Welfare Transfers Research Articles

Transfer Pricing and Global Poverty

A persistent puzzle in international political economy (IPE) is the lack of a robust correlation between foreign direct investment (FDI) and poverty alleviation in emerging markets. This is especially confusing given the compelling theory that predicts poverty reductions following FDI increases (Moran 1999). At least three general channels have been hypothesized linking FDI inflows to reductions in the poverty level (Hanson 2001). FDI is thought to contribute to poverty alleviation through (i) spillovers of labor productivity, technology, and corporate governance practices; (ii) market effects, as foreign invested enterprises (FIEs) contract domestic producers and sell their products in the host country, reducing consumer costs through competition; and (iii) revenue effects, as taxes paid by FIEs increase host country coffers and subsidize transfers to poorer citizens of the country. For all of the hypothesized channels, the empirical support is mixed at best. Figure ⇓ demonstrates the lack of observed correlation using a variety of poverty cutoffs, and the analysis is robust to using changes in FDI stocks as well. Fig 2 The Correlation between Poverty and Foreign Investment Flows By far the weakest support has been found for the revenue channel. There has been very little convincing work demonstrating that FIEs offer substantial increases in revenue above domestic firms, and even less evidence that FDI spurs equalizing welfare transfers. At a distance, this non-finding is the greatest enigma, as budget data are the easiest of the dependent variables to collect and analyze. Explanations are possible to explain the inability of FDI tax revenue to reach the poorest. The first basket of answers is methodological, including measurement error in poverty rates data, biased selection of foreign investors into wealthier states where poverty increases would be less obvious, and differing reporting rules for FDI in host countries leading to noisy estimates. The Beramendi and Wibbels contribution …

Remittances and Social Spending

Remittances are a significant source of foreign exchange for developing economies. I argue that remittances, due to their compensation and insurance functions, will increase the general income level and economic security of recipients, thereby reducing their perceived income risk. Over time, this will dampen demand from recipients for government taxation and social insurance. Therefore, I expect increases in income remitted to an economy to result in reduced levels of social welfare transfers at the macro-level. This dynamic can help us to understand spending patterns in developing democracies, and the absence of demand for social security transfers in countries with high levels of inequality and economic insecurity. I test this argument with a sample of 18 Latin American states, over the period 1990 to 2009, and subject the central causal mechanism to a battery of statistical tests. The results of these tests provide strong support for this argument.

Grain Price Spikes and Beggar-thy-Neighbor Policy Responses: A Global Economywide Analysis

When prices spike in international grain markets, national governments often reduce the extent to which that spike affects their domestic food markets. Those actions exacerbate the price spike and international welfare transfer associated with the terms of trade change. Several recent analyses have assessed the extent to which those policies contributed to the 2006-08 international price rise, but only by focusing on one commodity or using a back-of-the-envelope method. This paper provides a more comprehensive analysis that uses a global economywide model that is able to take account of the interactions between markets for farm products that are closely related in production or consumption. The model is able to estimate the impacts of those insulating policies on grain prices and on the grain trade and economic welfare of various countries. The results support the conclusion from earlier studies that there is a need for stronger World Trade Organization disciplines on export restrictions.

Paradoxes of Social Policy

Korpi and Palme’s (1998) classic “The Paradox of Redistribution and Strategies of Equality” claims that universal social policy better reduces poverty than social policies targeted at the poor. This article revisits Korpi and Palme’s classic, and in the process, explores and informs a set of enduring questions about social policy, politics, and social equality. Specifically, we investigate the relationships between three dimensions of welfare transfers—transfer share (the average share of household income from welfare transfers), low-income targeting, and universalism—and poverty and preferences for redistribution. We analyze rich democracies like Korpi and Palme, but we also generalize to a broader sample of developed and developing countries. Consistent with Korpi and Palme, we show (1) poverty is negatively associated with transfer share and universalism; (2) redistribution preferences are negatively associated with low-income targeting; and (3) universalism is positively associated with transfer share. Contrary to Korpi and Palme, redistribution preferences are not related to transfer share or universalism; and low-income targeting is neither positively associated with poverty nor negatively associated with transfer share. Therefore, instead of the “paradox of redistribution” we propose two new paradoxes of social policy: non-complementarity and undermining. The non-complementarity paradox entails a mismatch between the dimensions that matter to poverty and the dimension that matters to redistribution preferences. The undermining paradox emphasizes that the dimension (transfer share) that most reduces poverty tends to increase with the one dimension (low-income targeting) that reduces support for redistribution.

