High-income States Research Articles

To Conquer or Compel: War, Peace, and Economic Development

Theories of economic development suggest variously that national income increases or decreases the propensity for states to fight, while systematic evidence of the impact of development on warfare is ambiguous or non-existent. The lack of empirical support for nominally opposing claims can be reconciled if elements of both perspectives are partially correct. We use a formal model to construct an explanation linking economic development with interstate conflict that resolves contradictory theories and a relative paucity of evidence. Development increases the ability of states to project power while decreasing the willingness of states to engage in conflict over certain issues. High income states fight less often to conquer tangible assets or territory, but fight more often to compel adherence to preferred policies and to police the global commons.

State Growth Empirics: The Long-Run Determinants of State Income Growth

Real average U.S. per capita personal income growth over the last 65 years exceeded a remarkable 400 percent. Also notable over this period is that the stark income differences across states have narrowed considerably: In 1939 the highest income state's per capita personal income was 4.5 times the lowest, but by 1976 this ratio had fallen to less than 2 times. Since 1976, the standard deviation of per capita incomes at the state level has actually risen, as some higher-income states have seen their income levels rise relative to the median of the states. A better understanding of the sources of these relative growth performances should help to characterize more effective economic development strategies, if income growth differences are predictable. In this paper, we look for statistically and economically significant growth factors by estimating an augmented growth model using a panel of the 48 contiguous states from 1939 to 2004. Specifically, we control for factors that previous researchers have argued were important: tax burdens, public infrastructure, size of private financial markets, rates of business failure, industry structure, climate, and knowledge stocks.

Energy and Carbon Dynamics at Advanced Stages of Development: An Analysis of the U.S. States, 1960-1999

This paper explores the relationships among per capita income, energy consumption, and carbon dioxide (CO2) emissions by focusing on a set of economies at advanced stages of development, the U.S. states. Energy consumption and emissions grew 50-60percent on average over the 1960-1999 period. The states’ per capita energy consumption and emissions have grown on average 2 percent annually. The energy consumption income elasticity is positive but decreasing in income, although energy production takes an inverted- U shape, reflecting the electricity imports among high income states. The standard CO2 measure, corresponding to energy production, is characterized by an inverted-U environmental Kuznets curve. Adjusting emissions for interstate electricity trade yields an emissions-income relationship that peaks and plateaus. The carbon intensity of energy declines with income for total energy consumption and the industrial, residential, and commercial sectors.

Why Did Income Growth Vary Across States During the Great Depression?

This note investigates the sources of variation in the growth of per capita personal incomes across U.S. states during the Great Depression. States entering the economic contraction with relatively low per capita incomes tended to suffer larger percentage declines in per capita income than did high income states. By contrast, low-income states tended to experience larger percentage gains during the recovery. Hence, state per capita incomes diverged during the contraction phase and converged during the recovery phase.

Energy and Carbon Dynamics at Advanced Stages of Development: An Analysis of the U.S. States, 1960-1999

This paper explores the relationships among economic development, energy consumption, and carbon dioxide (CO2) emissions by focusing on a set of advanced economies, the U.S. states. Energy consumption and emissions grew 50-60 percent on average over the 1960-1999 period. The states' per capita energy consumption and emissions have grown on average 2 percent annually as income and population growth have outpaced improvements in energy intensity of output and carbon intensity of energy. The energy consumption income elasticity is positive but decreasing in income, although energy production takes an inverted-U shape, reflecting the electricity imports among high income states. The standard CO2 measure, corresponding to energy production, is characterized by an inverted-U environmental Kuznets curve. Adjusting emissions for interstate electricity trade yields an emissions-income relationship that peaks and plateaus. The carbon intensity of energy declines in income for total energy consumption and the industrial, residential, and commercial sectors.

Elasticities of ergodic solutions in the Markov chains approach to economic growth convergence*

Abstract. Elasticities are estimated for long‐run solutions of Markov chains of income distribution for the European regions. The results indicate that there will be no major changes in these long‐run solutions for lower income states in the Markov chain and that effects on higher income states will be only moderate.

