Per-capita Income Levels Research Articles

Economic growth and carbon dioxide emissions: An analysis of Latin America and the Caribbean

This paper analyzes the empirical relationship between carbon dioxide (CO2) emissions per-capita and economic growth in a panel of 20 Latin American and Caribbean countries over the period 1971-2011. This empirical relationship, known in the economic literature as the Environmental Kuznets Curve (EKC) hypothesis, suggests that the relationship between these variables, in the long run, follows an inverse U-shape, that is, from a certain level of per-capita income, an increased economic growth would be accompanied by improvements in environmental quality. Although this hypothesis has been studied since the 1990s, its empirical validity has recently been questioned on the basis of, among other things, the lack of diagnosis of the stationarity properties of the variables, and in a panel data context, the presence of cross-sectional dependence. Taking into account both criticisms, we use recent unit root tests and cointegration techniques that are robust to the presence of cross-sectional dependence. We find contradictory results depending on the assumption of cross-dependence. Under the assumption of cross-independence, the existence of an EKC with a realistic turning point is confirmed. However, this assumption is subsequently rejected, and because of the presence of cross-dependence in the panel, a long-run equilibrium relationship between the variables cannot be established, and we reject the existence of an EKC.

Development, Climate Change Adaptation, and Maladaptation: Some Econometric Evidence

This paper examines the determinants of climate related disasters and attempts to estimate the presence of adaptive capacity in terms of per capita income and population density elasticities. We find evidence of adaptive capacity in a “weak” form both in terms of income and population density elasticities over our entire sample. That is, damages are in fact increasing with income and population, but less than proportionally. There is also evidence of countries improving their adaptive capacity over the long run, but of maladaptation occurring in the short run. Repeating the analysis splitting the sample by per-capita income levels, we find that higher income countries show adaptive capacity in a “strong form”, i.e. damages decrease with GDP, while lower income countries highlight exactly the opposite behavior. Finally, using Granger causality tests for panel data, we find evidence of increase in GDP per capita Granger causing climate related damages for lower income countries, but not in higher income countries.

The relationship between per-capita income and infant mortality: A study of Five Most Industrial States and India

High level of income enables people to acquire a high level of education and skill that will bring to fruition the intellectual capability and quality of the individual. Human development measured by the level of per-capita income, life expectancy and literacy, thus, requires a level of income, material requisites of welfare as Marshall would have it, as its basis. Hence, the modern concept of human development is only as elaboration and explicit interpretation of the basic idea of economic welfare of man embedded in Marshall‘s definition of Economics.

Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis

We conduct a hierarchical meta-regression analysis to review 87 empirical studies that report 769 estimates for the effects of government size on economic growth. We follow best-practice recommendations for meta-analysis of economics research, and address issues of publication selection bias and heterogeneity. When size is measured as the ratio of total government expenditures to GDP, the partial correlation between government size and per-capita GDP growth is negative in developed countries, but insignificant in developing countries. When size is measured as the ratio of consumption expenditures to GDP, the partial correlation is negative in both developed and developing countries, but the effect in developing countries is less adverse. We also report that government size is associated with less adverse effects when primary studies control for endogeneity and are published in journals and more recently, but it is associated with more adverse effects when primary studies use cross-section data. Our findings indicate that the relationship between government size and per-capita GDP growth is context-specific and likely to be biased due to endogeneity between the level of per-capita income and government expenditures.

: (Literature Review on the Deposit Insurance System Around the World: Implications for Its Improvement)

