GLOBAL INEQUALITY AND ITS IMPLICATIONS (COURSE PUAF699I) UNIVERSITY OF MARYLAND

Transcription

1 GLOBAL INEQUALITY AND ITS IMPLICATIONS (COURSE PUAF699I) UNIVERSITY OF MARYLAND Professor: Branko Milanovic Spring semester 2007 The objective of the course is to give an overview of global inequality (inequality between citizens of the world) and to draw ethical and political implications from these findings. The course is divided into three parts. The first part (lectures 1 and 2) looks at the definition of inequality, its measurement, and the sources of data where we get information on inequality. The second part (lectures 3 to 7) is the core part of the course. It defines the three concepts of (international and global) inequality and reviews how they have evolved over the last fifty years. It addresses the reasons for divergence in mean incomes between countries and reviews the evidence on global (inter-personal) inequality. The third part (lectures 8-12) assesses political and ethical implications of the empirical findings. Can we say that inequalities are too high? Is there causality between global inequality and globalization? Are rich countries (and people) obligated to help poor countries (and people)? Grading: Each student will choose one paper (from the list of readings, or independently after consultation) to present in class. The presentation will count for 25% of total grade. Another 25% will depend on class participation; the in-class final exam will count 50%. All the required readings, marked by *, and most of the others are posted on: (go under COURSES) For consultations: you can see me after class, call, or send office phone: bmilanovic@worldbank.org 1

2 Part 1. What is economic (income/consumption) inequality and how do we measure it? Theme: how income inequality is defined, how it is measured, where we find the data to measure it, and what are key problems with these data 1.1 Absolute or relative inequality? Income or consumption? Per capita or per equivalent adult? (2 required reading) * Angus Deaton (1998), Analysis of Household Surveys, World Bank and Oxford University Press, pages and (section 4.3). * Martin Ravallion (2003), Competing concepts of inequality in globalization debate, World Bank Working paper series No Also, Ravallion, Martin (2004), Competing concepts in inequality debate, Brookings Trade Forum 2004, Brookings Institution: Washington, pp Amiel and Cowell (1996), Thinking about inequality : personal judgment and income distribution, Cambridge: Cambridge University Press. Fields, Gary (2001), Distribution and development, New York, Russell Sage, Chapter 2. Kakwani, Nanak (1980), Income inequality and poverty: Methods of estimation and policy applications, World Bank, Washington. P. Lanjouw, B. Milanovic and Stefano Paternostro (1998), Economies of scale and poverty: the impact of relative price shifts during economic transition, World Bank working paper No. 2009, November Downloadable from Gini coefficient; Lorenz curve. Lorenz dominance, First-order stochastic dominance (0) Shorrocks, Anthony (1983), Ranking Income Distributions, Economica, vol. 50, pp Yitzhaki, Shlomo (1998), More Than a Dozen Alternative Ways of Spelling Gini in Slottje, Daniel J. (ed), Research on economic inequality. Volume 8 (1998): Yitzhaki, S. (1994). Economic Distance and Overlapping of Distributions, Journal of Econometrics, 61, Lambert, Peter and Richard Aronson, 1993 Inequality Decomposition Analysis and the Gini Coefficient Revisited, Economic Journal v103, n420 (September 1993):

3 B. Milanovic (1994), The Gini-type Functions: An Alternative Derivation", Bulletin of Economic Research, 1:1994, pp Milanovic, Branko (1997), "A Simple Way to Calculate the Gini Coefficient, and Some Implications", Economics Letters 56, 1997, pp Esmaiel Abounoori and Patrick McCloughan (2000), Measuring the Gini coefficient: an empirical assessment of non-parametric and parametric methods, mimeo, University of Liverpool, May Frank Cowell (1998), Measurement of inequality, LSE, Distributional Analysis Discussion Paper, 36, STICERD, LSE, Houghton St., London, WC2A 2AE. December 1998, mimeo. 1.4 Sources of inequality data; problems with surveys (compliance, imputation of income, reference period) (1 required reading) * Angus Deaton (1998), Analysis of Household Surveys, World Bank and Oxford University Press, sections 1.1 and 1.2 Davies, J.M. and Shorrocks A.F. (1989), Optimal grouping of income and wealth data, Journal of econometrics, vol. 42, 1989, pp Mistiaen, Johan and Martin Ravallion (2003), Survey compliance and the distribution of income, World Bank Working Paper No. 2956, January. Also, Korinek, Mistiaen and Ravallon (2006), Survey nonresponse and the distribution of income, Journal of Economic Inequality, vol. 4, pp Where to find the data: [Example of HEIDE data base and definitions; see LIS: Africa: Poverty monitoring database: World Bank LSMS: Recent advances in data collection: Squire-Deininger WIDER data set downloadable from 3

