Latin America underwent two major transformations during the 2000s: the widespread election of left-leaning presidents (the so-called left turn) and the diffusion of conditional cash transfer ...programs (CCTs)—innovative social programs that award regular stipends to poor families on the condition that their children attend school. Combining cross-national quantitative research covering the entire region and in-depth case studies based on field research, Human Capital versus Basic Income: Ideology and Models for Anti-Poverty Programs in Latin America challenges the conventional wisdom that these two transformations were unrelated. In this book, author Fabián A. Borges demonstrates that this ideology greatly influenced both the adoption and design of CCTs. There were two distinct models of CCTs: a “human capital” model based on means-tested targeting and strict enforcement of program conditions, exemplified by the program launched by Mexico’s right, and a more universalistic “basic income” model with more permissive enforcement of conditionality, exemplified by Brazil’s program under Lula. These two models then spread across the region. Whereas right and center governments, with assistance from international financial institutions, enacted CCTs based on the human capital model, the left, with assistance from Brazil, enacted CCTs based on the basic income model. The existence of two distinct types of CCTs and their relation to ideology is supported by quantitative analyses covering the entire region and in-depth case studies based on field research in three countries. Left-wing governments operate CCTs that cover more people and spend more on those programs than their center or right-wing counterparts. Beyond coverage, a subsequent analysis of the 10 national programs adopted after Lula’s embrace of CCTs confirms that program design—evaluated in terms of scope of the target population, strictness of conditionality enforcement, and stipend structure—is shaped by government ideology. This finding is then fleshed out through case studies of the political processes that culminated in the adoption of basic income CCTs by left-wing governments in Argentina and Bolivia and a human capital CCT by a centrist president in Costa Rica.
This paper provides estimates of federal tax rates by income groups in the United States since 1960, with special emphasis on very top income groups. We include individual and corporate income taxes, ...payroll taxes, and estate and gift taxes. The progressivity of the U.S. federal tax system at the top of the income distribution has declined dramatically since the 1960s. This dramatic drop in progressivity is due primarily to a drop in corporate taxes and in estate and gift taxes combined with a sharp change in the composition of top incomes away from capital income and toward labor income. The sharp drop in statutory top marginal individual income tax rates has contributed only moderately to the decline in tax progressivity. International comparisons confirm that is it critical to take into account other taxes than the individual income tax to properly assess the extent of overall tax progressivity, both for time trends and for cross-country comparisons. The pattern for the United Kingdom is similar to the U.S. pattern. France had less progressive taxes than the United States or the United Kingdom in 1970 but has experienced an increase in tax progressivity and has now a more progressive tax system than the United States or the United Kingdom.
In recent years, researchers have used taxation statistics to estimate the share of total income held by the richest groups, such as the top 10% or the top 1%. Compiling a standardised top income ...shares dataset for 13 developed countries, I find that there is a strong and significant relationship between top income shares and broader inequality measures, such as the Gini coefficient. This suggests that panel data on top income shares may be a useful substitute for other measures of inequality over periods when alternative income distribution measures are of low quality, or unavailable.
We are used to thinking about inequality within countries--about rich Americans versus poor Americans, for instance. But what about inequality between all citizens of the world? Worlds Apart ...addresses just how to measure global inequality among individuals, and shows that inequality is shaped by complex forces often working in different directions. Branko Milanovic, a top World Bank economist, analyzes income distribution worldwide using, for the first time, household survey data from more than 100 countries. He evenhandedly explains the main approaches to the problem, offers a more accurate way of measuring inequality among individuals, and discusses the relevant policies of first-world countries and nongovernmental organizations.
Summary Income inequality in the USA has increased over the past four decades. Socioeconomic gaps in survival have also increased. Life expectancy has risen among middle-income and high-income ...Americans whereas it has stagnated among poor Americans and even declined in some demographic groups. Although the increase in income inequality since 1980 has been driven largely by soaring top incomes, the widening of survival inequalities has occurred lower in the distribution—ie, between the poor and upper-middle class. Growing survival gaps across income percentiles since 2001 reflect falling real incomes among poor Americans as well as an increasingly strong association between low income and poor health. Changes in individual risk factors such as smoking, obesity, and substance abuse play a part but do not fully explain the steeper gradient. Distal factors correlated with rising inequality including unequal access to technological innovations, increased geographical segregation by income, reduced economic mobility, mass incarceration, and increased exposure to the costs of medical care might have reduced access to salutary determinants of health among low-income Americans. Having missed out on decades of income growth and longevity gains, low-income Americans are increasingly left behind. Without interventions to decouple income and health, or to reduce inequalities in income, we might see the emergence of a 21st century health-poverty trap and the further widening and hardening of socioeconomic inequalities in health.