Korean Abstract: 본고에서는 기존문헌연구를 통하여 예금보험제도가 도입된 후 어떻게 발전되어 왔는지 살펴보았다. 이를 위해 먼저 예금보험과 금융안정의 관계를 분석한 기존문헌들을 분석하였다. 기존문헌에서는 일반적으로 금융산업이 발전한 국가에서는 예금보험제도가 금융안정에 긍정적인 영향을 미쳤으나 법체계와 경제 상황에 따라 그렇지 않은 국가들도 많았던 것으로 나타났다. 본 연구에 서 예금보험제도를 효율적으로 정착시키기 위한 개선방향에 대해 기존문헌을 분석한 결과는 다음 같이 요약된다. 첫째, 이미 예금보험제도를 도입한 국가에서는 금융기관의 재무건전성 정도에 따라 점진적으로 예금보험료를 차등해 조정할 필요가 있다. 둘째, 국민소득수준의 변화에 따라 주기적으로 적절하게 예금의 보호한도를 조정하는 것이 바람직하다. 셋째, 대형화추세로 인한 금융기관의 편중위험증대를 고려한 적정예금보험기금 추정과 그에 따른 적립이 이루어져야 할 것이다. 마지막으로 부실금융기관의 퇴출정책에서 예금보험기구의 주도적 역할이 중요함을 발견하였다. 본 연구의 정책적 시사점은 예금보험제도로 인한 은행의 과도한 위험 추구 행위를 방지하기위해서는 예금보험료, 보호한도, 기금적립, 부실기관 퇴출 정책을 종합적으로 고려하여야 한다는점이다. English Abstract: In this paper, we analyze how a national deposit insurance system evolves after the introduction in each country by reviewing the existing literature. We first examine the relationship between financial stability and deposit insurance. Overall, the findings in the existing literature show that deposit insurance systems have a positive impact on financial stability for countries with the well-developed financial services industry, while it is not valid for countries with poor economic conditions and legal systems. The direction of improvement for well-functioning deposit insurance from the findings on the existing literature suggests the following. First, for countries already with a deposit insurance system, it is important to gradually introduce differential deposit insurance premiums mechanisms, depending on the degree of financial soundness of financial institutions in the relevant country. Second, it is desirable to adjust periodically coverage limit as a function of the change in the per-capita income level of each country. Third, in line with the increased concentration risk from up-sizing of financial institutions, it is crucial to estimate the adequate level of the deposit insurance fund. Finally, we find that a leading role of deposit insurance agency is anticipated in the exit process of failing financial institutions. Our results offer important policy implications that we should comprehensively consider issues on pricing deposit insurance, specifying guarantee limits, raising deposit insurance funds, and designing exit policies to prevent insured banks from taking too excessive risks.

Jurists, Clerics, and Merchants: The Rise of Learned Law in Medieval Europe and its Impact on Economic Growth

Between the years 1200 and 1600, economic development in Catholic Europe gained momentum. By the end of this period, per-capita income levels were well above the income levels in all other regions of the world. We relate this unique development to the resurrection of Roman law, the rise of canon law, and the establishment of law as a scholarly and scientific discipline taught in universities. We test two competing hypotheses on the impact of these processes on economic growth in medieval Europe. The first conjecture is that the spread of substantive Roman law was conducive to the rise of commerce and economic growth. The second and competing conjecture is that growth occurred not as a result of the reception of substantive Roman law but because of the rational, scientific, and systemic features of Roman and canon law and the training of jurists in the newly established universities (Verwissenschaftlichung). This gave the law throughout Europe an innovative flexibility, which also influenced merchant law (lex mercatoria), and customary law. Using data on the population of more than 200 European cities as a proxy for per-capita income, we find that an important impact for economic development was not primarily the content of Roman law, but the rise of law faculties in universities and the emergence of a legal method developed by glossators and commentators in their interpretation and systematization of the sources of Roman law (Corpus Juris Civilis, Digests) and canon law. The endeavor to extract general normative conclusions from these sources led to abstraction, methodology, and the rise of law as a scholarly discipline. Wherever law faculties were founded anywhere in Europe, jurists learned new legal concepts and skills that were unknown before and conducive for doing business.

A Spatial Analysis of Incomes and Institutional Quality: Evidence from US Metropolitan Areas

We use the Stansel (2013) metropolitan area economic freedom index and 25 conditioning variables to analyze the spatial relationships between institutional quality and economic outcomes across 381 U.S. metropolitan areas. Specifically, we allow for spatial dependence in both the dependent and independent variables and estimate how economic freedom impacts both per-capita income growth and per-capita income levels. We find that while economic freedom and income levels are directly and positively related, increases in economic freedom in one area result in negative indirect effects on income levels in surrounding areas. In addition, we find that economic freedom has an insignificant relationship with economic growth.

