QAT EXPENDITURES IN YEMEN AND DJIBOUTI: AN EMPIRICAL ANALYSIS

Using household surveys from Yemen and Djibouti, the paper analyzes determinants of qat consumptions in two countries. The results confirm huge importance of qat in daily life: with between one-half (in Djibouti) and 70 percent (in Yemen) of all households reporting at least one user. But in Yemen, qat consumption is remarkably flat across income groups, age, and between rural and urban areas. Qat is a normal good and there is no indication that its use substitutes for food. In Djibouti, however, qat consumption increases with income, and appears to act as a substitute for food consumption. In both countries however there is a strong gender bias in the use: men are much more likely to use qat than women.qat; Horn of Africa; consumption

Cash social transfers, direct taxes, and income distribution in late socialism

The author analyzes the impact of direct taxes and cash social transfers on income distribution in Bulgaria, Czechoslovakia, Hungary, Poland and Yugoslavia in the years before the collapse of communism. He contrasts the results for socialist and market economies. Cash social transfers accounted for about a fifth of gross income, a proportion comparable with that in developed welfare economies. Generally, cash transfers were unrelated to income in socialist countries, in marked contrast with market economies, where such transfers go mainly to low income households. Direct taxes played almost no role in income redistribution. They were small - 1 to 2 percent of gross income, except in Hungary - and proportional to income. Most taxes were paid by enterprises, as payroll taxes, and most workers were unaware of the taxation and that public spending could not permanently exceed public revenues from taxation. In socialist countries, social support was built into the system through full employment guarantees, state run pension schemes, and free public education and health care. The only explicit policy toward poverty involved alcoholics, handicapped people, and other special categories. This system is being replaced by a market system in which the labor market is key and those who cannot earn enough must be supported by the state. To counteract increasing income disparities, social transfers must be focussed more on the poor. Eastern European states are ill prepared for this role. They have no experience in identifying the needy and targeting support to them. The question is, toward which world of welfare capitalism are the formerly socialist countries likely to evolve? The author contends that the Central European countries will probably evolve toward the corporatist model of continental Europe. Capitalist countries in Europe tend to have large social transfers that are often related to previous earnings, so they have relatively limited roles in income distribution. Transfers are closer to social insurance than to social assistance. The evolution of more agricultural Balkan countries and the Slavic republics of the former Soviet Union is more difficult to predict. Poorer and more agriculture based countries are generally less able to administer welfare schemes, gauge individual incomes, deliver social support - and their finances may be even more strained than those of their Central European counterparts.Services&Transfers to Poor,Poverty Impact Evaluation,Economic Theory&Research,Environmental Economics&Policies,Safety Nets and Transfers

Ethical case and economic feasibility of global transfers

Almost all social transfers are conducted within nations. Is there a case for cross border transfers? What could be the grounds for such transfers from the globally rich to globally poor people? The paper explores three possible grounds: compensation for the past wrongs; economic and political interdependence today; and the application of a Rawlsian difference principle at a global scale. The paper ends by arguing that global non-governmental institutions are likely to play a key advocacy role.global distributive justice; global inequality

Global inequality and global inequality extraction ratio: The story of the last two centuries

Using social tables, we make an estimate of global inequality (inequality among world citizens) in early 19th century. We then show that the level and composition of global inequality have changed over the last two centuries. The level has increased reaching a high plateau around 1950s, and the main determinants of global inequality have become differences in mean country incomes rather than inequalities within nations. The inequality extraction ratio (the percentage of total inequality that was extracted by global elites) has remained surprisingly stable, at around 70 percent of the maximum global Gini, during the last 100 years.global inequality; economic history; inequality extraction ratio

The Ricardian Vice: Why Sala-i-Martin’s calculations of world income inequality are wrong

The paper discusses recent world income inequality calculations by Sala- i-Martin. It shows that the two main problems with which the author had to grapple (too few data to derive countries’ income distributions, and sparseness of such data in time) are not solved in a satisfactory fashion. They, and several other simplifying assumptions, make Sala-i- Martin results very dubious. We argue that Sala-i-Martin has ended up by producing a population-weighted inter-national distribution of income augmented by a constant shift parameter and not a distribution of income among world citizens.income inequality, world, globalization

