Effects Of Changes In Income Research Articles

How do income and education affect health inequality: evidence from four developing countries

Using household survey data from four countries ‒ Albania, Nepal, Tajikistan and Tanzania ‒ this article calculates income-related inequality in health care utilization. We measure health disparity separately for generally and chronically ill individuals by constructing two models: one for the probability of a visit to a physician and another for the number of visits. Following model-based measurements, we decompose inequality into two major parts: one accounted for by identity-related factors and another by socioeconomic and other factors such as education, geography and distance to a clinic. We propose a new method to quantify the effect of changes in income and education on health disparity. One of our important findings suggests that health disparity is pro-rich in all our sample countries. The pro-rich disparity is prevalent among generally ill as well as chronically ill patients, in both visit probability and visit frequency models. Health inequality seems primarily driven by income differences followed by nonidentity factors. Further, the principle of equal treatment for equal need is not fulfilled in any of our countries. Among policy implications, increasing average income and education in a way that also reduces disparity in income and education, respectively, will substantially shrink inequality in health care utilization.

Income Changes and Consumption: Evidence from the 2013 Federal Government Shutdown

We use the 2013 federal government shutdown and a rich data set from an online personal finance website to study the effects of changes in income on changes in consumption. The 2013 shutdown represented a significant and unanticipated income shock for federal government workers, with no direct effect on permanent income. We exploit both the differences between unaffected state employees and affected federal employees as well as between federal employees required to remain at work and those required to stay at home to generate variation in income and leisure time. We find strong evidence for excess sensitivity of consumption patterns, violating the permanent income hypothesis. We demonstrate that this decline in spending can be largely explained by increased home production, changes in spending allocations, and credit constraints. We are able to discern detailed categories of household spending with widely varying elasticities. The results demonstrate the importance of household liquidity, leisure and home production when constructing stimulus or social insurance policy.

An analysis of the determinants of local public transport demand focusing the effects of income changes

Purpose In order for public transport to be a part of the solution to the environmental problems caused by traffic there need to be a clear understanding of how, and to what extent, different factors affect demand. There still seem to be some confusion regarding some key relationships, one of them being the effect of income on public transport demand. The purpose of this article is therefore to provide empirical estimates of how different factors, including price and car ownership (although income being the main issue), affect the demand for local public transport. Methods In order to achieve the aim of the study, an econometric FD-model, allowing for unobserved effects, was estimated using panel data from Swedish counes from 1986 to 2001. Results The short-run (direct) elascies with respect to fare, vehicle-kilometres, income and car ownership were found to be −0,4, 0,55, 0,34, and −1,37 respectively. However, income affects public transport demand directly, and through its effect on car ownership, these effects works in opposite direction. Combining these it is found that total income effect is close to zero. Conclusions It is concluded that, although the findings of several previous studies suggests that demand for public transport might be falling with increased income, there is no evidence of such effects even when the full effect of changes in income (including changes in car ownership) is taken into account.

Quantifying the psychological costs of unemployment: the role of permanent income

Unemployment causes significant losses in the quality of life. In addition to reducing individual income, it also creates nonpecuniary and psychological costs. We quantify these nonpecuniary losses by using the life satisfaction approach. In contrast to previous studies, we apply Friedman's (1957) permanent income hypothesis by distinguishing between temporary and permanent effects of income changes. This allows us to account for intertemporal spillovers of income compensations. Our results show that the nonpecuniary costs of unemployment are only half as large compared to a standard estimation without this distinction. Nevertheless, the nonpecuniary costs of unemployment calculated with this modified quantification method are still about two times higher than its pecuniary costs. This confirms the high value of work for life satisfaction.

The Heterogeneous Effects of Income Changes on Happiness

We investigate the relationship between money and happiness across the waves of the British Household Panel Study by using a latent class approach which accounts for slope heterogeneity. Our findings reveal the presence of a vast majority of “Easterlin-type” individuals with positive but very weak relationship between changes in income and changes in happiness and a small minority (2 percent) of “frustrated achievers” with negative relationship. Such share is much below descriptive evidence on frustrated achievement (17.5 percent). The probability of belonging to such group is shown to be positively related with divorced status and negatively related to education and relative (personal to reference group) income. Our interpretation of these results is that the standard concave money-happiness relationship provides a partial and incomplete picture of the complex nexus between happiness and income as it does not take into account two important phenomena: the role of peers and of reference group income and that of the dynamics between realisations and expectations.

