Household Disposable Income Research Articles

Estimating the Impact of Covid-19 and Policy Responses on Australian Income Distribution Using Incomplete Data

This paper undertakes a near real-time analysis of the income distribution effects of the Covid-19 crisis in Australia to understand the ongoing changes in the income distribution as well as the impact of policy responses. By semi-parametrically combining incomplete observed data from three different sources–the monthly Longitudinal Labour Force Survey, the Survey of Income and Housing and administrative payroll data–we estimate the impact of Covid-19 on the Australian income distribution and decompose its impact into the income shock effect and the policy effect between February and June 2020, covering the immediate periods before and after the initial Covid-19 outbreak. Our results suggest that, despite growth in unemployment, the Gini coefficient of equivalised household disposable income dropped by more than 0.02 points between February and June 2020. This reduction is due to the additional wage subsidies and welfare supports offered as part of the policy response, offsetting the increase in income inequality from the income shock effect. The results shows the effectiveness of temporary policy measures both in maintaining living standards and avoiding increases in income inequality. However, the heavy reliance on the support measures shown in the modelling raises the possibility that the changes in the income distribution may be reversed, or even that inequality and living standards could substantially worsen once the measures are withdrawn.

How the shadow economy can be detected in National Accounts

The paper examines how indicators of the shadow economy correspond to the National Accounts values. More precisely, we focus on household accounts assuming that the shadow economy should be visible in the difference between household income and consumption, as household (disposable) income is grossly underreported. Household consumption seems therefore to be a more accurate indicator in this context, as most shadow economy income is eventually spent on consumption. This implies that household savings figures should be negatively related to the values of the shadow economy; consequently, if the values relating to the shadow economy are high, savings should be low, or even negative, and vice versa. We verify this hypothesis using European cross-country data covering the years 1991–2017 with the application of MIMIC model calculations as a point of reference. The estimation results lend very little support to the hypothesis assuming that the shadow economy depresses household savings, even though we can otherwise explain comparatively well the cross-country variation in household savings and consumption growth rates.

The Decline of the Middle Class: New Evidence for Europe

: This article examines how the middle class has fared in twenty-six European countries between 2004 and 2014 based on European Survey on Income and Living Conditions (EU-SILC) data. We define individuals living in households with a median equivalized disposable household income between 75% and 125% to be middle class. We find that the middle class has decreased in eighteen out of twenty-six countries, which is accompanied by an increase of income polarization. Income redistribution is most influential for explaining differences in the size of the middle class across European countries. Supplemental data for this article is available online at https://doi.org/10.1080/00213624.2021.1982338

Monocentric versus polycentric urban structure: Case study in Hong Kong

Activity resource allocation or dispersion (e.g., employment, education), transport network improvement, and property development, affect the urban community in different ways. To illuminate their intricate relations, we study the perspectives of three groups of stakeholders: i) households with heterogeneous members seeking a common residence to optimize their proximity to activity resources; ii) transport planners aiming to relieve traffic congestion; and iii) property developers aiming to maximize their housing profit through the bid-rent process. To assess the impacts of different resource allocation patterns (centralized versus dispersed), a household bid-rent and residential location choice model with heterogeneous compositions is developed, including household members’ activity destination choices and travel choices under stochastic user equilibrium. We apply this model to a new redevelopment region in Kowloon, Hong Kong. The results show that centralized resource allocation increases the producer surplus but reduces the household disposable income. Compared with dispersion in school resource allocation or transport improvement, job reallocation is the most efficient in alleviating traffic congestion as employments are dispersed into multiple centers, and inter-zonal commute trips are converted into intra-zonal trips. We also investigate the outcomes as the urban structure varies from monocentric, dual-core into multiple self-contained communities (i.e. polycentric). The results show that any accessibility gain due to a change in the urban form will be capitalized by developers into higher housing prices in the new central business district (CBD) regions, hence shrinking the consumer surplus and disposable income. Therefore, it is unlikely to find an urban form that will achieve win–win–win situations for all three stakeholder groups in the case study example.

Distributional effects of macroeconomic shocks in real-time

The highly dynamic nature of the COVID-19 crisis poses an unprecedented challenge to policy makers around the world to take appropriate income-stabilizing countermeasures. To properly design such policy measures, it is important to quantify their effects in real-time. However, data on the relevant outcomes at the micro level is usually only available with considerable time lags. In this paper, we propose a novel method to assess the distributional consequences of macroeconomic shocks and policy responses in real-time and provide the first application to Germany in the context of the COVID-19 pandemic. Specifically, our approach combines different economic models estimated on firm- and household-level data: a VAR-model for output expectations, a structural labor demand model, and a tax-benefit microsimulation model. Our findings show that as of September 2020 the COVID-19 shock translates into a noticeable reduction in gross labor income across the entire income distribution. However, the tax benefit system and discretionary policy responses to the crisis act as important income stabilizers, since the effect on the distribution of disposable household incomes turns progressive: the bottom two deciles actually gain income, the middle deciles are hardly affected, and only the upper deciles lose income.

