Shlomo Yitzhaki

Remittances and Inequality

In this paper the authors propose a framework and develop techniques for analyzing the impact of migrant remittances on the distribution of rural income by size and subsequently its impact on rural welfare. Household data are used to assign numerical coefficients to the impact of net remittances from both internal and international migrants on income inequality in 2 Mexican villages. The impact of migrant remittances on the distribution of rural income by size depends critically on the degree to which migration opportunities become diffused through the village population on the returns to human capital embodied in remittances and on the distribution of potentially remittance-enhancing skills and education across village households. Our empirical findings demonstrate that in a village where many households contain internal migrants but few have experience migrating to the U.S. remittances from Mexico-to-US migrants have an unequalizing impact on village incomes while remittances from internal migrants have a favorable effect on the village income distribution. By contrast in a village with a long historyh of sending migrants to the US and hence a more ready access to US labor markets US-to-Mexico remittances have an equalizing impact on incomes. Remittances from internal migrants in this village however embody a large human capital component and are highly correlated with household income. Hence internal migrant remittances account for a comparatively large share of inequalities in the 2nd village. The overall effect of remittances on income inequality is favorable in both villages. Migration type migration stage and interaction terms all appear to play a role in this context. The effects of small changes in remittances upon income inequality and rural welfare in the 2 villages are explored and some implications for migration and rural development policy are considered. (authors modified)

A note on the calculation and interpretation of the Gini index

Abstract We derive a convenient way to calculate the Gini coefficient, using the covariance. Our approach improves on accuracy since, unlike other approaches, it requires no aggregation. We also point out some intuitive ways of interpreting the Gini.

Improving the accuracy of estimates of Gini coefficients

This paper presents a simple method for deriving Gini coefficients that makes full use of the detail from individual records. We develop this procedure for weighted samples of individuals. Next, we compare these precise measures of Gini coefficients with measures based on grouped data. The downward bias from grouped data is small as a percentage of inequality (about 1.5 to 2.0 percent), but rises with the degree of inequality.

Migration, remittances and inequality: A sensitivity analysis using the extended Gini index☆

Abstract This paper uses the extended Gini inequality index to examine the sensitivity of measurements of impacts of migrant remittances on the distribution of household income by size to different value judgements when measuring inequality. The results illustrate the robustness of earlier findings that the impacts of migration on village income distributions differ for different types of migration and for different periods in a villages migration history. The magnitude of these impacts, however, appears to be quite sensitive to the weights attached to incomes at different points in the village income distribution. For example, in a village with considerable Mexico-to-U.S. migration experience, remittances from Mexico-to-U.S. migrants have a favorable effect on the village income distribution. However, the extended Gini analysis shows that this favorable impact decreases as more weight is attached to incomes in the poorest households. This finding is consistent with the view that barriers to high-paying Mexico-to-U.S. migration work exist for households at the bottom of the village income distribution.

Economic distance and overlapping of distributions

Abstract Stratification and segmentation describe markets and societies. The aim of this paper is to further develop the index of the degree of overlapping between distributions as a measure of segmentation and stratification. The similarities and differences between the concepts of overlapping and economic distance are investigated.

A Measure of Association Based on Gini's Mean Difference

A measure of association between two random variables is proposed, which represents a compromise between the classical correlation coefficient and the rank correlation coefficient. The new measure is based on the covariance between two variables where one variable is taken in its variate values while the other is ranked. The large sample distribution of this measure is studied and some possible applications are mentioned.

Relative deprivation and economic welfare

Abstract It is shown that the theory of relative deprivation can be decomposed into two concepts: deprivation and its relativity. Deprivation is interpreted as forgone utility due to lack of commodities, thus minimizing deprivation and maximizing utility come to much the same thing. The relativity of the concept stems from the existence of reference groups in the society. The core of the paper deals with the effect of reference groups on the deprivation felt in the society.

On the excess burden of tax evasion

A simple model of tax evasion is presented leading to the following conclusions: (1) Tax evasion is a function of, inter alia, the marginal tax rate only if the probability of being caught is a function of undeclared income; (2) Tax evasion introduces uncertainty, which causes a utility loss. An example is presented showing that the excess burdens of tax evasion and the income tax are sometimes additive. Thus ignoring the excess burden of tax evasion will usually lead to underestimation of the total excess burden of a tax.

Using Analysis of Gini (ANOGI) for Detecting Whether Two Subsamples Represent the Same Universe

A wildly discussed shortcoming of panel surveys is a potential bias arising from selective attrition. Based on data of the German Socio-Economic Panel Study (SOEP), the authors analyze potential artifacts (level, structure, income inequality) by comparing results for two independently drawn panel subsamples started in 1984 and 2000. They apply ANOGI (analysis of Gini) techniques, the equivalent of ANOVA performed with the Gini coefficient. They rearrange, reinterpret, and use the decomposition in the comparison of subpopulations from which the different samples were drawn. Taking into account indicators for income, significant differences between these two samples with respect to income inequality are found in the first year, which start to fade away in Wave 2 and disappear in Wave 3. The authors find credible indication for these differences to be driven by changes in response behavior of short-term panel members rather than by attrition among members of the longer running sample.

The Costs of Taxation and the Marginal Efficiency Cost of Funds

It is argued that taxation causes deadweight losses--from substitution, evasion, and avoidance activities--and direct, administrative and compliance, costs. Some of these social costs tend to be discontinuous and/or nonconvex. Because most models of taxation ignore some components of the social costs of taxation, their conclusions cannot be considered all-encompassing. An alternative approach to policy evaluation is to rely on a marginal efficiency cost of funds rule that can indicate appropriate directions of reforms. The paper discusses the merits, applicability, and limitation of this rule, as well as its relationship to other concepts.