Consumption Inequality Attanasio, Orazio P.; Pistaferri, Luigi
The Journal of economic perspectives,
04/2016, Volume:
30, Issue:
2
Journal Article
Peer reviewed
Open access
In this essay, we discuss the importance of consumption inequality in the debate concerning the measurement of disparities in economic well-being. We summarize the advantages and disadvantages of ...using consumption as opposed to income for measuring trends in economic well-being. We critically evaluate the available evidence on these trends, and in particular discuss how the literature has evolved in its assessment of whether consumption inequality has grown as much as or less than income inequality. We provide some novel evidence on three relatively unexplored themes: inequality in different spending components, inequality in leisure time, and intergenerational consumption mobility.
We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children ...aged 12 to 24 months at baseline. We estimate the determinants of parents’ material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The effects of the program can be explained by increases in parental investments, emphasizing the importance of parenting interventions at an early age.
We estimate production functions for cognition and health for children aged 1–12 in India, based on the Young Lives Survey. India has over 70 million children aged 0–5 who are at risk of ...developmental deficits. The inputs into the production functions include parental background, prior child cognition and health, and child investments, which are taken as endogenous. Estimation is based on a nonlinear factor model, based on multiple measurements for both inputs and child outcomes. Our results show an important effect of early health on child cognitive development, which then becomes persistent. Parental investments affect cognitive development at all ages, but more so for younger children. Investments also have an impact on health at early ages only.
In this paper, I discuss a research agenda on the study of human capital accumulation in the early years, with a particular focus on developing countries. I discuss several methodological issues, ...from the use of structural models, to the importance of measurement and the development of new measurement tools. I present a conceptual framework that can be used to frame the study of human capital accumulation and view the current challenges and gaps in knowledge within such an organizing structure. I provide an example of the use of such a framework to interpret the evidence on the impacts of an early years intervention based on randomized controlled trial.
This paper provides a critical survey of the large literature on the life cycle model of consumption, both from an empirical and a theoretical point of view. It discusses several approaches that have ...been taken in the literature to bring the model to the data, their empirical successes, and their failures. Finally, the paper reviews a number of changes to the standard life cycle model that could help solve the remaining empirical puzzles.
Children's experiences during early childhood are critical for their cognitive and socioemotional development, two key dimensions of human capital. However, children from low-income backgrounds often ...grow up lacking stimulation and basic investments, which leads to developmental deficits that are difficult, if not impossible, to reverse later in life without intervention. The existence of these deficits is a key driver of inequality and contributes to the intergenerational transmission of poverty. In this article, we discuss the framework used in economics to model parental investments and early childhood development and use it as an organizing tool to review some of the empirical evidence on early childhood research. We then present results from various important early childhood interventions, with an emphasis on developing countries. Bringing these elements together, we draw conclusions on what we have learned and provide some directions for future research.
This article uses a novel identification strategy to measure power in the household. Our strategy is to elicit women's willingness to pay to receive a cash transfer instead of their spouse receiving ...it. We selected participants from a sample of women who had already participated in a policy intervention in Macedonia offering poor households cash transfers conditional on having their children attending secondary school. The programme randomised transfers at the municipality level to either household heads (generally a male) or mothers. We show that women who were offered the transfer on average have stronger measured empowerment. Here, IV estimation confirms this result.
We present evidence from a randomized field experiment in rural Mongolia to assess the poverty impacts of a joint-liability microcredit program targeted at women. We find a positive impact of access ...to group loans on female entrepreneurship and household food consumption but not on total working hours or income in the household. A simultaneously introduced individual-liability microcredit program delivers no significant poverty impacts. Additional results on informal transfers to families and friends suggest that joint liability may deter borrowers from using loans for noninvestment purposes with stronger impacts as a result. We find no difference in repayment rates between both types of microcredit.
We estimate and test the restrictions of a collective model of household consumption, usingz-conditional demands, in the context of a large conditional cash transfer program in rural Mexico. The ...model can explain the impacts of the program on the structure of food consumption. We use two plausible and novel distribution factors: the random allocation of a cash transfer to women and the relative size and wealth of the husband’s and wife’s family networks. Our structure does better at predicting the effect of exogenous increases in household income than an alternative, unitary, structure. We cannot reject efficiency of household decisions.
In this paper, we use an economic model to analyse data from a major randomized social experiment, namely PROGRESA in Mexico, and to evaluate its impact on school participation. We show the ...usefulness of using experimental data to estimate a structural economic model as well as the importance of a structural model in interpreting experimental results. The availability of the experiment also allows us to estimate the program's general equilibrium effects, which we then incorporate into our simulations. Our main findings are (i) the program's grant has a much stronger impact on school enrolment than an equivalent reduction in child wages; (ii) the program has a positive effect on the enrollment of children, especially after primary school; this result is well replicated by the parsimonious structural model; (iii) there are sizeable effects of the program on child wages, which, however, reduce the effectiveness of the program only marginally; and (iv) a revenue neutral change in the program that would increase the grant for secondary school children while eliminating for the primary school children would have a substantially larger effect on enrollment of the latter, while having minor effects on the former.