Identifying the Determinants of Nongrain Farming in China and Its Implications for Agricultural Development

Promoted by rapid industrialization and urbanization, the structure and spatial pattern of farming in China has changed greatly, and nongrain farming (NGF) has become more common. However, excessive NGF in some areas is not conducive to sustainable agricultural development and threatens China’s food security. In this study, we briefly analyze the stage characteristics of NGF in China and investigate the spatial agglomeration of NGF and its influencing factors from the perspective of spatial econometrics. The results showed that the average annual growth rate of NGF in China from 1985 to 2019 was 0.64%, and there was a growing positive spatial correlation between NGF in each province. Spatial Durbin model (SDM) estimation showed that both the per capita disposable income of local rural residents and the local urbanization rate promoted the development of NGF, while local per capita farmland, road density, and the functional orientation of the main grain-producing areas had a negative impact on NGF. The per capita disposable income of rural households and urbanization rate in neighboring areas had a promoting effect on the development of NGF, while road density in neighboring areas was negatively correlated with NGF. Ultimately, some targeted measures are proposed to promote China’s agricultural development in the new era.

The fall in income inequality during COVID-19 in four European countries

We here use panel data from the COME-HERE survey to track income inequality during COVID-19 in France, Germany, Italy, and Spain. Relative inequality in equivalent household disposable income among individuals changed in a hump-shaped way between January 2020 and January 2021, with an initial rise from January to May 2020 being more than reversed by September 2020. Absolute inequality also fell over this period. Due to the pandemic some households lost more than others, and government compensation schemes were targeted towards the poorest, implying that on average income differences decreased. Generalized Lorenz domination reveals that these distributive changes reduced welfare in Italy.

Assessing health gradient with different equivalence scales for household income – A sensitivity analysis

:Research on health inequalities shows considerable variation in health by socioeconomic position regardless of measurement. Income level is among the most commonly used indicators to measure the social gradient in health. The income gradient in health may, however, vary according to what aspect of health is studied but equally it may depend on how income is measured. The traditional approach of measuring income is to use household income and to modify it with consumption needs and size of the household. Our hypothesis was that the traditional picture of the income-health gradient becomes more nuanced when we use different equalization scales for household incomes than the most often used modified OECD equalization scale. More technically, we expected the steepness of the income-health gradient to change when the equivalence scale for adjusting household size and composition is altered. The data were Finnish cross-sectional 2017 data from EU-SILC (N = 9406). The primary measures were perceived health status and total household disposable annual income by household type. Ordered probit estimation using Stata package was applied to solving the function between health and income controlling for age, age-squared and gender. Respondents’ health status associated with their household type similarly to the association between personal income and household type. Those living in a single household tend to report poorer health but also tend to have lower personal income. Our main finding was that the health-income gradient becomes steeper with the larger equivalence scales, i.e., larger scale relativities, which assume bigger consumption needs for additional household members. One should be more aware of the fact that when household consumption is adjusted with conventional equivalence scales, other income-related aspects beyond consumption potential – such as social status, economic security – are also adjusted for.

Association between disability-related budget reductions and increasing drug-related mortality across local authorities in Great Britain

BackgroundDrug-related mortality in the UK rose markedly after 2012. Here we test the hypothesis that cuts to disability-related spending were associated with increased drug-related mortality across local governments in Great Britain. MethodsWe regressed changes in drug-related death rates (years 2010–12 versus 2015–17) on local government disability-related budget reductions, adjusting for a range of regional, demographic, and economic factors. Budget reductions are captured with a combined measure of financial losses due to Incapacity Benefit and Disability Living Allowance reforms, expressed in pounds sterling per capita, per year. 364 local authorities across England, Scotland, and Wales were included in the study. FindingsGreater budget reductions were associated with greater increases in drug-related death rates. In the unadjusted model, each £100 per capita budget reduction was associated with an increase in drug-related death rates of 3.30 per 100 000 population (95% CI: 2.43 to 4.17). The magnitude of the association increased after adjusting for region and demographic factors (b = 4.84; 95% CI: 3.26 to 6.43). The association remained statistically significant after adjusting for a full set of controls, including baseline and trends in unemployment rates, median hourly pay, and gross disposable household income per capita (b = 4.41; 95% CI: 2.57 to 6.24). ConclusionDeeper cuts to local government spending in Great Britain in the 2010s were associated with larger increases in drug-related deaths.

