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Sept 25, 2024

Support for universal basic income: A cross-disciplinary literature review

The technological development and the rise of artificial intelligence are driving a significant transformation of the labor market. The technological unemployment predicted by Keynes poses challenges for the global labor market that require new solutions. Basic income research has become a significant field of study, attracting attention from various disciplines such as political science, law, economics, and sociology. The aim of this paper is to explore on the basis of a literature review, what factors influence the support for basic income among the population. A systematic literature review based on the Web of Science and Scopus databases, after screening 2623 publications, identified 23 articles that contained findings relevant to the research question. A significant number of authors (12/23) analyzed data from the same source, the European Social Survey 2016 (ESS Round 8, 2020), conducted in 2016, first published in 2017 and updated several times since then. The paper shows that the study of the topic has a strong European focus. The social, economic, social and cultural diversity of European countries makes these studies important from a European and EU perspective, but from an international perspective, further research on the topic is needed.

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Apr 11, 2019

Rising incomes and inequality of access to infrastructure among Latin American Households

The question of infrastructure needs is a crucial policy one in Latin America, given evidence of large access shortfalls across all major types of infrastructure, and the increase in demand linked to the rapid growth in households’ income over the past two decades. However, how much and how fast countries should invest in each of the main infrastructure areas are largely speculative, as to date, literature on investment needs has relied exclusively on aggregate data and cross-country regressions, ignoring both potential policy and supply-side differences across settings, and variations in demand along the income distribution. This paper addresses these shortcomings, providing building blocks to better assess infrastructure investment needs across the region. It does so documenting access to services and ownership of infrastructure-related durables in the water, energy, telecom, and transport areas, based on harmonized household survey data covering 1.6 million households in 14 Latin American countries from 1992 to –2012. It provides a systematic disaggregation of access and ownership rates at different levels of income and over time, and econometrically derives the country infrastructure premium, a measure of how much a household benefits from simply being located in a given country. Within countries, the results show extensive inequality of access across the income distribution, but this is also the case for households at similar levels of income across countries. Few country fundamentals appear to be significant in explaining this variability, pointing to differences in policy choices and local constraints as important determinants. The paper derives disaggregated income elasticity measures for the full set of infrastructure indicators and uses these to estimate the time that would be needed to close the remaining gap for households at different levels of the income distribution in each country under a “business as usual” hypothesis. Under that scenario, universal access appears to still be decades away for many countries in the region. The last part discusses the policy challenges, arguing that in a context in which public budgets face strong constraints and significant increases in private investment are unlikely to be forthcoming, a large part of the solution lies in refocused investment strategies, better demand management, and improved public spending efficiency.

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Apr 2, 2024

The nonlinear dynamic effect of government expenditure on income inequality: The case of macroprudential policy switching

A panel data analysis of nonlinear government expenditure and income inequality dynamics in a macroprudential policy regime was conducted on a panel of 15 emerging countries from 1985–2019, where there had been a non-prudential regime from 1985–1999 and a prudential regime from 2000–2019. The paper explored the validity of the nonlinearity between government expenditure and income inequality in the macroprudential policy regime as well as the threshold level at which excessive spending reduces income inequality using the Bayesian spatial lag panel smooth transition regression (BSPSTR) and fix effect models. The BSPSTR model was adopted due to its ability to address the problems of heterogeneity, endogeneity, and cross-section correlation in a nonlinear framework. Moreover, as the transition variable often varies across time and space, the effect of the independent variables can also be time- and space-varying. The results reveal evidence of a nonlinear effect between government spending and income inequality, where the minimum level of government spending is found to be 29.89 percent of GDP, above which expenditure reduces inequality in emerging countries. The findings confirmed an inverted U-shaped relationship. The focal policy recommendation is that fiscal policy decisions that will reinforce the need for more emphasis on education and public expenditure on education and health, as important tools for improving income inequality, are crucial for these economies. Caution is needed when introducing macroprudential policies, especially at a low level of government expenditure.

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Jul 16, 2024

Income inequality, governance quality, and environmental degradation in Asian countries: Does interaction of governance quality matter? Evidence from panel data

The objective of this research is to examine the effects of income inequality, governance quality, and their interaction on environmental quality in Asian countries. Time series data are obtained from 45 Asian countries for the period 1996–2020 for this empirical analysis. The research has performed various econometric tests to ensure the robustness and reliability of the results. We have addressed different econometric issues, such as autocorrelation, heteroskedasticity, and cross-sectional dependence, using the Driscoll-Kraay (DK) standard error estimation and endogeneity issues by the system generalized method of moments (S-GMM). The results of the study revealed that income inequality and governance quality have a positive impact on environmental degradation, while the interaction of governance quality with income inequality has a negative effect on it. In addition, economic growth, population growth, urbanization, and natural resource dependency are found to deteriorate the quality of the environment. The findings of the study offer insightful policies to reduce environmental degradation in Asian countries.