Why we all do care about inequality (but are loath to admit it)

This note is motivated by recent arguments made by Martin Feldstein in which the relevance of inequality is dismissed (if everybody's income goes up, who cares if inequality is up too?), and the argument is made that only poverty alleviation should matter. This note shows that we all do care about inequality, and to hold that we should be concerned with poverty solely and not with inequality is internally inconsistent.Inequality, poverty, redistribution

Relationship between Income and Emergence of Democracy Reexamined, 1820-2000: A non-parametric approach

The paper contrasts Lipset’s modernization hypothesis and Przeworski- Limongi hypothesis that entries into democracy are random with respect to income. We use data on income and democracy going back to 1820, multiple definitions of democracy, and non-parametric testing focusing on the distribution of entrants’ incomes. We find that income matters for entry into higher levels of democracy; but if we control for the previously achieved level of democracy, the income effect vanishes. This means that countries that enter into higher levels of democracy are not a random draw from the universe of all country incomes but are a random draw from the joint distribution of previous level of democracy and income. These results are compatible with the presence of a subgroup of (low) income and (low) democracy countries from which recruitment into democracy is seldom made. But for other countries, accession to higher levels of democracy is income-random. Income seems therefore both to matter (probably explaining why poor countries cannot improve their democracy levels) and not matter (explaining why for other countries improvements in democracy are income-random).Democracy, income, modernization

Social costs of the transition to capitalism : Poland, 1990-91

The Polish stabilization program implemented in 1990 as part of the transition to capitalism entailed unexpectedly high social costs. The often unstated assumptions had been that since central planning was intrinsically inefficient, stabilization in Poland might be less costly in terms of lost output than it would have been in a market economy. The idea was that recession stemming from an overall decline in demand could be moderated by removing the administrative barriers that in a planned economy hindered the best deployment of resources. The results were the reverse of expectations. Unemployment reached 12 percent of the labor force by the end of 1991, and real incomes plummeted (by about 40 percent). An estimated 17 percent of the population lived in poverty in 1989. By 1991, that figure reached 34 percent. The poverty rate more than doubled for all social groups except pensioners, for which it remained stable. Large households, and children in particular, were especially affected. The poverty gap rose from an estimated 1.4 percent of GDP to 4.8 pecent. Existing evidence on income distribution shows that it did not change. There was a slight compression of income among farmers, which has also occurred in the past when real incomes declined, and possibly some wage-stretching among workers. What happened to the general welfare? Conclusive results are elusive. Personal consumption, overall decreased. Queuing also decreased, but utility gains from shorter lines were offset as real wages, and thus the opportunity cost of waiting declined. Real appreciation of the exchange rate raised dollar wages substantially and led to an upsurge in consumer imports, thus decreasing the utlility derived from the ownership of consumer durable.Achieving Shared Growth,Environmental Economics&Policies,Economic Theory&Research,Inequality,Poverty Impact Evaluation

Poverty in Poland : 1978-88

The economic crisis that began in Poland in 1978 significantly reduced the population's average incomes and increased the proportion of the population living below the poverty line by 10 percentage points. The composition of thepoor has also changed. Before the crisis, most of the poor lived in rural areas; now 70 percent of them live in cities. This change occurred because of a sharp jump in poverty among workers in the socialized sector, whose real wages declined. The most important direct cause of increased poverty in the second half of the 1980s was increased poverty in workers'households. The second most important cause was demographic: in shifting to retirement, some workers'households joined the ranks of the poor. The only groups for which the incidence of poverty decreased was mixed households. Until the end of the period studied, no unemployment appeared. The wage bill was reduced by uniform cuts in real wages - so the wage and the overall distribution of income remained practically unchanged. The real income of pensioners'households decreased almost as much as that of workers'households. Farm and mixed households weathered the crisis better than workers and pensioners. This was because farmers and mixed households had more flexibility about economic decisions. Farmers could change the composition of their crops and mixed households could also vary their labor inputs between work in socialized industry and private agriculture.Services&Transfers to Poor,Rural Poverty Reduction,Environmental Economics&Policies,Poverty Assessment,Safety Nets and Transfers