Income Factors Research Articles

The Shadow Economy, an Enigma, in the Agriculture of 15 EU Member States over the Period 1996–2019

The focus of this review is the shadow economy (SE) in agriculture. Our research aim is to empirically quantify the SE in the agricultural sector based on data collected in the EU-15 member states from 1996 to 2019. We apply the multiple indicators multiple causes model to estimate the levels and development of the SE in these countries. Furthermore, we investigate how the size of the agricultural SE differs between the EU-15 member states and how it affects the economy overall. The results show that (a) the main potential for SE lies in agricultural subsidies, the effects of taxation, the share of imports, and factor income in agriculture; (b) certain patterns and differences exist among the countries, which can be associated with the north-south-west divide; and (c) there are higher levels of SEs in agriculture compared to in the overall economies. This review emphasizes the potential for measuring the SE in agriculture, while recognizing current methodological limitations. Recommendations include diversifying methods, standardizing definitions internationally, and enhancing theoretical foundations. Furthermore, expanding research to include more regions and improve visibility and transparency in measurements is crucial if informed policy is to be made to benefit agriculture globally.

SMALL BUSINESS IN THE ECONOMIC DYNAMICS OF UKRAINE DURING 2012 – 2022

The article analyzes the dynamics of formation and use of small business potential in promotion of socio-economic development of Ukraine. The novelty of the author's approach lies, first, in the focus on the characteristics of the functioning of small and micro-businesses, which allows to reflect the presence of specific trends that qualitatively distinguish the processes of adaptation and development of small business and require differentiation of approaches and theoretical foundations of their regulatory policy. Secondly, by taking into account the ratio of socio-economic efficiency achieved by small and large business, which is interpreted by the authors as a crucial sign of the potential for accelerating economic development that can be ensured by rationalizing the forms of interaction between large, medium and small business. Using the methods of comparative analysis of the dynamics of the contribution of micro, small, medium and large enterprises to the creation of added value and assessing the changes in the ratio of labor productivity at enterprises of different scales of economic activity, the authors substantiate the conclusion about the leading role of small enterprises in ensuring the expansion of factor income creation: it is small enterprises that have increased the scale of value creation, in fact, have become the only center of growth against the background of ten years of stagnation in the groups of large and medium enterprises. The authors also substantiate the dominance of the trend of convergence of the basic indicator of economic efficiency of enterprises of different sizes and interpret this trend as a critically important feature of the small business functioning in Ukraine: in an extremely unstable macroeconomic environment, small businesses are able not only to maintain and even expand their resource potential, but also to approach medium and large enterprises in terms of economic efficiency, in the first place, with the higher competitiveness inherent in this segment of the domestic economy and, accordingly, with more incentives to increase efficiency as a leading factor in the realization of the tasks of business owners

Mangrove ecosystem in Asia: review and synthesis of ecosystem services and economic valuation methods

Mangroves provide multiple ecological and socioeconomic benefits in both terrestrial and aquatic ecosystems; however, little is known about their benefits to humans. This study presents a systematic synthesis of the ecosystem services (ESs) and economic valuation methods (EVMs) of mangrove ecosystems in Asia. A total of 28 studies published from 12 countries encompassing 194 observations were reviewed and included in the analysis using Publish or Perish Software. Results revealed that the majority of the mangrove forests in Asia host the genera Rhizophora and Avicennia spp. in the largest proportion, indicating that these genera contribute significantly to mangrove ESs. Market price and factor income methods were the most frequently used EVMs with 96 and 66 value estimates, respectively. Provisioning ecosystem services were valued the most often among ESs types. Moreover, regarding the values of specific ESs, the median values of those that belong to regulating ecosystem services were the highest, specifically erosion prevention (5833.22 $ ha–1 year–1) and moderation of extreme events (3633.69 $ ha–1 year ). Considering contemporary protection and conservation measures, research studies on mangrove ESs and EVMs can be further improved through broader geographic area coverage and improved economic assessment of the rarely studied ESs. Overall, the findings recommend focusing on these gaps, particularly encouraging institutions and policymakers to acknowledge the undervalued ecological and socioeconomic values of mangrove ecosystem services.