Sociodemographic factors associated with the first administration of anti-seizure medication in patients with focal epilepsy in Western China

BackgroundEpilepsy is a severe chronic neurologic disease with a prevalence of 0.7% worldwide; anti-seizure medications (ASMs) are the mainstay of epilepsy treatment. The effects of sociodemographic factors on the characteristics of initial treatment in patients with newly diagnosed focal epilepsy in Western China are unknown. This study was conducted to explore sociodemographic factors associated with initial treatment characteristics.MethodsPatients with focal epilepsy on continuous ASM treatment who visited to our epilepsy center at Sichuan Provincial People’s Hospital between January 2018 and December 2019 were recruited. Data on initial treatment status and sociodemographic variables were obtained from the patients with a questionnaire designed by our researchers. We examined whether sociodemographic factors were associated with epileptic patients’ access to neurologists and prescriptions of individual ASMs.ResultsA total of 569 patients completed this study. We found that patients with a higher education level, aged < 16 years, and with a higher household disposable income were more likely to receive treatment from a neurologist than their counterparts. Patients with a lower personal income level and who were treated at a junior hospital were more likely to receive prescriptions for carbamazepine, and those who were younger than 16 years were less likely to receive prescriptions for carbamazepine and oxcarbazepine. Patients with a higher education level, with a higher household disposable income level, who were younger than 16 years, and who were treated at a senior hospital were more likely to receive prescriptions for levetiracetam than their counterparts. Adult, female patients with focal epilepsy treated at a senior hospital were more likely to receive prescriptions for lamotrigine.ConclusionsThis observation suggests that sociodemographic characteristics are associated with access to neurologists and prescriptions of individual antiepileptic drugs. These data may help public health officials establish guidelines for doctors and distribute resources according to the needs of different patient groups.

An Assessment of the Relationship between Defence Expenditure and Sustainable Development in the Baltic Countries

As geopolitical instability increases and new threats emerge, a number of countries are increasing their respective allocations for defence expenditure in order to take greater responsibility for their citizens in terms of defending and protecting their values and way of life. Small states such as Lithuania, Latvia, and Estonia must evaluate certain economic, political, and strategic factors when increasing their respective defence expenditure. While they do tend to increase expenditure on national defence matters, budgetary constraints often force them to cut funding in some civilian domains or to increase their borrowing on international markets. Therefore, the security and defence of small states must be addressed in an integrated way, taking into account economic, social, and environmental factors. The aim of this article is to assess the relationships between defence expenditure and sustainable development indicators during the period between 2000 and 2018 in the Baltic states. The authors of this article aimed to determine which sustainable development indicators have a significant impact upon a country’s expenditure when it comes to defence matters. The study was conducted using econometric methods, including Spearman’s correlation analysis and Automatic Linear Modelling (ALM). The research results revealed some differences amongst the Baltic countries. In Lithuania, the employment rate and R&amp;D personnel as a share of the active population demonstrated a significant impact upon defence expenditure. In Latvia, defence expenditure was found to be affected by disposable household income per capita and environmental taxes as a share of total tax revenue. In Estonia, defence expenditure was mainly influenced by disposable household income per capita and energy import dependency. The study’s findings may be used to ensure both the security of the country and the implementation of the Sustainable Development Goals.

Club convergence of per capita disposable income in the United States

AbstractThis paper examines the long‐run trends in per‐capita income across the US states (1995–2018). Contrary to the majority of the literature on income convergence, which uses pre‐tax income as the variable of reference, we focus on per‐capita disposable household income. This enables us to better identify any convergence pattern. We apply the Phillips and Sul (2007, 2009) convergence methodology to check the existence of club convergence across the United States and within the Bureau of Economic Analysis (BEA) regions. Our findings confirm the club convergence hypothesis and highlight the role of tax policy in reducing regional disparities.

