Income distribution and financial satisfaction between spouses in Europe

The article analyses the distribution of income between spouses and the consequences for their financial satisfaction within different welfare regimes. We find that the financial satisfaction of husbands declines and that the financial satisfaction of wives increases the more a wife earns relative to her husband. However, the relationships are often of an inversed U-shaped form for both sexes, with men achieving the highest satisfaction at an earlier stage than women. Within the Scandinavian welfare state regime this optimal distribution is found closer to the actual income distribution than in the continental European and liberal regimes, and in the southern European regime the optimal distribution is far from being achieved.     

Financial satisfaction over the life course: The influence of assets and liabilities

Various studies have shown that financial satisfaction is, among other domains, an important determinant of overall individual well-being. Contrary to the common belief that financial satisfaction mainly depends on an individual’s income, evidence for the US indicates that life course financial satisfaction steadily increases from the thirties onwards, whereas life course income shows an inverted U-pattern with a peak at midlife. To judge from other studies in the US and Norway, this pattern for financial satisfaction is not unique. The aim of the present analysis is to explore the determinants of this life course financial satisfaction pattern, taking into account not only income but also the possible impact of assets and liabilities. The analysis suggests that while income has the expected positive relation, increasing financial satisfaction at older age can be partly explained by decreases in liabilities and increases in financial assets, and that assets and liabilities considered separately provide a better explanation than net wealth. In addition, reduction in the dependency burden at old age leads to increased financial satisfaction while the deterioration of health has a negative impact. The data are from the second and third waves of the US National Survey of Families and Households.     

Interhousehold grants in peninsular Malaysia: Impact of grantors' characteristics on amount of grants given

Grants of money, goods, and services are one-way transfers between households. Tobit analysis reveals that race, household structure, household income, transportation resources (viz., vehicles owned), goods and service grants received, husband's education, and stock of small animals owned (viz., a common commodity gift in Malaysia) are characteristics of granting households that are influential in determining the amount of grants given. The incidence of granting is substantially lower among Indian than among Chinese or Malay households, although Indian households give the highest mean amount of grants. Multivariate analysis reveals that, other factors held constant, Malay households are the most generous and Indian households the least so in giving interhousehold grants. When giving of grants is conceptualized as a consumption expenditure, granting is observed to have a relationship to income similar to that of necessities rather than luxury goods.His areas of research interest are grants economics, labor economics, welfare economics, and consumer rights and protection. He received his Ph.D. in Consumer and Family Economics from the University of Missouri.His research interests include various aspects of social policy and family economic circumstances and functioning. He received his Ed.D. from the University of Missouri.     

THE OPTIMAL TAXATION OF ASSET INCOME WHEN GOVERNMENT CONSUMPTION IS ENDOGENOUS: THEORY,ESTIMATION AND WELFARE

This paper derives the Ramsey optimal fiscal policy for taxing asset income in a model where government expenditure is a function of net output or the inputs that produce it. Extending work by Kenneth L. Judd, I demonstrate that the canonical result that the optimal tax on capital income is zero in the medium to long term is a special case of a more general model. Employing a vector error correction model to estimate the relationship between government consumption and net output or the factor inputs that generate it for the United States between 1948Q1 and 2015Q4, I demonstrate that this special case is empirically implausible, and show how a cointegrating vector can be used to determine the optimal tax schedule. I simulate a version of the model using the empirical estimates to measure the welfare implications of changing the tax rate on asset income, and contrast these results with those generated in a version of the model where government consumption is purely exogenous. The shifting pattern of welfare measurements confirms the theoretical results. I calculate that the prevailing effective tax rate on net asset income in the United States between 1970 and 2014 averaged 0.449. Hence abolishing the tax completely does generate welfare improvements, though only by the equivalent of between 1.103% and 1.616% permanent increase in consumption—well under half the implied welfare benefit when the endogeneity of the government consumption is ignored. The maximum welfare improvement from shifting part of the burden of tax from capital to labor is the equivalent of a permanent increase in consumption of between only 1.491% and 1.858%, and is attained when the tax rate on asset income is lowered to between 0.148 and 0.186. Allowing the tax rate to vary over time raises the maximum welfare benefit to 1.865%. All the results are very robust to a wide range of elasticities of labor supply. (JEL E62, H21, H50)     

