Publications des chercheurs de PSE

Drawing on a comprehensive compilation of quantile shares and inequality measures for 34 countries, including over 5,600 estimated Gini coefficients, we review the measurement of income inequality in Latin America and the Caribbean over the last seven decades. We find that there is quite a bit of uncertainty regarding inequality levels for the same country/year combinations. Differences in inequality levels estimated from household surveys alone are present but they derive from differences in the construction of the welfare indicator, the unit of analysis, or the treatment of the data. With harmonized household surveys, the discrepancies are quite small. The range, however, expands significantly when to correct for undercoverage and underreporting especially at the top of the distribution inequality estimates come from some combination of surveys and administrative tax data. The range increases even further when survey-based income aggregates are scaled to achieve consistency not only with tax registries but with National Accounts. Since no single method to correct for underreporting at the top is fully convincing at present, we are left with (often wide) ranges, or bands, of inequality as our best summaries of inequality levels. Reassuringly, however, the dynamic patterns are generally robust across the bands. Although the evidence roughly until the 1970s is too fragmentary and difficult to compare, clearer patterns emerge for the last fifty years. The main feature is a broad inverted U curve, with inequality rising in most countries prior to and often during the 1990s, and falling during the early 21st century, at least until around 2015, when trends appear to diverge across countries. This pattern is broadly robust but features considerable variation in timing and magnitude depending on the country.

We explore the implications of allowing a poverty-averse donor to monitor aid use within the familiar context of the needs vs. aid effectiveness tradeoff. The paper focuses on the optimal aid allocation between two countries when the donor simultaneously decides about aid shares and country-specific monitoring effort aimed at increasing the amount reaching the poor. Endogenizing aid effectiveness is shown to raise the poor’s income in the worse-governed country, yet not necessarily in the better-governed one, whereas the effect on country aid shares is essentially ambiguous. Those results still hold when the basic model is extended in various directions. Conventional aid allocation rules should be re-examined in their light.

Bangladesh is widely seen as a 'paradox'. Over the last quarter of a century, it has maintained economic growth and has outperformed many countries on social indicators while scoring very low on the quality of governance. Moreover, its economic progress does not seem to indicate significant improvement in comparative institutional indicators. Is the Bangladesh Paradox Sustainable? thus examines whether such a paradoxical combination can be sustained in the long run if growth continues with no improvement in the quality of institutions. It argues that although Bangladesh has become the second largest world exporter in the garments, export diversification is needed, both within and outside the garment sector, if it is to maintain its development pace. Based on a thorough account of the country's economic, social and political development, this companion volume analyzes Bangladesh's critical institution- and development-sensitive areas such as the garment sector, banking, taxation, land management, the judiciary, and education.

We study decennial anonymous and non‐anonymous growth incidence curves in the United States during the past 50 years. The former show income growth by quantile independent of initial incomes and are typically upward sloping, reflecting increasing inequality. The latter are conditional on initial ranks and are flat or downward sloping. This suggests distributional neutrality of growth when accounting for initial income positions. We explain this difference by decomposing the non‐anonymous curves into mobility and shape components. The former is always downward sloping, whereas the latter is upward sloping in periods of increasing inequality. Thus, flat non‐anonymous curves can be observed even with increasing inequality. We exploit the decomposition to show that the slope of non‐anonymous curves in the United States is determined by the evolution of cross‐sectional income distributions. This enables inferring the shape of non‐anonymous curves from cross‐sectional data and test them for a generalized pro‐poorness social welfare criterion.

The Growth Incidence Curve (GIC), introduced in the poverty measurement literature by Ravallion and Chen (Econ. Lett. 78 (1), 93–99, 2003), proved to be a valuable and widely used tool to analyze the impact of growth on poverty and its ‘pro-poorness’. Beyond pro-poorness, however, the relationship between the shape of GICs and social welfare is ambiguous. If a declining GIC, together with a positive overall rate of growth, is unambiguously associated with a social welfare gain, such a shape is not the most common and the reciprocal is not necessarily true. This paper analyzes the social welfare properties of GICs, as well as their non-anonymous counterpart (NAGICs), which describe how income growth depends on the initial rank of individuals in the initial income distribution. NAGICs thus account not only for the change in the distribution of income but also for income mobility, and differ conceptually from their anonymous counterpart. However, their social welfare interpretation proves to be very similar.

