A Bayesian Measure of Poverty in the Developing WorldJournal articleZhou Xun and Michel Lubrano, Review of Income and Wealth, Volume 64, Issue 3, pp. 649-678, 2018

We propose a new methodology to revise the international poverty line (IPL) after Ravallion et al. (2009) using the same database, but augmented with new variables to take into account social inclusion in the definition of poverty along the lines of Atkinson and Bourguignon (2001). We provide an estimation of the world income distribution and of the corresponding number of poor people in the developing world. Our revised IPL is based on an augmented two‐regime model estimated using a Bayesian approach, which allows us to take into account uncertainty when defining the reference group of countries where the IPL applies. The influence of weighting by population is discussed, as well as the IPL revision proposed in Deaton (2010). We also discuss the impact of using the new 2011 PPP and the recent IPL revision made by the World Bank.

The Wall’s Impact in the Occupied West Bank: A Bayesian Approach to Poverty Dynamics Using Repeated Cross-SectionsJournal articleTareq Sadeq and Michel Lubrano, Econometrics, Volume 6, Issue 2, pp. 29, 2018

In 2002, the Israeli government decided to build a wall inside the occupied West Bank. The wall had a marked effect on the access to land and water resources as well as to the Israeli labour market. It is difficult to include the effect of the wall in an econometric model explaining poverty dynamics as the wall was built in the richer region of the West Bank. So a diff-in-diff strategy is needed. Using a Bayesian approach, we treat our two-period repeated cross-section data set as an incomplete data problem, explaining the income-to-needs ratio as a function of time invariant exogenous variables. This allows us to provide inference results on poverty dynamics. We then build a conditional regression model including a wall variable and state dependence to see how the wall modified the initial results on poverty dynamics. We find that the wall has increased the probability of poverty persistence by 58 percentage points and the probability of poverty entry by 18 percentage points.

Income inequality decomposition using a finite mixture of log-normal distributions: A Bayesian approachJournal articleMichel Lubrano and Abdoul Aziz Junio Ndoye, Computational Statistics & Data Analysis, Volume 100, Issue C, pp. 830-846, 2016

The log-normal distribution is convenient for modelling the income distribution, and it offers an analytical expression for most inequality indices that depends only on the shape parameter of the associated Lorenz curve. A decomposable inequality index can be implemented in the framework of a finite mixture of log-normal distributions so that overall inequality can be decomposed into within-subgroup and between-subgroup components. Using a Bayesian approach and a Gibbs sampler, a Rao-Blackwellization can improve inference results on decomposable income inequality indices. The very nature of the economic question can provide prior information so as to distinguish between the income groups and construct an asymmetric prior density which can reduce label switching. Data from the UK Family Expenditure Survey (FES) (1979 to 1996) are used in an extended empirical application.

Simulation Estimation of Two‐tiered Dynamic Panel Tobit Models with an Application to the labour Supply of Married Women: A CommentJournal articleZhou Xun and Michel Lubrano, Journal of Applied Econometrics, Volume 31, Issue 4, pp. 756-761, 2016

We find that the empirical results reported in Chang (Journal of Applied Econometrics 2011; 26(5): 854–871) are contingent on the specification of the model. The use of Heckman's initial conditions combined with observed and not latent lagged dependent variables leads to a counter-intuitive estimation of the true state dependence. The use of Wooldridge's initial conditions together with the observed lagged dependent variable and a proper modelling of censoring provides a much more natural estimate of the true state dependence parameters together with a clearer interpretation of the decision to participate in the labour market in the two-tiered model. Copyright © 2015 John Wiley & Sons, Ltd.

Tournaments and Superstar Models: A Mixture of Two Pareto DistributionsBook chapterMichel Lubrano and Abdoul Aziz Junio Ndoye, In: Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting, J. Bishop and J. G. Rodríguez (Eds.), 2014, Volume 22, pp. 449-479, Emerald Publishing Ltd, 2014

We provide a Bayesian inference for a mixture of two Pareto distributions which is then used to approximate the upper tail of a wage distribution. The model is applied to the data from the CPS Outgoing Rotation Group to analyze the recent structure of top wages in U.S. from 1992 through 2009. We found enormous earnings inequality between the very highest wage earners (“the superstars”), and the other high wage earners. These findings are largely in accordance with the alternative explanations combining the model of super-stars and the model of tournaments in hierarchical organization structure. The approach can be used to analyze the recent pay gaps among top executives in large firms so as to exhibit the “superstar” effect.

