Copyright (c) 2009 All rights reserved. http://works.bepress.com/gary_fields Recent documents in Gary S Fields en-us Tue, 03 Nov 2009 23:22:06 PST 3600 http://works.bepress.com/gary_fields/36 http://works.bepress.com/gary_fields/36 Mon, 02 Nov 2009 13:45:15 PST [Excerpt] According to the latest figures, today an estimated 3.1 billion people still live in absolute poverty, essentially all of them in the low- and middle-income countries of Asia, Latin America, and Africa and none of them in what are traditionally called the "developed economies" of North America (excluding Mexico), Western Europe, and selected parts of Asia and Oceania. This book is about how the poor live and work and what actions the world community could take to improve poor people's earning opportunities as a central component of a multifaceted program aimed at ending the scourge of absolute economic misery. Gary S. Fields http://works.bepress.com/gary_fields/37 http://works.bepress.com/gary_fields/37 Mon, 02 Nov 2009 13:45:15 PST [Excerpt] Economic mobility has not been widely studied in developing countries until very recently owing to the lack of suitable data. Studying mobility requires longitudinal data tracking economic units (that is, individuals, households, or firms) over time. Collecting this type of data is expensive, and historically few Latin American countries carried it out. Now, however, such data sets are available for a number of Latin American and Caribbean countries; table A-1 in the appendix provides a list of available panel data sets that can be used for income mobility studies for these countries. In this paper, we discuss how the knowledge gleaned from mobility studies differs from comparable cross-sectional analysis. The structure of the paper is as follows. The next section discusses what mobility is, how it can be measured, and how it differs from inequality. The subsequent section reviews previous mobility studies in Latin American countries. The paper then summarizes the contributions of our own recent work, and the final section discusses what lies ahead in mobility research for Latin American economies. Gary S. Fields http://works.bepress.com/gary_fields/35 http://works.bepress.com/gary_fields/35 Mon, 02 Nov 2009 13:45:14 PST [Excerpt] The literature on income and earnings mobility falls into three categories: 1. Macro mobility studies address the entire economy. They ask the question, how much income mobility and/or earnings mobility is there in the economy? 2. A second group of studies, micro mobility studies, examines patterns of income and earnings change over time for different individuals or groups. They ask the questions, which individuals or households experience movements of what magnitudes, and what are the correlates and determinants of these movements? 3. Within the micro mobility studies are a number of studies that look specifically at poverty dynamics. These studies ask the question, how many households move into and out of poverty within a certain time frame and what are the correlates and determinants of these movements? -- The current project asks the following questions about earnings mobility: -- Who benefits the most from the growth process, and how much do they benefit? -- Who is left behind or made more vulnerable? -- Who is hurt when economic decline takes place and by how much (and who can withstand or even see income gains in such environments)? -- What are the forces behind these changes and behind the experiences of different groups of individuals? Given these questions, this literature review focuses on studies of micro earnings mobility. This review excludes a number other literatures: studies that present transition matrices across income classes; studies of macro mobility; studies of poverty dynamics, which necessarily are based on data on household incomes from all sources and/or household consumption; studies that use pseudo-panels rather than true panels or retrospective data; and studies using data from one or a very small number of villages, cities, or occupational groups. Gary S. Fields http://works.bepress.com/gary_fields/34 http://works.bepress.com/gary_fields/34 Thu, 14 May 2009 12:52:52 PDT [Excerpt] 'Income-mobility' analysis involves following the same people for two or more points in time and studying the changes in their economic well-being. It is something of a cliché, but nonetheless true, that income mobility is multifaceted. Gary S. Fields http://works.bepress.com/gary_fields/33 http://works.bepress.com/gary_fields/33 Thu, 14 May 2009 12:52:51 PDT [Excerpt] The main point of this chapter is to show that the different indices used in the mobility literature are not measures of the same underlying conceptual entity. In elementary statistics, students are taught that the mean and median are both measures of central tendency but they are different measures of central tendency; the variance and Gini coefficient are measures of dispersion but they are different measures of dispersion; and central tendency and dispersion are fundamentally different concepts from one another. In much the same way, this chapter maintains that the different mobility indices in common use are measuring fundamentally different mobility concepts from one another. It is in this sense that mobility really is multifaceted. Gary S. Fields http://works.bepress.com/gary_fields/32 http://works.bepress.com/gary_fields/32 Fri, 17 Apr 2009 12:48:26 PDT [Excerpt] This is a paper on labor markets. Why are labor markets important to economic development? Many individuals and institutions, including the World Bank and the regional development banks, seek "a world free of poverty." Broadly speaking, those who are poor are poor because 1) they earn little from the work they do, 2) the societies in which they live are too poor to provide them with substantial goods and services by virtue of their citizenship or residency, and 3) the poor are not permitted to move to richer countries. Thus, anti-poverty efforts can be focused on 1) helping people as workers (defined broadly to include wage employees, informal employees, and the self-employed in all ranges of the skill distribution), 2) helping people as citizens/residents through publicly-provided goods and services, and 3) striving for freer movement of labor from poor to rich countries. This paper is concerned with the first channel: helping improve labor market opportunities for workers. Gary S. Fields http://works.bepress.com/gary_fields/31 http://works.bepress.com/gary_fields/31 Fri, 17 Apr 2009 12:48:25 PDT [Excerpt] Throughout the world, there are fundamentally two, and only two, ways that people can escape from poverty. One is by earning their way out of poverty. The other is by receiving socially-provided goods and services that lift them out of poverty. Even with multilateral and bilateral assistance, low-income countries are too poor to be able to make a significant dent in poverty by the social services route alone. This means that creating more and better earning opportunities for the poor is the only other option available. In policy discussions, two mistakes are often made. One is to assume that policy interventions need to be made in the sectors of the economy where the poor are. Such interventions would raise the earnings of the poor in the low-earning sectors. The other mistake is