4 Part 2. International and Global Inequality Theme: what happened to inequality between mean incomes of the countries in the last fifty years; how big is inequality between world citizens today, has it changed since the 1980s; and why China and India are so important for this debate 2.1 Convergence vs. divergence (in the past, ; and present, since 1950) (2 required readings) * Branko Milanovic, Worlds Apart: Measuring International and Global Inequality, Princeton: Princeton University Press, 2005 (paperback), chapters 4, 5. * Islam, Nazrul (2003). What Have we Learnt from the Convergence Debate?, Journal of Economic Surveys, vol. 17, No. 3, pp Baumol, William (1986), Productivity Growth, Convergence, and Welfare: What the Long-run Data Show, American Economic Review, vol. 76, December, pp Barro, Robert and Xavier Sala-i-Martin (1992), Convergence, Journal of Political Economy, vol. 100 (2), pp Pritchett, Lant (1997), Divergence, Big Time, Journal of Economic Perspectives, vol.11, No. 3, pp Quah, Danny (1996), Empirics for Economic Growth and Convergence: Stratification and Convergence Clubs, European Economic Review, vol. 40, pp Quah, Danny (1993b), Galton s Fallacy and Tests of the Convergence Hypothesis, Scandinavian Journal of Economics, December 1993, vol. 94, no. 4, pp Lucas, Robert (1998), The Industrial Revolution: Past and Future, University of Chicago, mimeo. Romer, Paul (1994), The origins of endogeneous growth, Journal of Economic Perspectives, vol. 8, No. 1, pp DeLong, Bradford and Steve Dowrick (2003), Globalization and convergence, Ch. 4 in M. Bordo, A.M. Taylor and J. Williamson (eds.), Globalization in Historical Perspective, Chicago: Chicago University Press. B. Milanovic (2006), Economic integration and income convergence: not such a strong link?, Review of Economics and Statistics, vol. 88, No, 4, November pp WHERE TO FIND THE DATA: Maddison, Angus (2004), World population, GDP and GDP per capita, AD. Available at 4

5 Maddison, Angus (1995), Monitoring the World Economy, , Paris:OECD. Maddison, Angus (2001), The World Economy: A Millennial Perspective, Paris: OECD Development Centre Studies. Maddison, Angus (2003), The World Economy: Historical Statistics, Paris: OECD Development Centre Studies. 2.2 Global income inequality: what it is and why it matters? (7 required readings) * B. Milanovic, Worlds Apart: Measuring International and Global Inequality, Princeton: Princeton University Press, 2005, Chapters 1-3, 9 and 10. * B. Milanovic, Global income inequality: what it is and why it matters, in World Economics, vol. 7, No. 1, January-March Milanovic, Branko (2002), True world income distribution, 1988 and 1993: First calculations based on household surveys alone, Economic Journal, vol. 112, No. 476, January, pp Sala-i-Martin, Xavier (2002), The Disturbing Rise of World Income Inequality, NBER Working paper No. 8904, April. Available at Also, The world distribution of income: fallimg poverty and convergence, period, Quarterly Journal of Economics, no. 2, 2006, p * Sudhir Anand and Pauil Segal, (2007), What do we know about global income inequality? Journal of Economic Literature, forthcoming. Milanovic, Branko (2002a), The Ricardian vice: Why Sala-i-Martin s calculations of world income inequality are wrong, mimeo. Available on * Atkinson, Anthony B. and Andrea Brandolini (2004), Global world inequality: Absolute, relative or intermediate, Paper prepared for the 28 th Conference of the International Association for Research in Income and Wealth, Cork, Ireland, August 22-28, Bhalla, Surjit (2002), Imagine There is No Country, Washington, D.C: Institute for International Economics. Boltho, Andrea and Gianni Toniolo (1999), The assessment: the twentieth centuryachievements, failures, lessons, Oxford Review of Economic Policy, vol. 15 (Winter), No. 4, pp * Bourguignon, Francois and Christian Morrisson (2002), The size distribution of income among world citizens, , American Economic Review, September, pp * Capeau, Bart and Andre Decoster (2004), The rise or fall of world inequality: A spurious controversy, WIDER Discussion paper No. 2004/02. Available at 5