Household consumption: Influences of aspiration level, social comparison, and money management

The present research posits and tests a model of household consumption of less necessary or luxury goods and services. It is hypothesized that a household's economic situation has a direct effect on this consumption as well as indirect effects mediated by aspiration level, social comparison and money management. Structural equation modeling of questionnaire data from a sample of households in a metropolitan area of Sweden (n=411) was used to test the model. The results reveal that as expected the household's economic situation has a significant direct effect on consumption and indirect effects through aspiration level and social comparison. The results also show that satisfaction with consumption increases with increased consumption and decreases with higher aspiration levels.     

The welfare impact of microcredit on rural households in China

Microcredit has gained worldwide acceptance in recent years as a flexible mechanism to expand individuals’ (especially the poor's) access to financial services, which is considered as an efficient way to achieve poverty reduction and other social development. A large number of empirical studies have been done to examine the welfare effects of microcredit on the borrowers and such effects are well documented in many other countries such as Bangladesh. However, the impacts of microcredit on China rural households’ livelihood are not well documented. This paper attempts to empirically evaluate the impact of microcredit on household welfare outcomes such as income and consumption in rural China. The estimation is based on the difference-in-difference approach which is an increasingly popular method of tackling the selection bias issue in assessing the impacts of microcredit. The study uses a two-year panel dataset, including both primary and secondary data collected through a household survey in rural China. Our empirical results favour the wide belief in the literature that joining microcredit programme helps improve households’ welfare such as income and consumption. Despite the optimistic findings on how microcredit has changed the rural households’ living conditions, our results show that the vast majority of the programme participants are non-poor, which casts some doubts on the social potential (such as poverty reduction) of China's microcredit programmes.     

Intra-household inequality in transitional Russia

The paper proposes an original strategy for analyzing household sharing of income and satisfaction. Using two different subjective questions from the Russian data RLMS (Russia Longitudinal Monitoring Survey), we assume a correspondence between, first, the perception of income that household members report and their true income sharing, and, second, between their answer to a satisfaction question and their utility. We show that answers given by different members of the household bring pertinent information on income sharing and utility in the household. In particular, we find a significant effect of the female–male wage ratio in reported income perception and satisfaction differentials between household members. Our data covers the transition period (1994–2003) characterized by massive economic and social changes in Russia. We investigate the evolution of intra-household welfare distribution by exploiting the episode of the financial crisis of 1998 to distinguish two periods: pre- and post-crisis. Our empirical strategy consists of applying probit-type models allowing the parameters to change in a discrete manner between two periods and accounting for discrete unobserved heterogeneity.     

Relationships between work–life balance and job-related factors among child welfare workers

This study examined the relationships between work–life balance and several job-related factors among 573 public child welfare workers in a northeastern state in the United States of America. It explored job-related correlates of work–life balance and the possible mediating role of work–life balance between these factors and job satisfaction. Multiple regression analysis demonstrated that the job-related factors organizational support, job value, work time, and income were significantly associated with work–life balance among child welfare workers. It also confirmed that work–life balance partially mediated the associations of organizational support and job value with job satisfaction. Implications for child welfare research, policy, and practice are proposed based on the empirical findings.     

Popular support for social evaluation functions

This paper provides sufficient conditions under which the preferences of a social decision maker accord with majority voting. We show that an additive and monotone utilitarian social evaluation function is consistent with the outcomes of majority voting for the class of income distributions that are symmetric under a strictly increasing transformation. An example is the lognormal distribution. The required symmetry condition is generally accepted employing panel data for 116 countries from the World Bank’s POVCAL database.In this manner, the proposed methodology provides the consistent degree of inequality aversion and shows that median income is a good proxy for welfare.     