More than just Welfare Transfers? A Review of the Scope of Esping-Andersen's Welfare Regime Typology

With the Three Worlds of Welfare Capitalism (TWWC) Gøsta Esping-Andersen (1990) intended to provide a comprehensive typology covering welfare regimes as well as their effects on the economy. However, the initial TWWC-framework fell short of its promises as it ignored welfare services and the industrial sector of the economy. In the last twenty-five years many studies have analysed these previously overlooked aspects. In this article we review this research. We find that most empirical studies on welfare services, as well as on the economy, confirm the validity of the TWWC typology. However, insufficient attention has been paid to exposing the interplay between the different areas. In the second part of the article we provide two alternative explanations for the linkage between welfare regime and capitalism typologies. There is evidence for a functionalist explanation as proposed by the Varieties-of-Capitalism (VoC) framework, as well as for a political explanation delivered by the power resources approach.

Potential effects of perfect seasonal climate forecasting on agricultural markets, welfare and land use: A case study of Spain

Climate forecasting has emerged as an adaptation option for agriculture to better cope with climate variability. We use a coupled climate-crop-economy modeling system to analyze the value of climate information (VOI) in Spain for the domestic agricultural sector and for international agricultural markets. Climate variability in Spain is represented by the observed variability over a 30 year history. We assume perfect accuracy of seasonal climate forecasting but distinguish conservative and proactive crop mix adjustments. We also contrast nationally restricted dissemination of Spanish climate forecasts versus global dissemination. Averaged over the simulated climate states, the global benefits of Spanish climate forecasts range between 61 and 189 million US$ per year. Agricultural consumers in Spain gain between 0.8 and 2.9 percent and Spanish farm revenues increase between 1.9 and 7.0 percent. If Spanish farmers consider crop mix choices outside historical bounds (proactive reaction) their revenues are notably higher than otherwise (conservative reaction). The VOI under favorable climate conditions is greater than under adverse climate conditions. When adverse climate conditions are forecast, negative VOI could materialize for the Spanish farmers because of production and welfare transfers from Spain to other countries. Information sharing of Spanish climate predictions with the rest of the world (ROW) increases not only global welfare but also Spanish producers' benefits. Finally, climate forecasting promotes a more efficient use of agricultural resources. The agricultural efficiency increase due to climate forecasts translates into welfare-neutral land savings of 2 percent in Spain.

Fiscal Decentralization - A Survey of the Empirical Literature

We survey the empirical literature on fiscal decentralization (FD) and analyze the advantages and disadvantages of shifting fiscal responsibilities to sub national governments. We suggest several conclusions: First, there are large disagreements regarding the influence of FD on the size of government and the effect of FD on tax competition, economic growth and corruption. Probably the only unanimous conclusion is that intergovernmental grants are heavily influenced by political considerations. The empirical literature deals with several additional issues which are related to FD. While the literature on these topics is more scant and is not always econometrically rigorous, it is also more in agreement: there is no evidence for a race to the bottom in welfare transfers due to FD; FD seems to increase inequality in developing countries but to decrease inequality in developed economies and there seem to be economies of scale in the provision of several local public services. We conclude that there is no general answer regarding the net effect of FD. Fiscal decentralization reforms have to consider a wide array of factors and local contingencies before a successful implementation could be made.

Distributional and regional economic impact of energy taxes in Belgium

We analyse the macroeconomic and distributional effects of increased oil excises in Belgium by combining a regional Computable General Equilibrium (CGE) model with a microsimulation framework that exploits the rich detail of household-level data. The link between the CGE model and the microlevel is top–down, feeding changes in commodity prices, factor returns and employment by sector into a microsimulation model. The results suggest that policymakers face an equity-efficiency trade-off driven by the choice of revenue recycling options. When the additional revenue is used to raise welfare transfers to households, the reform is beneficial for lower income groups, but output levels decrease in all regions. However, when the energy tax revenue is used to lower distortionary labour taxes, the tax shift is slightly regressive. In this case, national GDP is hardly affected but regional production levels diverge. The impact of the environmental tax reform on income distribution depends strongly on changes in factor prices and welfare payments, whereas sector composition is an important determinant for regional impact variation.

Distributional Effects of a Minimum Wage in a Welfare State The Case of Germany

A popular argument for a federal minimum wage is that it will prevent in-work poverty and reduce income inequality. We examine this assertion for Germany, a welfare state with a relative generous means-tested social minimum and high marginal tax rates. Our analysis is based on a microsimulation model that accounts for the interactions between wages, the tax-benefit system and net incomes at the household level as well as employment and price effects on the distribution of incomes induced by the introduction of a minimum wage. We show that the impact of even a relatively high federal minimum wage on disposable incomes is small because low wage earners are scattered over the whole income distribution and wage increases would to a large extent be offset by reductions in means-tested welfare transfers and high marginal tax rates. Taking into account negative employment effects and increases in consumer prices induced by the minimum wage would wipe out any positive direct effects on net incomes of households affected by the minimum wage.

