Effectiveness of Globalization and Human Capital on Market & Net Income Inequality in NEXT11 Countries: A Panel Data Analysis

This study scrutinizes the impact of defacto and dejure GLOB (KOF GLOB index 2018) on Income inequality on economically emerging countries; NEXT11 countries. The defacto GLOB indicates the estimate of GLOB including variables representing activities and flows; de jure estimate includes variables which show policies representing enable flows and activities. Our analysis separates the impact of globalization on net and market income inequalities. Pretax/transfer and the post-tax/transfer GINI indices were employed as the measures of income inequality. This analysis used balanced panel for NEXT11 countries for the period 1990-2015. Economic globalization both defacto and dejure showed positive sign that depicts a significant relationship with dependent variable. It explains that defacto political has positive sign and dejure political globalization decreases inequality while economic globalizations in both divisions have positive sign and significant impact on inequality. Interestingly, defacto social globalization has positive sign but dejure social has positive sign. Moreover, the purchasing power parity and age dependency both have negative sign and significant influence on inequality. These conclusions point out that social and political globalization may be a hindering factor for governance in these countries.

A Critical Consideration of Current Social Insurance Policy Developments in New Zealand

Recent surprising announcements about the development of a social unemployment insurance (SUI) system by the Labour government are critically considered. Introducing SUI represents a major philosophical lurch from a welfare system mainly about family poverty alleviation towards one which has a stronger focus on market income replacement for individual low- and middle-income earners. We critically consider the policy process, the reasons why an SUI system might be desirable, and several alternative solutions to the likely proposal. We express scepticism about the democratic credentials of the process thus far and conclude that a persuasive case for such major reform has not yet been made.

Social Unemployment Insurance: A case (more or less) in favour

Budget 2021 announced a social unemployment insurance (SUI) system, to be developed in partnership with BusinessNZ and the New Zealand Council of Trade Unions, and modelled on the accident compensation (ACC) scheme. This new policy addresses the needs of workers involuntarily laid off as industries restructure and seek new skills. This article considers concerns raised about the SUI proposal, drawing comparisons with the ACC experience. While SUI would perpetuate market income inequalities and may not do much to prevent poverty, it could also reduce other sources of inconsistency and disadvantage.

Evaluating the budget's distributive influence on household incomes

<p>Many budget measures have been introduced by governments with the stated aim of transferring resources to particular groups - in general, the groups which are seen to receive lower incomes. An evaluative method is required to assess the extent to which resources are actually redistributed to households by the budget. This thesis suggests a taxonomy for assessing whether a measure of household income that takes account of central government budget activities is distributed differently from household earnings (market income). The taxonomy for evaluating the budget's distributive influence has four stages. Each stage progresses from observable household market income data to a more comprehensive income measure. Stage One is basically an accounting concept. Household market income is compared with an income measure which takes account of those central government budget transactions which have an obvious or direct effect on the sources and uses of household income. Stage Two is similar to studies of the influence of the budget on income distribution, such as those by Gillespie and Musgrave, which are referred to as quantitative studies. Quantitative studies are not based on structured models of economic activity, but use the results of other incidence analysis to approximate the economic effects of budget receipts and expenditures on household incomes. Stages Three and Four require structured general equilibrium models to take consistent account of the behavioural relationships important to the analysis of the economic effects of the budget by household income. The Harberger-Mieskowki-McLure (HMM) two-sector general equilibrium models specify both factor and product price changes, incorporating theories about the short-run macroeconomic effects of budget measures. Conclusions about budget incidence based on the HMM approach, however, relate to aggregate factor (capital and labour) income. Multi-sector models pioneered by Shoven, Whalley and Fullerton focus on the analysis of tax incidence by household income groups. Given the current state of the art, it is not possible to analyse the distributional effects of the entire budget on household income distribution using general equilibrium models. This thesis provides a clearer definition of some of the issues involved. A quantitative study of the money-income effects of the 1981/82 government budget is carried out as part of this thesis. The government budget is defined as the national income account of the central government's current income and outlays. Work by the New Zealand Department of Statistics based on a tax modelling system called ASSET provides the foundation for manipulating the massive data requirements of this thesis topic. The results are expressed by 10 household income groups (deciles) and 10 household types and represents the entire population residing in private dwellings. A major contribution of this thesis is that it analyses the distribution of government expenditures by household income and household type. It is found that the 1981/82 budget does redistribute money-income from households in the higher income groups to those in the lower-income groups. The personal income tax is shown to be the most important redistributive force, based on the assumption that households' actual tax payments are the same as their statutory liability for the tax. The household types which are estimated to receive the greatest net benefit from the 1981/82 central government non-market budget are one-adult and two-adult national-superannuitant household. According to the results, government expenditures tend, on average, to be consumed in greater proportion by childless household than by households with children. Comparison of the results using the Stage One and Stage Two approaches, as well as a rough approximation of a Stage Three initial income base, suggests that the more theoretically comprehensive the evaluative approach, the less redistributive is the budget. Piggott (1980b) has shown that a feature of the SWF general equilibrium models that makes them attractive for policymakers interested in social policy is that the model can be used to evaluate both the distributional and efficiency consequences of a budget change in terms of household incomes. This, and the above comparison, are powerful arguments in favour of further development of SWF models so that the incidence of the budget can be assessed in a theoretically-consistent fashion.</p>

