Intensity of Time and Income Interdependent Multidimensional Poverty: Well-Being and Minimum 2DGAP ; German Evidence

Extending the traditional income poverty concept by multidimensional poverty has been of growing interest within the last years. This paper contributes with an analysis of interdepend-ent multidimensional (IMD) poverty intensity of time and income, which in particular restricts social participation. The interdependency of the multiple poverty dimensions under a strong (union approach) and weak focus axiom (compensation approach) are regarded in particular when measuring the intensity of multidimensional poverty. In addition to various poverty gap measures including the multidimensional well-being gap, for the first time we propose a minimum multidimensional poverty gap (2DGAP).. - To respect Sen's capability approach with its social participation aspects we define the time dimension as genuine personal leisure time. Based on a CES well-being function and a multi-dimensional poverty line evaluated by the German population (estimated with the German Socio-Economic Panel) the individual poverty intensity of the active population is analysed for various regimes of multiple poverty. For this purpose the German Time Use Surveys 1991/92 and 2001/02 and its time use diary data are used. Analysing the active population this paper contributes too to the poverty situation of the working poor. . - All the empirical results, including the microeconometric Heckman type estimation of the IMD poverty intensity (2DGAP) and the IMD poverty risk, indicate the overall importance of the time dimension with its social participation aspect incorporated within an interdependent multidimensional time and income poverty approach. An important dimension would be ne-glected in the poverty analysis and in targeted poverty policies if time additional to income would is not respected.Intensity of time and income poverty, interdependent multidimensional time and income poverty, union and compensation approach, minimum multidimensional poverty gap (2DGAP), extended economic well-being, satisfaction/happiness, working poor

Cardiovascular Consequences of Unfair Pay

This paper investigates physiological responses to perceptions of unfair pay. In a simple principal agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. In this environment unfairness can arise if an agent's reward expectation is not met. Throughout the experiment we record agents' heart rate variability. Our findings provide evidence of a link between perceived unfairness and heart rate variability.The latter is an indicator of stressrelated impaired cardiac autonomic control, which has been shown to predict coronary heart diseases in the long run. Establishing a causal link between unfair pay and heart rate variability therefore uncovers a mechanism of how perceptions of unfairness can adversely affect cardiovascular health. Wefurther test potential adverse health effects of unfair pay using data from a large representative data set. Complementary to our experimental findings we find a strong and highly significant association between health outcomes, in particular cardiovascular health, and fairness of pay.Fairness, social preferences, inequality, heart rate variability, health, experiments, SOEP

20 Years of German Unification: Evidence on Income Convergence and Heterogeneity

We analyse the convergence and heterogeneity of living standards between East and West Germany since unification. Based on data from the German Socio-Economic Panel (GSOEP), we compare total individual income of permanent adult residents, including retirees and the unemployed, of East and West Germany over the fifteen years for which data are available. Using a fixed effects vector decomposition method, we estimate the gross total income difference between East and West Germans taking unobserved heterogeneity into account. Our analysis demonstrates that the negative income gap has decreased from 33 per cent in 1992 to 22 per cent in 2002, rising again to 26 per cent in 2007. Hence some convergence took place in nominal terms since unification. Constructing income gaps by decennial cohorts, we discover that the most recent cohorts have the highest negative income gap. This probably reflects out-migration from East Germany by the young and highly skilled. On the basis of quantile regressions we find a positive income gap at the beginning of the 1990s for the lower income deciles (that is higher incomes in East Germany). This was due to retirees in the East with relative long employment histories receiving transfer payments by western standards. The income gap is insignificant when accounting for heterogeneity at the area level by including area level variables to our regression.Unification, living standards, income inequality, distribution, GSOEP, Germany

Does Harboring Terrorists Have Economic Costs?

