112532 Advanced Seminar | Economics of Inequality

Instructors: Dr. Ekaterina Skoglund

Event type: Seminar

Org-unit: Studentische Forschung

Displayed in timetable as: VSCME_II

Hours per week: 3

Credits: 5,0
Note: In your exam regulations, differing credits may have been specified.

Location: Campus der Zeppelin Universität

Language of instruction: Englisch

Min. | Max. participants: 5 | 35

Course content:
The course focuses on the economics of poverty and inequality. It covers main definitions and methods to measure poverty and inequality, reasons and consequences of both these phenomena, relevant policies, and the concept of social justice. The course mostly takes the micro-economic point of view, and hence places an individual to the fore. Differences in context between developing and developed countries are addressed.While a number of statistical and quantitative concepts is included into the course content, the final focus is applied/practical, namely on the ability to withdraw and correctly interpret information provided by open sources. On the completion of the course, students are expected to be able to discuss and interpret a range of notions and indicators used by mass-media and public/international organizations, when issues related to poverty and inequality are covered. In order to demonstrate this capacity, students should submit - at the end of the course - an essay addressing their topic of interest with the help of numerical and visual information.
The working language of the course is English.

Course content:

Part 1: Poverty
·         Income and earnings. Sources of personal incomes. Household production. Income distribution and ways to describe it (mean, median, quantiles, and others)
·         Living standards: real vs nominal. International comparison of living standards.
·         What is poverty? Measurement and magnitude. Living wage. Poverty in developed and developing countries.
·         Absolute, relative and subjective poverty. Poverty lines, poverty indexes, poverty profiles, vulnerability to poverty. Poverty maps.
·         Issues in measurement of poverty (equivalence scales, treatment taxes)
·         Short-run vs. long-run poverty. Poverty: not only lack of income. Nutrition. Poverty traps. Notion of social exclusion.
·         Magnitude of the problem and policy response. Micro-loans. Pro-poor growth.
·         Social justice theories - I: Amartya Sen and Capability approach; Martha Nussbaum

Part 2: Inequality
·         What is inequality? Inequality of what and between whom? Inequality measures: income shares by quintile group, concentration measures, coefficient of variation, Lorenz curves, Gini coefficients, Theil index).
·         International comparisons of inequality. Kuznetz curve.
·         Social dimensions of inequality (race, ethnicity, class, gender, immigration status, disability, age, sexual orientation and family structure).
·         Theories of discrimination. Education and inequality. Empirical approaches to assessing discrimination. Oaxaca-Blinder decomposition. Gender gap in employment, gender and motherhood wage gap.
·         Wealth and well-being. Dynamics of wealth. Intra-household distribution of wealth.
·         “Middle class”.
·         Mobility. Measures of life time mobility. Intergenerational mobility.
·         Redistributional effects of public policy. Taxation and spending. Labour market institutions and inequality (e.g. Minimum wage).
·         Further sources of rising inequality: polarization of job opportunities, shift to services, institutional factors
·         Social justice and distributional issues - II: Rawls, Nozick and others . 

Educational objective:
Upon completion of the course the students should:
·         Be able to give a definition of income, wealth, well-being, poverty and inequality.
·         Be able to explain what income distribution is and which statistics can be used to describe one.
·         Be acquainted with main existing methods to measure inequality and poverty, be able to list their properties and limitations (their value and empirical dimensions, and their consequences for the social construction of the problem, policy response, and the political debate).
·         Envisage the differences in context for developed and developing countries while addressing poverty and inequality; be able to make examples
·         Be able to explain what social stratification is and to and inequality by various social dimensions such as race, ethnicity, class, gender, immigration status, disability, age, sexual orientation and family structure.
·         Examine the role played by worker and job characteristics in generating wage differentials among workers.
·         Understand the primary theories of discrimination in the labour market; be able to apply simple indices to measure gender wage discrimination.
·         Be aware of the role of policy in producing, maintaining, and alleviating poverty and inequality.
·         Know about the theoretical and analytical foundations for promoting social and economic justice; be able to list the main postulates of Utilitarism, Marxism, Libertarianism and Capability Theory. 

Further information about the exams:
The total grade is composed of two parts:

1.      (40%): 6 in-lecture quizzes will be offered during each 6 days of the lectures. Only 4 best results will count for the final grade. (The quizzes will cover the material covered during the lectures. No additional reading is required to pass a quizz.  Normally, a maximum of 15-20 minutes will be needed to complete a quiz.)

2.      (60%): essay, minimum of 6000 and maximum of 10000 characters without spaces. Topics of the essays will be discussed after the 1st block/part of the course. By the third block/part of the course students are expected to prepare a one-page proposal containing essay topic, data and literature sources. Final essay submission deadline is 15.07.2018.

Mandatory literature:
During the course, a number of chapters from several books and research papers will be used; the readings needed for discussions during classes will be uploaded to ZUhause on the course page.

Two recommended books for the course:

• 1) Edward N. Wolff, WileyBlackwell, 2nd Ed., 2009 (ISBN 978-1-4051-7660-6).
  
• 2) Haughton, J. and Khandker, S. R. (2009). Handbook on Poverty and Inequality, World Bank, Washington D.C.
  
