Publications
Ajit Zacharias
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Research Project Reports | March 2024
Integrating Nonmarket Consumption into the Bureau of Labor Statistics Consumer Expenditure Survey
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In spring 2021, under the direction and encouragement of Commissioner William Beach, the US Bureau of Labor Statistics (BLS) kicked off a major initiative—to produce a measure of consumption to supplement the release of consumer expenditures. The production of such a measure would fill a data gap regarding household economic well-being. For years BLS staff, with support from the public, had discussed the possibility of producing a consumption measure. However, it was the experience of COVID-19 and the role of home production for consumption that nudged the Bureau to promote the development of such a measure. To support this new initiative, the BLS sought input from the greater research community and public: first through the organization of a Consumption Symposium; and second through a Request for Information (RFI) that would result in an outside BLS contract. Consumption Symposium speakers included well-known national and international researchers who are expert in various aspects of measurement, including home production; the Symposium was held September 21–22, 2021. In parallel, the RFI was issued in May 2021 with responses received in July 2021. This was followed by Request for Quotation (RFQ) in September 2021. The Levy Institute was awarded the contract with a period of performance of twelve months beginning September 30, 2021.
The following report includes the Levy Institute’s findings in developing an empirical methodology and identifying data sources (including the BLS American Time Use Survey) to extend the consumer expenditure data collected by the BLS (using Consumer Expenditure Surveys) by incorporating household production (nonmarket and nongovernmental services such as do-it-yourself home repairs and childcare). The researchers—Ajit Zacharias, Fernando Rios-Avila, Nancy Folbre, and Thomas Masterson—found that an overwhelming share of home production is provided by women. Distinct from most previous research, this research extends the scope of household production to include supervisory childcare and care received by household members from people outside their household. Estimates are generated for various major components of household production, such as childcare and cooking, rather than a single category. Included are estimates by alternative methods with monetary values of household production. This research represents an extension of the work the Levy Institute has been doing in bringing the realm of household production into economic analysis, including the creation of alternative measures of economic well-being (LIMEW) and poverty (LIMTIP).
During fiscal year 2024, the BLS will be evaluating the methodology proposed in this report with an expectation that a BLS consumption measure that includes home production will be forthcoming in 2025.
The full report can be downloaded here.
Tables and figures from the report can be downloaded here.
Additional detailed information on the quality checks conducted regarding the imputations from the ATUS data can be found here.
The GitHub repository files contain detailed information on the three methods of imputation, weekday and weekend imputations, and results pertaining to each CE file (Interview, Diary, quarter, etc.). These files contain information that we used to check the quality of imputations. Users who want to use a particular method (say statistical matching) and a particular file (say third-quarter Interview sample) can check the quality of imputation for their use with the help of the information available in the repository. In assessing the quality, the users could use the strategy we provide in the report or their own criteria.Associated Program(s):Author(s): -
Research Project Reports | June 2022
Time Use, Employment, and Poverty
There is broad consensus in both research and policy circles that one of the key reasons for a lack of progress in reducing gender gaps in employment and wages is the persistent gender imbalance in unpaid work, three-quarters of which is performed by women. Universal access to quality care services enables the reduction of this unpaid care work through its redistribution from the domestic sphere to the public sphere, with empirical studies from different regions and countries demonstrating that access to services (in particular, childcare services) substantially increases female labor force participation and labor market attachment. Furthermore, a series of recent empirical studies show that access to care also creates new demand for female employment: increasing public spending on care is found to generate two-to-three times the number of new jobs per dollar than spending on sectors such as construction.
This research project report focuses on Mexico and builds on previous studies for Turkey, Ghana, and Tanzania by constructing a combined time-use and income-employment dataset for Mexico to evaluate the net effects a proposed childcare expansion could have on earnings and work hours and their concomitant impact on time and income poverty by gender, with results indicating that the employment creation achieved through increased social care spending reduces gender employment gaps while also helping to alleviate the twin deprivations of time and income poverty.Download:Associated Program(s):The Distribution of Income and Wealth Gender Equality and the Economy The Levy Institute Measure of Time and Income PovertyAuthor(s):
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Research Project Reports | July 2021
Scope and Effects of Reducing Time Deficits via Intrahousehold Redistribution of Household Production
View More View LessEvidence from sub-Saharan Africa
Gender disparity in the division of responsibilities for unpaid care and domestic work (household production) is a central and pervasive component of inequalities between men and women and boys and girls. Reducing disparity in household production figures as one element of the goal of gender equality enshrined in the United Nations’ Sustainable Development Goals (SDGs) and feminist scholars and political activists have articulated that the redistribution of household production responsibilities from females to males is important for its own sake, as well as for achieving gender equality in labor market outcomes. A cursory examination of available cross-country data indicates that higher per capita GDP—the neoliberal panacea for most societal malaise—provides little bulwark against the gender inequality in household production.
Ajit Zacharias, Thomas Masterson, Fernando Rios-Avila, and Abena D. Oduro contribute to the literature on the intrahousehold distribution of household production by placing the question within a framework of analyzing deprivation, applying that framework to better understand the interactions between poverty and the gendered division of labor in four sub-Saharan African nations: Ethiopia, Ghana, South Africa, and Tanzania. Central to their framework is the notion that attaining a minimal standard of living requires command over an adequate basket of commodities and sufficient time to be spent on home production, where meeting those requirements produces benefits for all—including those beyond the household.
Their findings motivate questions regarding the feasibility and effectiveness of redistribution of household responsibilities to alleviate time deficits and their impoverishing effects. By developing a framework to assess the mechanics of redistribution among family members and applying it to gender-based redistribution, they derive the maximum extent to which redistribution—either among all family members, between sexes, or between husbands and wives—can lower the incidence of time deficits. The conclude with a discussion of alternative principles of distributing household production responsibilities among family members and examine their impact on the Levy Institute Measure of Time and Income Poverty (LIMTCP) and discuss some policy questions in light of their findings.Download:Associated Program:Author(s):Related Topic(s): -
Research Project Reports | September 2019
Macroeconomic and Microeconomic Impacts of Improving Physical and Social Infrastructure
View More View LessA Macro-Micro Policy Model for Ghana and Tanzania
Feminist economics has long emphasized the role of physical and social infrastructure as determinants of the time women spend on household production (the provision of unpaid domestic services and care). Surprisingly, there is a lack of studies that directly investigate how infrastructure improvements affect the time spent on household production and commuting to work, which is another important unpaid activity for most employed individuals. We attempt to fill the lacunae in the research by studying this issue in the context of Ghana and Tanzania utilizing the framework of the Levy Institute Measure of Time and Income Poverty. Separately, while there are several studies (including those done previously at the Levy Institute) on the macroeconomic impacts of government expenditures on care, these assessments tend to be based primarily on employment multipliers along with simple macroeconomic assumptions. We develop a disaggregated and fully articulated macroeconomic model based on the social accounting matrices for the two countries to take account of the intersectoral linkages and external constraints, such as balance of payments, that are particularly important for many developing nations, including Ghana and Tanzania. The macro- and microeconomic aspects are integrated in a unified analytical framework via a top-down disaggregated macroeconomic model with microsimulation that is novel in that it enables the investigation of the gendered economic processes and outcomes at the macroeconomic and microeconomic levels.