Context: The existence of a positive relationship between income and morbidity has been well documented in the literature. But it is unclear whether the relationship is positive because increased ...income allows individuals to purchase more health inputs that improve their health, because healthy individuals are more productive and thus can earn higher wages in the labor market, or because a third factor is improving health and increasing income. This article explores whether increases in income improve the health of the low-income population. Methods: Because health status may affect income, this article uses an "instrumental variable" strategy that considers income variations over seventeen years of changes in the generosity of state and federal Earned Income Tax Credits (EITC, a measure that should be exogenous to health status). I measured health status using both the self-reported health status and the functional limitations indicated on the Survey of Income and Program Participation (SIPP), as well as the self-reported health status indicated on the March Current Population Survey (CPS). Findings: I found only limited support for the theory that the relationship between income and morbidity is derived from shifts in income. Although I did observe a correlation between income and self-reported health, I found no evidence that increases in income significantly improve self-reported health statuses. In addition, while increases in income appear to reduce the prevalence of hearing limitations when using corrective measures, these increases did not have a significant effect on most of the other functional limitations considered here. Conclusions: These findings suggest that the ability to improve short-term health outcomes through public transfer payments may be limited. However, the lifetime effects on the health of people with higher incomes would still be a valuable avenue for future research.
Money has meaning that shapes its uses and social significance, including the monies low-income families draw on for survival: wages, welfare, and the Earned Income Tax Credit (EITC). This study, ...based on in-depth interviews with 115 low-wage EITC recipients, reveals the EITC is an unusual type of government transfer. Recipients of the EITC say they value the debt relief this government benefit brings. However, they also perceive it as a just reward for work, which legitimizes a temporary increase in consumption. Furthermore, unlike other means-tested government transfers, the credit is seen as a springboard for upward mobility. Thus, by conferring dignity and spurring dreams, the EITC enhances feelings of citizenship and social inclusion.
•Based on a unique array of administrative records and household survey microdata, we provide detailed evidence on inequality trends for the recent period of survey-based inequality reduction in ...Uruguay (2009–2016).•Inequality trends are sensitive to the data source and inequality measure.•Synthetic indices decreased, but the top 1% and 0.1% income shares fell in household survey data, whereas in the corrected administrative data, they remained steady and even increased in 2016.•Differences result from increasing inequality in the upper tail of administrative data, mainly driven by a growing share of capital income and particularly dividends.•The probability of reaching top income positions is higher for men, liberal professionals, capital income receivers, and occupations associated to health services.
In contrast to the remaining regions of the world, the available evidence from household surveys indicates that most Latin American countries experienced substantial reductions in monetary poverty and personal income inequality in the first 15 years of the 21st century. However, it is still unclear whether these trends are robust to the inequality index and database. Based on a unique array of matched social security and personal and firm income tax records, and household survey microdata, we provide detailed evidence on inequality trends for the period of survey-based inequality reduction in Uruguay (2009–2016), focusing on the top income groups and the evolution of the capital income share. We correct administrative data to account for informality and social security/income tax underreporting. Trends are sensitive to the data source and inequality measure. Synthetic indices decreased in both datasets and the top income shares diverged. This results from increasing inequality in the upper tail of administrative data, mainly driven by a growing share of capital income, and particularly dividends. The probability of reaching top income positions is higher for men, liberal professionals, capital income receivers, and occupations associated to medical services. In contrast to evidence for developed countries, the financial and tech sectors are less represented. These findings have strong implications for the design of public policies aimed to reduce persistent inequalities in developing countries.
Do the Rich Save More? Dynan, Karen E.; Skinner, Jonathan; Zeldes, Stephen P.
The Journal of political economy,
04/2004, Volume:
112, Issue:
2
Journal Article
Peer reviewed
The question of whether higher–lifetime income households save a larger fraction of their income was the subject of much debate in the 1950s and 1960s, and while not resolved, it remains central to ...the evaluation of tax and macroeconomic policies. We resolve this long‐standing question using new empirical methods applied to the Panel Study of Income Dynamics, the Survey of Consumer Finances, and the Consumer Expenditure Survey. We find a strong positive relationship between saving rates and lifetime income and a weaker but still positive relationship between the marginal propensity to save and lifetime income. There is little support for theories that seek to explain these positive correlations by relying solely on time preference rates, nonhomothetic preferences, or variations in Social Security benefits. There is more support for models emphasizing uncertainty with respect to income and health expenses, bequest motives, and asset‐based means testing or behavioral factors causing minimal saving rates among low‐income households.
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