On the 19th of October, we hosted the fifth meeting on the ‘Theory and Empirics of Inequality, Poverty and Mobility’, at the QMUL premises on Charterhouse Square, London. There was a large spread of theoretical and applied issues addressed in the six papers presented. In the morning three papers discussed issues related to the measurement of mobility and poverty, with applications to the EU, Mexico and with global poverty data, while in the afternoon three papers discussed the impact of mining on individual well-being in Sub-Saharan Africa, how social connections and financial incentives affect productivity in tasks that require coordination among workers via an experiment in a garment factory in India, and a final paper evaluating the effect of aid on conflict in Indonesia.
Gaston Yalonetzky’s (Leeds and Oxford) paper proposes some mobility measures which are decomposable into growth, inequality change, and exchange mobility components. These measures react to both average improvements in wellbeing and inequality reductions. They apply their class of decomposable measures of absolute distributional change to study overcrowding in Mexico, a well-being indicator which features prominently as a dimension in the country’s multidimensional poverty index. They find that intergenerational average reductions in overcrowding in Mexico have also been pro-poor, although average improvements amount to nearly 60% of total social welfare change. The contribution of exchange mobility due to family re-rankings remains minimal, except among younger contemporary cohorts where they account for most of the inequality reduction component.
Elena Barcena Martin’s (Universidad de Málaga, Spain) paper measures downward mobility in particular and proposes a subgroup decomposable class of income mobility measures in a framework that is traditionally used for the measurement of poverty and deprivation. This approach allows the authors to provide intuitive measures of downward (and upward) mobility that consider incidence, intensity and inequality of income gaps and are easy to comprehend and communicate to policymakers. They apply their measure to measure downward income mobility for different age groups in three EU countries using the European Union Survey of Income and Living Conditions (EUSILC) longitudinal data from 2004 to 2015.
Florent Bresson (Université Clermont Auvergne, France) presented a paper assessing the robustness of global poverty reduction estimates established as part of the Millennium Development Goals. The paper questions current estimates on global poverty reduction between 1990 and 2015 in light of the weak formulation of the first MDG which lacks any reference to a specific poverty index or a precise poverty line. He shows how stochastic dominance tools can be used to check the robustness of claims with respect to relative variations in poverty. The paper uses data from PovcalNet to provide new estimates of the extent of poverty reduction during the MDG era and finds that there has been a comparatively modest reduction in global poverty, contrary to the current claims.
The papers presented in the afternoon were on applied issues relating to inequality, poverty and welfare on three independent issues in developing countries. The first paper presented by Sambit Bhattacharya (University of Sussex) discussed the effects of mining on living standards in Sub-Saharan Africa. Night-lights increase in mining districts when mineral production expands (intensive margin), but large effects approximately equivalent to a 16% increase in GDP are mainly associated with new discoveries and new production (extensive margin). They find that there is little evidence of significant spillovers to other districts reinforcing the enclave nature of mines in Africa. In addition, the local effects disappear after mining activities come to an end which is consistent with the ’resource curse’ view.
The following paper presented by Amrita Dhillon (Kings College, London) discusses how social connections and financial incentives affect productivity in tasks that require coordination among workers. They simulate assembly line production in a lab-in-the-field experiment in a garment factory in Delhi, in which workers exert real effort in a minimum-effort game in teams whose members are either socially connected or unconnected and are paid according to the group output. They find that group output increases by 18% and coordination improve by 30-39% when workers are socially connected with their co-workers. Connected groups continue to coordinate better when they introduce a lump sum bonus, suggesting that financial and social incentives can be complementary in this setting, with results mostly being driven by men whose average productivity is significantly lower than that of women.
The final paper was presented by Caterina Gennaioli (SBM, QMUL) in which the authors investigate the impact of development aid on conflict in Indonesia, focusing on the Kekamatan Development Program (KDP), the world’s largest community-driven program. The authors question whether the programme had unintended impacts due to the introduction of competition among potential beneficiaries. They find a small but significant negative impact of competition on the conflict in the region. Larger effects are found for local (within-village) and ethnic conflicts.
Papers and details of the event are available here.