New Sources of Development Finance: Funding the Millennium Development Goals

Mobilizing additional finance to meet the challenges of the Millennium Development Goals (MDGs) is an urgent priority. Developing countries are mobilizing resources themselves to meet the MDG targets by 2015, but they will fall short without additional external flows. Increased private and public money is needed in order for the world's poorest countries to invest in the basic services and infrastructure necessary for human development, and to improve livelihoods and employment for poor people.As a result of the Five Year Review of the World Summit for Social Development, the UN General Assembly in September 2000 adopted a resolution calling for 'a rigorous analysis of the advantages, disadvantages and other implications of proposals for developing new and innovative sources of funding, both public and private, for dedication to social development and poverty eradication programmes'. The UN Department of Economic and Social Affairs in turn requested the World Institute for Development Economics Research (UNU-WIDER) in Helsinki to undertake a project on 'Innovative Sources for Development Finance'. This Policy Brief summarizes the key findings of the study carried out by UNUWIDER. Anthony B. Atkinson, Project Director and Warden of Nuffield College, University of Oxford, has written the Policy Brief drawing on the papers prepared for the project. He acknowledges the substantial contribution made by the project authors, but takes full responsibility for the opinions expressed

Income Tax and Top Incomes over the Twentieth Century

The first section of the paper gives a stylised account of the development of the UK income tax structure over the past 200 years, and refers to recent changes in other OECD countries. The second section turns to the distribution of income and summarises the evidence about the top of the income distribution that can be derived from the income tax data. The main results relate to the UK, but comparisons are made with similar evidence for Canada, France, the Netherlands, and the US. The third part of the paper considers the explanation of the observed changes in the distribution and the impact of progressive income taxation. How far are changes in income shares a reflection of the re-arrangement of income? How far are they associated with changes in the composition of top incomes? Conclusions about distributional incidence have to be based on modelling the determination of the personal income distribution, but such modelling is not typically treated in public finance textbooks. The fourth section of the paper considers how the analysis of distributional incidence can be developed, paying specific attention to the explanation of the upper tail of the distribution. : Income, Taxation, Income Distribution, Tax Incidence

The Distribution of Top Incomes in Five Anglo-Saxon Countries over the Twentieth Century

Taxation data have been used to create long-run series for the distribution of top incomes in quite a number of countries. Most of these studies have focused on the national experience of individual countries, but we can also learn from cross-country comparisons. Comparative analysis is therefore the next stage in the research program. At the same time, we know from other fields that there are dangers in simply pooling all available time series, without regard to the specific nature of data and reality. In this paper, we therefore adopt an intermediate approach, taking five Anglo- Saxon countries that have relatively similar backgrounds and tax systems: Australia, Canada, New Zealand, the UK, and the US. The first part of the paper tackles the challenge of comparability of income-tax based estimates across countries and across time. The second part summarizes the evidence about top income shares. Across these five countries, the shares of the very richest exhibit a strikingly similar pattern, falling in the three decades after World War II, before rising sharply from the mid-1970s onwards. The share of the top 1 percent is highly correlated across Anglo-Saxon countries, more so than the share of the next 4 percent. The third part of the paper looks at the relationship between taxes and top income shares. Controlling for country and year fixed effects, we find that a reduction in the marginal tax rate on wage income is associated with an increase in the share of the top percentile group. Likewise, a fall in the marginal tax rate on investment income (based on a lagged moving average) is associated with a rise in the share of the top percentile group.inequality, taxation, Australia, Canada, New Zealand, United Kingdom, United States

Physical mechanism for a kinetic energy driven zero-bias anomaly in the Anderson-Hubbard model

