH)

SBTC. See Skill-biased technological change (SBTC)

SCF. See Survey of Consumer Finances (SCF)

Secondary school enrollment, 1936, 19411

Second poverty enlightenment

credit market, 1998

marginal social welfare, 1995-1996 market failure, 1997

nonutilitarian formulations, 1996

Pareto principle, 1997

poverty rediscovery, America, 2001-2004 promotional antipoverty policies, 1998 public attention, 1994-1995

Rawls’s Principles of Justice, 1998-2001 relative and subjective poverty, 2004-2007 rich world’s poverty rediscovery, 2007-2010 social ferment, 1995

utilitarian schema, 1995-1996

Self-assessed health (SAH), 1425-1427, 1432-1433, 1457, 1472-1473

decompositions of inequality, 1433-1435 earnings in, 1430f

employment rates by, 1431f

interval regressions, 14341

Self-employment income, 1233

SES. See Socioeconomic status (SES)

Sharing rule

global restrictions, 1395

local identification, 1393-1394

private-goods and, 1378-1379, 1393-1395

Sibling fixed effects, 1464-1465

Simple two-period model, 1288-1294

Single-breadwinner households, 1546 Single-earner households, 1546-1547 Single health variable (SAH), 1436 Skill-biased technological change (SBTC), 1594-1595, 1607-1608, 1609-1610, 1613-1614

hypothesis, xlvf, xli-xlii, xliii, xlv-xlvi, xlix wage dispersion, xlix

Skilled-to-unskilled labor ratio, 1853

Skill wage premium, 1270

Social exclusion, 2065

Social expenditure, 1667

Social inclusion indicators, 2068-2069

Social insurance, 2034

Social investment, 2123-2126

Socialism, 1990-1991

Social models, 1601-1603

Social protection and redistribution at-risk-of-poverty rate, 2084 cash public social expenditure, 2081, 2082f cash transfers, 2088-2094

child poverty and child cash transfers, 2094-2095 concentration index, 2085-2086, 2086f earned income tax credit, 2088 family formation incentives, 2087

GDP, 2080-2081

Gini coefficients, 2086 income security and cost compensation, 2084 insurance principle, 2085

means-tested benefits, 2083-2084 median voter theorem, 2084 minimum income system, 2087 minimum wage protection, 2081-2083 paradox of redistribution, 2083 pensions, 2085, 2102-2108 pre-transfer income, 2084 public expenditures, 2083 RSA scheme, 2087 social policy tools, 2081 social spending, 2081 social transfer policies, 2083 sociodemographic characteristics, 2085-2086 tax/transfer systems, 2086 universalism, 2087

working poor and in-work poverty, 2096-2102 working tax credit, 2087-2088

Social protection policies, 1975-1977

Social research, 1991-1994

Social Security Disability Insurance (SSDI) eligibility, 1450—1451

Social unrest, 1935

Social wage, 1565—1566

Socioeconomic status (SES), 1463,1469,1502—1503 SociiSmetro-BID, 1746

Spatial inequality, xxiv, 1865—1869

SSDI eligibility. See Social Security Disability Insurance (SSDI) eligibility

Standardized World Inequality Indicators Database (SWIID), 1748-1749, 1915-1916, õõõ³³³, xxxvii-xxxviii

State-level income inequality, 1509-1510 Stationary theory, 1241-1246

Statistical Office of the European Union (EUROSTAT), 1740-1741

Statistics on Income and Living Conditions (SILC), 1571

Steady-state capital share, 1349-1351 Steady-state equilibria, 1243

Steady-state factor prices, 1239

Steady-state wealth distribution, 1274-1275, 1275t Stepwise institutional change theory, 1621-1622 Stochastic mortality, 1240

Stolper-Samuelson theorem, 1847 Strike activity, 1665

Subnational and supranational modeling,

2198-2200

Survey of Consumer Finances (SCF), 1233, 1235-1236, 1242, 1341-1342

SWIID. See Standardized World Income Inequality Database (SWIID)

T

Tax, 2031-2032

allowances, 2094-2095 effect of democracy, 1918-1927 instruments, 2094-2095 noncompliance model, 2186-2190 and transfer policies, 1849

Tax-benefit microsimulation model (TAXBEN),

2144-2145

Tax-channeled in-work benefits, 2100-2101

Tax revenue, 1924-1927, 1925t, 1926t

residual of, 1920, 1921f

TAXSIM model, 2151-2152 Tax wedge, 1640, 1641, 1667 Three-goods H-O model, 1855

Time series regression methodology, 1737

Top income shares, xxiii-xxiv Top-incomes theory, 1614 Top marginal tax rates, 1614 Trade openness, 1865-1869

