Arjun Jayadev

The Declining Labor Share of Income

Abstract We use two separate panel datasets, one at the economy-wide level and one for the manufacturing sector alone to examine trends in the labor share over the last three decades. Both datasets show that labor shares have decreased, starting from about 1980, in most regions of the world. This finding is robust to adjustments for self-employment as well as adjustments for the unbalanced panel structure of both datasets. Furthermore, we present evidence that as a first approximation, this decrease is driven by declines in intra-sector labor shares as opposed to movements in activity towards sectors with lower labor shares. Finally, we show that global labor share at the economy wide level has been falling.

Two Ideas To Increase Innovation And Reduce Pharmaceutical Costs And Prices

The pharmaceutical industry is undergoing a period of uncertainty. Profits are being squeezed by increasing costs and competitive pressures, and new drug production is slowing down. This Perspective reviews two policies that could assist in realigning incentives toward genuine innovation while also keeping drug spending growth under check. Value-based pricing can incentivize genuinely new discoveries and align research and development with social welfare. Public funding of clinical trials likewise can reduce both pharmaceutical costs and prices and direct research effort in a manner that is more socially productive than the current state of affairs.

Medicine for Tomorrow: Some Alternative Proposals to Promote Socially Beneficial Research and Development in Pharmaceuticals

The current models of pharmaceutical drug discovery display significant inefficiencies. One inefficiency is the widespread prevalence of me-too drugs. Second, some patents can act as barriers to knowledge, by slowing down the pace of new discoveries. Third, there are higher costs for the public, who end up paying double costs — subsidizing or funding research and development (R & D) that leads to new discoveries on the one hand, and, on the other, paying the social costs of restricted access to knowledge when the discoveries are privatized. Fourth, when the market returns are the sole guide to R & D of new drugs, diseases that are prevalent in markets with weaker buying power are neglected. Thus, policymakers need to identify a new, more cost-effective and innovative productive system for R & D. Policymakers are faced with very complex choices in designing their regulations. They want to promote access to medicines, to lower costs and to encourage research. Politically, they have to balance pressure from the industry with increasingly forceful demands from health advocacy groups. The article looks at four different sorts of policies that may be used to address some of the inadequacies in the current system, especially with regard to the management of R & D: promoting prizes over patents; directing innovation toward socially beneficial outputs by adopting some form of value-based pricing; publicly funding clinical trials to reduce conflicts of interest while reducing costs; and actively managing frontier technologies to maximize positive social spillovers.

Inequalities and Identities

We introduce concepts and measures relating to inequality between identity groups. We define and discuss the concepts of Representational Inequality, Sequence Inequality and Group Inequality Comparison. Representational Inequality captures the extent to which an attribute is shared between members of distinct groups. Sequence Inequality captures the extent to which groups are ordered hierarchically. Group Inequality Comparison captures the extent of differences between groups-. The concepts have application in interpreting segregation, clustering and polarization in societies. There exists a mapping from familiar inequality measures to the measures we identify, making them empirically applicable.

The stagnant labor market: some aspects of the bleak picture

In this paper, we examine the labor market during the Great Recession and find some startling features underlying the stagnation and decline of 2007-10. The population in the labor force has stagnated while the population that is out of the labor force has grown sharply. For the first time since we have had adequate data, the likelihood of an individual leaving the labor force from being unemployed is higher than the likelihood that he or she will move from unemployment to employment. We argue that the most plausible reasons for the continued slump in the labor market have to do with inadequate aggregate demand and are not because of structural or skill-mismatch reasons.

The Middle Muddle: Conceptualizing and Measuring the Global Middle Class

Interest in the emergence of a global middle class has resulted in a number of attempts to identify and enumerate who belongs to it . Current research provides wildly different estimates about the size and evolution of the global middle class because of a lack of consensus on appropriate identification criteria for a person to be deemed to be middle class. We identify three competing and often conflated understandings in the literature on the subject. We further argue that for at least two of these understandings, the literature has been using inappropriate thresholds for identification. Using data from the Global Consumption and Income Project, we provide estimates of the size, composition and evolution of the global middle class for three competing understandings and contrast these to existing estimates.