Developing a framework for managing household debt The case of South Africa

The proportion of household debt to disposable income is very high in South Africa, signifying over-indebtedness which reduces the welfare of households and ultimately reduces economic growth. This paper presents the determinants of the household debt in South Africa and comes up with a framework of recommendations on how to manage household debt. The objectives are achieved through systematic literature review, document analysis and secondary data analysis. Our findings suggest that households are over-indebted because they lack the necessary finance management skills, lack proper protection from the predatory practices by lenders and fail to obtain disclosure of vital information pertaining credit which affects their decision to borrow. Household indebtedness is also caused by the rising cost of living and low household disposable income, low household savings, high interest rates, misfortunes or adverse trigger events and living in urban areas. Education, age and being a recipient of a social grant all have positive and negative impacts on household indebtedness. Findings also suggest that female-headed households, renting households, large households, households with a mortgage and households where head is not working, is sick or disabled are more likely to be over-indebted. We develop a framework with recommendations for managing household debt in South Africa. We recommend upskilling to help households to effectively manage their finances and take responsibility. Moneylending institutions are encouraged to disclose vital information pertaining credit which affects decision to borrow by households and to avoid predatory lending. We also recommend a review of interest rates on debt and availability of consumption insurance on all loans to cover for cases when the household faces unforeseen circumstances affecting repayment.

Inequalities in the European Union—A Partial Order Analysis of the Main Indicators

The inequality within the 27 European member states has been studied. Six indicators proclaimed by Eurostat to be the main indicators charactere the countries: (i) the relative median at-risk-of-poverty gap, (ii) the income distribution, (iii) the income share of the bottom 40% of the population, (iv) the purchasing power adjusted GDP per capita, (v) the adjusted gross disposable income of households per capita and (vi) the asylum applications by state of procedure. The resulting multi-indicator system was analyzed applying partial ordering methodology, i.e., including all indicators simultaneously without any pretreatment. The degree of inequality was studied for the years 2010, 2015 and 2019. The EU member states were partially ordered and ranked. For all three years Luxembourg, The Netherlands, Austria, and Finland are found to be highly ranked, i.e., having rather low inequality. Bulgaria and Romania are, on the other hand, for all three years ranked low, with the highest degree of inequality. Excluding the asylum indicator, the risk-poverty-gap and the adjusted gross disposable income were found as the most important indicators. If, however, the asylum application is included, this indicator turns out as the most important for the mutual ranking of the countries. A set of additional indicators was studied disclosing the educational aspect as of major importance to achieve equality. Special partial ordering tools were applied to study the role of the single indicators, e.g., in relation to elucidate the incomparability of some countries to all other countries within the union.

Determinants of Rice Farmers’ Willingness to Pay for Conservation and Sustainable Use of Swampy Wetlands in Ghana’s Northern and Ashanti Regions

In light of the increased importance of sustainability issues in the world economy, this study calculates the economic value of the swampy wetlands in Ghana’s Northern and Ashanti region, based on rice farmers’ and community members’ willingness to pay (WTP) for the sustainable use of the wetlands. It also examines the factors influencing this WTP. Data from 160 rice farmers and community members in four districts were collected via a questionnaire survey. A logistic regression model was employed to determine the significance of the influencing factors, while the respondents’ WTP was estimated by the contingent valuation method. The results revealed that 89.4% of the respondents were willing to contribute about 54.90–213.11 USD/household/ha/year and an aggregated 0.298–1.158 million USD/year to ensure swampy wetland sustainability. On an average, they were willing to pay 180.17 USD/household/ha/year and an aggregated 0.979 million USD/year. Gender, household size, household disposable income, and knowledge of the importance of wetlands were found to be the determinants of WTP. We recommend that farmers and the public be educated on wetland ecosystems and family planning. In addition, reducing household size and providing rice farmers with adequate irrigation and postharvest facilities are worthwhile conservation measures.

Can different approaches to funding household energy efficiency deliver on economic and social policy objectives? ECO and alternatives in the UK

Residential energy efficiency is a core element of the decarbonisation policy in many nations. In the UK, the established approach to enabling efficiency gains through centralised retrofitting programmes involves socialising costs via consumer energy bills through the Energy Company Obligation (ECO). One UK policy concern is whether less affluent households should receive greater access to ECO funding. However, there is a broader concern that the use of constrained public resources should be justified through wider and sustained economic returns emerging. Here, we consider the (centralised) ECO approach to cost recovery alongside alternative (decentralised) approaches to delivering energy efficiency programmes that either pass costs to beneficiary households or fully socialise costs via income tax. We find the key drivers of both household and wider economy outcomes are the absolute levels of resources actually devoted to enabling efficiency gains and household disposable income freed up to power expansionary processes. The latter in particular brings challenges and trade-offs in terms of meeting both economic performance and social policy objectives, given that resources targeted at higher income households can ultimately free up more real spending ability and sustain greater gains in GDP, employment and household incomes.

