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ABSTRACT: An analysis of poverty based on a country-specific income poverty line suffers from disregarding regional differences in prices
and needs within a country and may, therefore, produce results that give a misleading picture of the extent of poverty as
well as the geographic and demographic composition of the poor. To account for differences in prices and needs, this paper
introduces an alternative method for identifying the poor based on a set of region-specific poverty lines. Applying Norwegian
household register data for 2001 we find that the national level of poverty is only slightly affected by the change in definition
of poverty line. However, the geographic as well as the demographic poverty profiles are shown to depend heavily on whether
the method for identifying the poor relies on region- or country-specific thresholds. As expected, the results demonstrate
that an analysis of poverty based on a country-specific threshold produces downward biased poverty rates in urban areas and
upward biased poverty rates in rural areas. Moreover, when region-specific poverty thresholds form the basis of the poverty
analysis, we find that the poverty rates among young singles and non-western immigrants are significantly higher than what
is suggested by previous empirical evidence based on a joint country-specific poverty line.
The Journal of Economic Inequality 04/2012; 5(1):115-122. · 0.81 Impact Factor
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ABSTRACT: This paper uses a unique data set with nearly career-long earnings histories to provide evidence on the returns to schooling in current and lifetime earnings. We use these results to assess the importance of life-cycle bias in earnings regressions using current earnings as a proxy for lifetime earnings. To account for the endogeneity of schooling, we apply three commonly used identification strategies. Our estimates demonstrate a strong life-cycle bias, often exceeding the bias from assuming that schooling is exogenous. We further explore the problems caused by life-cycle bias in research on the economic returns to schooling, and discuss possible remedies.
IZA Institute for the Study of Labor Discussion Paper Series. 06/2011;
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ABSTRACT: Does internet use trigger sex crime? We use unique Norwegian data on crime and internet adoption to shed light on this question. A public program with limited funding rolled out broadband access points in 2000--2008, and provides plausibly exogenous variation in internet use. Our instrumental variables and fixed effect estimates show that internet use is associated with a substantial increase in reported incidences of rape and other sex crimes. We present a theoretical framework that highlights three mechanisms for how internet use may affect reported sex crime, namely a reporting effect, a matching effect on potential offenders and victims, and a direct effect on crime propensity. Our results indicate that the direct effect is non-negligible and positive, plausibly as a result of increased consumption of pornography.
LSN: Criminal Law (Sexuality) (Topic). 04/2011;
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ABSTRACT: This paper provides evidence on the returns to schooling in current and lifetime earnings. We use these results to assess the importance of life-cycle bias in earnings regressions using current earnings as proxy for lifetime earnings. To account for the endogeneity of schooling, we apply three commonly used identification strategies. Our estimates demonstrate a strong life-cycle bias, often exceeding the bias from assuming that schooling is exogenous. We also find that the cross-section estimates of the returns to schooling are highly sensitive to the age composition of the sample. They tend to increase with mean age, reflecting that higher educated workers experience more rapid earnings growth through most of the life-cycle. We further show that the returns to schooling in lifetime earnings are relatively low compared to what previous evidence based on cross-section data suggest.
Norwegian School of Economics & Business Administration, Department of Economics Research Paper Series. 03/2011;
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ABSTRACT: Innovation policy is increasingly informed from the perspective of a national innovation system (NIS), but, despite the fact that research findings emphasize the importance of national differences in the framing conditions for innovation, policy prescriptions tend to be uniform. Justifications for innovation policy by organizations such as the OECD generally relate to notions of market failure, and the USA, with its focus on the commercialization of public sector research and entrepreneurship, is commonly portrayed as the best model for international emulation. In this paper we develop a broad framework for NIS analysis, involving free market, coordination and complex-evolutionary system approaches. We argue that empirical evidence supporting the hypothesis that the ‘free market’ can be relied upon to promote innovation is limited, even in the USA, and the global financial crisis provides us with new opportunities to consider alternatives. The case of Australia is particularly interesting: a successful economy, but one that faces continuing productivity and innovation challenges. Drawing on information and analysis collected for a major review of Australia’s NIS, and the government’s 10-year plan in response to it, we show how the free market trajectory of policy-making of past decades is being extended, complemented and refocused by new approaches to coordination and complex-evolutionary system thinking. These approaches are shown to emphasize the importance of systemic connectivity, evolving institutions and organizational capabilities. Nonetheless, despite the fact that there has been much progress in this direction in the Australian debate, the predominant logic behind policy choices still remains one of addressing market failure, and the primary focus of policy attention continues to be science and research rather than demand-led approaches. We discuss how the development and elaboration of notions of systems failure, rather than just market failure, ca
Institute for the Study of Labor (IZA), IZA Discussion Papers. 01/2008;
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ABSTRACT: As an alternative to the conventional methods for measuring chronic poverty, this paper proposes an interpersonal comparable measure of permanent income as a basis for defining and measuring chronic poverty. This approach accounts for the fact that individuals regularly undertake inter-period income transfers. Moreover, the approach allows for individual-specific interest rates on borrowing and saving as well as for the presence of liquidity constraints. Due to the general nature the proposed method proves useful for evaluating the theoretical basis of the standard methods for measuring chronic poverty.
