Adjustment costs in labour markets and the distributional effects of trade liberalization: Analytics and calculations for Vietnam

This paper explores the implications of different labour market adjustment formulations for the analysis of trade liberalization across different sectors and households in the Vietnamese economy using computable general equilibrium (CGE) models. The model is calibrated to a model admissible Vietnamese data set for 1997.We use five different adjustment cost treatments in analyzing the effects of trade liberalization in Vietnam. We compare simulation results from each and show how different treatments can significantly affect the distributional impacts of policy reforms, such as the trade liberalization. First, labour is treated as fully mobile across all sectors in the economy. Second, the sectors of economy are broken down into the two blocks of agricultural and industrial-service sectors and labour markets are treated as segmented by sector block. No mobility of labour between blocks is allowed while labour within each sector block remains fully mobile. The third is the same as the second, but movement within each agricultural and industrial-service sector block involves transactions costs. In the fourth, mobility of workers from the agricultural to industrial-service sectors and vice versa is possible with transactions costs. Finally, we calibrate the model with unemployment but no adjustment costs for labour reallocation to explore how model results differ in terms of adjustments in the labour market and welfare effects.Our results indicate significant differences in the impacts from trade liberalization across these cases. The redistributional impact of trade liberalization is sharper against poor rural households with segmented labour markets and with transactions costs, while aggregate efficiency gains are similar to no adjustment cost analyses. The conclusion is the choice of model structure for labour markets is crucially important for the perceived distributional impacts of trade liberalization.     

Impacts of off‐farm employment on welfare,food security and poverty: Evidence from rural Vietnam

How off‐farm employment can enhance welfare in terms of food consumption and poverty alleviation is a critical question facing many developing countries. This study addressed that question by pursuing two objectives: (i) to quantify the impact of off‐farm employment on rural households’ welfare, food security and poverty; and (ii) to examine the factors that affect their decision to work off‐farm. Using panel data, we estimated a difference‐in‐difference combined with a propensity score matching model. The findings show that off‐farm employment improves income, ensures food security and contributes to poverty alleviation. The results also show that age, marital status, education, labour, financial capital, land, location, market access and losses from natural disasters are significant contributing factors to the decision to participate in off‐farm employment. The findings suggest that to improve the welfare of rural households, the Vietnamese government should proceed with policies that enhance their opportunities for participation in off‐farm employment.     

Clean cooking energy transition in Nigeria: Policy implications for Developing countries

Lack of access to clean cooking energy systems negatively affects the health and welfare of millions of people in developing countries. Different factors such as household income, household size, fuel price, and information spread have been identified as barriers to the widespread uptake of clean cooking systems. However, analyses exploring the dynamic influences of these factors towards accelerating clean cooking from the long-term perspective are limited. Here, we employ a system dynamics modelling framework to simulate how various strategies could affect the adoption of clean cooking systems in Nigeria over time. Our results reveal that clean cooking adoption is a fluctuating process, and the trends present a non-linear behaviour. We found that the adoption of clean cooking energy systems would occur faster early in the simulating year among urban households than in rural households. The results indicate that, at low prices of liquefied petroleum gas, many rural households will switch to clean cookstoves with higher adoption rates than consumers in urban households. Additionally, results from baseline scenario analysis revealed that, without significant policy interventions, not all households would switch to clean cooking. Our analysis further indicates that households with fewer members tend to transition quicker to clean cooking options than larger households. The impact of clean cooking due to communication among households would be more significant among rural households than among urban households. While the model results are perceptive, we emphasise that potent policies are needed to accelerate the diffusion and adoption of clean cooking energy systems in Nigeria and other African countries.     

Free riders and the redistributive effects of international commodity agreements: The Case of Coffeee

Most studies on the redistributive effects of international commodity agreements neglect the existence of free riders. This article shows, however, that incentives for a free rider behavior may exist under various systems of commodity control. The International Coffee Agreement includes an export quota scheme that is faced with free riders on the import side. The factors that determine the impacts of such a scheme on prices, trade, earnings, and expenditures on the world market and on welfare of importing nonmember countries are elaborated theoretically. An econometric model of the world coffee market is then used to measure the effects of coffee export quotas on different variables of the world market. By use of estimated national import demand functions for coffee, the national welfare gains of importing nonmember countries due to the quota policy of the International Coffee Agreement are also computed.     