Revisiting the carbon-economic inequality within global value chain considering corporate heterogeneity: Evidence from China's trade

The mismatch between trade-embodied economic benefits and CO2 emissions gives rise to inherent inequality within the era of global value chains (GVCs), whereas the existing accounting framework failed to distinguish between multinational corporations and local firms. Taking China as a case study, this study developed a novel Inter-country Input-output (ICIO) model based on the trade in factor income (TiFI) principle, while considering corporate heterogeneity. The findings reveal that when bilateral trades are measured in terms of trade in traditional value added (TiVA) principle, China's trade surplus with five partners was overestimated by 61 % from 2010 to 2015, with the United States being particularly overvalued by nearly 45 %. At the industry level, the Non-metallic manufacturing and Retail sectors accounted for over 10 % of China's exports, surpassing TiVA in terms of market share, indicating that China's contribution to crucial export sectors is underestimated. However, the evaluation based on the TiFI principle revealed a 27 % reduction in the overall carbon deficit, indicating that China's contribution to global carbon emissions continued to decline. The carbon-economic inequality (CEI) index between China and its trading partners indicates a value greater than or equal to 1, implying that China has encountered setbacks in global carbon trading. Notably, the application of the TiVA principle results in an underestimation of CEI between China-United States and China-South Korea, with respective values ranging from −0.13 to 0.27 and − 0.05 to 0.05. Overall, this study offers valuable scientific evidence towards addressing accountability and promoting climate justice.

Public investment, factor income taxation, and intergenerational welfare distribution in an overlapping generations model

Public investment, factor income taxation, and intergenerational welfare distribution in an overlapping generations model

Spatial distribution, influencing factors and innovative development countermeasures of farmer cooperatives in Hunan Province, China

China’s rural reform is reliant on farmers' cooperatives as a key organization vehicle. It plays an important role in promoting rural revitalization. Such as, realizing the organic connection between small farmers and agricultural modernization. This study used the nearest neighbor index and kernel density estimation to analyze the spatial distribution and structural characteristics of farmer cooperatives in Hunan Province. It revealed the spatial differentiation law of cooperatives. Also using geographical detectors to figure out the main factors that affect the spatial distribution. The results show that: ① Hunan Farmers Cooperatives show significant spatial agglomeration. The overall spatial distribution shows the spatial characteristics of "one core, one circle, and multiple points". And the spatial distribution pattern of "large agglomeration, finger-shaped radiation distribution". Among them, the distribution of provincial demonstration cooperatives is relatively balanced. ② Cooperatives in six types of industries, such as planting, forestry, and feeding, showed agglomeration distribution. Different industrial cooperatives spread out in different ways, such as in an anti-"L" shape, a dual-core shape, or a one-center area. ③ The 24 influence factors selected from the five dimensions of the natural environment, social economic basis, production basis, output capacity, and facility basis have high, general, and weak influence on cooperatives' spatial distribution. The development and distribution of cooperatives mainly depend on resource endowment, social and economic development level, and market dependence. The spatial distribution heterogeneity of different professional cooperatives is mainly affected by slope, per capita disposable income of rural residents, road density, and other factors. ④ The progression of farmer cooperatives in Hunan Province should prioritize high-quality development, emphasizing the need for innovative approaches and transformative strategies within rural industrial organizations. It is imperative to optimize the spatial distribution of cooperatives, strategically contributing to the establishment of a novel framework for modern agricultural development in Hunan Province. Additionally, there is a critical emphasis on spearheading collaborative initiatives among cooperatives of varied industrial types, aimed at fostering the integrated development of rural primary, secondary, and tertiary industries.

Impact of tariff liberalization on economic and social benefits: Computable general equilibrium application to Kenya

