Ravi Kanbur

Fifty Years of Regional Inequality in China: A Journey through Central Planning, Reform, and Openness

The paper constructs and analyzes a long-run time series for regional inequality in China from the Communist Revolution to the present. There have been three peaks of inequality in the last fifty years, coinciding with the Great Famine of the late 1950s, the Cultural Revolution of the late 1960s and 1970s, and finally the period of openness and global integration in the late 1990s. Econometric analysis establishes that regional inequality is explained in the different phases by three key policy variables—the ratio of heavy industry to gross output value, the degree of decentralization, and the degree of openness.

How serious is the neglect of intrahousehold inequality

In this report the authors develop a framework for assessing the consequences of ignoring intrahousehold inequality in the measurement and analysis of poverty and inequality. They apply this framework to data for the Philippines and conclude that : 1) the result of neglecting intrahousehold inequality will probably be considerable understatement of the levels of poverty and inequality. With the Philippine data, measured levels of inequality and poverty were off 30 percent as a result of ignoring intrahousehold variation, and 2) patterns of inequality revealed by household level data are somewhat different from patterns revealed by individual level data, but the differences seem not to be dramatic. To confirm these results, the exercise should be repeated with data from other countries.

Economic Policy, Distribution and Poverty: The Nature of Disagreements

Eds: This paper is an outstanding presentation of conflicts in the global system with regard to trade, financial aid, development, poverty reduction and environmental policies. These conflicts may often be described as basically between the developed countries and the developing ones. This paper is a reproduction of a statement appearing in the February issue Africa Notes published by the Institute for African Development at Cornell University. The editors thank the Institute for permission to reproduce the paper.

Income Distribution and Development

This paper is a review of the post-war literature on income distribution and development. It argues that the literature has cycled from one consensus to another, responding to emerging policy issues and new analysis. On the basis of the review, the paper identifies five areas that will command the attention of analysts in the coming two decades: (i) country case studies rather than cross-country regression analysis; (ii) the phenomenon of increasing inequality; (iii) different levels of disaggregation, particularly distribution between broadly defined groups; (iv) intra-household allocation; and (v) alternative modes of redistribution in face of inequality increasing tendencies.

What Difference Do Polarisation Measures Make? An Application to China

In recent years there has been much discussion of the difference between inequality and polarisation. The vast literature on inequality is held to miss out key features of distributional change, which are better described as changes in polarisation. Axioms have been proposed which capture some of these differences, and measures of polarisation, as distinct from inequality, have been suggested. The theoretical distinctions proposed in this literature are indeed interesting. But do the newly proposed measures of polarisation give different results in comparing societies over time? We address these questions for China, where dramatic increases in inequality and polarisation have been much discussed in the literature. We find that, contrary to theoretical expectation, the new measures of polarisation do not generate very different results from the standard measures of inequality. The paper ends by considering a different approach to polarisation which might better conform to the policy concerns expressed in the specific context of China.

Economics, Social Science and Development

Abstract Development economics nowadays is mainstream economics applied to poor countries. An examination of the core principles of mainstream economics reveals tremendous strengths, but also tremendous weaknesses. Other disciplines, such as sociology, anthropology and political science, have complementary strengths that suggest a role for them as equal partners in development studies and policy. The argument for a partnership of disciplines is logical and strong. But cross-disciplinarity is not easy in practice. It is best achieved through concrete exercises which demonstrate exactly how “two disciplines are better than one” when analyzing specific policy issues in development.

Optimal non-linear income taxation for the alleviation of income poverty

There has been much discussion recently of structuring tax and transfer programs to ensure that resources go to the poor, with minimal leaks to the nonpoor. The poor have no incentive to earn income with 100 percent marginal tax rates, but how high or low the marginal rate of taxation should be, and how they should vary with income, is a complex issue - and opinions vary. Social security schemes that withdraw benefits represent an extremely high effective marginal tax rate; other schemes call for relatively low marginal tax rates at the bottom of the income distribution. Which tax-transfer schedule does most to reduce poverty? The issue is one of optimal nonlinear income taxation. The authors show that one of the key theoretical results of the welfarist literature is overturned: if it is desirable for everybody to work, the optimal marginal tax rate on the very poorest individuals is strictly negative. They argue that the nonwelfarist perspective points toward lower marginal tax rates in the lower part of the income distribution than does the welfarist perspective. But numerical simulations suggest that the effect is of limited quantitative significance. Using conventional functional forms and parameter values, optimal marginal tax rates on the poor are in the 60-70 percent range.

Turning a Blind Eye: Costly Enforcement, Credible Commitment and Minimum Wage Laws

In many countries, non-compliance with minimum wage legislation is widespread, and authorities may be seen as having turned a blind eye to a legislation that they have themselves passed. But if enforcement is imperfect, how effective can a minimum wage be? And if non-compliance is widespread, why not revise the minimum wage? This paper examines a minimum wage policy in a model with imperfect competition, imperfect enforcement and imperfect commitment, and argues that it is the combination of all three that produces results which are consistent with a wide range of stylized facts that would otherwise be difficult to explain within a single framework. We demonstrate that turning a blind eye can indeed be an equilibrium phenomenon with rational expectations subject to an ex post credibility constraint. Since credible enforcement requires in effect a credible promise to execute ex post a costly transfer of income from employers to workers, a government with an objective function giving full weight to efficiency but none to distribution is shown, paradoxically, to be unable to credibly elicit efficiency improvements via a minimum wage reform.

Premature Mortality and Poverty Measurement

An active noise control system which minimizes noise output by creating a secondary, cancelling noise field using vibrational inputs. The system includes one or more piezoceramic actuators mounted to the inner surface of the shroud of an aircraft engine. The actuators can be either mounted directly to the shroud or to one or more noise cancelling members which are resiliently mounted the shroud. Transducers are also provided for sensing the noise generated by the engine and producing an error signal corresponding to the level of noise sensed. A controller sends a control signal to the actuators in response to the error signal, thereby causing the actuators to vibrate and generate a noise field which minimizes the total noise emanating from the engine. The piezoceramic actuators can be thin sheets of piezoceramic material or can be in the form of a piezoelectric-driven mechanical lever arrangement.

The Race to the Bottom, From the Bottom

The dominant perspective in discussions of labour and environmental standards and globalization is that of North-South competition and its impact on Northern standards. This paper presents an alternative perspective, that of South-South competition to export to the North and its impact on Southern standards. It develops a simple model of Southern competition, and demonstrates that whether a Southern race to the bottom is possible depends intricately on the Northern demand curve, the size of large exporters relative to each other and the relative size of the competitive fringe of small exporters. The possibility that Northern trade protectionism may undermine Southern standards is also examined. Copyright (c) The London School of Economics and Political Science 2006.