Download:Associated Program:Author(s):Ajit Zacharias Thomas Masterson Fernando Rios-Avila Michalis Nikiforos Kijong Kim Tamar KhitarishviliRelated Topic(s): -
One-Pager No. 57 | September 2018The Levy Institute Measure of Economic Well-Being (LIMEW) was designed to provide a more comprehensive understanding of the changes affecting household living standards. Ajit Zacharias, Thomas Masterson, and Fernando Rios-Avila summarize their latest research on the trends in economic well-being for US households. They reveal historic stagnation in LIMEW growth over the 2000–13 period, as well as a major shift in the composition of well-being. The post-2000 period can be characterized as one of a growing dependence on the government to sustain living standards, with rising net government expenditures offsetting a sharp drop in base income.Download:Associated Program(s):Author(s):Related Topic(s):
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Working Paper No. 912 | August 2018
The Sources and Methods Used in the Creation of the Levy Institute Measure of Economic Well-Being for the United States, 1959–2013
View More View LessThis paper documents the sources of data used in the construction of the estimates of the Levy Institute Measure of Economic Wellbeing (LIMEW) for the years 1959, 1972, 1982, 1989, 1992, 1995, 2000, 2001, 2004, 2007, 2010, and 2013. It also documents the methods used to combine the various sources of data into the synthetic dataset used to produce each year’s LIMEW estimates.Download:Associated Program:Author(s):Related Topic(s): -
Public Policy Brief No. 146 | August 2018
Post-2000 Trends in the United States
Ajit Zacharias, Thomas Masterson, and Fernando Rios-Avila update the Levy Institute Measure of Economic Well-Being (LIMEW) for US households for the period 2000–13. The LIMEW—which comprises base income, income from wealth, net government expenditures, and the value of household production—is aimed at achieving a more comprehensive understanding of trends in living standards. This policy brief analyzes developments during this period at all levels of the LIMEW distribution, with a particular focus on the significant role played by net government expenditures. The overall trend for 2000–13 was one of historic stagnation in the growth of economic well-being for US households, but an examination of the different components of the measure reveals significant shifts taking place behind this headline trend.
A companion document, the Supplemental Tables, features additional data referenced in the policy brief.
Details about the sources of data and methods used to construct the estimates in this policy brief are discussed in Levy Institute Working Paper No. 912.Download:Associated Program(s):Author(s):Related Topic(s): -
Research Project Reports | August 2018
The Levy Institute Measure of Time and Consumption Poverty
Time constraints that stem from the overlapping domains of paid and unpaid work are of central concern to the debates surrounding the economic development of developing countries in general and countries of sub-Saharan Africa in particular. Time deficits due to household production are especially acute in these countries due to the poor state of social and physical infrastructure, which constrains the time allocation people can choose.
Standard measures of poverty fail to capture hardships caused by time deficits. This report applies a methodological approach that incorporates time deficits into the measurement of poverty, known as the Levy Institute Measure of Time and Consumption Poverty (LIMTCP), to the cases of Ghana and Tanzania. The LIMTCP explicitly recognizes the role of time constraints and, as such, has the potential to meaningfully inform the design of policies aimed at poverty reduction and improvement of individual and household well-being. The analysis of simulation exercises assessing the impact of paid employment provision on official and LIMTCP poverty rates has strong implications for policies aimed at poverty reduction, emphasizing the need to account for alleviating not only income but also time constraints. It also has strong gender relevance, as time poverty is more relevant for women due to their disproportionate burden of household responsibilities. Our study argues that policies aimed at improving women’s labor market outcomes can also succeed at improving their well-being only if time constraints are addressed.Download:Associated Program:Author(s):Related Topic(s): -
Policy Note 2018/4 | May 2018
Some Lessons from Ghana and Tanzania
In this policy note, Thomas Masterson and Ajit Zacharias address the nexus between wage employment, consumption poverty, and time deficits in the context of Ghana and Tanzania. Based on a recently completed research project supported by the Hewlett Foundation, the authors apply the Levy Institute Measure of Time and Consumption Poverty (LIMTCP) to estimate whether the jobs that are likely to be available to potential employment-seeking, working-age individuals in consumption-poor households—who are predominantly female in both countries—can serve as vehicles of “economic empowerment.” They investigate this question using two indicators of empowerment, asking (1) whether the individual would be able to move their household to at least a minimal level of consumption via the additional earnings from their new job and (2) whether the individual would be deprived of the time required to meet the minimal needs of care for themselves (personal care), their homes, and their dependents.Download:Associated Program(s):Author(s):Related Topic(s): -
Policy Note 2017/4 | November 2017
How Time Deficits and Hidden Poverty Undermine the Sustainable Development Goals
View More View LessThe predominant framework for measuring poverty rests on an implicit assumption that everyone has enough time available to devote to household production or enough resources to compensate for deficits in household production by purchasing market substitutes. Senior Scholar Ajit Zacharias argues that this implicit bias in our official poverty statistics threatens to undermine the Sustainable Development Goals (SDGs).
The SDGs include the following targets: (1) reduce the incidence of poverty by 50 percent by 2030, and (2) recognize and provide support to the unpaid provision of domestic services and care of persons undertaken predominantly by women in their households. This policy note suggests that a closer link exists between poverty reduction and support for household production activities than is commonly acknowledged. Failure to recognize the link in policy design can contribute to failure on both fronts. To obtain a more accurate assessment of poverty, time deficits in household production must be taken into account.
Download:Associated Program(s):The Levy Institute Measure of Time and Income Poverty Gender Equality and the Economy The Distribution of Income and WealthAuthor(s):Related Topic(s): -
Working Paper No. 880 | January 2017
Evidence from Measures of Economic Well-Being
The Great Recession had a tremendous impact on low-income Americans, in particular black and Latino Americans. The losses in terms of employment and earnings are matched only by the losses in terms of real wealth. In many ways, however, these losses are merely a continuation of trends that have been unfolding for more than two decades. We examine the changes in overall economic well-being and inequality as well as changes in racial economic inequality over the Great Recession, using the period from 1989 to 2007 for historical context. We find that while racial inequality increased from 1989 to 2010, during the Great Recession racial inequality in terms of the Levy Institute Measure of Economic Well-Being (LIMEW) decreased. We find that changes in base income, taxes, and income from nonhome wealth during the Great Recession produced declines in overall inequality, while only taxes reduced between-group racial inequality.
Download:Associated Program(s):The Distribution of Income and Wealth Gender Equality and the Economy The State of the US and World EconomiesAuthor(s):Related Topic(s): -
Working Paper No. 865 | May 2016
Why Time Deficits Matter
We describe the production of estimates of the Levy Institute Measure of Time and Income Poverty (LIMTIP) for Buenos Aires, Argentina, and use it to analyze the incidence of time and income poverty. We find high numbers of hidden poor—those who are not poor according to the official measure but are found to be poor when using our time-adjusted poverty line. Large time deficits for those living just above the official poverty line are the reason for this hidden poverty. Time deficits are unevenly distributed by employment status, family type, and especially gender. Simulations of the impact of full-time employment on those households with nonworking (for pay) adults indicate that reductions in income poverty can be achieved, but at the cost of increased time poverty. Policy interventions that address the lack of both income and time are discussed.
