Income Series Research Articles

Predistribution versus Redistribution: Evidence from France and the United States

We construct series of posttax income for France over the 1900–2018 period and compare them with US series. We quantify the extent of redistribution—the reduction from pretax to posttax inequality—and estimate the contribution of redistribution in explaining differences in posttax inequality. We find that differences in pretax inequality drive most of the differences in posttax inequality between France and the United States, and that changes over time in both countries are mostly due to changes in pretax inequality. We highlight that the concept of redistribution can be empirically misleading for judging how policies reduce inequalities. (JEL D31, H23, H24, H31, I38)

Rent–wage inequality in Mexico City, 1770–1930

AbstractThis article traces trends of income inequality in Mexico City from 1770 to 1930 by measuring the gaps between urban real estate rents and unskilled wages. The article presents the first long‐term series of real estate values and rental income for Mexico. One series summarizes the price of an apartment in tenement housing (the prevalent type of popular housing in Mexico), while the other relies on newspaper ads, notarial records, and other sources to estimate property values and rental yield (rental revenue relative to property values). From these wage and rental income series, we calculate rental–wage ratios that are broadly representative of the income gaps between the wealthy and unskilled workers. We find that, at the end of the eighteenth century, inequality moderately increased, followed by a more egalitarian period in the first half of the nineteenth century, and a ballooning in the last quarter of the nineteenth century that persisted into 1930. While inequality receded after the insurrection in the 1810s, it remained high after the Mexican Revolution. We hypothesize that inequality was sensitive to economic growth, and that generalized violence did not universally temper inequality.

A Monte Carlo Simulation of the Tax Burdens and Impacts Associated With Common Intergenerational Family Farm Transfer Strategies

This paper utilizes a Monte Carlo approach to simulate intergenerational farm property transfers within the context of four common succession strategies across a series of ordinary income and capital gain tax rates. Ordinary income/expenses accompany these intergenerational transfers in the form of interest income and the potential for depreciation recapture and capital gain income for all sales between the parties where transaction prices exceed basis and financing is utilized. Finally, post-transfer depreciation charges for the successor may accompany the usage of the family farm assets exchanged. The findings highlight the fact that transfers through estates represent the best pure tax outcomes (lowest aggregate tax burden), while sales transactions involve the highest tax burden. The conclusion is that it would be prudent and well-advised for everyone contemplating or engaging in intergenerational family farm transfers to ensure that tax considerations represent a focus for evaluating, determining, and selecting the best timing and course of action.

Carbon Market Evaluation Based on Random Walk Hypothesis in China

According to the proposal of Kyoto protocol, carbon dioxide emission rights are traded as a commodity, and carbon emission trading market emerges as the times require. As the world’s largest carbon emitter, China has established eight pilot markets for carbon emission trading. Selecting the closing price of eight carbon trading markets from the establishment to June 23, 2020, this paper analyzes the daily, weekly, and monthly return series data, using the first-order autoregressive process to adjust the daily income series to eliminate the weak trading market effect and then comprehensively uses the traditional variance ratio test and multiple variance ratio test to analyze the weak-form market efficiency of the eight carbon trading markets. The empirical results show that most of the carbon trading markets are non-weak-form market efficiency, and only Tianjin, Shanghai, and Hubei markets are weak-form market efficiency under the daily trading data. However, with the increase of carbon holding period, the weak-form market efficiency continues to strengthen. It shows that liquidity, quantity, and information transparency are important factors that affect the market efficiency.

Modelling and mapping how common guillemots balance their energy budgets over a full annual cycle