04/2007;
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Magne Mogstad
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ABSTRACT: The standard approach in empirical analyses of income distributions is to estimate income inequality in a country under the assumption of full interpersonal comparability of income. To be meaningful, this method requires that prices and qualities of goods as well as consumption habits are uniform across individuals in different regions of the country. In this paper, we pursue two alternative approaches to measure inequality under restricted interpersonal comparability of income. First, we estimate regional price indices, transform observed incomes into real incomes in an attempt to incorporate relevant non-income heterogeneity, and then aggregate across individuals. Second, we use the observed income data and account for non-income heterogeneity at the aggregation stage. Results based on a Norwegian register household panel data set indicates that both levels and trends in overall inequality as well as the inequality contributions of various income factors are robust to whether the income inequality analysis is based on the standard approach or the methods developed to cope with comparability problems within a country.
04/2007;
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The Journal of Economic Inequality 02/2007; 5(1):115-122. · 0.81 Impact Factor
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ABSTRACT: This paper proposes a two-step aggregation method for measuring long-term income inequality and income mobility, where mobility is defined as an equalizer of long-term income. The first step consists of aggregating the income stream of each individual into a measure of permanent income, which accounts for the costs associated with income fluctuations and allows for credit market imperfections. The second step aggregates permanent incomes across individuals into measures of social welfare, inequality and mobility. To this end, we employ an axiomatic approach to justify the introduction of a generalized family of rank-dependent measures of inequality, where the distributional weights, as opposed to the Mehran-Yaari family, depend on income shares as well as on population shares. Moreover, a subfamily is shown to be associated with social welfare functions that have intuitively appealing interpretations. Further, the generalized family of inequality measures provides new interpretations of the Gini-coefficient.
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ABSTRACT: This paper is concerned with the problem of ranking Lorenz curves in situations where the Lorenz curves intersect and no unambiguous ranking can be attained without introducing weaker ranking criteria than first-degree Lorenz dominance. To deal with such situations Aaberge (2009) introduced two alternative sequences of nested dominance criteria for Lorenz curves which was proved to characterize two separate systems of nested subfamilies of inequality measures. This paper uses the obtained characterization results to arrange the members of two different generalized Gini families of inequality measures into subfamilies according to their relationship to Lorenz dominance of various degrees. Since the various criteria of higher degree Lorenz dominance provide convenient computational methods, these results can be used to identify the largest subfamily of the generalized Gini families and thus the least restrictive social preferences required to reach unambiguous ranking of a set of Lorenz curves. From the weight-functions of these inequality measures we obtain intuitive interpretations of higher degree Lorenz dominance, which generally has been viewed as difficult to interpret because they involve assumptions about third and higher derivatives. To demonstrate the usefulness of these methods for empirical applications, we examine the time trend in income and earnings inequality of Norwegian males during the period 1967-2005.
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ABSTRACT: In this paper, we introduce and apply a general framework for evaluating long-term income distributions according to the Equality of Opportunity principle. Our framework allows for both an ex-ante and an ex-post approach to EOp. Our ex-post approach relies on a permanent income measure defined as the minimum annual expenditure an individual would need in order to be as well off as he could be by undertaking inter-period income transfers. There is long-term ex-post inequality of opportunity if individuals who exert the same effort have different permanent incomes. In comparison, the ex-ante approach focuses on the expected permanent income for individuals with identical circumstances. Hence, the ex-ante approach pays attention to inequalities in expected permanent income between different types of individuals. To demonstrate the empirical relevance of a long-run perspective on EOp, we exploit a unique panel data from Norway on individuals' incomes over their working lifespan.
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ABSTRACT: Despite a broad consensus on the need to take into account the value of public services in distributional analysis, there is little reliable evidence on how inclusion of such non-cash income actually affects poverty and inequality estimates. In particular, the equivalence scales applied to cash income are not necessarily appropriate when including non-cash income, because the receipt of public services is likely to be associated with particular needs. In this paper, we propose a theory-based framework designed to provide a coherent evaluation of the distributional impact of local public services. The valuation of public services, identification of target groups, allocation of expenditures to target groups, and adjustment for differences in needs are derived from a model of local government spending behaviour. Using Norwegian data from municipal accounts and administrative registers we find that the inclusion of non-cash income reduces income inequality by about 15% and poverty rates by almost one-third. However, adjusting for differences in needs for public services across population subgroups offsets about half the inequality reduction and some of the poverty decrease.
Journal of Public Economics.
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ABSTRACT: Does pornography trigger sex crime? We use Norwegian registry data on crime and internet adoption to shed new light on this question. A public program with limited funding rolled out broadband access points in 2000–2008, and provides plausibly exogenous variation in internet use. Our 2SLS estimates suggest that internet usage is associated with a substantial increase in reported incidences of rape and other sex crimes. We present a conceptual framework that highlights three mechanisms for how internet use may affect reported sex crime, namely a reporting effect, a matching effect on potential offenders and victims, and a direct effect on crime propensity. Results indicate that the direct effect dominates, plausibly as a result of increased consumption of pornography.