Market access and the heterogeneous effect of shocks on wages: Evidence from Chinese cities

AbstractNew Economic Geography (NEG) models predict that locations with market access advantages have higher wages and larger labour inflows. Using comprehensive prefecture‐city level data for China, the study estimates a wage equation derived from a NEG model. The results support the NEG explanation for wage disparities across cities. An application of shock experiments on 230 prefecture‐cities in China shows that the average effect of income changes differs greatly across locations. In particular, income shocks generated in core cities have a higher average impact in the rest of the country than shocks generated elsewhere.ResumenLos modelos de la Nueva Geografía Económica (NEG, siglas en inglés) predicen que las localizaciones con ventajas de acceso a mercados ofrecen salarios más elevados y mayor afluencia de mano de obra. Mediante la utilización de datos a nivel de ciudad‐prefectura en China, este estudio estima una ecuación salarial a partir de un modelo NEG. Los resultados apoyan la explicación que da la NEG a las disparidades salariales entre ciudades. Una aplicación de experimentos de choque en 230 prefecturas en China muestra que el efecto promedio de cambios en los ingresos difiere en gran medida entre localizaciones. En particular, las conmociones salariales generadas en las ciudades principales tienen un impacto promedio mayor en el resto del país que las conmociones generadas en otros lugares.

The effect of income and occupation on body mass index among women in the Cebu Longitudinal Health and Nutrition Surveys (1983–2002)

We assessed the effects of changes in income and occupational activities on changes in body weight among 2952 non-pregnant women enrolled in the Cebu Longitudinal Health and Nutrition Surveys between 1983 and 2002. On average, body mass index (BMI) among women occupied in low activities was 0.29kg/m2 (standard error 0.11) larger compared to women occupied in heavy activities. BMI among women involved in medium activities was on average 0.12kg/m2 (standard error 0.05) larger compared to women occupied in heavy activities. A one-unit increase in log household income in the previous survey was associated with a small and positive change in BMI of 0.006kg/m2 (standard error 0.02) but the effect was not significant. The trend of increasing body mass was higher in the late 1980s than during the 1990s. These period effects were stronger for the women who were younger at baseline and for women with low or medium activity levels. Our analysis suggests a trend in the environment over the last 20 years that has increased the susceptibility of Filipino women to larger body mass.

Quantifying the Psychological Costs of Unemployment: The Role of Permanent Income

Unemployment causes significant losses in the quality of life. In addition to reducing individual income, it also creates non-pecuniary, psychological costs. We quantify these non-pecuniary losses by using the life satisfaction approach. In contrast to previous studies, we apply Friedman's (1957) permanent income hypothesis by distinguishing between temporary and permanent effects of income changes. This allows us to account for intertemporal spillovers of income compensations. Our results show that, without this distinction, the non-pecuniary costs of unemployment are overestimated by roughly one-third. Nevertheless, the non-pecuniary costs of unemployment with this modified quantification method still amount to 2.3 (1.5) times the pure pecuniary costs of unemployment for men (women).This confirms the high value of work for life satisfaction.

Easterlin-Types and Frustrated Achievers: The Heterogeneous Effects of Income Changes on Life Satisfaction

Most philosophers and social scientists argue that the relationship between life satisfaction and its determinants is intermediated by cultural drivers (education, race, gender, religion, regional cultural background, etc.) and that (as suggested by descriptive evidence on achievers) the relationship between changes in income and changes in life satisfaction is not necessarily positive. We investigate such relationship across the waves of the British Household Panel Study. By using a latent class approach which accounts for slope heterogeneity, omitted variable bias and departures from normality assumptions we have the unique opportunity of identifying determinants of the income-life satisfaction relationship and testing econometrically for the existence of “frustrated achievement. Our findings reveal the presence of a vast majority of Easterlin-type individuals with positive but very weak relationship between changes in income and changes in life satisfaction and a small minority (2 percent) of frustrated achievers with negative relationship. Such share is much below descriptive evidence on frustrated achievement (17.5 percent). The probability of belonging to such group is shown to be positively related with divorced status and negatively related to education and relative (personal to reference group) income. Our interpretation of these results is that the standard concave money-life satisfaction relationship provides a partial and incomplete picture of the complex nexus between life satisfaction and income as it does not take into account two important phenomena: the role of peers and of reference group income and that of the dynamics between realisations and expectations. The paradox of a negative relationship between changes in income and changes in life satisfaction may be explained by the fact that, in spite of a positive income change, the change in individual expectations and of peers income may be even higher, thereby generating the negative change in satisfaction.