Transformative Monitoring for Enhanced Equity (TransMonEE) database, 1746-1747

Transitional dynamics, steady states and, xliii-xlvi

U

Uncertainty effect, 1452 Unemployment benefit theory, 1619, 1666 UNICEF, 1746-1747

Union density, 1597-1598, 1637-1640, 1641-1643, 1646-1647, 1653, 1665

Union presence theory, 1618-1619

United Kingdom

child benefit, 2205-2207

earnings inequality, 1580 employment rates, 1545-1546, 1546f

Family Resources Survey, 2183-2184

United States

distribution of earnings in economy, 1233, 1234f earnings inequality, 1573-1579, 1575f, 1576f 1578f 157f 1608

inequality, xiχf 1853

labor share in business sector, 1256-1257, 1257f net worth in economy, 1234f

poverty rate, 2072

wealth distribution, 1245-1246 wealth-income ratio, 1313, 1313f

Units of analysis, 1736, 2152-2153

University of Texas Inequality Project (UTIP), 1748, xxxiii

U.N. System of National Accounts (SNA), 1308 UNU-WIDER database, 1744-1745

Utilitarianism, 1987-1988

Utility of poverty

aggregate domestic savings, 2018 borrowing constraints, 2021 cheap labor supply, 1974-1975 colonialism, 2021

conditional cash transfer, 2028 consumption inequality measures, 2024-2025 credit market failure, 2020 cross-country regressions, 2025-2026 dominant economic theory, 1974 England's Poor Laws, 1977-1979

Utility of poverty (Continued)

exogenous income gain, 2023—2024 financial sector development, 2025 Gini index, 2024

growth-equity tradeoff, 2019-2020 health environment, 2022-2023 lending, 2023

living standards, 2026

long-run mean income, 2018

negatively sloped labor supply curve, 1974 neoclassical growth model, 2022 neoclassical theory, 2019

nonlinear wealth effects, 2027

savings and investment rates, 2022

schooling, 1975

social protection policies, 1975-1977 socioeconomic gradient, 2020

Solow model, 2019

wealth distribution, 2021

W

Wage

centralization, 1665

determination, 1606-1607

distribution, 1543-1544, 1610 earnings, data sources and tables, 1659-1664, 1661t, 1662t, 1663t, 1664t

equation with endogenous debt, 1297 flexibility, 1612

Wage dispersion, 1537-1538, 1543-1544, 1546-1547, 1560-1561

and institutions, 1686t

and LMIs, 1670-1713

polarization and offshorability approaches, 1680t Wage inequality, 1266-1269, 1856, xliii-xliv

between-group, 1624-1634, 1625f 1626f 1630b, 1633f

debate (1980-2000), 1593-1596

evolution of, 1573-1585

Germany, 1610-1611

LMIs and, 1623-1655 longitudinal/pseudo-longitudinal approach,

1579f 1648-1653, 1649t, 1650/ 1652t measurement, 1561-1573

within-group, 1634-1643, 1635t, 1638t, 1642t Wage variable, 1565-1568

War on Poverty, 2066

Wealth

aging, 1361-1363

Britain, 1310-1312, 1322-1323

closed-form formulas, 1352-1354

France, 1310-1312, 1320-1322, 1334-1339

health and, 1471-1473

human capital, 1305-1306

income ratios, 1308-1319

inheritance-income ratio, 1307

inherited, 1326-1342

Kuznets curve hypothesis, 1305

life-cycle savings, 1306-1307

life expectancy, 1360-1361

multiplicative random shocks models, 1355-1356 national income, 1305

net-of-tax rate of return, 1307

saving motives, 1360-1361

shocks vs. steady states, 1342-1344

steady-state capital share, 1349-1351 steady-state wealth-income ratio, 1344-1349 Sweden, 1324