Social Choice and Social Unemployment-Income Cleavages: New Insights from Happiness Research

The nexus between income and happiness is very much disputed. Many cross-sectional studies seem to be in support of a positive relationship. Yet, the failure of most studies to find a similar link between increases in income through time and happiness in developed countries of the western hemisphere sparked an intense debate over the issue. Starting from the fact that the theoretical basis in happiness research has been comparatively weak, we develop a novel theoretical approach that allows us to identify distributional consequences of unemployment as a key factor in the nexus. Social cleavages rooted therein imply a bias in the social choice between private and public goods with the bias and thus the importance for happiness conditional on the level of per-capita income. Our theory is backed by corresponding empirical evidence in international data: controlling for a number of variables, we find that, in low-income countries, subjective well-being significantly depends on income per capita; however, in high-income countries, the unemployment-related distribution is more important as a determinant, with significance shifting from the level of per-capita income to cleavages associated with unemployment. Our findings thus emphasizes the relevance of the income-satiation hypothesis found in many longitudinal studies also in cross-sectional perspective.

Demografie und Wachstum: Die gesamtwirtschaftlichen Effekte einer höheren Erwerbstätigkeit Älterer

Abstract This paper quantifies the effects of increased employment of elderly persons on the growth potential of the German economy until 2030. Starting from an analysis of the labour market situation of elderly persons today, we construct nine scenarios for the future development of the employment level of the elderly. These scenarios differ in participation rates, unemployment rates, and hours worked of the elderly. For each scenario, we then calculate the corresponding production potential of the German economy and percapita income levels. The difference in per-capita income in 2030 between the scenarios with the highest and lowest employment level is 10 %.

Sustainable agricultural intensification or Jevons paradox? The role of public governance in tropical South America

The process of global deforestation calls for urgent attention, particularly in South America where deforestation rates have failed to decline over the past 20 years. The main direct cause of deforestation is land conversion to agriculture. We combine data from the FAO and the World Bank for six tropical Southern American countries over the period 1970–2006, estimate a panel data model accounting for various determinants of agricultural land expansion and derive elasticities to quantify the effect of the different independent variables. We investigate whether agricultural intensification, in conjunction with governance factors, has been promoting agricultural expansion, leading to a “Jevons paradox”. The paradox occurs if an increase in the productivity of one factor (here agricultural land) leads to its increased, rather than decreased, utilization. We find that for high values of our governance indicators a Jevons paradox exists even for moderate levels of agricultural productivity, leading to an overall expansion of agricultural area. Agricultural expansion is also positively related to the level of service on external debt and population growth, while its association with agricultural exports is only moderate. Finally, we find no evidence of an environmental Kuznets curve, as agricultural area is ultimately positively correlated to per-capita income levels.

Development outcomes, resource abundance, and the transmission through inequality

The paper studies the effect of resource abundance on human development in light of two complementary hypotheses: (i) resource abundance increases the inequality of income distribution within a country and (ii) higher income inequality reduces human development. The estimation of a system of equations provides support to both hypotheses. In addition, results suggest that resource abundance might also affect human development by reducing the quality of institutions. However, while statistically significant, this effect is quantitatively small. Finally, there is evidence of a strong, negative direct effect of resource abundance on human development after controlling for inequality, institutional quality, and the level of per-capita income.

Die Diskrepanz Zwischen Wirtschaftlicher Und Menschlicher Entwicklung in Der Arabischen Welt (The Gap between Economic and Human Development in the Arab World)

Human development laggs considerably behind economic development in all Arab countries. Countries with similar per-capita income levels in other parts of the world score on average much better with regards to most indicators for education, helath, social protection, sanitation and other elements of human development. Admittedly, Arab countries started from particularly low levels of human development after the second World War and picked up considerably between 1960 and 1995 with other world regions. Recently, however, their catch-up race lost momentum again with the effect that while per-capita income levels continued to rise considerably, human development indicators improved much less.

