December 26, 2009
Using factor analysis to derive a measure of religiosity, Martin Paldam (Aarhus University) and Erich Gundlach (Kiel Institute for the World Economy) find that religiosity is negatively correlated with per capita income.
The figure below shows the relation between religiously and income:
December 14, 2009
Here is an excerpt on the economic conditions in Iran from Michael Ledeen’s upcoming book, Accomplice to Evil: Iran and the War Against the West:
The country’s wealth is firmly in the hands of the regime’s elite families. More than 80 percent of the country’s gross national product comes from the petroleum industry, which is entirely in government hands. The mullahs have effectively ruined this primary source of national wealth: Oil production is currently around three million barrels per day. It was 6.2 at the end of the shah’s rule. According to a study released by the National Academy of Sciences on Christmas Day 2006, oil exports are expected to decline by upwards of 10 percent a year for the foreseeable future.
December 11, 2009
Mark Perry has created a great chart showing the net movement of income to right-to-work states:
From the National Right to Work Committee:
Counting just the income lost by forced-unionism states in the first year after each tax filer moved to a Right to Work state, forced-unionism states lost a net total of $124.3 billion (in constant 2008 dollars) due to domestic outmigration over this eight-year period.
December 10, 2009
Martin A. Sullivan at tax.com makes an interesting observation: the rich pay higher taxes than the “super rich.”
The chart above illustrates the latest data from the IRS. It shows that as income rises, effective tax rates also rise, but only up to a point.
The effective income tax rates levels off at around 24.1 percent for incomes between $1 million and $1.5 million. For higher incomes, however, the rate declines: for incomes above $10 million, the rate is 19.4 percent.
So what accounts for this?
Sullivan attributes the tax decline to capital gains. Most of the “super rich” receive their income through capital gains and qualified dividends which are taxed at a 15 percent rate, rather than the 35 percent rate that applies to other forms of income.
November 22, 2009
How do labor regulations effect a dual labor market economy? Rita Almeida and Pedro Carneiro from the World Bank study this question in their new working paper, ‘Mandated benefits, employment, and inequality in a dual economy.’
This paper studies the effect of enforcing labor regulation in an economy with a dual labor market. The analysis uses data from Brazil, a country with a large informal sector and strict labor law, where enforcement affects mainly the degree of compliance with mandated benefits (severance pay and health and safety conditions) in the formal sector, and the registration of informal workers. The authors find that stricter enforcement leads to higher unemployment but lower income inequality. They also show that, at the top of the formal wage distribution, workers bear the cost of mandated benefits by receiving lower wages. Wage rigidity (due, say, to the minimum wage) prevents this downward adjustment at the bottom of the income distribution. As a result, formal sector jobs at the bottom of the wage distribution become more attractive, inducing the low-skilled self-employed to search for formal jobs.
October 1, 2009
According to Forbes:
America’s super rich are getting poorer. For only the fifth time since 1982, the collective net worth of The Forbes 400, our annual tally of the nation’s richest people, has declined, falling $300 billion in the past 12 months from $1.57 trillion to $1.27 trillion.
Faltering capital markets and real estate prices, along with divorce and fraud, pushed the fortunes of 314 members down and drove 32 plutocrats off the rankings.
Click here to view the complete list.
September 12, 2009
Freakonomics points to a great article from the Economist that suggests that Capitalism is thriving. According to the World Bank’s annual Doing Business report, “which tracks changes to the regulations that affect business”:
In the year since June 2008, 131 countries introduced 287 pro-business reforms—20% more than in the previous 12 months and more than in any year since the World Bank started the survey in 2004.
Low and lower-middle income economies accounted for two-thirds of the action, with Rwanda turning out to be the world’s champion reformer—the first time a sub-Saharan country has claimed the prize. Eastern European and Central Asian countries were the most energetic reformers by region for the sixth year in a row (26 out of 27 governments there introduced reforms). Middle Eastern and North African countries were not far behind (17 out of 19 countries), and 17 high-income countries also spruced up their business regulations.
Of significance, the article also notes that,
…in poor countries, a ten-day reduction in the time it takes to start a business can lead to an increase of 0.4 percentage points in GDP growth. Another shows that people who have a formal title to their property invest as much as 47% more in their businesses.