Taxation as a Determinant of Economic Growth in South-Eastern Europe: The Case of Bulgaria and Croatia

1. Introduction Before jumping into the morass of empirical evidence, it would be useful firstly to ask the question. How does tax policy affect economic growth? By discouraging entrepreneurial activity? By distorting investment decisions (because taxes make some forms of investment more profitable than others)? By discouraging incentives to work and acquire skills and training? According to the theory of endogenous growth, the efficient use of taxation depends firstly on the extent to which taxation affects the behavior of individuals and motives for accumulation on physical and human capital and secondly on public expenditure that are financed by tax revenues (Dimeli, 2002). Taxes may affect savings by transferring income between households with different consumption-saving patterns. Moreover taxes may reduce income from which saving comes from and/or reduce the motive for saving either, because it reduces its return or because income losses are being made up through welfare transfers. The relationship between consumption and saving shows even if tax policy does not affect the tax burden but transfers income among groups, something that may still reduce savings in the short term, especially if households where income is transferred face liquidity problems (Ando and Modigliani, 1963). All the above is nothing else but the other side of the same coin, which is the efficacy of tax policy and its capability to transform tax revenues into a fiscal tool of endogenous economic growth. That's exactly the question of the article for the geopolitical region of South-Eastern Europe and especially for the examining countries of the last and next European enlargement (Bulgaria and Croatia). 2. Taxation and Economic Performance: A Continuous Interconnection In the 1990s a number of studies examined policies that affect economic growth (Temple, 1999). The causes of slow economic growth and high rates of unemployment in many OECD Countries since the mid 1970s have been examined in terms of the increase of tax burden and public expenditure and especially in terms of those characteristics of taxation, which cause distortions in economic behavior by affecting negatively motives to work, save and invest. Another dimension concerns the impact of tax policy on growth through the attraction of foreign direct investments (FDI). The extensive literature on this issue suggests that FDI could be an important factor contributing to growth that counter balance any negative potential effects caused from taxes distortions. We examine such distortions below: Distortions caused by personal income taxes affect the economic behavior of physical persons. Extensive research shows that an important determinant of the decision for work or leisure is the elasticity of work with respect to disposable income and the elasticity of work supply of income from employment. Moreover income taxes affect not only employment, but also work effort, as well as education and investment in personal skills. Another argument for low income tax suggests that low taxes leave more income for consumption which expands the economy and creates employment. In turn, employment creates more income, more consumption, production, thus employment and income. This argument derives from the Keynsian model, according to which consumption as well as investment, public expenditure, export surplus and effective demand are the main determinants of income (Keynes, 1936). In this context, the increase of disposable income, especially of those less well off, with bigger propensity to consume, increases effective demand and thus income. On the other hand, the counterargument could be that fewer taxes imply less income for governments to spend in public expenditure. Moreover it is possible for a part of consumption to be channeled abroad. In that case, the country from which income has originated benefits less. Consequently, we assume that there's a direct connection between taxation and saving. …

Carbon emission trading system of China: a linked market vs. separated markets

The Chinese government intends to upgrade its current provincial carbon emission trading pilots to a nationwide scheme by 2015. This study investigates two of scenarios: separated provincial markets and a linked inter-provincial market. The carbon abatement effects of separated and linked markets are compared using two pilot provinces of Hubei and Guangdong based on a computable general equilibrium model termed Sino-TERMCo2. Simulation results show that the linked market can improve social welfare and reduce carbon emission intensity for the nation as well as for the Hubei-Guangdong bloc compared to the separated market. However, the combined system also distributes welfare more unevenly and thus increases social inequity. On the policy ground, the current results suggest that a well-constructed, nationwide carbon market complemented with adequate welfare transfer policies can be employed to replace the current top-down abatement target disaggregation practice.

Estado e desigualdade de renda no Brasil: fluxos de rendimentos e estratificação social

Este estudo avalia o quanto o conjunto dos pagamentos e arrecadações tributárias diretas do Estado afeta diretamente a desigualdade de renda no Brasil. Para isso, realiza-se, a partir de dados da POF 2008-2009, uma decomposição de fatores que medem as contribuições para a desigualdade de tributos diretos, salários dos setores público e privado, previdência e assistência social e outras fontes de rendimento. O conjunto de pagamentos do Estado piora a desigualdade social, mas nem todas as ações do Estado são concentradoras. Esses pagamentos favorecem, particularmente, servidores públicos ativos e inativos. Tributos diretos e assistência social são progressivos, mas têm efeito limitado. O saldo final dos fluxos monetários diretos entre pessoas e Estado é regressivo e contribui para cerca de um terço da desigualdade de rendimentos familiares per capita disponíveis.