Download:Associated Program(s):The Distribution of Income and Wealth Gender Equality and the Economy The Levy Institute Measure of Time and Income PovertyAuthor(s):Related Topic(s): -
Research Project Reports | August 2014
The Levy Institute Measure of Time and Income Poverty
This report presents findings from a joint project of the Levy Economics Institute and the Korea Employment Information Service, with the central objective of developing a measure of time and income poverty for Korea that takes into account household production (unpaid work) requirements. Standard measurements of poverty assume that all households have enough time to adequately attend to the needs of household members—including, for example, caring for children. But this assumption is false. For numerous reasons, some households may not have sufficient time, and they thus experience “time deficits.” If a household officially classified as nonpoor has such a time deficit and cannot afford to cover it by buying market substitutes (e.g., hiring a care provider), that household will encounter hardships not reflected in the official poverty measure.To get a more accurate calculus of poverty, we developed the Levy Institute Measure of Time and Income Poverty (LIMTIP), a two-dimensional measure that takes into account both the necessary income and the household production time needed to achieve a minimum living standard. In the case of Korea, our estimates for 2008 (the last year for which data are available) show that the LIMTIP poverty rate of employed households was almost three times higher than the official poverty rate (7.5 percent versus 2.6 percent). The gap between the official and LIMTIP poverty rates was notably higher for “nonemployed male head with employed spouse,” “single female-headed” and “dual-earner” households. Our estimates of the size of the hidden poor—roughly two million individuals—suggest that ignoring time deficits in household production resulted in a serious undercount of the working poor, which has profound consequences for the formulation of policy. In addition, the stark gender disparity in the incidence of time poverty among the employed, even after controlling for hours of employment, suggests that the source of the gender difference in time poverty lies in the greater share of the household production activities that women undertake. Overall, current policies to promote gender equality and economic well-being in Korea need to be reconsidered, based on a deeper understanding of the linkages between the functioning of labor markets, unpaid household production activities, and existing arrangements of social provisioning—including social care provisioning.Download:Associated Program(s):The Distribution of Income and Wealth Gender Equality and the Economy The Levy Institute Measure of Time and Income PovertyAuthor(s):Related Topic(s): -
Public Policy Brief No. 136 | August 2014
Assessing the Korean Experience Using the Levy Institute Measure of Time and Income Poverty
In partnership with the Korea Employment Information Service, Senior Scholar Ajit Zacharias and Research Scholars Thomas Masterson and Kijong Kim investigate the complex issues of gender, changing labor market conditions, and the public provisioning of child care in Korea using the Levy Institute Measure of Time and Income Poverty (LIMTIP), an alternative measure that factors in both time and income deficits in the assessment of poverty.Since the 1997 Asian financial crisis, lifetime employment and single-breadwinner households have given way to increased job insecurity, flexible work arrangements, and rapid growth in dual-earner households in Korea. Add to these factors rising labor force participation by women but little change in the highly unequal division of household production, and many women effectively face a double shift each day: paid employment followed by a second shift of household production.Recognizing the implications of the heavy burden of care work for women’s well-being and employment, Korea introduced public child-care provisioning, via a voucher system for low-income families, in 1992 (the program became universal in 2013). This study analyzes the impact of the voucher program on reducing time and income poverty, and reassesses the overall level of poverty in Korea. While it reveals a much higher level of poverty than official estimates indicate—7.9 percent versus 2.6 percent—due to time deficits, the outsourcing of child-care services reduced the LIMTIP rate from 7.9 percent to 7.5 percent and the number of “hidden poor” individuals from two million to 1.8 million. While these results show that the problem of time poverty in Korea extends beyond child-care needs, the impact of public provisioning through the voucher program clearly has had a positive impact on families with children.The main findings and policy recommendations resulting from this study are presented in detail in the research project report The Measurement of Time and Income Poverty in Korea: The Levy Institute Measure of Time and Income Poverty.Download:Associated Program(s):The Distribution of Income and Wealth Gender Equality and the Economy The Levy Institute Measure of Time and Income PovertyAuthor(s):Related Topic(s): -
Public Policy Brief No. 132 | May 2014Gauging the severity of poverty in a given country requires a reasonably comprehensive measurement of whether individuals and households are surpassing some basic threshold of material well-being. This would seem to be an obvious point, and yet, in most cases, our official poverty metrics fail that test, often due to a crucial omission. In this policy brief, Senior Scholar Ajit Zacharias, Research Scholar Thomas Masterson, and Research Associate Emel Memiş present an alternative measure of poverty for Turkey and lay out the policy lessons that follow. Their research reveals that the number of people living in poverty and the severity of their deprivation have been significantly underestimated. This report is part of an ongoing Levy Institute project on time poverty (the Levy Institute Measure of Time and Income Poverty), which has produced research on Latin America, Korea, and now Turkey, with the aim of extending this approach to other countries.Download:Associated Program(s):Author(s):Related Topic(s):
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Research Project Reports | May 2014
The Levy Institute Measure of Time and Consumption Poverty for Turkey
Official poverty lines in Turkey and other countries often ignore the fact that unpaid household production activities that contribute to the fulfillment of material needs and wants are essential for the household to reproduce itself as a unit. This omission has consequences. Taking household production for granted when measuring poverty yields an unacceptably incomplete picture, and therefore estimates based on such an omission provide inadequate guidance to policymakers.
Standard measurements of poverty assume that all households and individuals have enough time to adequately attend to the needs of household members—including, for example, children. These tasks are absolutely necessary for attaining a minimum standard of living. But this assumption is false. For numerous reasons, some households may not have sufficient time, and they thus experience what are referred to as “time deficits.” If a household officially classified as nonpoor has a time deficit and cannot afford to cover it by buying market substitutes (e.g., hire a care provider), that household will encounter hardships not reflected in the official poverty measure. To get a more accurate calculus of poverty, we have developed the Levy Institute Measure of Time and Consumption Poverty (LIMTCP), a two-dimensional measure that takes into account both the necessary consumption expenditures and household production time needed to achieve a minimum living standard.
Download:Associated Program(s):Author(s):Related Topic(s): -
One-Pager No. 46 | February 2014The Levy Institute Measure of Time and Consumption Poverty (LIMTCP) is a two-dimensional measure that takes into account both the necessary consumption expenditures and the household production time needed to achieve a minimum standard of living—factors often ignored in official poverty measures. In the case of Turkey, application of the LIMTCP reveals an additional 7.6 million people living in poverty, resulting in a poverty rate that is a full 10 percentage points higher than the official rate of 30 percent.Download:Associated Program(s):The Distribution of Income and Wealth Gender Equality and the Economy The Levy Institute Measure of Time and Income PovertyAuthor(s):Related Topic(s):
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One-Pager No. 45 | January 2014Official poverty lines in Korea and other countries ignore the fact that unpaid household production contributes to the fulfillment of material needs and wants that are essential to attaining a minimum standard of living. By taking household work for granted, these official estimates provide an inaccurate accounting of the breadth and depth of poverty—and can lead policymakers astray.Download:Associated Program(s):The Levy Institute Measure of Time and Income Poverty The Distribution of Income and Wealth Gender Equality and the EconomyAuthor(s):Related Topic(s):
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Research Project Reports | December 2012
Revisiting Poverty Measurement, Informing Policy Responses
This report is published as part of the “Undoing Knots, Innovating for Change” series, issued by the United Nations Development Programme (UNDP) Regional Centre for Latin America and the Caribbean through its Gender Practice Area. It includes findings from a UNDP-supported research project undertaken in 2011 by the Levy Economics Institute with the objective of proposing an alternative to official income poverty measures, one that takes into account household production (unpaid work) requirements—an issue still largely ignored by official poverty estimates. This has significant consequences for policymaking. The resulting Levy Institute Measure of Time and Income Poverty is a two-dimensional measure that jointly tracks income gaps and time deficits. Using this alternative measure, the authors present selected results of empirical estimates of poverty and compare them with official income poverty rates for Argentina, Chile, and Mexico, with a focus on the study's policy implications.
