World Economics

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Analysing Data Issues in Measuring Inequality in UK Regions
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Julian Gough, World Economics, December 2020
Converting official nominal regional GDP data for 2017 to real values, using an approximate deflator for regional price levels, reduced the size of the London economy by 12% or £51 billion. Using real GDP per head as an indicator of prosperity revealed London to be the most prosperous region and Wales the poorest. Real data reduced the inequality between regions by 26% compared to the nominal data. Using real household income per head as an alternative indicator showed London to be the most prosperous region and the North East of England to be the poorest. Real data reduced the inequality between regions by 16% compared to the nominal data. Using the regional unemployment rate as a proxy inverse measure of prosperity produced markedly different results to the financial data. London had high prosperity in financial terms co-existing with a comparatively high unemployment rate. A composite index of prosperity, combining all three indicators with selected weights, revealed London to be the most prosperous region at 33% above the national average and the North East of England to be the poorest at 23% below the national average.
Measuring EU-Wide Inequality
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Michael Dauderstädt, World Economics, June 2020
EU-wide inequality is higher than official figures by Eurostat suggest. With a Gini coefficient of 0.35 and a quintile ratio of 8.4 in 2018 (5.8 at purchasing power parity), it reaches the level of US inequality. This is a major driver of migration and relocation of production within the European Union (EU), both of which have led to a rise of nativist votes and Brexit. Relative inequality has been declining owing to catch-up growth of the poorer economies in central and eastern Europe, while within-country inequality has remained stable or increased. However, absolute inequality is likely not to decline for many years.
Income Inequality and Foreign Direct Investment in Australia
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Anna Ploszaj, Tarlok Singh & Jen-Je Su, World Economics, June 2019
Income, wealth and consumption are three main factors that determine people’s standard of living. Many organisations in Australia report that in recent years the Australian standard of living has been changing, with some people falling behind. This paper examines the magnitude of and the factors contributing towards the growing income inequality in Australia. The data shows that income inequality, which in Australia in the mid-1990s was around the same level as in other developed countries, has recently outpaced their levels. The data on FDI shows that, at the same time as income inequality was on the rise, the amount of FDI inflows to Australia increased and despite a higher FDI restrictiveness index than the average for OECD countries Australia holds its position in the top ten countries in terms of the preferred destination of FDI.
Inequality: Concepts, Data, Perspectives and Solutions
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Michael Chibba & John M. Luiz, World Economics, March 2019
A comprehensive treatise on inequality from economic, social, business and metrics/data perspectives is lacking in the literature and this treatise fills that void. We posit that: (a) neoclassical economics has failed to address inequality within nations; (b) the social theories on inequality are of ancillary importance; (c) businesses have contributed to inequality in several ways but have also made a positive contribution towards a fairer, more equitable society; (d) data on inequality is not up to date. Taxation and social programs offer an inadequate approach to tackling inequality without a proper framework and supporting approaches. In addition, complementarity between neoclassical economics and behavioural economics would be a positive factor in addressing inequality and should be pursued. Issues of inequality metrics and data reliability have moved to the forefront of discussions as the data currently available is the basis of much dissent. Robust metrics and reliable and up to date inequality data (as well as related statistics) are indispensable for designing, implementing, monitoring, and evaluating inequality interventions and policies.
Using Price-Adjusted Income Data to Measure Regional Income Inequality Across the UK
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Julian Gough, World Economics, March 2018
Data for gross disposable household income for each region of the UK are published annually by the Office for National Statistics. The latest provisional data available are for the year 2015. The annual data for household income are in nominal terms only—i.e. they do not allow for differences in prices between regions of the UK, which distorts the results. A reliable deflator to correct the nominal data for differences in inter-regional price levels was derived from the regular survey of prices for calculating the Retail Prices Index, augmented by a special survey of prices of goods and services. When allowing for price level variations between nominal and real household income in different regions the greatest impact is on London. In real terms, household incomes in London are 6% lower than in nominal terms, amounting to a reduction of about £12.4 billion.
The Economics of Happiness
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Carol Graham, World Economics, September 2005
The economics of happiness is an approach to assessing welfare that combines economists’ techniques with those of psychologists, and relies on more expansive notions of utility than does conventional economics. Research based on this approach highlights the factors—in addition to income—that affect well-being. It is well suited to informing questions in areas where revealed preferences provide limited information, such as the welfare effects of inequality and of macroeconomic policies such as inflation and unemployment. One such question is the gap between economists’ assessments of the aggregate benefits of the globalization process and the more pessimistic assessments that are typical of the general public. The paper summarizes research on some of these questions, and in particular on those relevant to globalization, poverty, and inequality.
From Big Macs to iMacs
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Jonathan Haskel & Holger Wolf, World Economics, June 2000
The authors review recent international price comparisons to examine the veracity of claims about “rip-off Britain”. They reach three conclusions. First, methodologically, the data requirements for a meaningful price comparison are very demanding and most of the evidence does not meet these standards. Second, price differences within countries seem, in many cases, to be just as high if not higher than price differences between countries. Third, for most goods, the difference between the UK and the rest of the EU seems to be minor relative to the difference between the EU and the United States. The real puzzle is the comparatively high prices in the EU.
False Perspective: The UNDP View of the World
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David Henderson, World Economics, March 2000
Despite some searching and unanswered criticisms of its treatment of statistical evidence, the UNDP Human Development Report has become established as a widely-quoted and influential survey of the world scene. The 1999 Report, reviewed here, focuses on ‘globalization’. This is described as a dominant influence on the recent economic fortunes of developing countries in particular, and as a primary cause of continuing poverty and growing inequality in the world. The author argues that the Report provides neither argument nor evidence in support of this thesis; that it takes no account of other factors that have strongly influenced economic performance; that its main prescription for the world, of reforms in ‘global governance’, is largely beside the point; and that its whole approach is crudely anti-liberal. The author concludes by placing the Report, as also the economists who have aligned themselves with it, in the wider context of anti-liberalism today.

Displaying: 1-8 of 8