Euro-Productivity and Euro-Jobs since the 1960s: Which Institutions Really Mattered?

How have labor market institutions and welfare-state transfers affected jobs and productivity in Western Europe, relative to industrialized Pacific Rim countries? Orthodox criticisms of European government institutions are right in some cases and wrong in others. Protectionist labor-market policies such as employee protection laws seem to have become more costly since about 1980, not through overall employment effects, but through the net human-capital cost of protecting senior male workers at the expense of women and youth. Product-market regulations in core sectors may also have reduced GDP, though here the evidence is less robust. By contrast, high general tax levels have shed the negative influence they might have had in the 1960s and 1970s. Similarly, other institutions closer to the core of the welfare state have caused no net harm to European jobs and growth. The welfare state%u2019s tax-based social transfers and coordinated wage bargaining have not harmed either employment or GDP. Even unemployment benefits do not have robustly negative effects.

The Curious Dawn of American Public Schools

Three factors help to explain why school enrollments in the Northern United States were higher than those in the South and in most of Europe by 1850. One was affordability: the northern states had higher real incomes, cheaper teachers, and greater local tax support. The second was the greater autonomy of local governments. The third was the greater diffusion of voting power among the citizenry in much of the North, especially in rural communities. The distribution of local political voice appears to be a robust predictor of tax support and enrollments, both within and between regions.

Measuring Ancient Inequality

Is inequality largely the result of the Industrial Revolution? Or, were pre-industrial incomes and life expectancies as unequal as they are today? For want of sufficient data, these questions have not yet been answered. This paper infers inequality for 14 ancient, pre-industrial societies using what are known as social tables, stretching from the Roman Empire 14 AD, to Byzantium in 1000, to England in 1688, to Nueva España around 1790, to China in 1880 and to British India in 1947. It applies two new concepts in making those assessments – what we call the inequality possibility frontier and the inequality extraction ratio. Rather than simply offering measures of actual inequality, we compare the latter with the maximum feasible inequality (or surplus) that could have been extracted by the elite. The results, especially when compared with modern poor countries, give new insights in to the connection between inequality and economic development in the very long run.Inequality possibility frontier; pre-industrial inequality; history

Does Globalization Make the World More Unequal?

The world economy has become more unequal over the last two centuries. Since within- country inequality exhibits no ubiquitous trend, it follows that virtually all of the observed rise in world income inequality has been driven by widening gaps between nations, while almost none of it has driven by widening gaps within nations. Meanwhile, the world economy has become much more globally integrated over the past two centuries. If correlation meant causation, these facts would imply that globalization has raised inequality between nations, but that it has had no clear effect on inequality within nations. This paper argues that the likely impact of globalization on world inequality has been very different from what these simple correlations suggest. Globalization probably mitigated rising inequality between participating nations. The nations that gained the most from globalization are those poor ones that changed their policies to exploit it, while the ones that gained the least did not, or were too isolated to do so. The effect of globalization on inequality within nations has gone both ways, but here too those who have lost the most from globalization typically have been the excluded non-participants. In any case far too small to explain the observed long run rise in world inequality.

The unequal lag in Latin American schooling since 1900: follow the money

Special Issue on Latin American Inequality.Focusing on education–income anomalies, in which a richer country delivers less education than a poorer country, seems a promising way to harvest a part of the rich history that does not lend itself to econometrics. To test the chain of alleged causation from unequal power and wealth to poor schooling, one must follow the public money, or lack of it, in as many contexts as the data will allow. Public funding for mass schooling is the hitherto untested middle link in the chain. The key to Latin America’s poor schooling was the failure to supply tax money, not gender discrimination or any shortfall in market demand for skills. The most glaring anomalies were the Venezuelan and Argentine failures to supply the levels of tax support for mass schooling that their high income could have afforded.Este artículo estudia algunas irregularidades de la relación entre educación y renta, por la que los países ricos ofrecen menos educación que los pobres. Esta relación no parece encajar con la historia de los países ricos ni se presta a una comprobación econométrica. Para comprobar la cadena causal acreditada entre la desigualdad de poder o riqueza y baja escolarización, uno tiene que seguir el dinero público o la ausencia de éste en tantos contextos como sea posible. La financiación pública de la escolarización de masas aún no ha sido examinada en el eslabón medio en la cadena. La clave de la baja escolarización latinoamericana fue un problema de ingreso fiscal, no de discriminación de género o de un fallo de mercado en la demanda de mano de obra cualificada. Las irregularidades más flagrantes las encontramos en Venezuela y Argentina que fallaron en el nivel de apoyo fiscal a la escolarización de masas en relación con los ingresos medios disponibles

THREE CENTURIES OF INEQUALITY IN BRITAIN AND AMERICA

Income and wealth inequality rose over the first 150 years of U.S. history. They may have risen at times in Britain before 1875. The first half of this century equalized pre-fisc incomes more in Britain than in America. From the 1970s to the 1990s inequality rose in both countries, reversing some of the previous equalization. Government redistribution explains part but not all of the reversals in inequality trends. Factor-market forces and economic growth would have produced a similar chronology of rises and falls in income inequality even without shifts in the progressivity of redistribution through government. For economies starting from highly unequal property ownership, the development process lowers inequality. History suggests, however, that this may happen only once. Redistribution toward the poor tends to happen least in those times and polities where it would seem most justified by the usual goals of welfare policy.