Quantifying the Non-Pecuniary Costs of Unemployment: The Role of Permanent Income

Unemployment causes significant losses in the quality of life. In addition to reducing individual income, it also creates non-pecuniary, psychological costs. We quantify these non-pecuniary losses by using the life satisfaction approach. In contrast to previous studies, we apply Friedman's (1957) permanent income hypothesis by distinguishing between temporary and permanent effects of income changes. This allows us to account for intertemporal spillovers of income compensations. Our results show that, without this distinction, the non-pecuniary costs of unemployment are overestimated by roughly one-third. Nevertheless, the non-pecuniary costs of unemployment with this modified quantification method still amount to 2.3 (1.5) times the pure pecuniary costs of unemployment for men (women). This confirms the high value of work for life satisfaction.

Effects of the Free Trade Area of the Americas on Forest Resources

The effects of the Free Trade Area of the Americas (FTAA) agreement on the forest sectors and resources of member countries are investigated. A model of wood supply within the spatial partial-equilibrium Global Forest Products Model is developed to link international trade and deforestation. The direct effects of tariff changes and the indirect effects of income changes induced by trade liberalization are considered. The FTAA has a small positive impact on the region's forest resources. Higher harvests of industrial roundwood in most countries are offset by increased afforestation due to the income effect of trade liberalization (captured by the environmental Kuznets curve).

The causal effect of income on health: Evidence from German reunification

We investigate whether there was a causal effect of income changes on the health satisfaction of East and West Germans in the years following reunification. Our data source is the German Socio-Economic Panel (GSOEP) between 1984 and 2002, and we fit a recently proposed fixed-effects ordinal estimator to our health measures and use a causal decomposition technique to account for panel attrition. We find evidence of a significant positive effect of income changes on health satisfaction, but the quantitative size of this effect is small. This is the case with respect to current income and a measure of ‘permanent’ income.

Long-Term Forecasts for International Tourism

Modifications of earlier versions of models to make forecasts for world tourism allow us to trace the effects of changes in income and prices produced by and in each individual country considered in this model. At the theoretical level, in using a share approach these models could be viewed as similar to partial demand models based on the assumption of a multi-stage budgeting process. The new WTTOUR-2001 model is used to generate long-term forecasts of tourism imports and exports for 25 countries for the period up to 2020. It allows a more realistic simulation of the impact of political events such as the enlargement of the European Union.

The major determinants of Korean outbound travel to Australia

The aims of the paper are two-fold, namely to analyse the seasonal patterns of tourist arrivals from South Korea to Australia, and to use econometric time series modelling to quantify the factors affecting the flow of international tourists between Australia and Korea. Estimates of the effects of changes in income, relative prices, exchange rates, seasonality and other factors are provided, and the significance of these explanatory variables is tested. Adequate seasonally unadjusted quarterly time series data are required for extended periods to generate more accurate estimates of the range of explanatory variables, and to examine seasonal variations in international tourism demand. Since international tourist flows from South Korea have become an important source of the inbound tourist market, such information is vital to the Australian tourist industry, governments and tourism commissions, which need reliable estimates in order to take effective measures to stimulate tourism.

Redistributive effects of subsidies to urban public transport in Spain

This paper analyses the redistributive effects generated by the subsidization of urban public transport services. We estimate a two-stage model that takes into account both car ownership decisions and expenditure in urban public transport. In this way, we are able to measure the long run effects of income changes. Under the assumption that the user is the final beneficiary of the subsidies, and computing the share of the fare that is subsidized, we measure the progressiveness of the subsidies for different income groups and city sizes. Urban public transport subsidies are shown to be progressive. In larger urban areas this effect is considerably more important than in small ones.