Behavioral games and intrahousehold allocation: teenage mothers and their mothers in Brazil

Two games from experimental economics are paired to test household models. These experimental techniques can be helpful for informing policy that assigns welfare transfers, especially in the context of endogenous relationships or when impoverished families are omitted from income separability tests due to a lack of non-labor income, which is required for demand analysis of intrahousehold models. A trust game tests for Pareto efficiency, and a newly developed game tests for bargaining by determining if willingness-to-pay for a product changes based on endowment ownership. These games are applied in Salvador, Brazil, to a population not yet studied in the economic intrahousehold literature: adolescent mothers who live with their mothers. Their relationship is key for the welfare of adolescents’ children. The game outcomes reject Pareto efficiency but little evidence of bargaining is found. Qualitative survey questions confirm a cooperative relationship.

Donor ideology and types of foreign aid

We examine how donor government ideology influences the composition of foreign aid flows. We use data for 23 OECD countries over the period 1960–2009 and distinguish between multilateral and bilateral aid, grants and loans, recipient characteristics such as income and political institutions, tied and untied aid, and aid by sector. The results show that leftist governments increased the growth of bilateral grant aid, and more specifically grant aid to least developed and lower middle-income countries. Our findings confirm partisan politics hypotheses because grants are closely analogous to domestic social welfare transfer payments, and poverty and inequality are of greatest concern for less developed recipient countries.

The poverty-assistance paradox

We present a model of preferences on welfare transfers, which incorporates the recipient’s wealth as a signal of needs and deservingness. We show that a paradox may arise: the poorer the recipient is, the less transfer he/she will get. Implications might include the negative impact of targeting assistance to the poorest on public support for welfare.

Teen families, welfare transfers, and the minimum wage: evidence from Canada

Abstract This study evaluates the impacts of welfare transfers and the minimum wage on teen family formation by pooling provincial data from Canada between 1990 and 2005. OLS estimates suggest that welfare transfers have had limited impact on teen births. On the other hand, a 10% increase in the minimum wage is significantly correlated with a 3%–5% rise in teen birth rates. This finding is explained by further regressions, which reveal that an increase in the minimum wage is significantly associated with (1) higher earnings among male teens, (2) an increase in teen marriage rates, and (3) an increase in fertility among married teens but not among unmarried females. Finally, estimates based on the 2003 and 2005 waves of the Canadian Community Health Surveys demonstrate that married teens are more likely to engage in sex as well as unprotected intercourse in comparison with single teens.

Services for People Innovation Park - Planning Methodologies

This article aims to identify appropriate methodologies for the planning of a Services for People Innovation Park-SPIP, designed according to the model proposed by the Ibero-American Network launched by La Salle University of Madrid. Projected to form a network, these parks were conceived to provoke social change in their region, improving quality of life and social welfare, through knowledge, technology and innovation transfer and creation of companies focused on developing product and services to reduce social inequalities. Building a conceptual framework for the identification of planning methodologies compatible with the SPIP problematique, this article analyses the theories of complex systems and adaptive planning, considering the particularities presented by Innovation Parks. The study deepens the understanding of the problems inherent in park planning, identifies the key issues to be considered during this process, and characterizes the SPIP as active adaptive complex system, suggesting methodologies more appropriate to its planning.

Donor Ideology and Types of Foreign Aid

We examine how donor government ideology influences the composition of foreign aid flows. We use data for 23 OECD countries over the period 1960-2009 and distinguish between multilateral and bilateral aid, grants and loans, recipient characteristics such as income and political institutions, tied and untied aid, and aid by sector. The results show that leftist governments increased the growth of bilateral grant aid, and more specifically grant aid to least developed and lower middle]income countries. Our findings confirm partisan politics hypotheses because grants are closely analogous to domestic social welfare transfer payments, and poverty and inequality are of greatest concern for less developed recipient countries.

3B15 人間親和性を有する介護用移乗機の開発(GS13-3:移動・運動支援)

3B15 人間親和性を有する介護用移乗機の開発(GS13-3:移動・運動支援)

Selection and mortality: a ten-year follow-up of income decile mortality in Norway

There is universal agreement that higher mortality goes with lower income. Opinions differ on causality: the association may reflect the damaging effect of poverty on health and survival chances. Conversely, it may reflect selection/reverse causation: low income indicates health problems, and from health problems follow a higher risk of dying. We studied all deaths in Norway (111,504) during the 10-year period 1994-2003 among persons aged 25-66 years in 1993 (2,261,076). For each year, age-standardized mortality rates were calculated for each 1993 income decile for men and women separately. Income was calculated as family size-adjusted income after taxes but including cash welfare transfers. If the selection theory was correct, one would expect to see the excess mortality in the lower income fractiles decline as the bad risks, over-represented among the poorer, died away. Large income decile variations in mortality remained at the end of the 10-year period: after 10 years, the age-standardized mortality rate for men and women was still much higher in the lower income deciles. As the excess mortality in the poorer income deciles was not much reduced during the 10-year period, excess mortality among persons in bad health in the lower income deciles does not explain the income inequality in mortality in our data set.