Abstract The ability of individual animals to balance their energy budgets throughout the annual cycle is important for their survival, reproduction and population dynamics. However, the annual cycles of many wild, mobile animals are difficult to observe and our understanding of how individuals balance their energy budgets throughout the year therefore remains poor. We developed a hierarchical Bayesian state‐space model to investigate how key components of animal energy budgets (namely individual energy gain and storage) varied in space and time. Our model used biologger‐derived estimates of time‐activity budgets, locations and energy expenditure to infer year‐round time series of energy income and reserves. The model accounted for seasonality in environmental drivers such as sea surface temperature and daylength, allowing us to identify times and locations of high energy gain. Our study system was a population of common guillemots Uria aalge breeding at a western North Sea colony. These seabirds manage their energy budgets by adjusting their behaviour and accumulating fat reserves. However, typically during severe weather conditions, birds can experience an energy deficit over a sustained period, leading to starvation and large‐scale mortality events. We show that guillemot energy gain varied in both time and space. Estimates of guillemot body mass varied throughout the annual cycle and birds periodically experienced losses in mass. Mass losses were likely to have either been adaptive, or due to energetic bottlenecks, the latter leading to increased susceptibility to mortality. Guillemots tended to be lighter towards the edge of their spatial distribution. We describe a framework that combines biologging data, time‐activity budget analysis and Bayesian state‐space modelling to identify times and locations of high energetic reward or potential energetic bottlenecks in a wild animal population. Our approach can be extended to address ecological and conservation‐driven questions that were previously unanswerable due to logistical complexities in collecting data on wild, mobile animals across full annual cycles. Read the free Plain Language Summary for this article on the Journal blog.

Does Investing in Renewable Energy Sources Contribute to Growth? A Preliminary Study on Greece’s National Energy and Climate Plan

As more economies are transitioning away from fossil fuels for their electricity production and towards greener alternatives, many socioeconomic implications of this shift remain actively debated. The present paper attempts to assess the economic impact of investments in renewable energy sources (RESs) for Greece and whether the broader effects of this transition can offset the negative impact that will occur due to the targeted phase-out of lignite plants by 2028, which constitute the predominant power source for Greece. Our methodological approach builds on input–output analysis and the creation of composite RES industries for the estimation of the net effects of a series of monetary shocks that correspond to Greece’s phase-out investment plan, utilizing the most recent national input–output tables and satellite structural business statistics. We focus on the structural effects of these shocks on a series of socioeconomic indicators, including GDP, employment, wages, government income (through taxes), and capital formation. The results indicate that even though lignite power production still provides a significant contribution to the Greek economy, investing in renewables presents a significant opportunity for value added and job creation.

VIX (Korku Endeksi) ile BİST Endeksleri Arasındaki Volatilite Etkileşiminin DCC-GARCH Modeliyle Analizi(Analysis of Volatility Interaction Between VIX (Fear Index) and BIST Indexes With DCC-GARCH Model)

Purpose – In this study, It is aimed to examine and interpret the volatility interaction between some indexes operating in Borsa Istanbul and VIX (Fear Index). Design/methodology/approach – In the study, daily income series of BIST 30, BIST Corporate Governance, BIST Industry, BIST Trade, BIST Insurance and BIST Leasing and Factoring Indices and VIX (Fear Index), which are active in Borsa Istanbul, constituting the period 02.01.2015-31.12.2020 were used. . For the volatility of the return series, DCC-GARCH models, one of the multivariate GARCH models, were used Findings – As a result of the analysis, it is seen that volatility effect and volatility clusters occur in many of the VIX (Fear Index) and BIST indices. In addition, the volatility formed in VIX (Fear Index) increases some of the volatility of BIST indices. There is a positive and strong relationship between the returns of most of the BIST indices and the returns of VIX (Fear Index) that changes over time. In one, positive and low degree of correlation was found. Discussion – It will be important for the relevant persons and institutions to shape their investments and savings by taking into account the results of the VIX (Fear Index) and BIST indices by stocks investors and companies operating in the stock exchange.

Characterizing growth instability: new evidence on unit roots and structural breaks in countries’ long run trajectories

In this paper we investigate whether long run time series of income per capita are better described by a trend-stationary model with few structural changes or by unit root processes in which permanent stochastic shocks are responsible for the observed growth discontinuities. For a group of advanced and developing countries in the Maddison database, we employ a unit root test that allows for an unspecified number of breaks under the alternative hypothesis (up to some ex ante determined maximum). Monte Carlo simulations studying the finite sample properties of the test are reported and discussed. When compared with previous findings in the literature, our results show less evidence against the unit root hypothesis. We find even fewer rejections when relaxing the assumption of Gaussian shocks. Our results are broadly consistent with the implications of evolutionary macro models which posit frequent growth shifts and fat-tailed distribution of aggregate shocks.