Life satisfaction,income and personality

We use personality traits to better understand the relationship between income and life satisfaction. Personality traits mediate the effect of income on life satisfaction. The effect of neuroticism, which measures sensitivity to threat and punishment, is strong in both the British Household Panel Survey and the German Socioeconomic Panel. Neuroticism increases the usually observed concavity of the relationship: individuals with a higher neuroticism score enjoy extra income more than those with a lower score if they are poorer, and enjoy extra income less if they are richer. When the interaction between income and neuroticism is introduced, income does not have a significant effect on its own. To interpret the results, we present a simple model based on Prospect Theory, where we assume that: (i) life satisfaction is dependent on the gap between aspired and realized income, and this is modulated by neuroticism and (ii) income increases in aspirations with a slope less than unity, so that the gap between aspired and realized income increases with aspirations. From the estimation of this model we argue that poorer individuals tend to over-shoot in their aspirations, while the rich tend to under-shoot. The estimation of the model also shows a substantial effect of traits on income.     

Human development and the optimal size of government

Previous studies have found evidence for an optimal size of government with respect to GDP growth. In this paper, I look at the impact of the size of government consumption expenditures on social welfare as measured by the Human Development Index. Utilizing dynamic GMM estimation in a panel data framework, I find that evidence for an optimal size of government with respect to social welfare.     

Income Satisfaction Inequality and its Causes

In this paper, the concept of Income Satisfaction Inequality is operationalized on the basis of individual responses to an Income Satisfaction question posed in the German Socio-Economic Panel (GSOEP). Income satisfaction is the subjective analogue of the objective income concept. The paper introduces a method to decompose Income Satisfaction Inequality according to the contributions from variables such as income, education, and the number of children. Given the panel structure of the data, inequality may be attributed partly to permanent individual circumstances and partly to transitory changes. The paper shows that by far the largest part of the satisfaction inequality has to be ascribed to unobserved heterogeneity. Distinguishing between a structural and an unexplained part of inequality we find that income explains the largest part of structural Income Satisfaction Inequality together with household membership; for non-working individuals, the age distribution is very relevant as well.     

A panel data analysis of the impact of trade on human development

Arguments for a positive link between trade and per-capita income are often met with the counterargument that “there is more to life than income”—the implication being that trade improves income, but degrades “quality of life.” In this paper, we attempt to address this counterargument by examining the impact of trade on countries’ social developments as measured by the Human Development Index (HDI)—a composite measure of education, literacy, and income published by the United Nations Development Programme. Utilizing a generalized method of moments (GMM) procedure in a panel data framework, we find that increases in trade are positively associated with future increases in social welfare.     

The Sociology of Unequal Exchange in Ecological Context: A Panel Study of Lower‐Income Countries, 1975–20001

The structural theory of ecologically unequal exchange posits that through the vertical flow of exports from lower‐income countries, the stratified world economy enables higher‐income countries to misappropriate global environmental space. Tied to their unsustainable consumption levels, this misappropriation by higher‐income countries leads to the suppression of resource consumption in lower‐income countries, well below globally sustainable thresholds, which negatively impacts the well‐being of domestic populations. To evaluate key aspects of the theory, I test the hypothesis that lower‐income countries with elevated levels of exports sent to higher‐income countries exhibit lower consumption‐based environmental demand, measured as per‐capita ecological footprints. Findings for generalized least squares panel regression analyses of 66 lower‐income countries from 1975 to 2000 confirm the hypothesis, providing support for the theory. Additional results indicate that the strength of the hypothesized relationship increased in magnitude during the 25‐year period. These findings hold, net of the effects of economic development, ecological conditions, and other structural factors.     

Linking worker-parent working alliance to parent progress in child welfare: A longitudinal analysis

Using a national data set of child welfare cases, we asked how parent progress in a case plan was related to four factors: collaborative engagement, child welfare history, parent characteristics, and social worker characteristics. Our secondary analysis employed a sample extracted from nationally representative longitudinal records of 3185 children and their parents. Results of generalized least squares random-effects modeling showed that parent progress was associated positively with five specific variables: collaborative engagement, maintenance of effective working relationship, parent receipt of assistance in achieving goals, parent satisfaction with collaborative engagement, parent Hispanic ethnicity, and child welfare worker with MSW or degree in other major. Associated negatively with parent progress were parent receipt of assistance with obtaining needed services, out-of-home placement, multiple problems, and family income. Practice implications are discussed.     

