Why do household incomes not keep up with economic growth?

Divergence between the evolution of GDP per capita and the income of a “typical” household as measured in household surveys is giving rise to a range of serious concerns, especially in the USA. In a new paper published in Review of Income and Wealth, together with Brian Nolan and Max Roser we investigate the extent of that divergence and the factors that contribute to it across 27 OECD countries, using data from OECD National Accounts and the Luxembourg Income Study. While GDP per capita has risen faster than median household income in most of these countries over the period these data cover, the size of that divergence varied very substantially, with the USA a clear outlier. The paper distinguishes a number of factors contributing to such a divergence, and finds wide variation across countries in the impact of the various factors. These findings have serious implications for the monitoring and assessment of changes in household incomes and living standards over time.

Fair progress? Economic mobility across generations around the world

A new book with the World Bank that I contributed to, looks at an issue that has gotten much attention in the developed world, but with, for the first time, new data and analysis covering most of the world, including developing economies. The book examines whether those born in poverty or in prosperity are destined to remain in the same economic circumstances into which they were born, and looks back over a half a century at whether children’s lives are better or worse than their parents’ in different parts of the world. It suggests local, national, and global actions and policies that can help break the cycle of poverty, paving the way for the next generation to realise their potential and improve their lives.
A huge thanks to the principal investigators Ambar Narayan and Roy van der Weide, and core team members Alexandru Cojocaru, Christoph Lakner, Silvia Redaelli, Daniel Gerszon Mahler, and Rakesh Gupta Ramasubbaiah.

Average income per capita, health outcomes, and the allocation of development assistance for health

Large multilateral organisations like WHO and the UN rely heavily on average income data in determining eligibility for, and the allocation of, development assistance for health. This column tests this paradigm by analysing the determinants of health outcomes for 99 countries. A country’s epidemiological surroundings, poverty gap, and institutional capacity appear to be much better predictors of health outcomes than gross national income. These findings suggest alternative metrics that could be leveraged in allocating development assistance for health.

See my VoxEU blog here, and full paper here – together with Olivier Sterck, Max Roser, and Mthuli Ncube.

New position at ODI!

From today onwards, I am working as a research fellow at the Overseas Development Institute (ODI) in London! I am part of their Social Protection and Social Policy team. I am very excited to contribute to their work on social protection and development; including studying and advising on the rise of the gig economy in low and middle income countries, taxes & transfers, and health insurance coverage. You can find my ODI profile here – and please reach out if you have overlapping interests.


Technological change as a determinant of redistribution preferences

Technological change presents an occupational risk for individuals in routine work, as these occupations are more prone to being automated. In a paper forthcoming with Comparative Political Studies with David Rueda, we show with survey data for 17 European countries between 2002-2012 that individuals in routine occupations prefer public insurance against the increased risk of future income loss resulting from automation. We conclude that vulnerability to automation is an important determinant of the demand for redistribution.

Competing with the dragon

China’s rapid rise on the global economic stage might have substantial and unequal employment effects in advanced industrialized democracies given China’s large volume of low-wage labor. In a new paper written together with Olaf van Vliet, we analyse the effects of Chinese trade competition across 17 sectors in 18 countries. We devote attention to a new channel, increased competition from China in foreign export markets. Our empirical findings reveal overall employment declines in sectors more exposed to Chinese imports. Furthermore, our results suggest that employment effects are not equally shared across skill levels, as the share of hours worked worsens for low-skilled workers.

Taking the sector seriously

In a new study published in Social Indicators Research, I explore with two colleagues developments and the drivers of earnings inequality at the sectoral level using an own database that is publicly available. The study examines three key explanations for increasing earnings inequality exploiting sectoral variation within countries over time—namely, globalisation, technological change and waning labour union power. Interestingly, the results provide only limited support for the argument that international trade leads to higher levels of earnings inequality. When we focus the analysis on trade with less developed countries we find a positive association between trade and earnings inequality. With regard to technological change, our findings provide mixed evidence for the hypothesis that skill-biased technological change increases earnings inequality. Our results bring back the waning country-wide labour union power as an important driver of earnings inequality. This corresponds with the fact that our sectoral data reveal a more general trend towards rising inequality across sectors over time.