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Public Policy Brief No. 126 | November 2012
Why Time Deficits Matter for Poverty
We cannot adequately assess how much or how little progress we have made in addressing the condition of the most vulnerable in our societies, or provide accurate guidance to policymakers intent on improving each individual’s and household’s ability to reach a basic standard of living, if we do not have a reliable means of measuring who is being left behind. With the support of the United Nations Development Programme and the International Labour Organization, Senior Scholars Rania Antonopoulos and Ajit Zacharias and Research Scholar Thomas Masterson have constructed an alternative measure of poverty that, when applied to the cases of Argentina, Chile, and Mexico, reveals significant blind spots in the official numbers.
Download:Associated Program(s):The Levy Institute Measure of Time and Income Poverty The Distribution of Income and Wealth Gender Equality and the EconomyAuthor(s):Related Topic(s): -
One-Pager No. 34 | October 2012
The Importance of Time Deficits
Standard poverty measurements assume that all households and individuals have enough time to engage in the unpaid cooking, cleaning, and caregiving that are essential to attaining a bare-bones standard of living. But this assumption is false. With the support of the United Nations Development Programme and the International Labour Organization, Senior Scholars Rania Antonopoulos and Ajit Zacharias and Research Scholar Thomas Masterson have constructed an alternative measure of poverty that, when applied to the cases of Argentina, Chile, and Mexico, reveals significant blind spots in the official numbers.
Download:Associated Program(s):The Levy Institute Measure of Time and Income Poverty The Distribution of Income and Wealth Gender Equality and the EconomyAuthor(s):Related Topic(s): -
Research Project Reports | August 2012
Implications for the Measurement of Poverty
Customarily, income poverty incidence is judged by the ability of individuals and households to gain access to some level of minimum income based on the premise that such access ensures the fulfillment of basic material needs. However, this approach neglects to take into account the necessary (unpaid) household production requirements without which basic needs cannot be fulfilled. In fact, the two are interdependent and evaluation of standards of living ought to consider both dimensions.
This report provides an analytical and empirical framework that includes unpaid household production work in the very conceptualization and calculations of poverty: the Levy Institute Measure of Time and Income Poverty (LIMTIP). Based on this new analytical framework, empirical estimates of poverty are presented and compared with those calculated according to the official income poverty lines for Argentina, Chile, and Mexico. In addition, an employment-generating poverty-reduction policy is simulated in each country, and the results are assessed using the official and LIMTIP poverty lines.
The undertaking of this work was initiated as a result of joint discussions and collaboration between the Levy Economics Institute and United Nations Development Programme Regional Service Centre for Latin America and the Caribbean, particularly the Gender Practice, Poverty, and Millennium Development Goals areas. It addresses an identified need to expand the knowledge base, conceptually, analytically, and empirically, on the links between (official) income poverty and the time allocation of households between paid and unpaid work.
Supporting documents:
Executive Summary
Appendices
Excel Tables for Chapters 2, 3, 4, and 5Download:Associated Program(s):The Levy Institute Measure of Time and Income Poverty The Distribution of Income and Wealth Gender Equality and the EconomyAuthor(s):Related Topic(s): -
Working Paper No. 703 | January 2012
A Comparison of Inequality and Living Standards in Canada and the United States Using an Expanded Measure of Economic Well-Being
View More View LessWe use the Levy Institute Measure of Economic Well-being (LIMEW), the most comprehensive income measure available to date, to compare economic well-being in Canada and the United States in the first decade of the 21st century. This study represents the first international comparison based on LIMEW, which differs from the standard measure of gross money income (MI) in that it includes noncash government transfers, public consumption, income from wealth, and household production, and nets out all personal taxes.
We find that, relative to the United States, median equivalent LIMEW was 11 percent lower in Canada in 2000. By 2005, this gap had narrowed to 7 percent, while the difference in median equivalent MI was only 3 percent. Inequality was notably lower in Canada, with a Gini coefficient of 0.285 for equivalent LIMEW in 2005, compared to a US coefficient of 0.376—a gap that primarily reflects the greater importance of income from wealth in the States. However, the difference in Gini coefficients declined between 2000 and 2005. We also find that the elderly were better off relative to the nonelderly in the United States, but that high school graduates did better relative to college graduates in Canada.
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Working Paper No. 690 | October 2011
Official poverty thresholds are based on the implicit assumption that the household with poverty-level income possesses sufficient time for household production to enable it to reproduce itself as a unit. Several authors have questioned the validity of the assumption and explored alternative methods to account for time deficits in the measurement of poverty. I critically review the alternative approaches within a unified framework to highlight the commonalities and relative merits of individual approaches. I also propose a two-dimensional, time-income poverty measure that accounts for intrahousehold disparities in the division of household labor and briefly discuss its uses in thinking about antipoverty policies.
Download:Associated Program(s):The Levy Institute Measure of Time and Income Poverty The Distribution of Income and Wealth Gender Equality and the EconomyAuthor(s):Related Topic(s): -
One-Pager No. 11 | August 2011There is little mystery to explaining our current high levels of unemployment. The Bureau of Economic Analysis recently revised its figures on GDP growth, and revealed that not only was the recession worse than we realized, but recent growth rates have been overstated as well. The hole, in other words, was deeper than we thought, and we have been climbing out of it at a slower pace. Simply put, the economy has failed to recover to the point where it can be expected to generate sufficient job growth. In the event that Congress should turn its attention away from the (so far) purely notional dangers of rising debt levels and back toward the immediate and tangible jobs crisis, it might consider a solution that has been overlooked so far: job creation through social care investment.
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Working Paper No. 679 | July 2011
We construct estimates of the Levy Institute Measure of Economic Well-Being for France for the years 1989 and 2000. We also estimate the standard measure of disposable cash income (DI) from the same data sources. We analyze overall trends in the level and distribution of household well-being using both measures for France as a whole and for subgroups of the French population. The average French household experienced a slower rate of growth in LIMEW than DI over the period. A substantial portion of the growth in well-being for the middle quintile was a result of increases in net government expenditures and income from wealth. We also found that the well-being of families headed by single females relative to married couples deteriorated much more, while the well-being of households headed by the elderly relative to households headed by the nonelderly improved much more than indicated by the standard measure of disposable income. The conventional measure indicates that a steep decline in economic inequality took place between 1989 and 2000, while our measure indicates no such change. We argue that these outcomes can be traced to the difference in the treatment of the role of wealth in shaping economic inequality. Our measure also indicates that, on balance, government expenditures and taxes did not have an inequality-reducing effect in France for both years. This is, again, contrary to conventional wisdom.
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Working Paper No. 667 | April 2011
We construct estimates of the Levy Institute Measure of Economic Well-Being for Great Britain for the years 1995 and 2005. We also produce estimates of the official British measures HBAI (from the Department for Work and Pensions annual report titled “Households below Average Income”) and ROI (from the Office of National Statistics Redistribution of Income analysis). We analyze overall trends in the level and distribution of household well-being using all three measures for Great Britain as a whole and for subgroups of the British population. Gains in household economic well-being between 1995 and 2005 vary by the measure used, from 23 percent (HBAI) to 32 percent (LIMEW) and 35 percent (ROI). LIMEW shows that much of the middle class’s gain in well-being was as a result of increases in government expenditures. LIMEW also marks a greater increase in economic well-being among elderly households due to the increase in their net worth. The redistributive effect of net government expenditures decreased notably between 1995 and 2005 according to the official measures, primarily due to the change in the distributive impact of government expenditures.