AbstractThis study employed computable general equilibrium policy simulations to examine the impact of import tariff liberalization on socioeconomic outcomes including living standards, cost of living, gross domestic product (GDP) from expenditure, total investment expenditure, intermediate input demand, output, value‐added, tariff revenue, sales tax revenue, indirect tax revenue, direct income tax revenue, factor income tax revenue, and factor demand. Findings from the simulations have policy implications touching on a need to embrace reciprocal tariff liberalization under agreements like strategic trade and investment partnerships and economic partnership agreements as they are associated with welfare gains, reduction in cost of living, and GDP growth. Targeted policy incentives could be directed to specific domestic sectors since tariff liberalization has negative impacts on investment expenditure. Incentives regarding intermediate inputs should be directed to the manufacturing and services sectors for liberalization of agrifood commodities. Targeted policy incentives should be directed to the manufacturing and services sectors which experience decrease in output with tariff reductions. Liberalization of manufactured commodities should be accompanied by value‐added incentives directed to the agrifood and home production–home consumption sectors. For the liberalization of manufactured commodities, targeted policy incentives should be directed to the services sector which experiences job losses while for the liberalization of tariffs on imports of agrifood commodities, targeted policy incentives should be directed to the agrifood and the home production–home consumption sectors, which also lose jobs. These targeted policy incentives could support industrial activity and compensate for revenue loss, especially from customs duties.Related ArticlesGruber, Lloyd. 2013. “Trade, Growth, Poverty, and Politics: Toward a Unified Theory.” Politics & Policy 41(5): 723–64. https://doi.org/10.1111/polp.12034.Onyango, Gedion, and Japheth Otieno Ondiek. 2022. “Open Innovation During the COVID‐19 Pandemic Policy Responses in South Africa and Kenya.” Politics & Policy 50(5): 1008–31. https://doi.org/10.1111/polp.12490.Soto, Gloria. 2012. “Environmental Impact of Agricultural Trade Liberalization under NAFTA.” Politics & Policy 40(3): 471–91. https://doi.org/10.1111/j.1747‐1346.2012.00354.x.

Does carbon ETS affect the distribution of labor's slice of the factor income pie? From the low carbon transition perspective

The carbon emission trading scheme (hereafter ETS) impacts firms' production decisions and promotes them to achieve low-carbon transition. This transition entails the movement of both labor and capital factors and consequently triggers re-distribution of factor income. To analyze the impacts of the carbon ETS on factor income distribution, we first theoretically incorporate carbon emission permit as a new factor into the general equilibrium model, shedding light on the potential mechanism. Utilizing city-level panel data from 2003 to 2019 and employing a staggered difference-in-differences (DID) model, we find that the carbon ETS is inclined to benefit labor at the expense of capital, exhibiting a progressively strengthening dynamic effect. Furthermore, we verify the intra-industry and inter-industry low carbon transition are valid mechanisms. Overall, these findings imply that implementing carbon ETS contributes to increasing the labor share of factor income. This study suggests that market-based climate policies have the potential to mitigate excessive reliance on capital and fossil fuels through low-carbon transition. Furthermore, it offers insights into mitigating the declining trend of labor income share.

Transfer pricing reforms in the context of BEPS: challenges remain

The presence of affiliated entities in different countries and the independence of tax systems make it easy to shift profits from jurisdictions with high corporate tax rates to jurisdictions with low rates. Transfer prices and the arm's length principle are used to prevent profit shifting. The article identifies the peculiarities of transfer pricing reform in the context of the BEPS plan, analyses changes to Ukrainian legislation and opportunities for its improvement.
 The article analyses the amendments to the Tax Code of Ukraine aimed at ensuring the implementation of the BEPS plan. The shortcomings of these amendments are outlined and amendments are proposed to improve the legislation. The author also examines the compliance with the BEPS guiding principle, which provides for the taxation of profits where profit-generating economic activities are carried out and where value is created. It is established that the amendments to the Tax Code of Ukraine do not ensure the implementation of this principle.
 In addition to the problems of practical implementation of the provisions of legislation, the article identifies conceptual shortcomings of the proposed improvements to the transfer pricing methods, which practically do not ensure the achievement of the set goals. An alternative method of pricing based on the market assessment of value added, which is determined by the sum of the firm’s factor income, wages and profits, is substantiated. Instead of the concept of “transfer price”, the concept of “fair market price” is introduced, which is determined by the sum of value added, depreciation and expenses, representing the added value of all previous stages of the production and/or distribution cycles. The proposed approach excludes the concepts of “affiliated entities”, “transfer prices” and “arm’s length principle”. The existence of a unified system of value added tax in the European Union allows for the unification of the tax system in terms of direct and indirect taxes as a result of the introduction of fair market prices.
 Amendments to the legislation have been proposed to allow for automatic solution of the following tasks.