Redistributive effects of subsidies to urban public transport in Spain

This paper analyses the redistributive effects generated by the subsidization ofurban public transport services. We estimate a two-stage model that takes intoaccount both car ownership decisions and expenditure in urban public transport.In this way, we are able to measure the long run effects of income changes. Underthe assumption that the user is the final beneficiary of the subsidies, andcomputing the share of the fare that is subsidized, we measure the progressivenessof the subsidies for different income groups and city sizes. Urban public transportsubsidies are shown to be progressive. In larger urban areas this effect isconsiderably more important than in small ones.

Forecasting international tourism trends to 2010

Modifications of earlier versions of forecasting models make it possible to trace the effects of changes in income and prices emanating from each individual country considered in this paper. At the theoretical level, it examines the assumptions underlying partial demand models and points out the implications of these assumptions in the context of those relating to international tourism. The new model is used to generate forecasts of tourism imports and exports for 20 countries for the period up to 2010. It allows a more realistic simulation of the impact of political events such as the introduction of the Euro and of changes in framework conditions.

Demand for nutrition vs. demand for tastes 1

This paper extends the analyses by Silberberg (1985) of the relationship between the expenditures for food to satisfy nutritional requirements and the expenditures to satisfy the desire for tastes using alternative estimates of the minimum cost or technically efficient diet. The hypothesis originally tested by Silberberg is retested by following his procedure for estimating the minimum cost diet but using data supplied by the 1977–78 Food Consumption Survey in Hawaii. The results are roughly consistent with the hypothesis, i.e., if the lowest income group is excluded, the ratio of actual food expenditures to the minimum cost diet rises with increase in household incomes. However, an argument could be made that the procedure used by Silberberg in estimating the minimum cost or technically efficient diets did not satisfactorily separate the expenditures for nutrition from the expenditures to satisfy the demand for tastes. We, therefore, re-estimated the hypothesis with the minimum cost diet which satisfies Recommended Daily Allowances (RDAs). We find that the results again are consistent with the hypothesis but the effect of changes in income on food expenditures to satisfy tastes is relatively small. It is argued elsewhere that the technology (as embodied in available recipes) is not available to convert all nutrients contained in a typical minimum cost diet into palatable meals. Therefore, the minimum cost diet estimated by optimizing over the raw foods is not feasible and, therefore, is not an appropriate measure of how cheaply the demand for nutrition could be satisfied. We retested the Silberberg's hypothesis using the ‘feasible’ minimum cost diet estimated by optimizing over those bundles of foods that represent reasonably popular meal recipes. Using this procedure, it is estimated that about 60% of the food expenditures were to satisfy the demand for tastes versus about 70% obtained using Silberberg's procedure.

Umwelthandeln und Konsumtechnologie / Household Production and Environment

Zusammenfassung Zur Erklärung der in zahlreichen empirischen Studien konstatierten Diskrepanz zwischen (auf Befragen bekundetem) Umweltbewußtsein und dem tatsächlichen Umwelthandeln auf der persönlichen bzw. der Haushaltsebene wird ein produktionstheoretisches Modell mit einer Konsumtechnologie vom Lancaster-Typ vorgeschlagen. Die Modellüberlegungen zeigen, daß - je nach den durch die Konsumtechnologie gegebenen Interdependenzen auf der Haushaltsebene - Änderungen von Daten wie dem Haushaltseinkommen oder der Besteuerung von Ressourcen unerwartete oder sogar umweltpolitisch unerwünschte Effekte zeitigen können. Einige Schlußfölgerungen für die Anlage und die inhaltlichen Schwerpunkte künftiger empirischer Untersuchungen werden gezogen.

ADJUSTING NET WORTH FOR PRICE CHANGES WITH REFERENCE TO THE CANADIAN SYSTEM OF NATIONAL ACCOUNTS

This paper develops a rationale for a comprehensive measure of income and provides illustrative calculations within the Canadian System of National Accounts for making adjustments to net worth for price changes.The paper notes that the System of National Accounts is designed to provide a number of individual aggregates measuring total production, income, savings and net worth. There is no single overall comprehensive measure which reflects the combined effect of changes in income and wealth. Such a measure is of particular importance in periods of rapid or extensive price changes which affect not only purchasing power of income but also the value of assets held and liabilities outstanding with consequences on net worth positions. This paper explores these issues and develops techniques for measuring the effects of specific and overall price changes with respect to net worth of the various sectors in the economy, illustrated with data from the integrated Canadian System of National Accounts.