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Working Paper No. 610 | August 2010
A Strategy for Effective and Equitable Job Creation
Massive job losses in the United States, over eight million since the onset of the “Great Recession,” call for job creation measures through fiscal expansion. In this paper we analyze the job creation potential of social service–delivery sectors—early childhood development and home-based health care—as compared to other proposed alternatives in infrastructure construction and energy. Our microsimulation results suggest that investing in the care sector creates more jobs in total, at double the rate of infrastructure investment. The second finding is that these jobs are more effective in reaching disadvantaged workers—those from poor households and with lower levels of educational attainment. Job creation in these sectors can easily be rolled out. States already have mechanisms and implementation capacity in place. All that is required is policy recalibration to allow funds to be channeled into sectors that deliver jobs both more efficiently and more equitably.Download:Associated Program(s):Employment Policy and Labor Markets The Distribution of Income and Wealth Gender Equality and the EconomyAuthor(s):Related Topic(s): -
Public Policy Brief Highlights No. 108A | April 2010
Why President Obama Should Care About “Care”: An Effective and Equitable Investment Strategy for Job Creation
View More View LessIn his State of the Union address President Obama acknowledged that “our most urgent task is job creation”—that a move toward full employment will lay the foundation for long-term economic growth and ensure that the federal government creates the necessary conditions for businesses to expand and hire more workers. According to a new study by Levy scholars Rania Antonopoulos, Kijong Kim, Thomas Masterson, and Ajit Zacharias, the government needs to identify and invest in projects that have the potential for massive, and immediate, public job creation. They conclude that social sector investment, such as early childhood education and home-based care, would generate twice as many jobs as infrastructure spending and nearly 1.5 times the number created by investment in green energy, while catering to the most vulnerable segments of the workforce.
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Public Policy Brief No. 108 | February 2010
Why President Obama Should Care About “Care”: An Effective and Equitable Investment Strategy for Job Creation
View More View LessIn his State of the Union address President Obama acknowledged that “our most urgent task is job creation”—that a move toward full employment will lay the foundation for long-term economic growth and ensure that the federal government creates the necessary conditions for businesses to expand and hire more workers. According to a new study by Levy scholars Rania Antonopoulos, Kijong Kim, Thomas Masterson, and Ajit Zacharias, the government needs to identify and invest in projects that have the potential for massive, and immediate, public job creation. They conclude that social sector investment, such as early childhood education and home-based care, would generate twice as many jobs as infrastructure spending and nearly 1.5 times the number created by investment in green energy, while catering to the most vulnerable segments of the workforce.Download:Associated Program(s):Author(s):Related Topic(s): -
LIMEW Reports | November 2009Reports of a postracial society may be premature. Studies continue to show wide racial gaps in income and, especially, wealth; although there is some evidence that income gaps have shrunk over the past half century, wealth inequality is large and persistent.
In this report, the authors examine trends in economic well-being between 1959 and 2007 based on the race/ethnicity of households. Using the Levy Institute Measure of Economic Well-Being, they find that changes in household wealth and net government expenditure are the key elements in the story that unfolds about racial differences.
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Policy Note 2009 | June 2009
Special Report: Who Gains from President Obama's Stimulus Package ... And How Much?
View More View LessIn this Special Report, Levy scholars Ajit Zacharias, Thomas Masterson, and Kijong Kim provide a preliminary assessment of the 2009 American Recovery and Reinvestment Act (ARRA), a package of transfers and tax cuts that is expected to provide relief to low-income and vulnerable households especially hurt by the economic crisis, while at the same time supporting aggregate demand. By the administration’s estimate, ARRA will create or save approximately three and a half million jobs by the end of 2010; while the ameliorating impact of the stimulus plan on the employment situation is surely welcome, say the authors, the government could have achieved far more at the same cost by skewing the stimulus package toward outlays rather than tax cuts. Their analysis points toward the necessity for a comprehensive employment strategy that goes well beyond ARRA. The need for public provisioning of various sorts—ranging from early childhood education centers to public health facilities to the “greening” of public transportation—coupled with the severe underutilization of labor, naturally suggests an expanded role for public employment as a desirable ingredient in any alternative strategy.
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Working Paper No. 568 | June 2009
A Microsimulation Approach
Over the last two decades, those at the bottom of the income scale have seen their incomes stagnate, while those at the top have seen theirs skyrocket; without intervention, the recession that began in December 2007 was likely to exacerbate this trend. Will the American Recovery and Reinvestment Act of 2009 (ARRA) be able to keep the situation from getting worse for those at the bottom of the income scale? Will ARRA reverse the upward trend in inequality that we’ve seen in the recent past? The authors of this new working paper employ a microsimulation of ARRA to address these questions. They find that, despite a large amount of job creation, ARRA is likely to have little impact on overall income inequality, or on the income gaps between relatively advantaged and disadvantaged groups.
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Working Paper No. 566 | May 2009
In this paper, we conduct the novel exercise of analyzing the relationship between overall wealth inequality and caste divisions in India using nationally representative surveys on household wealth conducted during 1991–92 and 2002–03. According to our findings, the groups in India that are generally considered disadvantaged (known as Scheduled Castes or Scheduled Tribes) have, as one would expect, substantially lower wealth than the “forward” caste groups, while the Other Backward Classes and non-Hindus occupy positions in the middle. Using the ANOGI decomposition technique, we estimate that between-caste inequality accounted for about 13 percent of overall wealth inequality in 2002–03, in part due to the considerable heterogeneity within the broadly defined caste groups. The stratification parameters indicate that the forward caste Hindus overlap little with the other caste groups, while the latter have significantly higher degrees of overlap with one another and with the overall population. Using this method, we are also able to comment on the emergence and strengthening of a “creamy layer,” or relatively well-off group, among the disadvantaged castes, especially the Scheduled Tribes.
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LIMEW Reports | April 2009
In this latest LIMEW report, the authors present new evidence on the pattern of economic inequality in the United States that indicates higher inequality in 2004 than in 1959. According to the LIMEW, there was a surge in inequality between 1989 and 2000 that reflects the large increase in income from wealth for the top rungs of the economic ladder; the principal factor behind the official measures was base income (consisting mainly of labor income). The authors’ findings suggest a rather bleak picture for the lower and middle classes in terms of sharing the economic pie.
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LIMEW Reports | February 2009
Over the last half century, government policy has had an important hand in alleviating disparities among population subgroups in the United States; for example, special tax treatment for families with children has meant an improvement in the well-being of single mothers, and Medicare and Social Security have been the driving force in improving well-being among the elderly. Thus, the measure of economic well-being used is critical in assessing changes in disparities between groups.
The Levy Institute Measure of Economic Well-Being (LIMEW) is a comprehensive measure that not only includes estimates of public consumption and household production but also factors in the long-run benefits of wealth ownership. In this report, the authors examine long-term trends in economic well-being in the United States between 1959 and 2004 within various population subgroups based on the following household characteristics: race/ethnicity, age, education, and marital status. With the exception of income from wealth, they find that the gap between nonwhite and white households narrowed between 1959 and 2004, and public consumption increasingly favored nonwhites. Relative well-being for those 65 and older improved significantly, and was 9 percent higher than the average nonelderly household in 2000 (a finding at odds with official measures of economic well-being). In contrast, the under-35 age group experienced a sizable deterioration in relative well-being, as did less educated groups relative to college graduates. The gap between families with a single, female head of household and families with a married head of household also widened further over time.