Long term building energy demand for India: Disaggregating end use energy services in an integrated assessment modeling framework

With increasing population, income, and urbanization, meeting the energy service demands for the building sector will be a huge challenge for Indian energy policy. Although there is broad consensus that the Indian building sector will grow and evolve over the coming century, there is little understanding of the potential nature of this evolution over the longer term. The present study uses a technologically detailed, service based building energy model nested in the long term, global, integrated assessment framework, GCAM, to produce scenarios of the evolution of the Indian buildings sector up through the end of the century. The results support the idea that as India evolves toward developed country per-capita income levels, its building sector will largely evolve to resemble those of the currently developed countries (heavy reliance on electricity both for increasing cooling loads and a range of emerging appliance and other plug loads), albeit with unique characteristics based on its climate conditions (cooling dominating heating and even more so with climate change), on fuel preferences that may linger from the present (for example, a preference for gas for cooking), and vestiges of its development path (including remnants of rural poor that use substantial quantities of traditional biomass).

Heterogeneous technology and the technological catching-up hypothesis: Theory and assessment in the case of MENA countries

Long run convergence implies that the convergence hypothesis will be rejected if the income differential is not stationary. However, this definition is valid only if the catching-up process between the two countries is already over. If we take into account catching-up dynamics, then poorest countries should obtain a faster growth than developed countries. Thus, income gaps should integrate decreasing time trends. We formalise this hypothesis theoretically using a stochastic neoclassical growth model with heterogeneous technology. We then apply this model to the issue of per-capita GDP catching-up of eight MENA countries towards the level of income in Europe. We approximate the nonlinear deterministic trend by a linear function with breaks and apply panel unit root tests with breaks. The analysis reveals firstly that the periods of divergence outnumber the periods of convergence. Secondly, since the year 2000 all countries but Syria have been converging toward the European per-capita income level.

The correlation between human capital and morality and its effect on economic performance: Theory and evidence

In this paper we analyze the relationship between the correlation between morality and human capital (“ability”) on the one hand and aggregate economic performance on the other. Morality is defined as an aversion to consuming goods obtained through appropriative rather than productive activities. In our empirical analysis we adapt the well-known regression framework of Rodrik et al. (2004), using the World Values Survey as a source of proxies for morality. Using our preferred proxy, we find evidence that higher within-country correlation between morality and ability, holding constant the levels of morality and ability, increases per-capita income levels. Under our preferred specification, a one-standard-deviation increase in the correlation between morality and ability raises the log of per-capita income by about one-fourth of a standard deviation, equal to approximately $3600 for the median income country in our sample. Results are robust to correcting for endogeneity and to changes in sample and specification. Results are mixed when we use alternative morality proxies, but the coefficient on the morality–ability correlation is still usually positive and statistically significant. We also develop a simple static general equilibrium model to serve as a possible framework for understanding the empirical results.

Does More Money Make You Happier? Why so much Debate?

Easterlin’s famous paradox questioned standard economic assumptions about a fundamental relationship in economics: that between happiness and income. In recent years there has been renewed debate about the paradox. In this essay, I highlight some of the methodological issues and challenges underlying that debate. I focus on the sensitivity of the results to the method selected, the choice of micro or macro data, and the way that happiness questions are defined and framed, all of which result in divergent conclusions. I also note the mediating role of the pace and nature of economic growth, institutional frameworks, and inequality. What is most notable is the remarkable consistency in the determinants of individual happiness – including income – within countries of diverse income levels and, at the same time, how happiness is affected by cross-country differences that are related to average per-capita income levels, such as political freedom and public goods. Income clearly plays a role in determining both individual and country level happiness. Still, assessing its role relative to other more difficult to measure factors as countries develop in new ways and at different rates will remain a challenge for the foreseeable future.