Evaluating the budget's distributive influence on household incomes

<p>Many budget measures have been introduced by governments with the stated aim of transferring resources to particular groups - in general, the groups which are seen to receive lower incomes. An evaluative method is required to assess the extent to which resources are actually redistributed to households by the budget. This thesis suggests a taxonomy for assessing whether a measure of household income that takes account of central government budget activities is distributed differently from household earnings (market income). The taxonomy for evaluating the budget's distributive influence has four stages. Each stage progresses from observable household market income data to a more comprehensive income measure. Stage One is basically an accounting concept. Household market income is compared with an income measure which takes account of those central government budget transactions which have an obvious or direct effect on the sources and uses of household income. Stage Two is similar to studies of the influence of the budget on income distribution, such as those by Gillespie and Musgrave, which are referred to as quantitative studies. Quantitative studies are not based on structured models of economic activity, but use the results of other incidence analysis to approximate the economic effects of budget receipts and expenditures on household incomes. Stages Three and Four require structured general equilibrium models to take consistent account of the behavioural relationships important to the analysis of the economic effects of the budget by household income. The Harberger-Mieskowki-McLure (HMM) two-sector general equilibrium models specify both factor and product price changes, incorporating theories about the short-run macroeconomic effects of budget measures. Conclusions about budget incidence based on the HMM approach, however, relate to aggregate factor (capital and labour) income. Multi-sector models pioneered by Shoven, Whalley and Fullerton focus on the analysis of tax incidence by household income groups. Given the current state of the art, it is not possible to analyse the distributional effects of the entire budget on household income distribution using general equilibrium models. This thesis provides a clearer definition of some of the issues involved. A quantitative study of the money-income effects of the 1981/82 government budget is carried out as part of this thesis. The government budget is defined as the national income account of the central government's current income and outlays. Work by the New Zealand Department of Statistics based on a tax modelling system called ASSET provides the foundation for manipulating the massive data requirements of this thesis topic. The results are expressed by 10 household income groups (deciles) and 10 household types and represents the entire population residing in private dwellings. A major contribution of this thesis is that it analyses the distribution of government expenditures by household income and household type. It is found that the 1981/82 budget does redistribute money-income from households in the higher income groups to those in the lower-income groups. The personal income tax is shown to be the most important redistributive force, based on the assumption that households' actual tax payments are the same as their statutory liability for the tax. The household types which are estimated to receive the greatest net benefit from the 1981/82 central government non-market budget are one-adult and two-adult national-superannuitant household. According to the results, government expenditures tend, on average, to be consumed in greater proportion by childless household than by households with children. Comparison of the results using the Stage One and Stage Two approaches, as well as a rough approximation of a Stage Three initial income base, suggests that the more theoretically comprehensive the evaluative approach, the less redistributive is the budget. Piggott (1980b) has shown that a feature of the SWF general equilibrium models that makes them attractive for policymakers interested in social policy is that the model can be used to evaluate both the distributional and efficiency consequences of a budget change in terms of household incomes. This, and the above comparison, are powerful arguments in favour of further development of SWF models so that the incidence of the budget can be assessed in a theoretically-consistent fashion.</p>

The Distribution of Income and Wealth in Ireland

Ensuring a fair and efficient distribution of economic resources in society is one of the most important public policy challenges facing democratic governments. This chapter notes how the emergence of new and better data on the composition and distribution of income and wealth has heightened interest in economic inequality. Data on the distribution of both income and wealth are presented, highlighting how Ireland, as a liberal market economy, has high levels of direct market income inequality but the welfare state plays a significant role in redistribution. The provision of robust wealth data is a recent phenomenon for Ireland, one absent from our understanding of living standards, well-being, and redistributive public policies for some time. Wealth is more unequally distributed than income, and it is notably concentrated in housing capital. The chapter concludes by highlighting the relevance and potential of these new insights.

Do social investment policies reduce income inequality? An analysis of industrial countries

Scholars and policymakers who call for social investment (SI) policies hope that SI policies reduce income inequality and poverty, among other policy goals. Meanwhile, some others point out potentially less pro-poor effects of SI policies. There are relatively few cross-national studies that empirically examine the distributional effects of SI policies. The current study seeks to fill the gap by investigating the effects of SI policies on income inequality in OECD countries. The empirical analysis finds mixed results. Parental leave benefits reduce market income inequality, but other family support policies do not lessen inequality, and family allowances and paid leave (the length of generous leave) even increase it. The effects of some family policies are partly context-specific. In contexts where there are a large number of single-mother households, parental leave benefits reduce market income inequality. There is no stable evidence that education and active labour market policy (ALMP) reduce market income inequality. Education and ALMP, however, reduce disposable income inequality (even after controlling for left governments and Nordic countries). The article suggests that in countries with high education and/or ALMP spending, the skills of workers towards the lower end of the income distribution may be relatively high (even though their pre-tax and transfer income may be low), and it may make their income salvageable with redistributive policies. In this sense, SI policies and conventional redistributive policies may be complementary in reducing disposable income inequality.

Fair and Inclusive Markets

We show empirical evidence that there may not be a tradeoff between market income inequality and high sustained growth, which is key for poverty alleviation. We argue that the economies that achieved high sustained growth and low market income inequality are characterized by dynamism—a drive toward sophisticated export industries, innovation, and creative destruction and a high level of competition. What a country produces and how much it competes domestically and internationally are important for achieving fair and inclusive markets. We explore policy options to steer industrial and market structures toward providing growth opportunities for both workers and firms.