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LIMEW Reports | February 2009
The Levy Institute Measure of Economic Well-Being (LIMEW) is a more comprehensive measure than either gross money income or extended income because it includes estimates of public consumption and household production, as well as the long-run benefits from the ownership of wealth. As a result, it provides a picture of economic well-being in the United States that is very different from the official measures.
The authors find that median household well-being grew rather sluggishly over the 1959–2004 period compared to the annual growth rate of per capita GDP. They note the crucial role of net government expenditures, and therefore call for the Obama administration’s fiscal stimulus package to improve the broader economic well-being of the poor and the middle class, while also creating jobs.
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Working Paper No. 556 | January 2009
Long-Term Trends in the Levy Institute Measure of Economic Well-Being (LIMEW), United States, 1959–2004
View More View LessThe motivation to construct the LIMEW in lieu of relying on the official measures of well-being is to provide a more comprehensive measure of economic inequality that will also show the disparities among key demographic groups. The authors of this new working paper show that the LIMEW provides a perspective on disparities among population subgroups that differs from the official measures, as well as differing time trends. For example, according to the LIMEW, there has been an almost continuous improvement in the relative well-being of the elderly, which were 9 percent better off than the nonelderly in 2000 because of greater income from wealth. Moreover, the principle factor behind the increase in inequality over the 1959–2004 period was the rising contribution of income derived from nonhome wealth.
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Working Paper No. 496 | May 2007
Gender Disparities in Employment and Aggregate Profitability in the United States
View More View LessWe explore the relationships between aggregate profitability and women’s growing share of market work in the United States during the 1980s and 1990s. Using decomposition analysis and counterfactuals, we investigate whether the contribution of the declining wage share to the upswing in profitability was aided by the growing incorporation of women into the workforce. Results show that women helped to moderate the decline in the aggregate wage share. The counterfactuals suggest that the reduction in gender pay disparity overwhelmed the negative effect of women’s growing share of market work on the wage share. The decline in the wage share was driven primarily by distributional changes within the sectors rather than by changes in the composition of value added. In sectors where wage shares fell, however, women did not restrain the fall, indicating that the aggregate outcome was the net result of distinct sectoral trends in women’s employment.
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LIMEW Reports | April 2007
A New Perspective
Given the aging of the American population and the widening gap between rich and poor—not to mention the controversy surrounding the future viability of Social Security—the economic welfare of the elderly is an extremely topical issue. This report provides a new look at America’s elderly, and shows that the official measures drastically understate their level of economic well-being.
The conventional measures of well-being do not adequately reflect income from wealth and net government expenditures. Moreover, in the period from 1989 to 2001, there was an extraordinary increase in income from nonhome wealth, as well as a widening gap in net government expenditures between the elderly and nonelderly. Thus, on the basis of the Levy Institute Measure of Economic Well-Being, which is a more comprehensive measure of income, the economic disadvantage of the elderly relative to the nonelderly appears to be less severe. Nevertheless, inequality has continued to widen within both groups.
The results suggest that government policies and programs that favor the elderly over the nonelderly are misdirected. Rather than cutting back on these programs or redirecting policy, however, the authors advocate the extension of similar programs to the nonelderly, such as universal health care, as well as more generous provisions for the nonelderly in existing social welfare programs.
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Working Paper No. 487 | January 2007
Existing empirical schemas of class structure do not specify the capitalist class in an adequate manner. We propose a schema in which the specification of capitalist households is based on wealth thresholds. Individuals in noncapitalist households are assigned class locations based on their position in the labor process. The schema is designed to address the question of the relationship between class structure and overall economic inequality. Our analysis of the US data shows that class divisions among households, especially the large gaps between capitalist households and everyone else, contribute substantially to overall inequality.
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LIMEW Reports | December 2006
Who’s at the Top of the Economic Ladder?
This report argues that wealth is an integral aspect of economic well-being. The authors combine income and net worth to demonstrate the importance of wealth inequalities in shaping overall economic inequality and defining the disparities among population subgroups.
Conventional measures of household economic well-being do not adequately reflect the advantages of asset ownership or the disadvantages of financial liabilities. The authors find that the picture of economic well-being in the United States is quite different if the yardstick is their wealth-adjusted income measure (WI) rather than the standard income measure.
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Working Paper No. 466 | August 2006
Net Government Expenditures and the Economic Well-Being of the Elderly in the United States, 1989–2001
View More View LessWe examine the economic well-being of the elderly, using the Levy Institute Measure of Economic Well-Being (LIMEW). Compared to the conventional measures of income, the LIMEW is a comprehensive measure that incorporates broader definitions of income from wealth, government expenditures, and taxes. It also includes the value of household production. We find that the elderly are much better off, relative to the nonelderly, according to our broader measure of economic well-being than by conventional income measures. The main reason for the higher relative LIMEW of the elderly is the much higher values of income from wealth and net government expenditures for the elderly than the nonelderly. There are pronounced differences in well-being among the population subgroups within the elderly. The older elderly are worse off than the younger elderly, nonwhites are worse off than whites, and singles are worse off than married couples. We also find that the degree of inequality in the LIMEW is substantially higher among the elderly than among the nonelderly. In contrast, inequality in the most comprehensive measure of income published by the Census Bureau is virtually identical among the elderly and nonelderly. The main factor behind the degree of inequality, as the decomposition analysis reveals, is the greater size and concentration of income from nonhome wealth in the LIMEW compared to extended income (EI).
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Working Paper No. 447 | May 2006
Household Wealth and the Measurement of Economic Well-Being in the United States
View More View LessWhy Today's International Financial System Is Unsustainable
The standard official measure of household economic well-being in the United States is gross money income. The general consensus is that such measures are limited because they ignore other crucial determinants of well-being. We modify the standard measure to account for one such determinant: household wealth. We then analyze the level and distribution of economic well-being in the United States during the 1980s and 1990s, using the standard measure and a measure that differs from the standard in that income from wealth is calculated as the sum of lifetime annuity from nonhome wealth and imputed rental-equivalent for owner-occupied homes. Our findings indicate that the level and distribution of economic well-being is substantially altered when money income is adjusted for wealth. Over the 1989–2000 period, median well-being appears to increase faster when these adjustments are made than when standard money income is used. This adjustment also widens the income gap between African Americans and whites, but increases the relative well-being of the elderly. Adding imputed rent and annuities from household wealth to household income considerably increases measured inequality and the share of income from wealth in inequality. However, both measures show about the same rise in inequality over the period. Our results contradict the assertion that the "working rich" have replaced the rentiers at the top of the economic ladder.