• Available online at: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,,contentMDK:22405907~menuPK:6626650~pagePK:148956~piPK:216618~theSitePK:430367,00.html
  

• Atkinson, A.B. and Bourguignon, F (eds), (2015). Handbook of Income Distribution, Elsevier
  
• Borjas, G. J. (2016). Labor Economics, 7th Edition, McGraw-Hill Education: Chapter 7 “The wage structure”, Chapter 9 “Labor market discrimination”
  
• Cowell, F., (2009). Measuring Inequality, Oxford University Press, Handbook of Economic Inequality, Oxford, Oxford University Press
  
• Silber, J (ed), (1999). Handbook of Income Inequality Measurement, Kluwer Academic Publishers
  

• “Who is poor?”, Dan Morrell, Harvard Magazine, Jan-Feb 2011
  
• Online at: http://harvardmag.com/pdf/2011/01-pdfs/0111-9.pdf
  
• Acemoglu, D., & Robinson, J. A. (2013). Why nations fail: The origins of power, prosperity, and poverty. Crown Business.
  
• Baneree, A. V., & Duflo, E. (2011). Poor economics: A radical rethinking of the way to fight global poverty. Public Affairs.
  
• Banerjee, A.V. and Duflo, E. (2007). The Economic Lives of the Poor. The Journal of Economic Perspectives. 21(1):141–167
  
• Ravallion, M. (1992), Poverty comparisons, a guide to concepts and methods. Living Standards Measurement Study. Working Paper 88, World Bank, Washington D.C. Online at: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2000/04/28/000178830_98101902174198/Rendered/PDF/multi_page.pdf
  
• On extreme poverty: http://www.worldbank.org/en/topic/poverty/overview
  
• http://www.nation.co.ke/news/World-Bank-says-poverty-is-reducing-worldwide/1056-3402866-sseirm/
  
• Kakwani, N. 2006. What is Poverty? (UNDP IPC). Online at: http://www.ipc-undp.org/pub/IPCOnePager26.pdf
  

• https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1998/press.html
  

• A short video on how unequal the world is
  
• http://www.independent.co.uk/news/world/if-the-world-were-100-people-one-video-that-explains-how-unequal-the-world-is-a6932006.html
  
• TED-talk by Richard Wilkinson on ``How economic inequality harms societies. Online at http://www.ted.com/talks/richard_wilkinson?language=en
  
• Main conclusions from “The Spirit Level: Why Equality is Better for Everyone”, book by Kate Pickett and Richard Wilkinson (2009).Online at: https://www.equalitytrust.org.uk/spirit-level
  
• How Income and Wealth are “Earned” Matters in Understanding Inequality, by Jason Clemens,
  
• Taylor Jackson, and Megan O’Neil. Online at: https://www.fraserinstitute.org/studies/how-income-and-wealth-are-earned-matters-in-understanding-inequality
  
• Kate Pickett and Richard Wilkinson, ``The Spirit Level: Why Equality is Better for Everyone'', 2009 (1st Edition) (Partially available through Google Books; an easy read) 
  

• https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2015/popular-economicsciences2015.pdf
  
• https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2015/advanced-economicsciences2015.pdf
  
• https://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2015/deaton-lecture.pdf
  
• Atkinson, A. B. (2015). Can we reduce income inequality in OECD countries?. Empirica, 42(2), 211-223.
  
• Atkinson, A. B., & Brandolini, A. (2013). On the identification of the middle class. Income inequality: Economic disparities and the middle class in affluent countries, 77-100.
  
• Stiglitz, J. E. (2014). The Price of Inequality: Why Inequality Matters and What Can Be Done About It. Testimony to the United States Senate Budget Committee, Hearing on Opportunity, Mobility, and Inequality in Today's Economy.
  
•  
  
• Wealth and Income Distribution: New Theories Needed for a New Era econintersect.com /a/blogs/blog1.php/wealth-and-income-distribution-new by Ravi Kanbur and Joseph Stiglitz Appeared originally at Voxeu.org 18 August 2015
  
• http://econintersect.com/a/blogs/blog1.php/wealth-and-income-distribution-new
  

• Fuchs-Schündeln, N., Krueger, D., & Sommer, M. (2010). Inequality trends for Germany in the last two decades: A tale of two countries. Review of Economic Dynamics, 13(1), 103-132.
  
• Biewen, M., Ungerer, M., & Löffler, M. (2017). Why Did Income Inequality in Germany Not Increase Further After 2005?. German Economic Review.
  
• DW 21.032016: “Bundesbank warns inequality is rising in Germany” http://www.dw.com/en/bundesbank-warns-inequality-is-rising-in-germany/a-19132127
  

Modulbeschreibung:
Income inequality is a hot topic in public and scholarly discourse nowadays, leading to numerous policy issues/implications regarding inequalities of race, ethnicity, gender, and social class.  The course aims to review various definitions and approaches to measurement of economic inequality and poverty, and considers patterns of inequality between different countries and over time. It provides an overview of  causes of inequality within different subgroups of the population,  and assesses the effectiveness of policy measures aimed at reducing inequality and poverty with a particular focus on current approaches. Theoretical foundations – rooted in several fields of economics including labour economics, public economics, the economics of education, the economics of crime, migration economics - are illustrated by evidence from both developed and developing countries.