Regional inequality in Russia: Anatomy of convergence

During the last 15–20 years, inequality between Russian regions in terms of real personal incomes per capita was decreasing. This paper aims at revealing the “anatomy” of this phenomenon. To do so, time series of every regional income per capita is tested for catching-up with the national income per capita. Nonlinear asymptotically subsiding trends model the processes of convergence. The data cover 2002–2018 with a monthly frequency. Real incomes are estimated by adjusting nominal incomes to regional price levels. The results obtained suggest that 54.4% of the Russian regions exhibit convergence, and 20.3% of regions retain (approximately) stable income gap. At the same time, there is a significant proportion of deterministically diverging regions, equaling 22.8%. Random walks are detected in two regions only.

Estimation of the price elasticity of petroleum products? consumption in Ukraine

Research background: The analysts of the petroleum product markets of industrial countries believe that the elasticity of demand varies at different periods, which gave rise to the hypothesis that behavioral and structural factors have changed the consumers? reaction during the last few decades, with a change in prices of petroleum products.
 Purpose of the article: The purpose of this article is to study the elasticity of demand and prices in order to identify changes in consumer behavior in the oil market after significant socio-economic shocks and to establish a correlation between changes in elasticity and price volatility, with the Ukrainian petroleum products market as an illustrative example.
 Methods: Based on the time series of the petroleum product market of Ukraine, static and dynamic models for assessing the demand elasticity were constructed. It was found that the time series of demand for petroleum products is non-stationary but then the time series of the first differences is stationary according to the extended Dickey-Fuller test; further, the fact of co-integration between time series of consumption, income, and prices was established by the Johansson test. This made it possible to construct co-integration dependence, allowing, in turn, the development of models for assessing the elasticity of demand for petroleum products, on the basis of which objective assessments of changes in consumer behavior were established. Analysis of the monthly calculation of petroleum products? price volatility during the period 2008 to 2018 has showed that the values of volatility increased abnormally in the period between the beginning of 2014 and the middle of 2015. The estimates of price and demand elasticities obtained for the two periods up to the beginning of 2014 and the second half of 2015 differ significantly from the values of the corresponding elasticities between the beginning of 2014 and the middle of 2015.
 Findings & Value added: Assessments of income elasticities and price elasticities for petroleum products in the Ukrainian market were obtained by three co-integration models, both short and long term, for each of the three previously defined time intervals. In one of them, characterized by a high level of price volatility conditionally referred to as a crisis, the value of elasticities differed markedly from the corresponding values in the other two periods, in particular, -0.383 for price elasticity and 1.068 for a long-term bond. In the other two periods, these were, respectively, 0.543 for price elasticity and 0.274 for long-term pre-crisis elasticity, and -0.470 for price elasticity and 0.235 for long-term post-crisis elasticity. Appropriate elasticity estimates were obtained for both the short-run and the dynamic model, for the same defined intervals. A comparison of these estimates showed the closeness of the values of elasticities for the pre-crisis and post-crisis intervals and a marked difference from the estimates of the elasticities in the crisis interval. Thus, it was found that a significant change in elasticities is accompanied by an increase in price volatility.

Economic growth and environmental degradation: evidence from the US case environmental Kuznets curve hypothesis with application of decomposition

ABSTRACT This study re-tests the environmetal Kuznets curve (EKC) hypothesis for the US, based on a methodology that differentiates this study from previous empirical studies.To this aim, the per-capita income series (variable) is decomposed into its increases and decreases as two new time series and only one series, which contains income increases, is used. The rationale of this decomposition method is that the EKC hypothesis is originally postulated based on the impacts of income increases on environmental degradation. Therefore, this decomposition may allow us to test the EKC hypothesis more accurately through only income increases in accordance with its original postulation. Following decomposition, the ARDL approach to cointegration is applied between 1990M1 and 2019M7. Empirical findings of decomposed and undecomposed models are exactly opposite to each other. While the undecomposed model does not detect evidence of the EKC hypothesis for the US, the decomposed model strongly does so. This can lead to the interpretation that the decomposed model discovers-detects the existing but concealed validity of the EKC hypothesis, which the undecomposed model is not capable of detecting. Based on this result, this study proposes using this method as well, as an alternative technique for the EKC hypothesis testing models.