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LIMEW Reports | May 2005
The Effects of Government Deficits and the 2001–02 Recession on Well-Being
This interim report compares the LIMEW and official measures of economic well-being for 1989–2002, a period marked by the economic boom of the late 1990s and a mild recession in 2001–02. All measures show that the well-being of the average American household was significantly higher in 2000 than in 1989, with most of the improvement occurring in the latter half of the 1990s. In contrast, while the official measures show deterioration in well-being of 2–3 percent for the average household in the period 2000–02, the LIMEW shows a hefty increase of more than 5 percent. Nevertheless, inequality was higher in 2002 than in 1989 according to all measures of well-being.Download:Associated Program(s):Author(s): -
LIMEW Reports | March 2005This report analyzes regional aspects of economic well-being according to four regions identified by the United States Census Bureau: the Northeast, Midwest, South, and West. Using the official measures and the Levy Institute Measure of Economic Well-Being (LIMEW), the authors examine how the average American household fared from 1989 to 2001 and discuss disparities in well-being among population subgroups and across regions. In light of the 2004 presidential election, the report also examines patterns of well-being in the “red” and “blue” states, where the electoral majority favored George W. Bush and John Kerry, respectively.Download:Associated Program(s):Author(s):
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LIMEW Reports | December 2004
This report supplements previous findings of the Levy Institute Measure of Economic Well-Being (LIMEW) research project within our program on the distribution of income and wealth. Some readers have questioned the sensitivity of our estimates in view of our imputation techniques. Therefore, the authors explore the sensitivity of their key findings to changes in the set of assumptions that they use to impute public consumption, which is a major component of the LIMEW.
The authors consider alternative assumptions regarding three components of public consumption: general public consumption, highways, and schooling. New calculations for 1989 and 2000 show that their initial major findings remain intact using alternative estimation procedures: there is a positive correlation between public consumption and the LIMEW, overall inequality is higher in 2000 than 1989, and public consumption reduces inequality. The results show that their measure of economic well-being is robust under alternative assumptions of public consumption. They conclude that government provisioning of amenities plays an important role in sustaining living standards and should be included in a measure of economic well-being.
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LIMEW Reports | September 2004
Alternative Measures of Income from Wealth
Economic well-being refers to the command or access by members of a household over the goods and services produced in a modern market economy during a given period of time.The Levy Institute Measure of Economic Well-Being (LIMEW) is a comprehensive measure that is constructed as the sum of the following components: base money income (gross money income minus property income and government cash transfers), employer contributions for health insurance, income from wealth, net government expenditures (transfers and public consumption, net of taxes), and the value of household production.
Our previous work provided estimates of the LIMEW and its components for households in the United States, estimates of the LIMEW for some key demographic groups, and estimates of overall economic inequality. These estimates were compared with those based on the official measures (see Wolff, Zacharias, and Caner 2004 for more information regarding our concepts, sources, and methods). Some readers have questioned the sensitivity of our estimates to the particular types of imputation techniques that we use. This document explores the sensitivity of the LIMEW to the underlying assumptions on imputing income from wealth, a major component of the LIMEW. We provide new calculations for 1989 and 2000 that show that our initial major findings using the LIMEW hold up, generally, using alternative estimation procedures: mean income from wealth increases by decile, the share of mean income from wealth rises between 1989 and 2000, and inequality is higher in 2000 than 1989.
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LIMEW Reports | May 2004
United States, 1989, 1995, 2000, and 2001
This report presents the latest findings of the Levy Institute Measure of Economic Well-Being (LIMEW) research project within our program on the distribution of income and wealth. It enhances previous findings about economic well-being and inequality in the United States by extending our analysis to include additional years, 1995 and 2001, and by comparing our results with the Census Bureau's most comprehensive measure of a household's command over commodities, which we refer to as extended income (EI).
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LIMEW Reports | February 2004
Concept Measurement and Findings: United States, 1989 and 2000
The Levy Economics Institute has, since its inception, maintained an active research program on the distribution of earnings, income, and wealth. Experience from the 1990s suggests that economic growth alone cannot dramatically reduce economic inequality. Because we are concerned with the improvement of well being, we have initiated a research project, the Levy Institute Measure of Economic Well-Being (LIMEW), within the program on distribution of income and wealth. This project seeks to assess policy options and to provide guidance toward improving the distribution of economic well-being in the United States, and it gives us the opportunity to track the progress of economic well-being using a comprehensive measure. Our expectation is that the LIMEW will become a useful tool for policymakers to assess programs and to design policies that will ensure improvement in economic well-being.
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LIMEW Reports | December 2003
United States, 1989 and 2000
The Levy Economics Institute has, since its inception, maintained an active research program on the distribution of earnings, income, and wealth. Experience from the 1990s suggests that economic growth alone cannot dramatically reduce economic inequality. Because we are concerned with the improvement of well being, we have initiated a research project, the Levy Institute Measure of Economic Well-Being (LIMEW), within the program on distribution of income and wealth. This project seeks to assess policy options and to provide guidance toward improving the distribution of economic well-being in the United States, and it gives us the opportunity to track the progress of economic well-being using a comprehensive measure. Our expectation is that the LIMEW will become a useful tool for policymakers to assess programs and to design policies that will ensure improvement in economic well-being.
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Working Paper No. 386 | September 2003
Household Wealth, Public Consumption, and Economic Well-Being in the United States
View More View Less*Preliminary draft. Please do not quote or cite without permission.
Standard official measures of economic well-being are based on money income. The general consensus is that such measures are seriously flawed because they ignore several crucial determinants of well-being. We examine two such determinants--household wealth and public consumption--in the context of the United States. Our findings suggest that the level and distribution of economic well-being is substantially altered when money income is adjusted for wealth or public consumption.
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Working Paper No. 372 | February 2003
Our measure of economic well-being is motivated by the conviction that there is substantial room for improving existing official measures of the level and distribution of household economic well-being. The definition of the scope of our measure is guided by an extended concept of income that fundamentally reflects the resources that a household can command for facilitating current consumption or acquiring financial and physical assets. In the contemporary United States, three main institutions--markets, the government, and the household--mediate such command. The measure therefore attempts to integrate the following components: money income, wealth, noncash transfers from the business and government sectors, some forms of public consumption, and household production. We discuss conceptual issues relevant to each of the components and outline an approach for combining them.
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Working Paper No. 342 | February 2002
Empirical studies of intertemporal dynamics of individual income, distribution of personal income, and growth and distribution of national income are all based on statistics that rely on some concept of income. The dominant one today appears to be the so-called Haig-Simons-Hicks (HSH) concept of income. I examine the foundations of this concept in Hicks? Value and Capital and conclude that there is nothing "Hicksian" about the HSH concept of income. Furthermore, I argue that Hicks? failure to distinguish between definition and calculation, and the consequent lack of adequate ex post concepts, make it impossible for his income definitions to serve as a basis for income accounting.
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Summary Vol. 10, No. 2 | January 2001
A special feature by Senior Scholar Edward N. Wolff focuses on the inequality in the distribution of income and wealth—and what can be done about it.
Contents: The Rich Get Richer (Special feature by Edward N. Wolff) · Is there a Skills Crisis? · Testing Profit Rate Equalization · The Markets versus the ECB · Origins of the GATT · Race or People · Productivity in Manufacturing and Length of the Working Day
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Working Paper No. 321 | January 2001
1947–1998
Long-run differentials in interindustrial profitability are relevant for several areas of theoretical and applied economics because they characterize the overall nature of competition in a capitalist economy. This paper argues that the existing empirical models of competition in the industrial organization literature suffer from serious flaws. An alternative framework, based on recent advances in the econometric modeling of the long run, is developed for estimating the size of long-run profit rate differentials. It is shown that this framework generates separate, industry-specific estimates of two potential components of long-run profit rate differentials identified in economic theory. One component, the noncompetitive differential, stems from factors that do not depend directly on the state of competition; these factors are generally characterized as risk and other premia. The other component, the competitive differential, is due to factors that depend directly on the state of competition (factors such as degree of concentration and economies of scale). Estimates provided here show that during the period under study, the group of industries with statistically insignificant competitive differentials accounted for 72 percent of manufacturing profits and 75 percent of manufacturing capital stock, which is interpreted as lending support to the theories of competition advanced by the classical economists and their modern followers.