The literature on conflict and terrorism has paid little attention to the economic costs of terrorism for the perpetrators of terror attacks. Our research fills that gap by examining the economic costs of harboring suicide terror attacks. We combine data on Palestinian suicide terrorists with data from the Palestinian Labor Force Survey, to identify and quantify the impact of a successful attack on unemployment and wages. We find robust evidence that terror attacks have important economic costs. They cause a significant increase in unemployment and a significant decrease in wages and on the number of Palestinians working in Israel. Importantly, these effects are persistent and last for at least six months after the attack.

The Svensson versus McCallum and Nelson Controversy Revisited in the BMW Framework

This note shows that the Svensson versus McCallum and Nelson controversy battled in the Federal Reserve Bank of St. Loius Review (September/ October 2005) can be mapped into a static version of a New Keynesian macro model that consists of an IS-equation, a Phillips curve and an inflation targeting central bank (e.g., Bofinger, Mayer, Wollmershäuser, (2006); Walsh (2002)). As a contribution to literature we supplement the controversy by a forceful graphical analysis. The general debate centers on the question by which notion monetary policy should be implemented. The two sides have fundamentally opposite views on this issue. Svensson argues for targeting rules as a notion of optimal monetary policy, whereas McCallum and Nelson promote simple instrument rules. In this note we systematically analyze these two categories of monetary policy rules. In particular we show that the rule discussed by McCallum and Nelson (2005) imposes different degrees of variability on the economy compared to a targeting rule when monetary policy falls prey to measurement error. To our opinion the hybrid Taylor rule developed by McCallum and Nelson contradicts the original idea of simple rules as a heuristic for monetary policy making and should be rebutted for practical reasons

Land Access, Tenure and Investment in Post-War Northern Mozambique

The relationship between land investment and tenure security is usually tested in land scarce but peaceful areas. This article examines instead the effects of land abundance and war for investment and tenure security. The paper demonstrates that war enhances land abundance. This implies that farm size for the analysis of land investment and tenure security. The paper formally tests for land abundance and estimates a system of equations using farm survey data from post-war Mozambique. Farm size is found to be a key determinant of both investment and tenure security. This raises important policy issues for post-war reconstruction.land, property rights, tenure security, investment, war, conflict, reconstruction, policy, Mozambique, Africa

International Commodity Taxation under Monopolistic Competition

We analyze non-cooperative commodity taxation in a two-country trade model characterized by monopolistic competition and international firm and capital mobility. In this setting, taxes in one country affect foreign welfare through the relocation of mobile firms and through changes in the rents accruing to capital owners. With consumption-based taxation, these fiscal externalities exactly offset each other and the non-cooperative tax equilibrium is Pareto efficient. With production-based taxation, however, there are additional externalities on the foreign tax base and the foreign price level which lead non-cooperative tax rates to exceed their Pareto efficient levels.tax competition, market imperfections, international trade

Dynamics of Earnings and Hourly Wages in Germany

There is by now a vast number of studies which document a sharp increase in crosssectional wage inequality during the 2000s. It is often assumed that this inequality is of a "permanent nature" which in turn is used as an argument calling for government intervention. We examine these claims using a fully balanced panel of full-time employed individuals in Germany from the German Socio-Economic Panel for the years 1994-2006. In line with previous studies, our sample shows sharply rising inequality during the 2000s. Applying covariance structure models, we calculate the fraction of permanent and transitory wage and earnings inequality. From 1994 on, permanent inequality increases continuously, peaks in 2001 and then declines in subsequent years. Interestingly the decline in the permanent fraction of inequality occurs at the time of most rapid increases in cross-sectional inequality. It seems therefore that it is primarilythe temporary and not the permanent component which has driven the strong expansion of cross-sectional inequality during the 2000s in Germany.Variance decomposition, covariance structure models, earnings inequality, wage dynamics

Income Thresholds and Income Classes

This paper proposes a method for detecting income classes based on the change-point problem. There is an increasing demand for such a method in the literature. Computation of polarization indices requires a pre-grouping of the incomes. Similarly, indices of social exclusion and sometimes indices of income inequality require detection of thresholds. The estimation procedure is implemented using a bootstrap technique. Finally, an application of the method to EU member states and to the United States is also considered.income distribution, change-point, thresholds.