to assume that the most appropriate interventions are in the parts of the economy where the poor are not, so that more of them can be drawn into the higher-earning parts of the economy. Neither is correct. What is required is a careful comparison of the benefits and costs associated with each approach to policy. In what I just said, I have implicitly adopted a labor market segmentation approach to the analysis of employment and labor market policy in low-income countries. Before proceeding, I would like to try to establish agreement on the meaning of these terms. Employment, as I shall use the term here, is of two types: wage-employment (in which the worker is hired by an employer and paid a wage or salary) and self-employment. "Employment" is to be contrasted with "unemployment" which, according to standard ILO definitions, consists of people who a) did not work even one hour of work for pay in the preceding week or fifteen hours of unpaid work in a family business or on a family farm, and b) were actively looking for work. Labor market segmentation is the idea that the labor market consists of various segments with qualitatively different types of employment. When there are just two segments, we have labor market dualism. Because the segments differ qualitatively, access to the good job segments is restricted in the sense that not all who want to work in those segments are able to be employed there. Such rationing is an essential part of the idea of labor market segmentation. My current thinking is influenced heavily by two well-developed strands of work in economics: the dual economy models of development economics and the dual labor market models of labor economics. At the same time, I will argue that we need a third duality: the duality that arises within the informal sector. Bringing together these three types of duality into a coherent analytical framework is a task that remains to be completed; it constitutes the frontier of future work on employment in low-income countries. I shall begin this note by talking about these three types of duality. I will then go on to put forward a number of propositions about labor markets, after which I will consider the implications of these propositions for analytical and policy purposes. Finally, I will answer the specific questions posed to me by the conference convener. Gary S. Fields http://works.bepress.com/gary_fields/29 http://works.bepress.com/gary_fields/29 Fri, 17 Apr 2009 12:48:24 PDT Earnings mobility has been studied both at the macro level (how much of a certain kind of mobility is there in the economy?) and at the micro level (what are the correlates of change in income or position?). Many empirical mobility studies provide estimates of the amount of mobility in a country over time and the correlates of individual mobility within the income distribution. While measurement error is recognized as potentially important at both these levels, very little is known about the degree to which earnings mobility estimates are affected by measurement error. In this paper, we use a new dataset that contains individually reported total annual labor earnings from the Survey of Income and Program Participation (SIPP) linked to employer-reported total annual labor earnings from the Social Security Administration's Detailed Earnings Record (DER; these are taken directly from Box 1 on theW-2 form and are not capped by FICA) to compare micro and macro earnings mobility estimates for the U.S. during the 1990s using the two different earnings measures. We ask how much difference it makes to mobility estimates to use administrative-based earnings rather than survey-based earnings, and we obtain two major findings. Qualitatively, we find that the results are similar but not identical when administrative-based earnings are used rather than survey-based earnings. Quantitatively, we find that magnitudes are often very different when administrative-based earnings are used rather than survey-based earnings. The administrative-based results are neither systematically larger nor systematically smaller than the survey-based ones. Lisa M. Dragoset http://works.bepress.com/gary_fields/30 http://works.bepress.com/gary_fields/30 Fri, 17 Apr 2009 12:48:24 PDT [Excerpt] This is a paper on earnings mobility in Argentina during the macroeconomic growth and contractions that have characterized that nation's economy from 1996 to the present. Since 1996, real GDP growth has fluctuated widely. For most of the 1990s, Argentina was seen as a model of successful policymaking. Having pegged its exchange rate to the dollar under a currency board type arrangement in 1991, Argentina had succeeded in ending hyperinflation, reducing inflation rates to single-digit levels. Greater economic stability attracted foreign investment inflows, contributing to an acceleration in economic growth; indeed, even as lenders withdrew their financing in East Asia in 1997, capital inflows continued to Argentina. Then, Argentina entered into a prolonged recession. The combination of the hard peg of the local currency to the U.S. dollar and excessive borrowing led to an unsustainable fiscal situation and, ultimately, to the collapse of the economy at the end of 2001 (See Figure 1). Gross Domestic Product fell by 13.5 percent from the second quarter of 2001 to the second quarter of 2002, and the share of the population in poverty reached 58 percent in October 2002, versus 38 percent in October 2001, according to the official moderate poverty line. This paper addresses the distributional consequences of these macroeconomic events. (Note: Here and throughout the paper, "distribution of income" means the entire density or cumulative distribution function; it does not mean "inequality.") Who benefited the most from Argentine economic growth? Who lost the most in economic decline? Are those who started rich getting richer in growth periods and losing more in recessionary periods, or is it the other way around? Are the answers to these questions the same for all measures of initial advantage? Gary S. Fields http://works.bepress.com/gary_fields/27 http://works.bepress.com/gary_fields/27 Mon, 24 Nov 2008 06:49:39 PST Labor markets are important, because most people, especially the poor, derive all or the great bulk of their income from the work they do. This paper approaches labor markets through models of segmented labor markets. The first main substantive section presents the essence of segmented labor market modeling, in particular, the role of labor market dualism. Given that labor markets often consist of quite distinct segments, a useful and insightful analytical approach is to start with just two interrelated segments, which here are termed formal and informal. Accordingly, the next sections present models of wages and employment in the formal sector, the informal sector, and the linkages between the two respectively. The final substantive section shows the contributions that these models make to understanding and policy analysis in labor markets. It would not be expected that the same model would fit East Africa and East Asia or South Africa and South Korea. Surely, the "correct" model is context-specific. Blending empirical observation and analytical modeling has yielded great advances. Sound labor market policies require sound labor market models. Gary S. Fields