Unreal Wages? Real Income and Economic Growth in England, 1260–1850

Abstract Estimates of historical workers’ annual incomes suffer from the fundamental problem that they are inferred from day wage rates without knowing how many days of work day-labourers undertook per year. We circumvent the problem by building an income series based on the payments made to workers employed by the year rather than by the day. Our data suggest that earlier annual income estimates based on day wages overestimate medieval labour incomes but underestimate labour incomes during the Industrial Revolution. Our revised estimates indicate that modern economic growth began more than two centuries earlier than commonly thought and was driven by an ‘Industrious Revolution’. They also suggest that the current global downturn in labour's share is not exceptional but fits within the range of historical fluctuations.

The Influence of Income Shifting Incentives towards The Tax Haven Country Utilization: Case Study on the Companies listed in Indonesian Stock Exchange

This study aims to determine the association between a series of income shifting incentives, including multinationality, transfer pricing aggressiveness, thin capitalization, intangible assets, and tax haven country utilization. This study is based on a sample of 78 multinational companies listed on the Indonesia Stock Exchange over 2012–2016 period (390 firm-year). The results prove that, multinationality, thin capitalization, intangible asset are positively associated with tax haven utilization, while transfer pricing aggressiveness is not positively associated with tax haven utilization. Based on the additional analysis, basic and chemicals sectors have the highest association between a series of income shifting incentives and tax haven utilization among other industrial sectors and each industry sector has different ways of utilizing tax haven country. The findings of this study are expected to provide input to the Directorate General of Taxes the importance of reviewing debt to equity ratio rule which turned out to be one gap for the taxpayer and in making the proposed inspection plan and the potential thematic exploration related to profit shifting incentives more focused on basic industry and chemicals sector. The Directorate General of Taxes also needs to raise awareness of the taxpayers of agriculture, mining, basic and chemicals, and trade, service and investment, which has a growing number of subsidiaries in tax haven country. Increased supervision of intangible assets transfers in the agriculture and infra­structure, utilities & transportation sectors also needs to be done.

The EU Enlargement and Income Convergence: Central and Eastern European Countries vs. Western Balkan Countries

Objective: This article analyses the stochastic convergence of income per capita between the Western Balkan (WB) and the Central and Eastern European (CEE) countries compared to developed EU countries (EU15). Research Design & Methods: Stochastic convergence implies that all shocks in country’s income relative to the average income of the group are only temporary. In order to test stochastic convergence, the tests of the unit root were used. The Augmented Dickey-Fuller (ADF) test is supplemented with the Zivot-Andrews (ZA) unit root test, which allows for the structural breaks in time series of income per capita. Findings: Results confirm the existence of stochastic convergence of income per capita toward the EU15 average in the cases of the Czech Republic, Slovakia, Poland, Slovenia, Estonia, Latvia and Romania. Income convergence is not found in the case of the Western Balkan countries. Implications & Recommendations: While income convergence toward the EU15 average level was found in the case of 7 CEE countries, it was not found in the case of any WB country. This could be a proof of the importance of further support to reforms in the Western Balkan countries. Contribution & Value Added: The scientific contribution of the article is reflected in the fact that the existing literature dealing with income convergence of the Western Balkan countries toward the income of the EU15 countries is still very limited in number, as is the number of studies that compare convergence of income per capita toward the EU15 between the Western Balkan and CEE countries.

An Investigation OfStationarity Properties Of The Turkish Tourism Income Variable

Tourism has a significant impact on economic growth as put forth by the tourism- led growth hypothesis. Turkey’s earnings from tourism were 31.5 billion dollars in 2015 according to TURKSTAT. This implies that tourism is an important industry for Turkey and has a significant impact on economy. Therefore, the question whether a policy implementation in tourism is long-lasting or not is critical for both the industry and whole economy. This study researches the persistence of policies in tourism industry, employing tourism income series for period of 2009M1-2015M12 and tests the stationarity of this series using traditional unit root tests as well as a wavelet-based unit root test developed by Fan and Gencay (2010). Both seasonally adjusted and unadjusted series have been used. The empirical results point out that the traditional unit root test has a proclivity to report that tourism income series is I(1) or non-stationary. On the other hand, the wavelet-base unit root test indicates that tourism income is stationary. The empirical result of wavelet-based test implies that impact of a shock on this sector is transitory. The income in tourism industry will return more or less back to its meaning the following year.