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Summary Vol. 10, No. 3 | January 2001
Summaries of the speeches and sessions at the 11th Annual Hyman P. Minsky Conference on Financial Structure include the remarks of Thomas Hoenig, president of the Federal Reserve Bank in Kansas City, who discussed the broad policy lessons that can be learned from the recent proliferation of financial crises in developed nations and their implications for the Fed's role in crisis management.
Contents: Conference Summaries: Quality of Life Indicators; Education Reform outside the School; 11th Annual Minsky Conference · Policy Notes: Put Your Chips on 35 (James K. Galbraith) and Financing Health Care (Walter M. Cadette) · Working Papers include "Euro Instability," "Making EMU Work," and "Will the Euro Bring Economic Crisis to Europe?"
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Summary Vol. 10, No. 1 | January 2001
A special project report by Senior Scholar Joel Perlmann outlines research he has been conducting on immigration, ethnic assimilation, and social mobility in America. Summaries of the sessions held at a related conference on multiraciality also appear in this issue.
Contents: Conference on multiraciality and the 2000 Census · Project Report: Ethnicity, Assimilation, and Social Mobility in America · Racial wealth disparities · Asset ownership across generations · A reassessment of export-led growth · Demographic outcomes of ethnic intermarriage in American history · Call for papers · Announcement of upcoming conferences
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Public Policy Brief No. 61 | November 2000
The Macroeconomics of Social Policy
The idea that saving is the force driving private investment and economic growth has become ever more entrenched in mainstream economic thought as well as in the minds of policymakers and the general public. Even though the empirical evidence that increased household saving will directly stimulate private investment and economic growth is scant, the idea remains prominent and underlies policy debates on topics ranging from Social Security to a balanced federal budget to reducing the national debt. The popular theory underlying these cuts is countered by evidence that private sector investment is financed primarily out of business retained earnings, not household saving, which explains why current policies aimed at raising household saving via cuts to social spending programs have been unsuccessful at raising saving rates. Moreover, government spending on social programs does not necessarily reduce economic growth. Higher government spending could be supported, and a greater degree of investment spending stimulated, through a combination of lower taxes on business income and higher taxes on personal incomes of upper-income households.
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Public Policy Brief Highlights No. 61A | November 2000
The Macroeconomics of Social Policy
The idea that saving is the force driving private investment and economic growth has become ever more entrenched in mainstream economic thought as well as in the minds of policymakers and the general public. Even though the empirical evidence that increased household saving will directly stimulate private investment and economic growth is scant, the idea remains prominent and underlies policy debates on topics ranging from Social Security to a balanced federal budget to reducing the national debt. The popular theory underlying these cuts is countered by evidence that private sector investment is financed primarily out of business retained earnings, not household saving, which explains why current policies aimed at raising household saving via cuts to social spending programs have been unsuccessful at raising saving rates. Moreover, government spending on social programs does not necessarily reduce economic growth. Higher government spending could be supported, and a greater degree of investment spending stimulated, through a combination of lower taxes on business income and higher taxes on personal incomes of upper-income households.Download:Associated Program:Author(s): -
Summary Vol. 9, No. 3 | January 2000
Summaries of the sessions held at the 10th Annual Hyman P. Minsky Conference on Financial Structure examine the problems and prospects of the liberalization of financial markets.
Contents: Tenth Annual Hyman P. Minsky Conference on Financial Structure: Liberalization of Financial Markets · Is the New Economy Rewriting the Rules? · The Views of Jerome Levy and Michal Kalecki · History of Wage Inequality · Japan's Lost Decade · Trends in Wealth Ownership · Can the Expansion Be Sustained? · Phoenician Port Power
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Summary Vol. 9, No. 2 | January 2000
The Spring Summary leads off with Senior Scholar Edward N. Wolff's report on his new research project: an in-depth empirical examination of the long-term effects of technological change on earnings, inequality, and employment in the United States.
Contents: New Research Project: Long-Term Effects of Technological Change on Earnings, Inequality, and Labor Demand · Notes on the US Trade and Balance of Payments Deficits · On Krugman and the Liquidity Trap · Is There a Skills Crisis? · A New Approach to Tax-Exempt Bonds · Explaining the US Trade Deficit · The Brazilian Crisis · The Social Wage, Welfare Policy, and the Phases of Capital Accumulation · What's Behind the Recent Rise in Profitability?
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Report | January 2000
Notes on the U.S. Trade and Balance of Payments Deficits
If the United States’s balance of trade does not improve, the country could eventually find itself in a “debt trap,” the author says. The aim of this paper, the second in a series offering Godley’s strategic analysis, is to display what seems reasonably likely to happen if world output recovers but otherwise past trends, policies, and relationships continue. The potential usefulness of the exercise is to warn policymakers of dangers that may exist and to help them think out what policy instruments are, or should be made, available to deal with worst cases, should they arise.
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Summary Vol. 9, No. 1 | January 2000
A special feature by Distinguished Scholar Wynne Godley focuses on the relationship between inventory investment and the American business cycle. Also in this issue: a new working paper by Federal Reserve Board Governor Laurence Meyer provides a central banker's perspective on the Asian crisis.
Contents: Conference on Inequality in the Industrialized and Developing Countries · Special Feature on Inventories and the US Business Cycle · History of Wage Inequality in America · Finance in a Classical and Harrodian Cyclical Growth Model · Financing Long-Term Care · Rhetorical Evolution of the Minimum Wage · Seven Unsustainable Processes · Computers and the Wage Structure
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Working Paper No. 291 | December 1999
This paper addresses two broad questions. The first one relates to the economic rationale for the existence of the welfare state. To address this question, we review the marginalist arguments and then counterpose a historical and institutional analysis of the rise of the US welfare state. The second question concerns the macroeconomic impacts of welfare spending. We examine the standard neoclassical macroeconomic arguments for and against welfare cutbacks and then propose an alternative growth framework, rooted in the classical and Harrodian traditions, to evaluate social policy. We argue that the alternative framework provides both demand-side and supply-side mechanisms whereby social spending can be supported without harmful long-run macroeconomic effects. Our analysis suggests that, in general, because growth and crises are endogenous, there may be no tension between social policy and economic performance. Specifically, the recent cutbacks in the US are hard to justify on purely economic grounds.
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Summary Vol. 8, No. 3 | January 1999
This double issue of the Summary features the Ninth Annual Hyman P. Minsky Conference on Financial Structure, which underscored the renewed general interest in Minsky's work as it applies to the global financial system.
Contents: Risk Reduction in the New Financial Architecture · Can Goldilocks Survive? · Workshop: Earnings Inequality, Technology, and Institutions · Keynesian Alternatives to the Independent Central European Bank · Ninth Annual Hyman P. Minsky Conference on Financial Structure: Structure, Instability, and the World Economy · The Minimum Wage and Regional Wage Structure: Implications for Income Distribution · How Can We Provide for the Baby Boomers in Their Old Age? · Financing Full Employment · Surplus Mania
Publication Highlight
The Macroeconomic Effects of Student Debt Cancellation
Author(s): Scott Fullwiler, Stephanie A. Kelton, Catherine Ruetschlin, Marshall SteinbaumFebruary 2018
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