This paper attempts to explain the increase in inequality that has been observed in all transition economies by constructing a simple model of change in composition of employment during the transition. The change consists of the ‘hollowing-out’ of the state-sector middle class as it moves into either the ‘rich’ private sector or the ‘poor’ unemployed sector. The predictions of the model are con...

Charitable Bequests and Wealth at Death Charitable bequests are a major source of income for charities but surprisingly little is known about them. The aim of this paper is to propose a multi-stage framework for analysing the bequest decision and to examine the evidence for Great Britain provided by new data on estates. The novelty of the framework is that it distinguishes between the different...

Measuring Richness and Poverty: A Micro Data Application to Europe and Germany In this paper, we define a new class of richness measures. In contrast to the often used headcount, these new measures are sensitive to changes in rich persons’ income and therefore allow for a more sophisticated analysis of richness. We demonstrate the application of these new measures to analyze the development of ...

This paper analyzes subjective evaluations of the wage distribution and preferences for redistribution using Swiss data from the International Social Survey Program. Preferences for redistribution are conceptualized and measured as the discrepancy between the perceived and the just level of wage inequality. The results suggest that there is both considerable support for equalisation of wages an...

Earlier studies on income inequality and crime have typically used total income or total earnings. However, it is quite likely that it is changes in permanent rather than in transitory income that affects crime rates. The purpose of this paper is therefore to disentangle the two effects by, first, estimating region-specific inequality in permanent and transitory income and, second, estimating c...

Using data from the German SOEP, this paper analyses whether there have been (a) any significant changes in poverty rates and poverty intensities before and after the Hartz IV reforms and (b) whether there have been observable changes in the effect of employment in reducing the threat or intensity of poverty. Using multivariate analyses we can find no evidence of increases in poverty rates comp...

Demand for Redistribution, Support for the Welfare State, and Party Identification in Austria This paper describes subjective wage inequality and the demand for redistribution in Austria using individuals' estimates of occupational wages from the International Social Survey Program. Although these estimates differ widely across individuals, the data clearly show that most individuals would like...

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the authors and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the authors and are published to elicit comments and to further debate. This paper assesses the distributional impact of the recent VAT r...

We examine an economy in which the cost of consuming some goods can be reduced by making commitments that reduce flexibility. We show that such consumption commitments can induce consumers with riskneutral underlying utility functions to be risk averse over small variations in income, but sometimes to seek risk over large variations. As a result, optimal employment contracts will smooth wages c...

This paper investigates empirically why Japan’s household savings rate fell in the 1990s. We constructed an economic model consisting of two types of household: unconstrained life-cycle households and liquidity-constrained households. Unconstrained households generally save, but liquidity-constrained households consume all of their disposable income. We found that the proportion of liquidity-co...