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This articles focuses on the recent research efforts to incorporate income, wage and wealth inequality in macroeconomic models. I start by reviewing recent models on the impact of inequality on, on the one hand, long-run growth and, on the other, and macroeconomic fluctuations. The articles then reviews the literature concerned with the macroeconomic determinants of wage and wealth inequality. It concludes by discussing a number of possible avenues of research that seem to me particularly important, such as the impact of macroeconomic policy on distribution or the effect that firm size can have on both growth and wage inequality.
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A sizable literature has established the positive impact of social infrastructure on economic development, but the determinants of social infrastructure itself have yet to be fully explored. Competing theories suggest a variety of political institutions as driving forces of social infrastructure, but the empirical literature has been hampered by the small set of available proxies, many of which are broadly defined. We leverage a new, comprehensive dataset that codes political institutions directly from countries’ constitutions. By employing a statistical methodology that is designed to juxtapose candidate regressors associated with many competing theories, we test each individual political institution's effect on social infrastructure. Our results show that constitutional rules pertaining to executive constraints as well as to the structure of electoral systems are crucial for the development of high-quality social infrastructure. We also find that the determinants of social infrastructure are much more fundamental than previously thought: not only the general structure of electoral systems matter, but also highly detailed aspects such as limits on campaign contributions and the freedom to form parties. Moreover, the granularity of our data allows us to highlight the profound effect of basic human rights on social infrastructure, a dimension which has not been explored in the literature to date.
The long-term costs of protectionism are difficult to evaluate as very few countries have switched back to this economic policy after a long period of free trade. One country that did make the move was France in 1892, when the Chamber of Deputies, encouraged by the president of the customs commission, Jules Méline, decided to sharply raise cereal import duties. This decision slowed the upwards trend in education levels as it made farming jobs more attractive than manufacturing jobs, thereby reducing the relative return on an education. These findings are consistent with the theory of unified growth which associates demand for education with technological improvement. They also suggest that educational progress is reversible.
Cet article s’intéresse aux inégalités de répartition des salaires et du patrimoine comme programme de recherche macroéconomique. Après un bref aperçu des modèles récents liant inégalités et croissance à long terme d’une part, et inégalités et fluctuations macroéconomiques d’autre part, nous passons en revue la littérature sur les facteurs macroéconomiques à l’origine des inégalités de répartition des salaires et du patrimoine. En guise de conclusion, nous proposons quelques pistes de recherches futures qui nous semblent importantes à mener telles que le rôle des politiques macroéconomiques sur la répartition ou encore celui de la taille des entreprises sur la croissance et leur contribution aux inégalités.
Earnings are the product of wages and hours of work; hence, the dispersion of hours can magnify or dampen a given distribution of wages. This paper examines how earnings inequality is affected by the dispersion of working hours using data for the USA, the UK, Germany, and France over the period 1989–2012. We find that hours dispersion can account for over a third of earnings inequality in some countries and that its contribution has been growing over time. We interpret the expansion in hours inequality in European countries as being the result of weaker union power that led to less successful bargaining concerning working hours.
We examine the determinants of income mobility and inequality in a Ramsey model with elastic labor supply and heterogeneous wealth and ability (labor endowment). Both agents with lower wealth and with greater ability tend to supply more labor, implying that labor supply decisions may have an equalizing or unequalizing effect depending on the relative importance of the two sources of heterogeneity. Moreover, these decisions are central to the extent of mobility observed in an economy. The relationship between mobility and inequality is complex. For example, a reduction in the interest rate and an increase in the wage rate reduce capital income inequality and allow upward mobility of the ability-rich. However, the increase in the labor supply of high ability agents in response to higher wages raises earnings dispersion and thus has an offsetting effect. As a result, high mobility can be associated with an increase or a decrease in overall income inequality. (This abstract was borrowed from another version of this item.)
A substantial literature has examined the determinants of support for democracy and although existing work has found a gender gap in democratic attitudes, there have been no attempts to explain it. In this paper we try to understand why females are less supportive of democracy than males in a number of countries. Using data for 20 Sub-Saharan African countries, we test whether the gap is due to individual differences previously ignored or to country-wide characteristics. We find that controlling for individual characteristics does not offset the gender gap, but our results indicate that the gap is eroded by high levels of human development and political rights.
After a decade of research on the relationship between institutions and growth, there is no consensus about the exact way in which these two variables interact. In this paper we re-examine the role that institutions play in the growth process using data for developed and developing economies over the period 1975–2005. Our results indicate that the data is best described by an econometric model with two growth regimes. Political institutions are the key determinant of which regime an economy belongs to, while economic institutions have a direct impact on growth rates within each regime. These findings support the hypothesis that political institutions are one of the deep causes of growth, setting the stage in which economic institutions and standard covariates operate.
Focusing on the promotion system for French academics, the authors aim at understanding the causes behind the underrepresentation of women among the highest positions. Three potential explanations are tested: gender discrimination, self-selection of women into competition, and poorer performance of women in contests conditional on applying for promotion. A rich database including information on candidates, those eligible to be candidates and the results of competitive examinations is used. They find that women have a lower probability to be candidates. It remains to understand why women tend to participate less than men in contests.
The promotion system for French academic economists provides an interesting environment to examine the promotion gap between men and women. Promotions occur through national competitions for which we have information both on candidates and on those eligible to be candidates. Thus, we can examine the two stages of the process: application and success. Women are less likely to seek promotion, and this accounts for up to 76 percent of the promotion gap. Being a woman also reduces the probability of promotion conditional on applying, although the gender difference is not statistically significant. Our results highlight the importance of the decision to apply.