The influence of therapeutic exercise on housekeeping

The processes that ensure household management require a certain level of physical fitness and restorative physical education. All this affects the content of the work, its quality and frequency. Accordingly, the dynamics of incomes of such households depends on this. The basis for the study was the change in the level of household income in the Kyrgyz Republic for the period from 2017 to 2021, taking into account the socio-economic development of the regions, the possibility of organizing sanatorium recreation. The methodology of the study is used to describe factor incomes (remuneration for hired labor, profit from entrepreneurial activity, interest on capital and rent from (i.e. from a land plot) and their percentage in the total mass of all incomes of the population.

European Union on the way towards sustainability in the domain of food security, improved nutrition, and sustainable agriculture

Sustainable development was the global key issue and is in the interest of human beings. Among the 17 Sustainable Development Goals, goal 2 is significant in terms of eliminating hunger, achieving food security, and improving sustainable agriculture. The study aims to analyse the state, development, association, and convergence of indicators that are related to monitoring the European Union´s countries’ progress toward to Zero Hunger Goal. For analytical purposes, the univariate statistical approach was used, correlation analysis depicted the linear relationship between the variables, the sigma and Beta convergence coefficients were employed to detect the convergence progress, and the index numbers enabled to follow the changes of the indicators over time. The convergence of the agricultural factor income per annual efforts was discovered, which is a positive signal for the catching-up process of the EU countries. A positive and significant correlation between the government support for the research and development of agriculture and the agricultural factor income was determined, therefore an increase in the government support allocation for research and development for agriculture can lead to an increase of the agricultural income. The analysis highlighted a negative, significant correlation between the ammonia emissions from agriculture and the area under organic farming that supports the idea of increasing organic farming with benefits to the environment and population health. The study results can be used for further development of the EU’s ambitions toward sustainable agriculture and nutrition

Study on Livelihood Resilience of Rural Residents under the Rural Revitalization Strategy in Ethnic Areas of Western Sichuan, China

Ethnic areas are special in terms of their geographic type, population size, production mode, etc. Scientific assessment of rural residents’ livelihood resilience and exploration of its influencing factors are significant for tapping the potential of rural residents’ livelihood resilience and promoting sustainable rural development. This research takes the villages in the western Sichuan ethnic area as the study area and, based on the sustainable livelihood framework and the analysis framework of rural residents’ livelihood resilience, constructs an evaluation index system of rural residents’ livelihood resilience and explores the factors affecting its evolution using the OLS parameter estimation method. The results found that: (1) Annual per capita income and livelihood diversification of key livelihood factors of farm households have improved under the rural revitalization strategy. (2) Skill training opportunities, loan opportunities, living conditions, non-agricultural work experience, and traffic accessibility had the most significant impact on livelihood resilience, and were the dominant forces in enhancing the rural residents’ livelihood resilience. (3) There was a divergence of livelihood resilience among different types of rural residents, and those with low altitude, low dependency ratio, strong labor endowment, and high literacy had a higher livelihood resilience; furthermore, the mean value of livelihood resilience of tourism-led rural residents was higher than that of non-tourism-led rural residents under different livelihood strategies.

Can social insurance contributions boost labor share?—Evidence from China’s social insurance law

Improving the factor income distribution is a crucial issue in the field of income inequality. Using large-scale data from China’s National Tax Survey from 2008 to 2016, this paper examines the impact of the implementation of the Social Insurance Law on firms’ labor share and its mechanisms. The results show that the Social Insurance Law significantly reduces firms’ labor share. Although it increases the firms’ social insurance rate and total amount of social insurance contributions, firms respond by reducing the number of employed labors and net wages to mitigate rising labor costs, as well as adopting alternative technological advancement patterns and capital deepening behavior, leading to a reduction in labor share. The weakening effects of Social Insurance Law primarily exist in non-SOEs, and MSEs, and firms faced with higher financial constraints and located in lower judicial quality areas. Our study suggests that stronger social security collection could account for the decline in labor share worldwide.

