Stefan Thewissen

Is It the Income Distribution or Redistribution That Affects Growth

This study addresses the central question in political economy how the objectives of attaining welfare and restricting income inequality are related to each other. Thus far few studies scrutinise whether income inequality as such, or the redistributing public interventions to equalise incomes affect economic growth. This study aims to fill this gap using a panel design covering 30 OECD countries. Taking into account the limited data availability, this study finds a negative association between redistribution and growth that remains significant when the level of inequality is held constant. No evidence is found for a relationship between income inequality and growth. This finding is in line with the trade-off hypothesis, holding that redistribution limits the financial incentives to gain wealth, leading to lower output growth. Yet, the found association is small, and a causal interpretation of the negative association between redistribution and growth does not seem to be warranted.

Sectoral trends in earnings inequality and employment International trade, skill-biased technological change, or labour market institutions?

Current studies addressing the rise in inequality confine themselves to country-level developments. This paper delineates trends in earnings inequality and employment at the sectoral level for eight LIS countries between 1985-2005. Earnings inequality mainly manifests itself within rather than between sectors. Yet, there is significant variation in the level of inequality across sectors whilst the differences between countries in intrasectoral inequality are much less pronounced. A general rise in intrasectoral earnings dispersion and a shift from the manufacturing industry towards the financial sector are perceptible. Crosssectional pooled time-series analyses indicate significant associations between the exposure to import and decreased employment within sectors, whilst no evidence is found for relations between earnings inequality and international trade or skill-biased technological change.

Allocation of development assistance for health: is the predominance of national income justified?

Abstract Gross national income (GNI) per capita is widely regarded as a key determinant of health outcomes. Major donors heavily rely on GNI per capita to allocate development assistance for health (DAH). This article questions this paradigm by analysing the determinants of health outcomes using cross-sectional data from 99 countries in 2012. We use disability-adjusted life years (Group I) per capita as our main indicator for health outcomes. We consider four primary variables: GNI per capita, institutional capacity, individual poverty and the epidemiological surroundings. Our empirical strategy has two innovations. First, we construct a health poverty line of 10.89 international-

Competing with the Dragon: Employment and Wage Effects of Chinese Trade Competition in 17 Sectors Across 18 OECD Countries

per day, which measures the minimum level of income an individual needs to have access to basic healthcare. Second, we take the contagious nature of communicable diseases into account, by estimating the extent to which the population health in neighbouring countries (the epidemiological surroundings) affects health outcomes. We apply a spatial two-stage least-squares model to mitigate the risks of reverse causality. Our model captures 92% of the variation in health outcomes. We emphasize four findings. First, GNI per capita is not a significant predictor of health outcomes once other factors are controlled for. Second, the poverty gap below the 10.89 health poverty line is a good measure of universal access to healthcare, as it explains 19% of deviation in health outcomes. Third, the epidemiological surroundings in which countries are embedded capture as much as 47% of deviation in health outcomes. Finally, institutional capacity explains 10% of deviation in health outcomes. Our empirical findings suggest that allocation frameworks for DAH should not only take into account national income, which remains an important indicator of countries’ financial capacity, but also individual poverty, governance and epidemiological surroundings to increase impact on health outcomes.

Automation and the Welfare State: Technological Change as a Determinant of Redistribution Preferences:

The rapid rise of China on the global economic stage could have substantial and unequal employment and wage effects in advanced industrialised democracies given China’s large volume of low-wage labour. Thus far, these effects have not been analysed in the comparative political economy literature. Building on new pooled time-series data, we analyse the effects of Chinese trade competition across 17 sectors in 18 countries between 1990 and 2007. Our empirical findings reveal overall employment declines and higher earnings inequality in sectors more exposed to Chinese imports. We devote particular attention to a new channel, increased competition from China in 59 foreign export markets, which positively affects the high-skilled whilst the low-skilled bear the brunt. Hence, this study shows that neglecting the competition in foreign countries leads to underestimation of the distributive effects of trade. More generally, our findings provide new insights into how international trade, technological change, and labour market institutions contribute to the widely observed trend of rising inequality.

Leiden LIS Sectoral Income Inequality Dataset

Technological change is widely considered to be a key driver of the economic and occupational structure of affluent countries. Current advances in information technology have led to a significant substitution of routine work by capital, while occupations with abstract or interpersonal manual task structures are complemented or unaffected. We develop a simple theoretical framework for the reasons why individuals in routine task-intensive occupations would prefer public insurance against the increased risk of future income loss resulting from automation. Moreover, we contend that this relation will be stronger for richer individuals who have more to lose from automation. We focus on the role of occupational elements of risk exposure and challenge some general interpretations of the determinants of redistribution preferences. We test the implications of our theoretical framework with survey data for 17 European countries between 2002 and 2012. While up to now the political economy literature has emphasized other occupational risks, we find vulnerability to automation to be an important determinant of the demand for redistribution that should not be ignored.

Falling Back on Old Habits? A Comparison of the Social and Unemployment Crisis Reactive Policy Strategies in Germany, the UK and Sweden

The Leiden LIS Sectoral Income Inequality Dataset contains information on multiple indicators of earnings inequality and employment within 9 sectors and 12 subsectors for 12 developed countries and 49 LIS waves between 1969 and 2005. We provide additional information of earnings and employment at the country level. This dataset draws upon data from the Luxembourg Income Study (LIS) micro dataset, which is a time series of household survey data containing information on earnings and employment, standardised across countries. The Leiden LIS Sectoral Income Inequality Dataset allows researchers and public policy analysts to compare sectoral earnings inequality and employment levels across developed countries over the last three decades, based on a standardised classification of sectors across countries and periods. The data can be linked to other sectoral databases, for instance to the OECD Structural Analysis (STAN) database. The database extends the work of Mahler, Jesuit, and Roscoe (1999) who calculate sectoral earnings inequality in 10 countries around the years 1985 and 1990.