Perceived causes of poverty in the context of objective poverty, subjective poverty and selected sociodemographic variables

Perceived causes of poverty in the context of objective poverty, subjective poverty and selected sociodemographic variables

Abstract No. 99 Financial reimbursement in interventional radiology procedures: multicenter analysis within the Americas

To compare financial reimbursement costs related to interventional radiology procedures (IRP) across USA, Canada (Ontario) and Brazil Medicare Billing (based on RVU and CPT codes) obtained from a single institution was considered as the primary database for US billing. USA Procedure Reimbursement Fees (PRF) included billings in NON FAC PAR, NON FAC NON PAR, NON FAC LC, FAC PAR, FAC NON PAR and FAC LC categories. However, NON FAC PAR fees were utilized as a US Standard baseline for comparison with Ontario and Brazil. Brazilian private PRF were obtained from a single institution. Canadian billings were obtained from a single institution in Ontario (OHIP Database). Equivalency factor for standardization of PRF included the pre-COVID cost of living adjusted income (using proportionate household disposable income as a basis) and pre-COVID foreign exchange rate for each country (February 2020), relative to USA. All currency values were presented in US dollar equivalent. 32 of 45 procedures met inclusion criteria with PRF present for each country. Procedures with fees not available in 1 or more countries were excluded. Brazil-USA: 19 (59%) procedures demonstrated an average of 66% lower fees in Brazil as compared to USA. Some of these procedures include varicocele embolization, portal vein embolization, uterine fibroid embolization, Gastrojejunostomy tube placement and IVC filter placement. Only 12 (37%) procedures demonstrated an average of 219% higher fees in Brazil as compared to USA. Canada-USA: 22 (69%) procedures were underpaid in Ontario (-95% to -19%). Some of these procedures include biliary stent insertion, CT-guided visceral biopsy, port insertion, cholecystostomy tube, carotid stenting, hepatic radiofrequency ablation, thoracocentesis, mesenteric stenting and suprapubic catheter insertion. 1 (3%) procedure was similar in PRF (variance within ±5%). Variable PRF across nations has resulted in relatively low reimbursement fees in Brazil and Canada. Based on cost-of-living adjusted income and foreign exchange rate, a PRF reform is needed, in order to standardize IRP fees in Brazil, Canada and USA.

Financialization and political economy of financial regulation in Uganda

Firstly, in this present paper, empirical evidence obtained after employing generalized least squares technique on the relevant sample data for Uganda over the 1970 to 2016 period, shows that financialization had adverse effect on economic growth. Secondly, in Uganda during the sample period, deregulation (represented by exchange rate depreciation) enhanced financialization. Thirdly, financialization depressed investments in the country because a large fraction of investments could have been diverted away from the real sector to the financial sector. Fourthly, financialization had positive and significant effects on inflation, quantity of foreign exchange and balance of payments deficit. Lastly, empirical evidence indicates that financialization was as a result of increase in exchange rate and gold reserves, monetization of the economy, imports and movements in household disposable income relative to GDP. Results in the paper suggest the following recommendations: control of financialization through macro prudential financial regulation, reduction of balance of payments deficit, undertaking more investments in directly productive areas and control of the relative movements in disposable household consumption relative to GDP. Keywords. Financialization, Political economy, Financial regulation. JEL. C01, C10, G18, P16, P34.

Pricing Strategy for Residential Water in Drought Years. Application to the City of Tianjin, China

In drought years, most residents fail to improve water use efficiency due to residential water supply normally being prioritized in many regions, which makes other low-priority industrial water users suffer more from water shortage. This paper proposes a Pricing Strategy for Residential Water (PSRW), a water tariff that changes on annual time scale, based on the scarcity value of water resources, aiming to promote residential water conservation and reallocate water resources across the residential and industrial sectors during droughts. An optimization model to maximize the total benefit of residents and industrial sectors is introduced based on marginal benefit and price elasticity. The water shortage of industrial sectors is used to reflect the scarcity of water resources, and the lowest water supply standard for households and the maximum proportion of household water fee expenditure (HWFE) to household disposable income (HDI) are used to ensure the residents’ acceptability to price raising. It shows an “S-type” relationship between the optimal price raising coefficient and industrial water shortage, and two turning points are found in the curve, which are the starting and stopping points of price raising. The appearance of starting point depends on the non-negative net benefit, and the stopping point is affected by the factors that represent the residents’ acceptability to price raising. The application to Tianjin, a city in northern China with the rapid growth of population and economy but scarce water resources, shows PSRW is a potential means to improve water efficiency and optimize water resource allocation in water scarcity situations.