Poverty eradication programs in Indonesia: Progress,challenges and reforms

This study explores the progress of and the challenges to poverty eradication programs in Indonesia by analyzing various social assistance programs and subsidies. Earlier poverty eradication programs such as food-based assistance and energy subsidies were only designed to increase households’ purchasing power. Later, the government also developed more advanced programs, such as conditional cash transfer, school assistance, and health insurance contribution assistance, to address long-run poverty by improving human capital quality. Common challenges of the existing programs remain, including inaccurate target the poor and lack of complementarity between programs. An exercise using a dynamic Computable General Equilibrium model shows that integrating programs into the conditional cash transfer reduces poverty further in rural and urban areas.     

The microeconomics of distribution: A simulation of the farm economy

A simulation model that incorporates both production and consumption behavior of farm households in Taiwan is presented. The model is used to analyze the effects of policy instruments (price supports, minimum wages, taxes, subsidies, demographic policies, and land and capital redistribution) on the aggregate values of the endogenous variables of the system—the supplies of output and labor, the demands of factors and consumption, income and expenditure—and their distribution among households. The model differs from other simulation models in that it is based on microsimulation, in which the joint distribution of individual household characteristics such as farm-specific prices, initial endowments of land and capital, and numbers of workers and dependents, is explicitly taken into account. As a result, the model is capable of capturing the distributional as well as aggregate impacts of policy changes.     

Stable International Environmental Agreements with a Stock Pollutant,Uncertainty and Learning

In this paper I address the question of how uncertainty about damage costs and the possibility of resolving that uncertainty in the future affects the incentives for countries to join an international environmental agreement. I use a two-period model with a stock pollutant where the number of countries generating pollution can be arbitrarily large. The stability concept employed is such that size of the stable IEA can be anywhere between 2 and the grand coalition of all countries depending on parameter values. The dynamic structure allows two different membership rules for an IEA: fixed (countries commit at the outset to be members for both periods) or variable (countries decide each period whether to join). I show that with fixed membership learning results in at least as high membership and global welfare as no learning (unless both the expected value and variance of damage costs are high). With variable membership, learning leads to higher membership (in the second period) but lower global welfare than no learning. For most parameter values variable membership results in higher global welfare than fixed membership.     

Public Opinion against Markets? Attitudes towards Market Distribution of Social Services – A Comparison of 17 Countries

This article studies how citizens view the appropriateness of market criteria for allocating services commonly associated with social citizenship rights and welfare state responsibility. The article focuses specifically on a potential role for the market in the provision of social services. The relationship between welfare policy institutions, socio‐economic class and attitudes is explored by comparing attitudes across 17 countries of the Organisation for Economic Co‐operation and Development, using multilevel modelling and data from the 2009 International Social Survey Programme. Results show that public support for market distribution of services is relatively weak in most countries, a result suggesting that public opinion is unlikely to pose a driving force within ongoing processes of welfare marketization. Still, attitudes are found to vary a lot across countries in tandem with between‐country variation in welfare policy design. First, aggregate public support for market distribution of services is stronger in countries with more private spending on services. Second, class differences in attitudes are larger in countries with more extensive state‐led delivery of services. Together, these results point to the operation of normative feedback‐effects flowing from existing welfare policy arrangements. The theoretical arguments and the empirical results presented in this article suggest that future research exploring the relationship between welfare policy and public opinion from a country‐comparative perspective is well advised to place greater focus on the market institutions that, to varying extents in different countries, act as complements to the state in the administration of social welfare.     

Agricultural economic reforms,gender inequality and poverty in Senegal

In Senegal, as in many developing countries, the agricultural sector plays a key role in the economy. In addition to supplying food, agriculture is the most important source of employment, especially for women. Through the Plan for an Emerging Senegal (PES), the Senegalese government is implementing an ambitious financing plan to improve the productivity of the agricultural sector and enhance employment opportunities for women. Our study assesses the impact of two PES measures (investment subsidies and an increase in production subsidies for the agricultural sectors) on economic growth, women's employment, poverty and inequality using a dynamic computable general equilibrium model linked to a microsimulation model. The results show that both policies have generally positive effects in reducing poverty and gender inequalities. However, investment subsidies in the agricultural sectors have stronger impacts in reducing gender inequality and poverty in the long term.     