Power Plays & Capacity Constraints: The Selection of Defendants in WTO Disputes

Are smaller members of the World Trade Organization able to use the WTO’s dispute settlement mechanism on an equal footing with the more powerful members of the organization? This paper examines the relationship between the wealth and power of states and their ability to participate fully within this system of dispute resolution. Two alternative hypotheses are considered. The “power hypothesis” predicts that politically weak countries will refrain from filing complaints against politically powerful states for fear of costly retaliation. The “capacity hypothesis” predicts the opposite - low income states will tend to complain about behavior by high income states because the latter offer a higher expected return. Using the set of all WTO disputes we test these two hypotheses and find considerable support for the capacity hypothesis and no support for the power hypothesis. We conclude that poor states behave differently than their rich counterparts because they lack the financial, human, and institutional capital to participate fully in the dispute resolution system.

The Potential of Temporary Migration Programme in Future International Migration Policy

This paper explores the potential of temporary migration programmes (TMPs) as a means of helping to manage international labour migration in a way that is both practical and sensitive to the interests of all sides involved. More specifically, the paper discusses whether and how TMPs can (a) help high-income countries to meet their labour market needs; (b) provide people from low-income countries better access to labour markets in higher-income states; (c) maximize the developmental impact of migration in countries of origin; and (d) address concerns in high-income countries about the permanent settlement of migrants and the diversity of their societies. The discussion draws upon the outcomes and policy experiences of various past and existing TMPs. It identifies the core considerations and policies needed to formulate and effectively implement TMPs.

Inter-state disparities in health care and financial burden on the poor in India.

Over five decades of independence, India has made rapid strides in various sectors. However, its performance in social sectors and particularly the healthcare sector has not been too rosy. Being the State's responsibility the healthcare has traditionally been influenced by individual State's budgetary allocation. Consequently inter-state disparity in availability and utilization of health services and health manpower are distinctly marked. This has implications for achievement of Health for All for the nation as a whole. Keeping in view the significance of studying inter-state variations in healthcare, this study focuses on the performance of healthcare sector in 15 major States in India. This is attempted through a comparative analysis of various parameters depicting availability of health services, their utilization and health outcomes. Our analysis depicts the prevalence of considerable inequity favoring high income group of States. In terms of healthcare resources, for instance, it indicates that the high income States hold a superior position in terms of: per capita government expenditure on medical and public health, total number of hospitals and dispensaries, per capita availability of beds in hospitals and dispensaries and health manpower in rural and urban areas. These parameters of availability have an impact on utilization levels and health outcomes in these States. A comparative profile of high and low income States as well as middle and low income States, both in rural and urban areas, reaffirms a greater financial burden in availing treatment at OPD and inpatient in low income States. In line with the higher financial burden and low per capita health expenditure, the health outcome indicators also depict a disconcerting situation in regard to low income States. These States are marked by lower life expectancy and higher incidence of diseases as well as high mortality rates. In this regard, demand as well as supply side constraints are observed which restrain the optimum utilization of existing health services. Among the low income States the main constraints on the demand side include illiteracy, malnutrition, and lack of infrastructure in accessing the facilities. Certain state specific supply side factors add significantly to under-utilization in low income States. In some of the States, however, corrective actions have been initiated to overcome the problem of the quality and low utilization of health facilities. In due course of time, it is likely that proper implementation of these measures may result in improved utilization level of existing health services, which may be useful to improve health status indicators. Nonetheless, overcoming the current levels of regional disparities in healthcare across three income groups of States may also require additional resources. The latter could be mobilized through assistance of donor agencies and appropriate mix of social and private insurance. Ultimately mitigating the problem of regional disparities in healthcare and protecting the poor and vulnerable from financial burden may require establishing and maintaining proper linkages between socio-economic development and healthcare planning.

