Welfare Dominance: An Application to Commodity Taxation

In this paper, we suggest a method which enables the user to identify commodities that all individuals who can agree on certain weak assumptions with regard to the social welfare function will agree upon as worth subsidizing or taxing in the absence of efficiency considerations. The method is based on an extension of the stochastic dominance criteria and is illustrated using data from Israel.

Food Pricing Policy and Rural Poverty: Insights from Maize in Kenya

This study estimates the effects on poverty resulting from maize price changes associated with the operations of the maize marketing board in Kenya. We consider both supply and demand responses and the accompanying adjustments in rural labor markets in estimating a second order approximation to equilibrium income changes. We then use stochastic dominance techniques to generate poverty rankings between the distribution of income with the effects of the government marketing operations and the distribution of counterfactual incomes. This approach effectively addresses concerns regarding the sensitivity of poverty estimates to the type of poverty measure used. Results indicate that the price-elevating effects of government maize marketing operations have exacerbated rural poverty in all regions of the country except the region from which the largest part of surplus maize originates.Kenya, income transfers, maize policy, Crop Production/Industries, Food Security and Poverty, C22, O2, Q13, Q18,

Equivalence Scales and Housing Deprivation Orderings: an Example Using Lebanese Data

Housing deprivation orderings raise challenges as far as measurement is concerned. The first challenge resides in the identification of an adequate variable that characterizes housing services consumed by households. Another challenge may arise in the comparisons of housing services consumption between households of different sizes and composition. The last challenge may arise in the choice of a deprivation threshold and of a deprivation index. In this paper we address theoretically those challenges. An empirical illustration is offered using Lebanese data.Housing, Deprivation, Stochastic dominance, Equivalence scales, Lebanon

Equivalence Scales and Housing Deprivation Orderings: An Example Using Lebanese Data

Housing deprivation orderings raise challenges as far as measurement is concerned. The first challengeresides in the identification of an adequate variable that characterizes housing services consumed byhouseholds. Another challenge may arise in the comparisons of housing services consumption betweenhouseholds of different sizes and composition. The last challenge may arise in the choice of a deprivationline and of a deprivation index. In this paper we address theoretically those challenges. An empirical illustration is offered using Lebanese data.Housing, Deprivation, Stochastic dominance, Equivalence scales, Lebanon

Working Paper 122 - Welfare Analysis Using Data from the International Comparison Program for Africa

This paper uses data from the International Comparison Program 2005 to recover income and price elasticity estimates for the African continent using the Extended Linear Expenditure System for 13 broadly defined commodities. The results can be used for aggregate welfare comparison in such global models as GTAP (Global Trade Analysis Project) and exercises to infer welfare impact of relative price shocks at the continental level. In a heuristic way also, it is possible to derive a “utility-consistent” global poverty line from the demand function that could be compared with the popular international poverty lines. Results generally indicate that changes in the price of food items could lead to greater welfare loss compared to changes in the price of energy or other commodities. Income elasticity estimates generally fell within bounds usually found from household surveys. At the continental level, the estimated utility-consistent subsistence expenditure is close to 1.12 dollar a day per person, which is quite close to the 1.08 dollar a day global (international) poverty line used in 2005 to measure absolute poverty.

Income Distribution and Poverty in the Republic of Haiti

After decades of stagnation and economic decline coupled with political upheavals, the Republic of Haiti is today the poorest nation in the Western Hemisphere and one of the poorest in the world. The present research reveals that this country is also where income is worst distributed in the most unequal region of the world, viz., Latin America and the Carribbean. We use the 2001 Haiti Living Conditions Survey for distributive analysis and poverty assessment to try to make manifest the potential links between household well-being and individual socio-economic characteristics. One particular finding is that access to land does not help the poor escape poverty. Complementary to the inequality and poverty profiles constructed herein, a relatively new methodology using weighted least squares for complex survey is adopted to additively decompose inequality by multiple factor components. Also, we estimate a polychotomous ordered logic to investigate the risk of being indigent or poor.Republic of Haiti, inequality, multiple factor components decomposition, poverty, stochastic dominance

Competition and Price Dispersion in the U.S. Airline Industry

This papers analyzes dispersion in the prices that an airline charges to different customers on the same route. Such variation in airlines fares is substantial: the expected absolute difference in fares between two of an airline's passengers on a route averages thirty-six percent of the airline's average ticket price on the route. The pattern of price dispersion that we find does not seem to be explained solely by cost differences. Dispersion is higher on more competitive routes, possibly reflecting a pattern of discrimination against customers who are less willing to switch to alternative flights or airlines. We argue that the data support an explanation based on theories of price discrimination in monopolistically competitive industries.

THE IMPACT OF CAPITAL AND INCOME RISK ON LONG-RUN GROWTH

The paper analyzes the effects of individual--specific and economy--wide productivity shocks on intertemporal decision--making of risk averse agents. We focus especially on the consequences for long--run growth. By contrasting the most widely used models of modern growth theory, namely the AK-model and the learning by doing-model, it is shown that not only the degree of risk aversion but also the source of income as measured by the factor income distribution is crucial for the impact of the stochastic disturbances. In the presence of a pure capital risk, growth and welfare effects are different from those arising when agents are subject to capital and income risk.

International Labour Market Regulation and Economic Growth with Creative Destruction

A multi-country Schumpeterian growth model is constructed when there is world-wide externality in technological knowledge. Households can enter the labour force as workers or become engineers at some cost. Production employs both workers and engineers while R&D uses only engineers. Workers are unionized and labour market regulation supports union power in wage bargaining. It is shown that international coordination of labour market policy increases the growth rate and the level of welfare. When the interest-rate elasticity of consumption in the world is low (high), the simultaneous regulation (deregulation) of the labour market in all countries increases welfare.international technology transfers, labour market regulation, endogenous growth

Gender and poverty

This paper presents new evidence on the association between gender and poverty based on an empirical analysis of 11 data sets from 10 developing countries. The paper computes income- and expenditure-based poverty measures and investigates their sensitivity to the use of per capita and per adult equivalent units. It also tests for differences in poverty incidence between individuals in male- and female-headed households using stochastic dominance analysis. Stochastic dominance analysis reveals that differences between male- and female-headed households among the very poor are not sufficiently large that one can conclude that one is unambiguously worse- or better-off, except for a few exceptions. When we use the method of endogenous bounds, persons in female-headed households in rural Ghana and Bangladesh are consistently worse-off, using two stochastic dominance criteria. These results suggest that, among the very poor, persons in male- and female-headed households may not differ significantly. The consistent and significant exceptions, rural Ghana and Bangladesh, suggest that cultural and institutional factors may be responsible for higher poverty among women in these countries. Our results point to the need to analyze determinants of household income and consumption using multivariate methods, and to give greater attention to the processes underlying female headship.Gender ,Household resource allocation ,Poverty ,rural population ,Developing countries ,