Effective means of legal regulation of foreign trade

The article proposes means of state-legal regulation of foreign trade, in particular legal, economic (in particular tax), political, financial and administrative instruments. The main shortcomings of the legislation are analyzed, which make it possible to effectively optimize taxation, carry out illegal export of capital and demand compensation from the budget. In order to avoid erosion of the tax base and profit shifting, a single object of taxation is proposed – value added, which is determined by the sum of factor incomes of the payers: wages fund and profit. Substantiated formation principle of the fair market value (price), which is equal to the sum of added value, VAT, charged on it, depreciation of means of production and costs, determined by the fair market value of goods/services, used in production. The established correspondence between the fair market price and the added value allows you to accurately determine the size of the tax base (VAT, personal income tax, profit tax and social contributions) and excludes any known methods of tax optimization. The amount of taxes paid determines the monetary equivalent of the added value and the increase in the sales price at each stage of production and distribution, which excludes the possibility of artificially reducing the tax base and/or transferring profits to jurisdictions with low taxes. The introduction of added value and its components as a single base of basic taxes and fees excludes weak capitalization and any other deductions from the tax base. The proposed definition of a single tax base significantly simplifies the administration of basic taxes and contributions and exhausts measures for the implementation of paragraphs 3, 4 and 5 of the BEPS plan.

Adjustments of factor income tax rates and aggregate (in)stability

AbstractA general wisdom, since at least the work of Schmitt-Grohé and Uribe [(1997) Journal of Political Economy 105, 976–1000.], holds that a government that relies on adjusting factor income tax rates to achieve budget objective may induce aggregate instability driven by self-fulfilling expectations. This paper shows that this conventional wisdom may be overturned if the rate of adjustment of the capital income tax rate is bigger than that of the labor income tax rate. How much bigger depends on country specifics and particularly on the levels of the capital and labor income tax rates. Thus, adjustments in capital and labor income tax rates, if properly designed and implemented, can help achieve the budget objective while at the same time preempting extrinsic volatility.

Economic Productivity through Net National Disposable Income

According to the Keynesian consumption function, Consumption expenditure plays a crucial role in determining the Gross Domestic Product (GDP), as evident in the Absolute Income Hypothesis. This concept has subsequently been used in developing the permanent income hypothesis and the life cycle hypothesis. However, when considering the net national disposable income after accounting for factors like net factor income from abroad, taxes, and subsidies, it becomes clear that final consumption expenditure holds a more dominant position. A gap in the existing literature arises from the historical unavailability of data, leading to the use of GDP as a proxy variable instead of net national disposable income when determining the consumption function for India. This research paper aims to address this gap by employing the net national disposable income of the Indian economy to estimate the consumption function for the period between 1994 and 2018. Additionally, it empirically tests the long-term effects of current income and current wealth (defined as past year income minus past year consumption) on consumption within the context of the Indian economy. The empirical findings provide support for a significant positive relationship between consumption and income and wealth. This is further substantiated by the significant values of the marginal propensity to consume (MPC) derived from income and wealth during the given time period. The estimated equation aligns with the life cycle hypothesis for the Indian economy, indicating that long-term, steadfast planning is crucial for improving the productive capacity of the economy, reducing poverty, and enhancing employment levels more effectively.

Influencing factors of medication adherence in schizophrenic patients: a meta-analysis

Medication adherence of schizophrenic patients is a growing public health problem. We conducted a meta-analysis on the influencing factors of medication compliance in schizophrenic patients. We searched PubMed, Embase, Cochrane Library, and Web Of Science for relevant articles published up to December 22, 2022. Combined odds ratios (ORs) and 95% confidence intervals (CIs) were used to assess influencing factors. Egger’s test, funnel plot, the trim and fill method, and meta-regression analysis were used to assess publication bias. A total of 20 articles were included in the analysis. Twenty influencing factors were divided into seven categories: drug factors (OR = 1.96, 95% CI: 1.48–2.59), problem behavior (OR = 1.77, 95% CI: 1.43–2.19), income and quality of life (OR = 1.23, 95% CI: 1.08–1.39), personal characteristics (OR = 1.21, 95% CI: 1.14–1.30), disease factors (OR = 1.14, 95% CI: 1.98–1.21), support level (OR = 0.54, 95% CI: 0.42–0.70), and positive attitude and behavior (OR = 0.52, 95% CI: 0.45–0.62). This meta-analysis found that drug factors, disease factors, problem behavior, low income and quality of life, and factors related to personal characteristics appear to be risk factors for medication adherence in people with schizophrenia. And support level, positive attitude and behavior appear to be protective factors.