U-shaped pattern, 1306

Wealth concentration, 1319-1326

Britain, 1322-1323

concepts, data sources, and methods, 1319-1320

France, 1320-1322

inequality reversal, 1325-1326

steady-state level, 1351-1360

Sweden, 1324

Wealth distribution, 1287-1288

borrowing limits, 1274-1279, 1275t, 1276f concentration and skewness, 1235t

of economy, 1245

facts on, 1233-1236

of income, 1304

steady-state, 1274-1275, 1275t

United States, 1245-1246

Wealth dynamics

borrowing constraint, 1972

children's learning, 1971-1972

human capital, 1971

moral weaknesses, 1973-1974

nonhuman capital, 1971

physiology, 1971-1972

poor people, 1971

poverty trap, 1972-1973, 1972f

protection policies, 1973

public responsibility, 1973-1974

social and political stability, 1973

Wealth effects

adult health, 1478—1489

on health behavior, 1479t, 1483t, 1489-1491

Wealth-income ratios

Britain and France, 1310-1312 country balance sheets, 1308

OldEurope vs. NewWorld, 1312-1315

rich countries, 1316-1319 steady-state, 1344-1349 wealth vs. capital, 1309-1310

Wealth inequality

irrelevance of income and, 1237-1238

in neoclassical model, 1237-1238

overlapping generations models and, 1238-1241 stationary theories of, 1241-1246

Wealth-in-the-utility-function model, 1346-1347 Welfare

reforms, 2034

regimes, 1735

Welfare state

econometric modeling, 2080

economic crisis, 2120-2126 employment rate, 2080

income poverty rates, EU countries, 2077-2078, 20781

negative income tax experiments, 2077 poverty reduction, 2075-2077

social democratic and corporatist regimes, 2078-2079

social democratic/Nordic countries, 2078-2079 social transfers, 2077-2078

spending levels, 2078-2079 wage protection, 2079-2080

WIDER project, 2181-2182 WIID. See World Income Inequality Database (WIID)

Withholding taxes, 2185

Within-country income distributions, 1734, 1810t Within-group inequality, 1634-1643, 1635t, 1638t, 1642t

Within-industry wage differentials, 1853-1854 Workfare, 2032-2034

Work incentives, 2153-2155

Working-age households, with employees, 1546, 1548f

Working poor and in-work poverty Anglo-Saxon-style negative income taxes, 2099-2100

Anglo-Saxon-style tax credits, 2100 at-risk-of-financial-poverty status, 2098 Earned Income Credit, 2099 household earnings distribution, 2101-2102 household equivalized disposable income, 2096-2097

in-work benefit schemes, 2102

low-paid insecure employment, 2096 low-work-intensity population, 2098 median poverty threshold, 2097 postindustrial labour markets, 2096 self-employment income, 2096-2097 single-parent households, 2100-2101 sole-breadwinner households, 2098-2099 supply and demand elasticity, 2101 tax-channeled in-work benefits, 2100-2101 tax credits, 2099

wage inequality, 2101-2102

Working tax credit (WTC), 2087-2088

World Bank, 1745-1746

World Development Indicators (WDI), 1746 World Income Distribution (WYD) data set, 1745-1746

World Income Inequality Database (WIID), xxxiii, xxxiii, 1744-1745, 1915-1916

World Top Incomes Database, 1748, 1915

4^{4 * 6} It is also possible that the rise of the return to capital during the eighteenth to nineteenth centuries was

somewhat larger than the lower-bound estimates that we report on Figure 15.27, so that the r—g gap

perhaps did not decline at all. See Piketty (2014) for a more elaborate discussion.

⁴ See http://www.microsimulation.org/ijm/.

Box 24.1 EUROMOD—A tax-benefit microsimulation model

EUROMOD is the tax-benefit microsimulation model of the European Union. It simulates individual and household tax liabilities and cash benefit entitlements according to the policy rules in place, and reforms to them, in each member state. It has two main distinguishing features. First, it covers many countries within the same framework, enabling a wide range of applications and comparability of results. Generally, EUROMOD is much more flexible than national microsimulation models in order to ensure consistency of results and transferability of tax-benefit system components across countries. Second, it is intended to be openly accessible: use is not restricted to the owners of the model. The calculations carried out by EUROMOD for any one country are in other respects quite typical of all tax-benefit microsimulation models, at least for developed countries. The description below is therefore generally applicable.

EUROMOD combines information on policy rules with detailed and nationally representative microdata on individual and household circumstances drawn from household income surveys and other data sources. The rules for each policy instrument are applied arithmetically to the characteristics of each individual, resulting in the amount of tax liability or benefit entitlement. For example, in the case of the simplest universal child benefit, the number of children within the eligible age range in the family is counted and the benefit amount per child is multiplied by this number to give the family’s entitlement. Further issues complicate the calculation: “child” and “family” need to be defined, and the interaction of the child benefit amount with the rest of the tax-benefit system needs to be accounted for. This illustrative calculation is taken further in Appendix A by considering the effects of a change in policy.

The results of the calculations for each household are stored at the micro level and can be analyzed with any statistical software. At their simplest they may be weighted to population level, and the weighted change in income can be added up to provide an estimate of the budgetary effect of the policy change, or it can be analyzed in relation to any characteristics provided in the data: for example, to show the proportion of households gaining and losing by income quantile, region, or household type. The micro-outputs from alternative policy or labor market scenarios can also be used as the basis for calculating indicators of work incentives or for modeling changes in labor supply or other behavior.

Continued