Up the Down Staircase: Australasia in the `Pacific Century'

Since the end of the Second World War, the Australasian economies have fared poorly relative both to the high-income states of western Europe and North America and to the `miracle' economies strung along the Pacific coasts of Asia. This article attempts to analyze the post-war trajectories of antipodean economies in the context of the reconstruction of the world market under US hegemony after the end of the Second World War. The first section traces the rise of Japan and the emergence of Pacific Asia as a consolidated nexus of densely interwoven patterns of relational networks. The second section examines how ongoing processes of capitalist restructuring undermined the Asian miracle economies. Finally, the last section seeks to analyze the causes for the disproportionately adverse impact that processes of worldwide transformation have had for the two antipodean settler states.

The relationship between air pollution emissions and income: US Data

Considerable interest has focused on the possible existence of an environmental Kuznets curve, whereby pollution first increases but later falls with increasing income. Empirical studies have concentrated on a wide spectrum of countries and run into inevitable problems of data comparability and quality. We avoid these problems by looking at seven types of air emissions across the 50 US states and find all seven pollutants decrease with increasing per capita income. We also find strong evidence of heteroscedasticity with respect to the income–emissions relationship: lower-income states display much greater variability in per capita emission levels than higher-income states. Additionally, we look at the best measured of these emissions, air toxics, for the period 1988–94. Using a simple sign test, we find support for the notion that an increase in income is associated with a decrease in per capita emissions. However, the change in emissions appears to be unrelated to the magnitude of the change in income. We do find, though, that the reduction in per capita emissions is increasing both in terms of the 1988 level of per capita emissions and income. Possible implications of these results for the development process are discussed.

Why don't state incomes converge? Effective worker pay does not differ among states

Differing education levels affect mean income differences among states. But mean earnings also differ holding constant the amounts of education and experience; persons in higher income states earn more. The causes could operate either during the process of growing up, or currently. To distinguish between these two possibilities, the paper compares natives' and immigrants' earnings. Immigrants show a smaller state income effect than do natives, or no effect. This suggests that the differences among states are mainly due to influences during development (when immigrants were not present) rather than during adulthood. That is, the observed state differentials represent not different pay for the same work but (in addition to differences in occupational composition) different pay for different qualities of work, and most likely stem from differences in the quality of schooling.

The Effect of the Elimination of Sales Tax Deductibility on State Fiscal Decisions

This article formulates and estimates a model of state government to assess the effect of the elimination of state sales-tax deductibility on state fiscal decisions. Government is modeled as maximizing a social welfare function defined over public expenditures and taxes. The model yields a plausible characterization of state government behavior. The simulations on the uncompensated and compensated removal of sales-tax deductibility suggest that this change will lead to cutbacks in key areas of state government spending and in state government reliance on its major tax sources. The largest changes will be sizable cutbacks in state government reliance on the sales tax and in spending for income-transfer programs. Sales-tax revenues will fall by the largest proportion in higher-income states and expenditures for income-transfer programs will fall by the largest proportion in lower-income states.

Using Median Splits to Motivate Learning

I know the mean is 14.0 and the standard deviation is 2.4, but what does it tell me? Such a comment reveals the need for concrete reference points. A few statistics (e.g., skewness) can be compared with known distributions, and a stan? dardized sample can be compared with normal percentiles. But the median split offers a simple way to make a univariate statistics assignment both more meaningful and more interesting. The idea is to divide the sample on Y into two subgroups based on values of another variable X suspected of being causally related to Y. Students are then asked to compare central tendency, dispersion, and shape for these two subgroups. For example, to investigate whether infant mortality rates [Hammond Almanac, 1982, p. 271] are related to per capita income [U.S. Bureau of the Census, Statistical Abstract of the U.S., 1982-1983, p. 429] we divide the fifty states into two equal groups, those above and those below the median income. Then, we split infant mortality rates into two groups corresponding to the low-income and high-income states and prepare simple summary statistics for the two groups. We present our descriptive statistics side-by-side, as shown in Table 1, rounding heavily so the presentation is effective [A. S. C. Ehrenberg, The problem of numeracy, American Statistician 35 (1981) 67-71].