Access to Medicines in India: A Review of Recent Concerns

India has long been a central front in the struggle for access to affordable medicines. Because of its dynamic generic pharmaceutical industry, it has become what Medecins Sans Frontieres has called the “Pharmacy of the Developing World” (MSF 2007). As a result, it has also been a key battleground on some of the most contentious issues relating to whether, and to what extent, countries retain flexibilities under the WTO’s Agreement on Trade-Related Aspects of Intellectual Property (the TRIPS Agreement) to ensure that patent protection does not come at the cost of access to safe, effective and affordable essential medicines. This chapter reviews some of the key developments in India, four years on, since the entry into force of the Patents (Amendment) Act of 2005, which introduced product patent protection for pharmaceuticals for the first time since 1972. Although there have been some notable successes for the access to medicines movement, many challenges remain, and the future of India’s continuing status as the developing world’s pharmacy remains unclear. This paper examines some of the key challenges and opportunities that lie ahead for India.

The Global Consumption and Income Project (GCIP): An Overview

We introduce two separate datasets (The Global Consumption Dataset (GCD) and The Global Income Dataset (GID)) making possible an unprecedented portrait of consumption and income of persons over time, within and across countries, around the world. The current benchmark version of the dataset presents estimates of monthly real consumption and income for every percentile of the population (a ‘consumption/income profile’) for more than 160 countries and more than half a century (1960-2015). We describe the construction of the datasets and demonstrate possible uses by presenting some sample results concerning the distribution of consumption, poverty and inequality in the world.

Who Got What, Then and Now? A Fifty Year Overview from the Global Consumption and Income Project

Using newly comprehensive data and tools from the Global Consumption and Income Project or CGIP, covering most of the world and five decades, we present a portrait of the changing global distribution of consumption and income and discuss its implications for our understanding of inequality, poverty, inclusivity of growth and development, world economic welfare, and the emergence of a global ‘middle class’. We show how regional distributions of income and consumption have evolved very differently over time. We also undertake sensitivity analysis to quantify the impact of various choices made in database construction and analysis. We find that levels of consumption and income have increased across the distribution, that the global distribution has become more relatively equal due to falling inter-country relative inequality, and that by some measures global poverty has declined greatly but by others it has hardly declined at all, even over the fifty years. The global middle class has grown markedly in certain countries but only slightly worldwide. Most of the marked changes have occurred after 1990. China’s rapid economic growth is by far the most important factor underlying almost all of them, notwithstanding sharply increasing inequalities within the country. Most improvements outside of China are associated with rapid developing country growth after 2000, and are of unknown durability. Country-experiences vary widely; there is for instance some evidence of ‘inequality convergence’ with previously more equal countries becoming less equal over time and the obverse. We provide support for previous findings (e.g. the replacement of the global ‘twin peaks’ by a unimodal distribution) but also arrive at some conclusions that overthrow old ‘stylized facts’ (e.g. that the Sub-Saharan African countries, and not Latin American ones, have the highest levels of inequality in the world, when measured using standardized surveys). The GCIP provides a resource for ongoing analysis, and forecasting, of developments in the world distribution.

Loose money, high rates: interest rate spreads in historical perspective

Abstract: Over the past fifty years interest rate spreads have widened substantially, both between longer and shorter maturity loans and between loans to riskier and less risky borrowers. In much of economic theory, the determination of interest rate spreads is analytically distinct from the determination of the overall level of interest rates. But from a Keynesian perspective that regards interest as fundamentally the price of liquidity, there is no conceptual basis for picking out the difference in yield between money and a short-term government bond as “the” interest rate; there are many other pairs of asset yields the difference between which is determined on the same principles, and may have equivalent economic significance. In this article, we argue that this Keynesian perspective is particularly useful in explaining the secular rise in interest rate spreads since the 1980s, and that both conventional expectations and stronger liquidity preference appear to have played a role. The rise in the term and credit premiums is important for policy, because they mean that the low policy rates in recent periods of expansionary policy have not been reliably translated into low rates for private borrowers.