The combined effects of strong disorder, strong correlations and hopping in the Anderson-Hubbard model have been shown to produce a zero bias anomaly which has an energy scale proportional to the hopping and minimal dependence on interaction strength, disorder strength and doping. Disorder-induced suppression of the density of states for a purely local interaction is inconsistent with both the Efros-Shklovskii Coulomb gap and the Altshuler-Aronov anomaly, and moreover the energy scale of this anomaly is inconsistent with the standard energy scales of both weak and strong coupling pictures. We demonstrate that a density of states anomaly with similar features arises in an ensemble of two-site systems, and we argue that the energy scale t emerges in strongly correlated systems with disorder due to the mixing of lower and upper Hubbard orbitals on neighboring sites.Comment: 4 pages, 3 figures; new version includes minor changes to figures and text to increase clarit

Robustness of the nodal d-wave spectrum to strongly fluctuating competing order

We resolve an existing controversy between, on the one hand, convincing evidence for the existence of competing order in underdoped cuprates, and, on the other hand, spectroscopic data consistent with a seemingly homogeneous d-wave superconductor in the very same compounds. Specifically, we show how short-range fluctuations of the competing order essentially restore the nodal d-wave spectrum from the qualitatively distinct folded dispersion resulting from homogeneous coexisting phases. The signatures of the fluctuating competing order can be found mainly in a splitting of the antinodal quasi-particles and, depending of the strength of the competing order, also in small induced nodal gaps as found in recent experiments on underdoped La{2-x}SrxCuO4.Comment: 5 pages, 4 figure

A European social agenda: poverty benchmarking and social transfers

Development of the social dimension of Europe was advanced by the Lisbon Summit in March 2000, and this paper considers the future direction of social policy. The first step towards a social agenda could take the form of benchmarking, based on national competencies in this field, with Member States learning from best performance in the Union; this step would be parallel to the first phase of the Maastricht process towards macro-economic convergence. Initially, this benchmarking would focus on financial poverty: people living in households with economic resources below the level used by Eurostat (60% of the median in the Member State), with this being accompanied by a measure of child poverty. Social investment in improving labour market skills and employability, or an active welfare state, is an important part of antipoverty policy, but is not a complete substitute for social spending. The European countries which perform best in terms of reducing poverty tend to have higher social spending. Such statistical performance indicators need however to be accompanied by evaluation of the relationship between policy instruments and poverty reduction, showing the trade-off between poverty reduction and social spending at the level of individual policies. Illustrative estimates using EUROMOD suggest that employing universal social transfers to reduce a country's poverty rate from the EU-average of 18% to the best-performing average of 12% would necessitate an increase in social transfers of some 2% of GDP. More targeted schemes may allow sizeable expenditure savings but at the cost of increased disincentives; the design of Europe's social agenda has to confront well-known issues of economic trade-offs; economic and social policy cannot be divorced

Temperature dependence of the zero-bias anomaly in the Anderson-Hubbard model: Insights from an ensemble of two-site systems

Motivated by experiments on doped transition metal oxides, this paper considers the interplay of interactions, disorder, kinetic energy and temperature in a simple system. An ensemble of two-site Anderson-Hubbard model systems has already been shown to display a zero-bias anomaly which shares features with that found in the two-dimensional Anderson-Hubbard model. Here the temperature dependence of the density of states of this ensemble is examined. In the atomic limit, there is no zero-bias anomaly at zero temperature, but one develops at small nonzero temperatures. With hopping, small temperatures augment the zero-temperature kinetic-energy-driven zero-bias anomaly, while at larger temperatures the anomaly is filled in.Comment: 8 pages, 3 figures; submitted to SCES 2010 conference proceeding

Pareto and the upper tail of the income distribution in the UK: 1799 to the present

The Pareto distribution has long been a source of fascination to economists, and the Pareto coefficient is widely used, in theoretical and empirical studies, as a summary of the degree of concentration of top incomes. This paper examines the empirical evidence from income tax data concerning top incomes in the UK, contrasting the dramatic changes that took place in the twentieth century, after 1918, with the much more modest changes in the preceding nineteenth century. Probing beneath the surface, it identifies a number of features of the evolution of the UK income inequality that warrant closer attention. These include the changing shape of the upper tail, where there is a link with Pareto’s theory of elites, the need for a richer functional form to describe top incomes, and the limited evidence at the top of the distribution for a Kuznets curve in nineteenth century Britain