Birth control practices and levels of development in India.

The paper examines the acceptance of birth control practices in India, and examines the relationhsip of these patterns to levels of economic development. A study of selected couples with markedly low incomes revealed that fertility tended to increase until a certain level of per capita income was reached. From this level onward, fertility and desired family size goals declined with increasing economic status. The study reveals an association in India between those less developed states and poor acceptance of family planning. The level of medical and administrative personnel for family planning services is superior in the more developed states and, logically, adoption of family planning practices is also higher. In higher-income states, characterized by relatively higher spatial mobility and literacy rates, the spread of family planning practices is relatively rapid. In less developed states, characterized by poorly developed centralized systems of communication and distribution, a lower spatial mobility of people, and a lower diffusion of knowledge through personal contact, family planning methods tend to spread very slowly or become less and less popular. A classification of Indian states as related to their acceptance of formal family planning policy and governmental efforts has been helpful in developing regionally-oriented program strategies for the future. Such strategies would take into account varying socioeconomic, cultural and administrative infrastructure differences in order to better assure delivery of services. As India also faces a shortage of trained physicians and personnel for the National Family Planning program, a regionally-based spatial allocation policy must be formulated that will divert some family planning personnel from states with high-acceptance patterns to the more densely populated, less developed regions of the country.

Interregional Fiscal Equity and Benefit Transfers

Over twenty years ago James M. Buchanan showed that serious horizontal inequities could exist in a federated system in the sense that residents of relatively low-income political subdivisions might receive lower benefits (net of taxes) from central and state government expenditures than people with the same income residing in high-income states. One possible solution offered was the imposition of discriminatory federal income tax rates with higher rates being charged in high-income states. This paper suggests an alternative solution in the form of federal transfers of benefits among states, either via conditional grants or revenue-sharing. The relative merits of the two approaches are discussed, and it is shown that the redistribution of benefits can be achieved at minimum cost by an application of the Hitchcock transportation problem.

An analysis of the determinants of internal labor mobility in India.

Several variables have been chosen which might reasonably be expected to explain the interstate migration which has occurred in India. The independent variables used in the study explain a fairly high percentage of the variance in migration between states, and all variables except Uj are significant at the 5 percent level or better. The distance variable consistently has in absolute value the highest elasticity in the various estimated relationships, and it is the variable which contributes most in terms of addition to R2. This result is similar to those of other studies dealing with both advanced and less-developed countries, but it appears that the deterring effects of distance may be greater in India than in other countries studied. Migration in India tends to be away from low-income states and toward high-income states, a finding which is similar to those for Ghana, Egypt, and Brazil. Migration also tends to be away from and to populous states, and while migration is away from highly urbanized states, it does not seem to be toward highly urbanized places in India,ceteris paribus. However, migration does tend to be in the direction of places which are urbanizing rapidly and away from places which are urbanizing slowly. There is evidence that in India mobility tends to increase with increased education; this finding is contrary to what was found for Ghana, Egypt, and Brazil. Migration in India also tends to be toward places which display relatively high levels of educational achievement.

Motor Accident Mortality and Compulsory Inspection of Vehicles

The relation between motor accident mortality and compulsory vehicle inspection is examined by regressing age-standardized mortality ratios on inspection and other variables across states. The adjusted coefficient of multiple determination is typically about 0.85. Inspection is negatively related to mortality, but the net effect of inspection is less than one third as large as the gross difference between states that require inspection and those that do not and does not generally differ from zero at high levels of statistical significance. The effect of inspection appears to be greater in states with more than one annual inspection. It is greater in low income than in high income states, and greater in high education than in low education states. Dollar estimates of the benefits of inspection are found to exceed estimated costs; the difference, however, is not as large as is often alleged.