Public assistance in urban and rural China: A tale of two stories

China's public assistance system has been urban–rural divided ever since its implementation in the 1990s. Despite the intention in recent years to promote an integrated public assistance system, there has been little empirical research that has systematically examined the differences between urban and rural areas. Moreover, research has focused mostly on the Minimum Living Assurance system (“Dibao”), paying little attention to other types of public assistance. This study contributes to filling this gap by analyzing a recent data set collected primarily from two Chinese provinces. The findings show substantial differences in the amount of public assistance received by urban and rural low‐income households, even after controlling for demographic and socioeconomic factors. Compared with urban recipient households, rural recipient households have disproportionally lower public assistance benefits and higher medical costs relative to their household expenditure, which suggests that assistance inadequacy is especially prominent among rural households. Policy implications are discussed.     

Poverty and social conditions in Poland during the transformation to a market economy

The social welfare system in Poland was changed during the 1990s. The full employment policy, as a guarantee for social security, was abandoned and the institutions through which social resources were distributed were replaced. State-owned enterprises previously fulfilled certain social functions; the necessary resources came from state subsidies and from obligatory funds: housing and social funds as well as a proportion of wage costs. Thus, the prices of many types of important consumption goods (such as food and housing) were fixed at a relatively low level. The elimination of subsidies resulted in the bankruptcy of many state-owned enterprises which, in turn, led to the diminished importance of the social security function of industrial enterprises. Their role in the newly created social welfare system was taken over by social welfare centers, through which assistance was distributed to those in need. Besides the traditional recipients of social assistance, a growing number of unemployed people, who comprise approximately 14% of the productively active citizens, have also begun collecting assistance.     

Rural development under the European CAP: The role of diversity

Achieving optimal diversity at community level is a key in solving the rural development problem. In this essay rural development at community level and the impact of Common Agricultural Policy (CAP) reforms are analyzed in the framework of privately provided public goods models. It is shown that CAP support redistribution inducing diversification of community activities across households can potentially have important positive impact on rural development and household welfare.     

The East Asian welfare model

This article aims to outline main features of the East Asian welfare model, to understand its past development and assess lessons that can be learned for other developing and developed countries. It describes the particular path of welfare state development in Japan, South Korea, Taiwan, Hong Kong and Singapore, by focusing particularly on developmental and political aspects of welfare state development. In the final part of the study, particular features of the East Asian welfare model are outlined, and thus the existence of a distinct, ideal-typical welfare regime in East Asia substantiated.     

Chinese Workfarism: Logics and Realities of the Work–Welfare Governance Model

Given the fundamental disparities between China and the west in political structures, social values, policy regimes, and problem loads, it is meaningful to use “workfare” as a challenging analytical standpoint and detect that China had created unique workfare regimes to build up the past state‐socialism and the present market‐socialism. In the era of state‐socialism, the dual‐track welfare system, apparently adopting an institutional approach to the city and a residual approach to the countryside, was purposely integrated with the segregated urban‐rural work system, constituting a China‐specific workfare regime in which the whole workforce was included and effectively organized into the socio‐economic order. Under market‐socialism that appears as an awkward hybrid, the work‐welfare governance model is being gradually transformed into a pragmatic, much marketized one, though without idealogical legitimacy as well as a clear‐cut vision. On the one hand, employment differentiation and income disparity resulted from a strategic shift from the “reform‐without‐losers” stage to the “reform‐with‐losers” stage in the labor market, together with a large scale rural‐to‐urban labor migration, are structuring a market‐oriented, stratified employment system. On the other hand, while being a welfare laggard, China's productivist, status‐segregated welfare system is taking shape owing to a set of welfare reforms along the line of marketization and societalization. All these changes would imply that China is converging towards a neo‐liberal regime in which the role of the state is residual to the market.     

Should trade barriers be phased-out slowly? A case study of North America

A dynamic computable general is developed to analyze the effects of different phase-in rates of the Canada–US and North American Free Trade Agreements on their member countries, as well as the impact on the rest of their trading partners. The model is based on intertemporal optimization behavior of households and firms with fully specified countries/regions in which all prices and quantities are endogenously determined. I show that the size and the distribution of the welfare gains from these trade agreements are quite sensitive to the speed of trade liberalization. In particular, I find as a general rule that smaller member countries are better off under a more rapid phase-out of trade barriers, while larger member countries/regions are better off under a slower phase-out.     

