Savings and Income Distribution

While this paper emphasizes the analytical ambiguity of the relationship between savings and income inequality, the empirical examination renders weak support for a negative association between them. However, this relationship is not very robust. Subsamples of OECD countries and Asian countries show that income inequality and the savings rate can be positively and significantly associated.Savings, Income distribution

Dynamics of Income Distribution

In this paper, we have obtained closed-form solutions in Cass-Koopmans growth models with heterogeneous agents. The relationship between the form of production function and the dynamics of income distribution is made explicit. We then use this relationship to determine what production structure is simultaneously consistent with facts on growth and income inequality. Our empirical findings give support to models with decreasing returns in the reproducible factor.Income Distribution, Economic Growth

Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management

This paper shows that top management structures in large US firms radically changed since the mid-1980s. While the number of managers reporting directly to the CEO doubled, the growth was driven primarily by functional managers rather than general managers. Using panel data on senior management positions, we explore the relationship between changes in executive team composition, firm diversification, and IT investments—which arguably alter returns to exploiting synergies through corporate-wide coordination by functional managers in headquarters. We find that the number of functional managers closer to the product (“product” functions i.e., marketing, R&D) increase as firms focus their businesses, while the number of functional managers farther from the product (“administrative” functions i.e., finance, law, HR) increase with IT investments. Finally, we show that general manager pay decreases as functional managers join the executive team suggesting a shift in activities from general to functional managers—a phenomenon we term “functional centralization.”

Health, Taxes, and Growth

This paper studies capital accumulation and consumption in the traditional Ramsey model under an exogenous growth framework. The model has three important features: (1) treating health as a simple function of consumption, which enable the study of health and growth in an aggregate macroeconomic model; (2) the existence of multiple equilibria of capital stock, health, and consumption, which is more consistent with the real world situation-rich countries may end up with high capital, better health, and higher consumption than poor countries; (3) the fundamental proposition of a consumption tax instead of capital taxation from the traditional growth model does not hold anymore in our model. As long as consumption goods contribute to health formation, the issue of a consumption tax versus an income (or capital) tax should be re-examined.Health, Capital accumulation, Taxation

Explaining International and Intertemporal Variations in Income Inequality

This paper explores the propositions that, income inequality is relatively stable within countries; and that it varies significantly among countries. A new and expanded data set provides broad support for both propositions. Drawing on a political economy and capital market imperfection arguments to explain the intertemporal and international variation in inequality, the empirical analysis shows that the predicted variables associated with the first argument (a measure of civil liberties and the initial level of secondary schooling) and the second argument (a measure of financial depth and the initial distribution of land) are indeed important determinants of inequality.

Quantifying the fiscal effects of trade reform

Using a tax model of an open economy, the authors provide a simple but rigorous method for estimating the fiscal impact of trade reform. Both the direction and the magnitude of the fiscal consequences of trade reform depend on the elasticities of substitution and transformation between foreign and domestic goods, so they provide empirical estimates of those elasticities. They also discuss the implications of their analysis for public revenue. In general, they find that it matters what the values of the two elasticities are relative to each other. If only one of the elasticities is low (close to zero), revenue will drop unequivocally as a result of tariff reform, reaching close to the maximum drop whether or not the other elasticity is high. For imports to grow and tariff collection to compensate for the tax cut, the import elasticity has to be high. Because of the balance of trade constraint, however, imports cannot substitute for domestic goods unless supply is able to switch toward exports. Hence, the export transformation elasticity has to be high as well. As substitution possibilities between foreign and domestic goods increase, a tariff reform can theoretically be self-financing. But if the elasticities are less than"large", tax revenue will fall with tariff reduction and further fiscal adjustments will be necessary. The authors provide empirical estimates of the possible range of values for the elasticities of about 60 countries, using various approaches. The elasticties range from 0 to only 3 in most cases - nowhere near the point at which tariff reform can be self-financing.Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Achieving Shared Growth