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January 16, 2023
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The link between technological change and income inequality is central to the Kuznets hypothesis. In a time of technological transition towards the digitization and intelligentization of manufacturing processes (the fourth industrial revolution), this paper investigates the relationship between economic development and income distribution through the implementation of both a system generalized method of moments (system-GMM) and a semiparametric fixed effects model approach. Based on a panel of 31 European-area countries over a period of 12 years (2007–2018), accounting for the endogeneity bias arising from the transitional dynamics of income inequality and per capita income, our main results confirm the existence of an inverted U-shaped relationship between income inequality and economic development. Moreover, our analysis shows that the change in the share of labour employed in high-tech sectors is the main driver of this evolutionary pattern.
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January 6, 2023
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The Lindahl-Samuelson condition is adapted to derive the range, or interval, of the efficient/Pareto levels of a public good. The size and bounds of the interval are shown to be dependent on the curvature of the marginal rate of substitution functions and the degree of heterogeneity of preferences. A policy implication is that unlike Nash or private provision, the relationship between the efficient level of a public good and income inequality can be ambiguous.
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December 16, 2022
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We show that overconfident individuals are likely to be arrested for public intoxication by using arrest records from a university town police log. This relationship is robust to various control variables such as risk aversion, time discounting, present bias, self-control, selfishness, loss aversion, and socializing with peers arrested for public intoxication. However, this relationship is no longer significant using only self-reported arrest data. We hypothesize that overconfident individuals are likely to underreport their arrests. This result has important implications for the use of self-reported data on public intoxication arrests rather than actual arrest records.
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February 1, 2020
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This paper uses a unique data set on 143,000 poor households from Northern Bangladesh to analyze the effects of microfinance membership on a household’s ability to cope with seasonal famine known as Monga. We develop an identification and estimation strategy that exploits a jump and a kink at the 10-decimal land ownership-threshold driven by the Microfinance Institution screening process to ensure repayment by excluding the ultra-poor. Evidence shows that microfinance membership improves food security during Monga, especially for the poorest households who survive at the margin of one and two meals a day. The positive effects on food security are, however, not driven by higher income, as microcredit does not improve the ability to migrate for work, nor does it reduce dependence on distress sale of labor. The evidence is consistent with consumption smoothing being the primary mechanism behind the gains in food security of MFI households during the season of starvation.