Market-based Governance and the Challenge for Rural Governments: US Trends

Privatization and decentralization represent market‐based approaches to government. Designed to increase efficiency and responsiveness of government, these approaches also limit the potential for redistribution. A key question is: how will rural governments compete in such a market‐based system? Will they be favoured, as their reliance on market provision for public goods is higher due to the smaller number of services provided by government? Or will they be less able to compete due to the costs of sparsity, which may make them less attractive to market suppliers? Data from the United States covering the period 1992–2002, show that rural areas are not favoured by either of these trends – privatization or decentralization. Managerial weakness does not explain the shortfall. Rural areas are not as attractive to market suppliers and thus are disadvantaged under market‐based service delivery approaches. Although national policy continues to advance a privatization agenda, policy‐makers should be concerned about the uneven impacts of such market‐based approaches.     

Reforming the European Common Agricultural Policy: From price & income support to risk management

Over the last 30 years, the European Union has significantly reformed its Common Agricultural Policy by introducing direct payments to farmers and reducing price support levels. While the European agricultural prices become more volatile, all economic models assessing these reforms remain static and ignore the risk dimensions. This paper develops an original stochastic computable general equilibrium model capturing the different sources of risk, farmers’ risk attitude and risk contingent markets. We find that the reduction of price support levels has modest market impacts but negative global welfare effects by exposing risk-averse European farmers to the world price volatility. This issue is not solved by the direct payments, which have negligible market and global welfare impacts through their wealth effects. On the other hand, we find that unbiased futures markets can solve this global welfare issue by allowing European farmers to transfer their price risks. Therefore, European policymakers should ensure well-functioning risk contingent markets rather than maintaining rigid intervention price levels.     

Agricultural policy in Madagascar: A seasonal multi-market model

The purpose of this note is to illustrate how a generic multi-market model can be adapted to the circumstances of a particular developing country to assess the impact of alternative agricultural policies on the well being of households. We describe the main features and results of a multi-market model for Madagascar that focuses on income generating activities in an agricultural sector that is characterized by seasonal variability. We find evidence that investments in rural infrastructure and commercial food storage have both direct and indirect benefits on poor households.     

Impacts of HIV/AIDS on poor and socially marginalised former commercial plasma donors in rural central China: social work implications

Little is known about the impact of HIV/AIDS on people who acquired the virus through former commercial plasma donations in the mid-1990s in rural Central China. The objective of this study was to examine socioeconomic impacts associated with HIV/AIDS on poor farm workers and their families, with a particular focus on economic hardships and social exclusion. The findings from 30 interviews reveal the profound effects of deteriorating health on labour power loss. The well-being of people living with HIV/AIDS was immensely affected by the loss of income, debts due to health-related expenses and a lack of alternate sources of income. Social exclusion and HIV/AIDS-related stigma remain significant issues in a workplace, funerals, and weddings. This article highlights the economic impacts of HIV/AIDS on China’s rural population and provides recommendations for social workers to mitigate the impacts of social exclusion on vulnerable rural households in China.     

From the Cradle to the Grave: Funeral Welfare from an International Perspective

This article reports on a pilot study examining funeral welfare for citizens from low income backgrounds. Through a review of funeral welfare provision in 12 capitalist democratic countries it seeks to inform the current system of state support in Britain, arguing that insufficient attention has been given to funeral costs as a policy issue. Mindful of the British welfare state's original ‘cradle to grave’ ethos, such attention is ever more pressing in light of rising funeral costs, an ageing population and projected increases in the death rate. Arguing that funeral costs are an issue of income support, the article draws on Esping‐Andersen's threefold welfare‐regime typology to situate the British system within a comparative study of funeral welfare that identifies similarities and differences both within and between the three welfare‐regime types. On the basis of an empirical example, the article further argues that systems of funeral welfare reflect the relationship between culture, politics and local practice. The findings indicate that the British system is hampered by a discourse of welfare dependency rather than entitlement, which stigmatises those who need support with funeral costs at a time when they are under pressure to ensure that the deceased person receives a ‘dignified’ send‐off.