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Sept 2, 2024

Evaluating how and why the Government of Rwanda failed to achieve middle-income status (MICS) in 2020: Lessons for other African countries

In the 1960s, many East Asian Tiger countries, such as Taiwan, Malaysia, China, etc., faced unfavourable socio-economic conditions like those facing many African countries such as Rwanda. For example, in the 1960s, Singapore was classified as an undeveloped country, with its GDP per capita standing at less than $320. However, all these countries managed to reach a development level like that of Western and North American countries (such as the U.S. and Canada), within a space of less than 15 years. Today, Singapore’s GDP per capita has risen to an incredible $84,501, making it the sixth highest GDP per capita in the world. With Vision 2020, President Kagame promised that Rwanda, which he referred to as “the African lion”, would cruise faster to the middle-income country status faster than Singapore and other middle income status countries, most of which are in East-Asia in less than 20 years. Thirteen years after the introduction of Rwanda’s Vision 2020, President Kagame dashed off the Wall Street Journal and other western media which often referred to Rwanda’s economic development as “the economic tiger of Africa” in his 2013 famous statement as follows: “There is a view that development is a marathon, not a sprint. We do not agree. Development is a marathon that must be run at a sprint. In our pursuit of progress, we have, of course, looked to East Asia’s so-called “tiger” economies for inspiration. But Africa’s experience is unique, and we must now define our own destiny. So, while being described as an “African tiger” is a welcome recognition of how far Rwanda has come, perhaps it isn’t quite right. After all, our continent has its own big cat. Step forward, the new lions of Africa.”. To achieve this objective between 2000 and 2020, Rwanda’s GDP per capita needed to increase from 254.94 USD (2000) to $1240 (in 2020), and the GDP growth rate was to grow consistently between 7% and 10% for a period of 20 years (2000–2020). The objective of this article is to critically analyse how the Government of Rwanda failed to achieve its promise of achieving a middle-income status (MICS) between 2000 and 2020. In 2000 the Rwandan president Paul Kagame launched Rwanda’s Vision 2020. This was a long-term framework for Rwanda’s development in 20 (i.e., 2000–2020). The idea behind Rwanda’s leadership was to imitate whatever Singapore did to become a developed country in just 15 years after its independence in 1965. Blatantly stated, President Paul Kagame wanted to turn his country into the Singapore of Africa. The IMF states that “Vision 2020 was the longer-term socio-economic development framework that sought to transform Rwanda into a middle-income country by 2020”. There is no doubt that Rwanda has made some developmental strides through the implementation of Vision 2020 as an instrument for operationalisation for the Singaporean-modelled developmental state over the past 20 years and has succeeded in some areas. However, the Government of Rwanda has failed in many areas and has failed to achieve the prestigious MICS in 2020. Therefore, among the many gaps in the current literature that this research seeks close is to find out what were some of the accomplishments that Rwanda’s Vision 2020 was unable to achieve? Why did the Government of Rwanda fail to achieve middle-income status within 20 years? What insights can other developing countries gain from Rwanda’s Vision 2020 experience? This study is a significant contribution to the current theoretical knowledge as it sheds light on the reasons behind the Government of Rwanda’s failure to achieve middle-income country status in 2020, a topic that has been largely ignored by the Government’s documents and the media. Despite Rwanda’s Vision 2020, there has been no scientific study to date that has attempted to deal with this topic. Therefore, this study, titled “Why the Government of Rwanda failed to achieve middle-income status (MICS) in 2020” is likely the first of its kind. By addressing

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Jul 19, 2024

Conservation leads to less income for rural residents? Evidence from a comparison of western and eastern China

Compared with their fellow citizens in the city, rural residents are more likely to be affected by ecological restoration programs and policies. Yet no one has conducted a large-scale study of how ecological conservation impacts rural livelihoods and the economic status of rural households, especially in China. To fill that knowledge gap, I collected and analyzed relevant data from 2007 to 2018 for western and eastern China. I found that the relationship between western China’s green coverage rate and rural income followed an inverted U curve whereas that between its green coverage rate and urban-rural income gap was instead U-shaped, suggesting that ecological restoration has come to eventually negatively impact the economic welfare of rural residents in western China; however, the complete opposite was found in eastern China. Greater urbanization, financial support, and infrastructure such as education, medical, and Internet services would help to improve the current situation in western China. This suggests the government should take actions—such as improving the quality of farmer training to the rural residents and improving infrastructure construction—to help farmers acquire a new source of income and narrow the urban-rural income gap in parallel to implementing ecological restoration projects.

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