Is there conditional convergence in the per capita incomes of BIMAROU states in India?

The stochastic income convergence hypothesis is examined for five BIMAROU (Bihar, Madhya Pradesh, Rajasthan, Orissa and Uttar Pradesh) states in India for the period 1960–2012 using the univariate Narayan and Popp (2010) unit root test with two structural breaks. The per capita incomes of all BIMAROU states, except Uttar Pradesh, are found to be stochastically converging in the long run. Significant structural breaks are detected in the relative per capita income series of the BIMAROU states. Most of the breaks spotted in the relative per capita income series correspond with periods of political uncertainty and regime change in the state elections.

Transforming Indian agriculture: is doubling farmers' income by 2022 in the realm of reality?

Indian agriculture is essentially monsoon- and market-dependent, and suffers frequent distresses posing threat to the welfare of farmers as well as interest in farming. Declining farm productivity and income have serious implications on rural prosperity and overall economy. Hence, increasing the real farm income, i.e. nominal (actual) income adjusted to inflation has become a priority for the state and policy planners. The Government of India, in its budget 2016–17 proposed to double the farmers’ income by 2022 (marking the 75th year of Independence) by addressing the agrarian distress and crisis. Indian agricultural databases lack farmer income series. Nevertheless, it has been estimated from survey data that the farm income growth, currently hovering around 1%, has declined since 2011–12 (ref. 1). We discuss here the farm income trends across holding sizes and states, as well as disaggregated sources of farm income using the National Sample Survey Office (NSSO) data for 2003 and 2013 (ref. 2). The potential pathways integrating science and technology (S&T), institutions and policy to double the farmers’ income are explored.

Re-examination of convergence hypothesis among Indian states in panel stationarity testing framework with structural breaks

ABSTRACTThis article examines the conditional income convergence hypothesis for 17 major states in India for the period of 1960–2012. Univariate stationarity tests without structural breaks provide evidence against the convergence hypothesis. However, when two or more structural breaks are applied in per capita income series, the incomes of around 11–13 states are found to stochastically converge to the national average. This finding supports the convergence hypothesis for the panel as a whole after accounting for two data features, cross-sectional dependence and structural breaks in incomes, using a unified panel stationarity testing framework.

Effect of the touristic product prices and costs on the international competitiveness: a comparative panel data analysis

Purpose- Tourism is an important sector for countries across the world which develops the fastests and contributes to country's economy. The countries in the tourism market are in a serious competition due to its contribution to the economic development. Therefore are countries increasing their international competitiveness by the price and cost advantage of the touristic products they offer in order to obtain a greater share of the international tourism market. Methodology- In the study are the effects of the price and cost advantages on the tourism incomes determined by utilizing the data of 31 European stakeholder countries in the tourism sector for 2000-2014. The harmonized index of consumer prices, representing the price and cost advantage and established by the European Commission’s (EC) Economic and Financial Affairs Council (ECOFIN) with 5 indicators based on the real effective Exchange rate, and the unit labour cost series are utilized. Findings- The co-integration and causality relation between these series and the tourism income series of the current period are examined by the Kao (1999) panel co-integration and the Dumitrescu and Hurlin (2012) panel causality analysis. Conclusion- As a result of the conducted analysis, it is determined that there is a co-integration between the price-cost advantage and the tourism revenues, and that the price-cost advantage is a statistically meaningful reason for the tourism revenues.

Top Income Shares in a Growing South American Economy: Ecuador 2004-2011

This paper presents series of top income shares in Ecuador from 2004 to 2011 using individual income tax returns and external control totals for income and population from national accounts and census population projections respectively. First, our results show that the income distribution in this country has followed different growth paths between the bottom 90% of the population and the top income groups. The top groups have experienced a steep increase during this period. Second, income in Ecuador is highly concentrated at the very top of the distribution. In 2011, the share of total income accruing to the top 1% was between 12% and 16%. Third, top income shares have followed an inverted U-shape over this short period of time, suggesting a decline of income inequality. Fourth, contrary to evidence in industrialized countries, high-income individuals in Ecuador are mainly capital and business owners.