147 Effect of Elasticity Analysis on Beef Cattle Production Costs

Abstract The influence of major cost items on the total production cost of beef cattle during the growing phase was evaluated. A mathematical model assessing production inputs considering the cost of the items according to the Economic Theory was used. Costs were allocated into: A) variable costs, B) fixed costs, and C) factor income. A survey was carried-out in 2018 and 2019 with a rancher located in the state of Minas Gerais (Brazil) aiming to define the major technical indicators of production. The spot prices used in the current analysis refered to December 2019. The base-animal used during the growing phase represented the Nelore breed (Bos indicus), intact males and females (n = 34), separated into three lots according to the ranch of origin and sex. The initial averaging 195 ± 15 kg of live shrunk BW (body weight), and the average selling weight was 360 ± 15 kg shrunk BW. Two types of supplementations were offered during the year, the mineral was provided for 150 d, and protein supplementation was offered for 210 d. In the base scenario, the production cost was US$ 1.13/kg of animal. The fixed cost of the activity represents 23% of the total cost, in which capital depreciation, equipment maintenance, and labor represented 7.1%, 6.7%, and 5.9%, respectively. The variable cost of the activity represented 66.3% of total costs, in which cattle purchase price and feed costs represented 58.8% and 7.1%, respectively. These two factors, cattle purchase price, and feed costs, can be directly related to the success or failure of the system, thus also becoming good variables to be closely managed, justifying the importance of current elasticity analyses in such items. The price elasticity of items involving production cost variability in case a total expenditure cost of such items increased by 1% was hypothesized. The input costs that most represented the total cost were in order: 1) cattle purchase price, 2) feed, 3) capital depreciation, 4) labor, and 5) equipment maintenance. The cattle purchase price represented in the elasticity analysis as the most impactful factor, followed by equipment maintenance, feed, depreciation, and labor, at +0.54%, +0.11%, +0.07%, +0.07%, +0.05%, respectively. The cattle purchase price was the most related to the total cost. The increases of 1% in this variable caused variations of +0.54% of the total cost. It means the cost of production of 1 kg of beef cattle goes from US$ 1.13/kg to US$ 1.74/kg. In conclusion, the power of negotiation when buying and selling animals was the factor that can influence the most total costs of the cattle enterprise assessed.

The increase in the elasticity of substitution between capital and labour: a repeated cross-country investigation

ABSTRACT The economics literature emphasizes the importance of the elasticity of substitution between capital and labour in several economic contexts. However, analyses of the effect of the elasticity of substitution on the direction of technological change are often overlooked. Most assessments of the direction of technological change rely on a Constant Elasticity of Substitution (CES) production framework. This strand of empirical work considers the elasticity of substitution between capital and labour as a deep and fixed parameter. In this article, we show that the change in the elasticity of substitution that has occurred in recent decades might be an alternative source of change of factor income shares in addition to changes in factor-augmenting technological change. We construct a theoretical environment in which the elasticity of substitution is determined endogenously by the capital share and capital intensity. Rolling window estimates and non-linear estimation methods show that the elasticity of substitution in nine OECD economies observed between 1950 and 2017 was not constant and that, in fact, in the latter half of the 1970s, the elasticity of substitution increased, in the presence of labour-augmenting technical change.

Investment subsidies and redistributive capital income taxation in a neoclassical growth model

AbstractHow do investment subsidies bear on pure redistribution when coupled with capital income taxes? In a heterogeneous agent, neoclassical growth framework it is found that on impact, with no optimizing behavior, investment subsidies are good for growth but bad for redistribution. The opposite holds for capital income taxes. But when the government acts as a Stackelberg leader vis‐à‐vis the private sector (the follower), the optimal feedback policy is by construction time‐consistent and implies that in a long‐run optimum the tax scheme does not distort accumulation. This holds regardless of social preferences. For the feedback Stackelberg equilibrium I find that (pure) redistribution can go either way and capital income taxes are nonzero in the long‐run, time‐consistent optimum, depending on the social weight of those who receive redistributive transfers, the distribution of pretax factor incomes, and the intertemporal elasticity of substitution. It is argued that investment subsidies may be an important indirect tool for redistribution, and may allow for the separation of “efficiency” and “equity” concerns.