Kevin Sylwester

Income inequality, education expenditures, and growth

Abstract Recent studies have reported a negative association between income inequality and economic growth. If true, what accounts for this finding? What are possible transition mechanisms that might link the two? This paper explores one such mechanism. Income inequality raises expenditures for public education as a fraction of gross domestic product (GDP). Although public education expenditures are positively associated with future economic growth, the contemporaneous effect upon growth is negative. Given this cost upon current growth, these findings may help to explain the lack of a large, positive effect from the growth of human capital upon economic growth as reported in the literature.

R&D and economic growth

This paper examines the association between research and development (R&D) and the growth rate of output per capita at a national level. Do countries that allocate a larger share of output to R&D grow faster than otherwise similar countries? After reviewing past literature, I examine the association between R&D and economic growth in 20 OECD countries using a multivariate regression. There is not found to be a strong association between the two. But when considering only G-7 countries, there is reported to be a positive association between industry R&D expenditures and economic growth.

Technical efficiency and productivity analysis in Indonesian provincial economies

This article estimates inefficiency and Total Factor Productivity (TFP) across Indonesian provinces from 1993 to 2000. Indonesia is a large emerging market economy, but provinces within the country (due to the island structure of the country) are more distinct from one another compared to other countries. We use a stochastic frontier methodology to estimate inefficiency and TFP. We find that TFP fell by an average rate of 7.5% across provinces due to the decrease in technical efficiency. In fact, the majority of output growth within Indonesia is explained by the accumulation of inputs. In this sense, economic growth within Indonesia does not appear to be sustainable without reversing these trends.

Enrolment in Higher Education and Changes in Income Inequality

Using a cross-section of countries, this paper empirically examines whether greater enrolment rates in higher education are associated with increases or decreases in subsequent income inequality as measured by the Gini coefficient. It finds a negative association between the two, suggesting that countries with larger enrolment rates saw their income inequality decrease relative to other countries. These findings are robust to the inclusion of several control variables and to limiting the sample to non-OECD countries.

A Model of Public Education and Income Inequality with a Subsistence Constraint

This paper constructs a model in which incomes do not necessarily converge under a public education system. School attendance creates an opportunity cost of foregone income that poorer agents might need. These poorer agents, unlike high-income agents, allocate less time to schooling and so are less able to increase their human capital. However, some agents in a poverty trap might actually have higher income, at least temporarily, than do agents who do not fall into this trap. The model also shows why better public education systems can lead to more income inequality and why a gradual allocation of resources to public education may prove more beneficial than a sudden, large shift of resources.

Female Labour Force Participation and Religion: A Cross‐Country Analysis

This paper empirically examines whether female labour force participation (FLFP) in a cross‐section of countries between 1985 and 2005 varies depending upon the religion practised in these countries. Using a cross‐sectional empirical specification, we initially find that FLFP is lower in Muslim countries. However, the association between Islam and FLFP greatly diminishes once other controls are included in the regression, suggesting that Islam might not diminish FLFP as some have argued. Moreover, once these additional controls are included, the association between Islam and FLFP is similar to that between Catholicism and FLFP. Countries where Protestantism is prevalent or where no religion is practised have higher FLFP. Finally, we find some evidence that the association between FLFP and religion is weakening over time.

A model of institutional formation within a rent seeking environment

Abstract This paper presents a game theoretic model in which some fraction of output is appropriated from entrepreneurs. Entrepreneurs are able to form a league to prevent this appropriation, but this might not be individually rational because of either the free rider problem or coordination failure. The model also shows that poorer countries are less able to form this league and so might not be able to develop institutions establishing property rights.

Do the effects of corruption upon growth differ between democracies and autocracies

Many studies examining whether corruption lowers economic growth do not consider if the effects of corruption differ across countries. Whether corruption produces the same effects everywhere or whether its effects are conditional on some country characteristics are important questions. We investigate the association between corruption and growth, where the marginal impact of corruption is allowed to differ across democratic and nondemocratic regimes. Using cross-country, annual data from 1984 to 2007, we regress growth on corruption, democracy and their interaction. We find that decreases in corruption raise growth but more so in authoritarian regimes. Possible reasons are that in autocracies corruption causes more uncertainty, is of a more pernicious nature, or is less substitutable with other forms of rent seeking.

Changes in income inequality and the black market premium

Is a high black market premium for US dollars associated with rising or falling income inequality within a nation? This paper empirically examines this issue within a cross section of countries and finds that the black market premium is strongly associated with rising income inequality as measured by changes in the Gini coefficient. Others have used the black market premium as a proxy to measure protectionist policies so a possible implication is that protectionist policies further skew the distribution of income within a country. However, other measures of protectionist policies are not associated with changes in income inequality. Instead, other factors which might drive the black market premium such as interest rate differentials appear to be more relevant in explaining why the black market premium is positively related with increases in income inequality.

Does Democracy Increase Growth More in New Countries

Countries face governing challenges at their inception, albeit not of the same degree or type. Challenges such as creating governing structures and forming one nation from disparate groups can create uncertainty and so lower economic growth. Does democracy exacerbate or lessen such problems? This paper considers an empirical specification where the effect of democracy upon economic growth is allowed to vary over time. I find that democracy is more greatly associated with economic growth in newer countries. This suggests that democracy helps to mitigate governing challenges that can lower economic growth.