6 Dowrick, Steve and Muhammed Akmal (2001), Contradictory trends in global income inequality: A tale of two biases, draft 29 March 2001, available from published in Review of Income and Wealth, June 2005, vol. 51, No. 2, pp Sutcliffe, Bob (2003), A more or less unequal world? World income distribution in the 20 th century, University of Massachusetts Amherst, Political Economy Research Institute, Working Paper Series, No. 54. Published as World Inequality and Globalization, Oxford Review of Economic Policy, vol. 20, No. 1, pp Svedberg, Peter (2003), World income distribution: which way, Institute for International Economic Studies, Stockholm. Published in Journal of Development Studies, vol. 40, No. 5, June 2005, pp * B,. Milanovic, Globalization and Goals: Does soccer Show the Way?, Review of International Political Economy, vol. 12, No.5, December 2005, pp WHERE TO FIND THE DATA: World Income Distribution (WYD) data set (household survey data for three benchmark years, 1988, 1993, 1998) The role of China and India in global income distribution (3) * Branko Milanovic, Worlds Apart: Measuring International and Global Inequality, Princeton: Princeton University Press, 2005, Chapter 8. Deaton, Angus (2003), Measuring Poverty in a Growing World (or Measuring Growth in a Poor World), NBER Working Paper 9822, June. Available at Also in Review of Economics and Statistics, Review of Economics and Statistics, vol. 87: , Ravallion, Martin (2000), Should poverty measures be anchored to the national accounts? Economic and Political Weekly, 34 (August 26), pp Brandt, Loren and Carsten Holz (2006), Spatial price differences in China: Estimates and implications, Economic Development and Cultural Change, forthcoming. Available at * Deaton, Angus and Jean Drèze (2002), Poverty and inequality in India: A re-examination, Economic and Political Weekly, September 7, 2002, pp Jiang Zhiyong (2006), China component in international income inequality, Population Research and Policy Review, forthcoming. Availabler at my Website. * Ravallion, Martin and Shaohua Chen (2006). China s (uneven) progress against poverty, Journal of Development Economics, forthcoming. Also, World Bank Working Paper No

7 Part 3. Global Distributive Justice Theme: Yes, there are large inequalities between people in the world, but should something be done about it, and if so, what and how? 3.1 Does global difference principle apply? (4 required readings) * Rawls, John (1999), The law of peoples, Cambridge, Mass.: Harvard University Press, pages Singer, Peter (2002), One World: The Ethics of Globalization. New Haven, USA: Yale University Press. Beitz, Charles (1999), Political theory and international relations, Princeton, N.J.: Princeton University Press, part III. *Beitz, Charles (2000), Rawls law of peoples, Ethics, vol. 110, No. 4, July 2000, pp * Nagel, Thomas (2005), The problem of global justice, Philosophy and Public Affairs, vol. 35, No. 2, pp Pogge, Thomas (1994), An Egalitarian Law of Peoples, Philosophy and Public Affairs, vol. 23, No. 3 (Summer), pp * Wenar, Leif (2006), Why Rawls is not a cosmopolitan egalitarian, in R. Martin and D. Ready (eds.), Rawls Law of Peoples : A realistic utopia?, Blackwell. David Held (2004), Global Covenant: the social democratic alternative to the Washington consensius, London: Polity Press. 3.2 How can it be done? (2) Jomo, K.S. (2002), Globalisation for Whom? A World for All, Ishac Shari Memorial Lecture at the Institut Kajian Malaysia dan Antarabangsa (IKMAS), Bangi, Selangor, Malaysia, delivered on June 11, Available at Risse, Mattias (2005), How does global order harm the poor, Philosophy and Public Affairs, vol. 33, No. 4 (Fall), pp * B. Milanovic (2006), Ethical case and economic feasibility of global transfers. See my Website. * Bourguignon, Francois, Victoria Levin and David Rosenblatt (2006), Global redistribution of income, World Bank Policy Research Working Paper No. 3961, July Freeman, Richard (2006), People flows in globalization, National Bureau of Economic Research Working Paper No

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