The objective of this chapter is to collect insights from different sources and different people about institutional features that may slow down economic development in Tanzania or threaten its sustainability and inclusiveness. It essentially follows three approaches presented in three separate sections. First, by exploiting the numerous institutional indicators available in international databases, insights are collected about the quality of Tanzanian institutions in comparison with a set of relevant countries. Insights aim to identify those institutional features that may possibly differentiate Tanzania. Second, an original questionnaire survey is undertaken among various types of decision-makers operating in Tanzania. The survey asks them about their own perception of how institutions work there and how they affect development. Finally, the analysis is enriched by the summary of the main points that arose in a large set of open-ended interviews with top policymakers of the country about the same questions. The final section concludes.

Despite strong interest in the role of institutions; methods of operation, underlying political forces and their precise nature are still misunderstood. Partial analysis of specific aspects of public interventions simplified historical examples, or rough cross-country relationships tend to be the main guides to policy recommendations. Along with four in-depth country studies, published in companion volumes, Institutional Challenges at the Early Stages of Development gives a thorough review of the experiences of South Korea and Taiwan, offering a new perspective for identifying critical institutional issues. Including those related to state-business relations and the economic structure, and its transformation, analytical tools and concept are provided to help diagnose important hurdles at the early stage of a country's development. This title is also available as Open Access.

Using an approach that embodies an explicit tradeoff between need and governance considerations, we propose an optimal aid allocation formula. We first assume exogenous, then endogenous governance. In the former case, a central concept is need-adjusted aid effectiveness while in the second case the donor has policing instruments under the form of monitoring and sanctioning capacities. We show that external disciplining has two advantages when the donor is sensitive enough to poverty intensity: (1) to cater to poor countries to a greater extent than is possible when local governance cannot be influenced by external forces, and (2) to respond (non-perversely) to improvements in the local governance of a country by raising its aid share. In institutionally weak countries, populations should welcome wisely applied donor's discipline as a way not only to get access to financial support but also to constrain their elites to refrain from abusing their position excessively. Imposing discipline when the release of externally-provided development funds is at stake seems more acceptable than aid directed to the explicit purpose of combatting corruption.

This article revisits the inter-country aid allocation by a donor who must distribute a given aid amount and is sensitive to needs and governance considerations. Against conventional wisdom, if the donor has strong enough aversion to poverty, the share of a country whose governance has improved is reduced. Yet, the poor will still be better off. These results continue to hold when aid effectiveness depends on intrinsic governance and the volume of aid received, and when a more general dynamic specification is considered. Finally, using our approach, the allocation rules in international organisations appear as clearly privileging governance over needs.

The essential role that institutions play in understanding economic development has long been recognized across the social sciences, including in economics. Academic and policy interest in this subject has never been higher. The Handbook of Economic Development and Institutions is the first to bring together in one single volume the most cutting-edge work in this area by the best-known international economists. The volume’s editors, themselves leading scholars in the discipline, provide a comprehensive introduction, and the stellar contributors offer up-to-date analysis into institutional change and its interactions with the dynamics of economic development. This book focuses on three critical issues: the definitions of institutions in order to argue for a causal link to development, the complex interplay between formal and informal institutions, and the evolution and coevolution of institutions and their interactions with the political economy of development. Topics examined include the relationship between institutions and growth, educational systems, the role of the media, and the intersection between traditional systems of patronage and political institutions. Each chapter—covering the frontier research in its area and pointing to new areas of research—is the product of extensive workshopping on the part of the contributors. The definitive reference work on this topic, The Handbook of Economic Development and Institutions will be essential for academics, researchers, and professionals working in the field.