EVALUATING CHANGES IN THE DISTRIBUTION OF CAPITAL WEALTH

A small-scale general equilibrium model in which the distribution of capital wealth is a key parameter is employed to examine the potential economic consequences of greater capital wealth equality. Every performance indicator examined – aggregate income, consumption equality, social welfare in the sum-of-utilities sense, and aggregate saving –is improved by greater capital wealth equality. However, the bottom-line social welfare gain, relative to the present high-inequality situation – even from the maximum achievable level of complete equality in capital wealth distribution – would be numerically rather modest.     

MEASURING THE WELFARE GAIN FROM PERSONAL COMPUTERS

The welfare gain to consumers from the introduction of personal computers (PCs) is estimated. A simple model of consumer demand is formulated that uses a slightly modified version of standard preferences. The modification permits marginal utility, and hence total utility, to be finite when the consumption of computers is zero. This implies that the good will not be consumed at a high enough price. It also bounds the consumer surplus derived from the product. The model is calibrated/estimated using standard national income and product account data. The welfare gain from the introduction of PCs is 2%–3% of consumption expenditure. (JEL E01, E21, O33, O47)     

HOW DOES GLOBALIZATION AFFECT THE IMPLICIT TAX RATES ON LABOR INCOME,CAPITAL INCOME,AND CONSUMPTION IN THE EUROPEAN UNION?

This article analyzes the effects of globalization on implicit tax rates (ITRs) on labor income, capital income, and consumption in the EU15 and Central and Eastern European New Member States (CEE NMS). We find supportive evidence for an increase in the ITR on labor income in the EU15, but no effect on the ITR on capital income. There is evidence of convergence in terms of the ITR on consumption, as countries with higher than average ITR on consumption respond to globalization by decreasing their tax rates. There are important differences among the welfare regimes within the EU15. Social‐democratic countries have decreased the tax burden on capital, but increased that on labor due to globalization. Globalization exerts a pressure to increase taxes on labor income in the conservative and liberal regimes as well. Taxes on consumption decrease in response to globalization in the conservative and social‐democratic regimes. In the CEE NMS, there is no effect of globalization on the ITR on labor and capital income, but we find a negative impact on the ITR on consumption in the CEE NMS with higher than average ITR on consumption. (JEL H23, H24, H25, F19, F21)     

Child welfare clients and school satisfaction

Despite long-standing knowledge about child welfare clients' poor educational outcomes, we know less about these vulnerable young people's situation in school. This article addresses school satisfaction among upper secondary students who have been in contact with the child welfare services. These child welfare clients' school satisfaction is compared with their peers' satisfaction. The results from a survey indicated that the majority of child welfare clients were satisfied with school but that they were less satisfied with school than were their peers. The results showed that the association between school satisfaction and positive school experiences explains a large part of this difference. Among students who reported they were doing well in school, had supportive teachers and friends at school, the difference in school satisfaction between child welfare clients and others was small. Among students who did not report similar positive experiences in school, difference in school satisfaction between child welfare clients and their peers was more substantial. These results show that school can be a good place for child welfare clients, but that facilitating support from teachers, increasing opportunities for making friends at school, and working to develop the child welfare clients' academic performances are important as efforts to improve school satisfaction.     

Life cycle welfare: evidence and conjecture

At a point in time subjective well-being is positively related to income; over the life course subjective well-being is constant despite substantial growth in income. This paradox is explained by new evidence on consumption aspirations. At a point in time aspirations vary fairly little by income level; over the life cycle, aspirations increase about in proportion to income. These shifts in aspirations also affect assessments of past and future well-being in such a way that the choices underlying behavior (based on what psychologists call “decision utility”) turn out not to have their expected welfare effects (experienced utility). Of the two influences shaping consumption aspirations – comparisons with others and with one’s past experience – the former appears more salient early in the life cycle and the latter, later on.