TESTING CATCHING‐UP BETWEEN THE DEVELOPING COUNTRIES: “GROWTH RESISTANCE” AND SOMETIMES “GROWTH TRAGEDY”

ABSTRACTThis paper provides empirical evidence that there is no convergence between the GDP per‐capita of the developing countries since 1950. Relying upon recent econometric methodologies (non‐stationary long‐memory models, wavelet models and time‐varying factor representation models), we show that the transition paths to long‐run growth (the catch‐up dynamics) are very persistent over time and non‐stationary, thereby yielding a variety of potential steady states (conditional convergence). Our findings do not support the idea according to which the developing countries share a common factor (such as technology) that eliminates per‐capita output divergence in the very long run. Instead, we conclude that growth is an idiosyncratic phenomenon that yields different forms of transitional economic performance: growth tragedy (some countries with an initial low level of per‐capita income diverge from the richest ones), growth resistance (with many countries experiencing a low speed of growth convergence), and rapid convergence.

Growth in a Cross-Section of Cities: Location, Increasing Returns or Random Growth?

This article analyzes empirically the main existing theories on income and population city growth: increasing returns to scale, locational fundamentals and random growth. To do this we implement a threshold nonlinearity test that extends standard linear growth regression models to a dataset on urban, climatological and macroeconomic variables on 1,175 U.S. cities. Our analysis reveals the existence of increasing returns when per-capita income levels are beyond $19; 264. Despite this, income growth is mostly explained by social and locational fundamentals. Population growth also exhibits two distinct equilibria determined by a threshold value of 116,300 inhabitants beyond which city population grows at a higher rate. Income and population growth do not go hand in hand, implying an optimal level of population beyond which income growth stagnates or deteriorates.

Migration und Immobilienmärkte: Fallstudie China

Migration and Residential Property Markets: Case Study China We have examined the role of migration processes for the development of Chinese residential property markets at province level and have found empirical support of the following hypotheses: Migration between regions bears a close relationship with income differentials. The population shift induced thereby in combination with the disposable level of per-capita income and with urbanization is a dominant factor in the development of regional residential property price differentials in China. The main source of migration processes is the rural area compensating the weak natural growth in population in the metropolis. Conversely, high residential property prices in the conurbations are the determinants of the level of investment activity together with Tobin's q. Migration und Immobilienmärkte: Fallstudie China Wir untersuchen die Rolle von Migrationsprozessen für die Entwicklung der chinesischen Immobilienmärkte auf der Ebene der Provinzen und finden empirische Unterstützung für folgende Hypothesen: Migration zwischen den Regionen steht in engem Zusammenhang mit Einkommensdifferenzen. Die dadurch induzierte Bevölkerungsverschiebung in Verbindung mit dem verfügbaren Pro-Kopf-Einkommen und der Urbanisierung ist ein dominanter Faktor bei der Entwicklung regionaler Immobilienpreisdifferenzen in China. Hauptquelle hinter den Migrationsprozessen ist der ländliche Raum, der das geringe natürliche Bevölkerungswachstum der Metropolen kompensiert. Hohe Immobilienpreise in den Ballungszentren wiederum bestimmen mit Tobins q die Investitionstätigkeit. (JEL R11, J61)

Estimating rural populations without access to electricity in developing countries through night-time light satellite imagery

A lack of access to energy and, in particular, electricity is a less obvious manifestation of poverty but arguably one of the most important. This paper investigates the extent to which electricity access can be investigated using night-time light satellite data and spatially explicit population datasets to compare electricity access between 1990 and 2000. We present here the first satellite derived estimates of rural population without access to electricity in developing countries to draw insights on issues surrounding the delivery of electricity to populations in rural areas. The paper provides additional evidence of the slow progress in expansion of energy access to households in Sub-Saharan Africa and shows how this might be ascribed in part due to the low population densities in rural areas. The fact that this is a continent with some of the lowest per-capita income levels aggravates the intrinsic difficulties associated with making the investments needed to supply electricity in areas with low population density and high dispersion. Clearly, these spatial dimensions of the distributions of the remaining unelectrified populations in the world have an impact on what options are considered the most appropriate in expanding access to these households and the relative attractiveness of decentralized options.