Bayesian Unconditional Quantile Regression: An Analysis of Recent Expansions in Wage Structure and Earnings Inequality in the US 1992-2009Journal articleMichel Lubrano and Abdoul Aziz Junio Ndoye, Scottish Journal of Political Economy, Volume 61, Issue 2, pp. 129-153, 2014

We develop Bayesian inference for an unconditional quantile regression model. Our approach provides better estimates in the upper tail of the wage distribution as well as valid small sample confidence intervals for the Oaxaca–Blinder decomposition. We analyze the recent changes in the US wage structure using data from the CPS Outgoing Rotation Group from 1992 to 2009. We find that the largest part of the recent changes is explained mainly by differences in returns to education while the decline in the unionization rate has a small impact, and that earnings inequality is rising more at the top end of the wage distribution.

Human Capital, Social Capital and Scientific Research in Europe: an Application of Linear Hierarchical ModelsJournal articleMathieu Goudard and Michel Lubrano, Manchester School, Volume 81, Issue 6, pp. 876-903, 2013

The theory of human capital is one way to explain individual decisions to produce scientific research. However, this theory, even if it reckons the importance of time in science, is too short for explaining the existing diversity of scientific output. The present paper introduces the social capital of Bourdieu (1980), Coleman (1988) and Putnam (1995) as a necessary complement to explain the creation of scientific human capital. This paper connects these two concepts by means of a hierarchical econometric model which makes the distinction between the individual level (human capital) and the cluster level of departments (social capital). The paper shows how a collection of variables can be built from a bibliographic data base indicating both individual behaviour including mobility and collective characteristics of the department housing individual researchers. The two level hierarchical model is estimated on fourteen European countries using bibliometric data in the fields of economics.

ELIE-Minating Poverty? Limits of the Mechanism and Potential ImprovementsBook chapterAlain Leroux and Justin Leroux, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel and Michel Lubrano (Eds.), 2011, pp. 257-272, Springer Berlin Heidelberg, 2011

Using French data, we show that ELIE performs rather weakly when it comes to addressing the issue of poverty. Yet, eliminating poverty is also a valid normative property of any redistribution mechanism. We suggest combining ELIE with another redistributive solution aimed specifically at alleviating poverty: the personal allowance (PERAL) mechanism (Leroux 2004 and 2007). We argue that ELIE and the PERAL mechanism, more than being compatible, are in fact complementary.

Basic Income and ELIE Transfers: Argument for Compatibility Despite DivergenceBook chapterClaude Gamel, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel and Michel Lubrano (Eds.), 2011, pp. 145-185, Springer Berlin Heidelberg, 2011

Van Parijs (1995) with basic income and Kolm (2005) with ELIE transfers have both revisited the ethical foundations and the redistributive patterns of the tax system. Despite being formally close, both propositions diverge because the financing of basic income is not really guaranteed and the treatment by ELIE transfers of “eccentric productive people” who choose not to work is not obvious. Both projects remain nevertheless compatible: from a philosophical point of view, Van Parijs tries to equalise individuals’ “external endowments”, while Kolm exploits only their “internal endowments”; from an economic point of view, TECIE transfers which would be based on “external endowments” could thus complete ELIE transfers stemming from “internal endowments”. The first examination of this “hybridisation” provides the framework of our conclusion.

The Trade-off Between Growth and Redistribution: ELIE in an Overlapping Generations ModelBook chapterDavid de la Croix and Michel Lubrano, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel and Michel Lubrano (Eds.), 2011, pp. 305-337, Springer Berlin Heidelberg, 2011

The ELIE scheme of Kolm taxes labour capacities instead of labour income in order to circumvent the distortive effect of taxation on labour supply. Still, Kolm does not study the impact of ELIE on human capital formation and investment. In this paper, we build an overlapping generations (OLG) model with heterogenous agents and endogenous growth driven by investment in human capital. We study the effect of ELIE on education investment and other aggregate economic variables. Calibrating the model to French data, we highlight a trade-off between growth and redistribution. With a perfect credit market, ELIE is successful in reducing inequalities and poverty, but it is at the expense of lower investment in education and slower growth. In an economy with an imperfect credit market where individuals cannot borrow to educate, the trade-off between growth and redistribution is not overturned but is less severe. However, it is possible to overturn completely that trade-off simply by changing the base of taxation for the young generation which is equivalent to subsidising education.