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Welfare Economics

Welfare Economics . Aravinda Guntupalli. Government welfare spending in developed and developing countries. Nita Rudra (2002) Globalization and the decline of the welfare states in Less-Developed countries. Industrial organization. Vol 56(2). Why is it important?.

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Welfare Economics

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  1. Welfare Economics Aravinda Guntupalli

  2. Government welfare spending in developed and developing countries Nita Rudra (2002) Globalization and the decline of the welfare states in Less-Developed countries. Industrial organization. Vol 56(2).

  3. Why is it important? • All nations are being challenged by the crucial task of improving income, well-being and economic capabilities of people. • Every year aid is distributed, investments are made, policies are framed, and elaborated plans are hatched to achieve this goal. • It is always complex issue that is debated by economists, media, politicians and layperson.

  4. Different topics • May 2 General discussion on welfare • May 9 Types of welfare states and history • May 16 Child welfare • May 23 Inequality and welfare • May 30 Gender and Welfare • Room 332 and Tuesdays 12:00-14:00

  5. Additional lectures • June 13 (pclabor) • We will work on SPSS and use data of World Bank • Regression analyses • July 4th (Discussion on special problems with analyses of the data) • Office hours (Wednesday 2 to 4) Room 422

  6. FAQ (Frequently Asked Questions) • Open an account in the PC labor as soon as possible to have access to computers for June • The course has 4 point weight • We will have to give both assignment and a presentation for 10 minutes • Brushing up your old statistics lectures would help you analyze the data • Language of the course, presentation and the exam is English

  7. Presentation and Assignment • Presentation dates • Saturday and Sunday (July 22 and 23 ???) • Assignment • Deadline for the submission is 29th July

  8. Various topics • Does a GDP growth rate reduces poverty? • How to measure Welfare? • Welfare in Germany from 1900 onwards • Great divergence (Asia, Ottoman Empire and Europe) • Child welfare • Employment of the women • Fertility and welfare: Is there a relation?

  9. Contd… • Age structure and its impact on welfare (if any) • Missing women concept (declining sex ratio in some Asian countries) • Health and welfare relation • Gender differences in education, and health (special emphasis on Germany) • Latin American inequality and its relation to welfare • Democracy and welfare • Migrants and their welfare

  10. www.uni-tuebingen.de/uni/wwl/meera.html Don’t hesitate to send me an email if you have doubts aravinda-meera.guntupalli@uni-tuebingen.de

  11. How to define and measure welfare? Aravinda Guntupalli

  12. Definition of welfare • Welfare refers to the economic well being of an individual, group, or economy. • For individuals, it is conceptualized by a utility function. • For groups, including countries and the world, it is a complex concept, since individuals fare differently. • In trade theory, an improvement in welfare is often inferred from an increase in real national income.

  13. Contemporary measurement • Measurement of economic development • GNP and GDP • Human Development Index (HDI) • Inequality • Lorenz curve • Gini concentration ratio • Poverty • Both Absolute and relative income are important • Measurement of poverty • Poverty line • Poverty head count

  14. Complexity of welfare measurement(Tata and Schultz, 1988) • Physical system the total value of primary industry output per capita and population per square kilometer of arable land. • Economic system • GDP/capita and manufacturing value-added per capita are two common and useful measures of output in economic systems • Social system • A social system has the role in providing in situations for satisfying peoples needs, safety, security and human development. • As there are no direct measures for cross-country comparisons we have to use proxy measures like infant death rates, percentage of highly educated people, and percentage of rural population.

  15. Contd.. • Political system • The role of political system is to establish order, justice in society and to manage human and physical resources efficiently. • We can measure it using various measures like democracy. (freedom house or polity data) • Psychological measurement (???) • Happiness, good mental health and some psychological indicators also reflect the wellbeing of people • Gender differences in Welfare (?) • Welfare of Children(?)

  16. GNH measure (Bhutan) (BBC)

  17. Silver wages of unskilled labourers, 1500-1849 (grams of silver per day) Source: Allen (2001), Broadberry and Gupta (2005) Istanbul from Özmucur and Pamuk (2002

  18. Consumer prices in Europe, 1500-1799 (1500-49=100) Source: Allen (2001), Broadberry and Gupta (2005)

  19. See also Broadberry and Gupta’s research papers from Warwick

  20. Height for measuring welfare • GDP and other statistical data are mostly available for country level • Also there is paucity of information regarding gdp of various countries before 1960 • Economic Historians employed the finding of human biologists that average (not individual) human stature was influenced by the quality of nutrition, the disease environment and physical exertion. (see papers by Baten, Komlos and Steckel)

  21. Baten and Wagner (2002)

  22. Classification of economies • 1996 World Bank income classification • Less than $785 per capita - Low income • $785-$3115 - Lower Middle income • $3115 to $9636 - Upper middle income • Over $9636 - High income economies

  23. GNP and GDP • The GDP is defined as the market value of all final goods and services produced within a country in a given period of time. • Until the 1980s the term GNP or gross national product was used. • The most common approach to measuring and understanding GDP is the expenditure method • GDP = consumption + investment + government spending + (exports − imports)

  24. Limitations • Poor quality statistics • Definition - Goods and services that are sold in the market (unpaid work ????) • Exchange rate problems • To overcome this problem, common set of prices are used to measure output of every country (hair cut in India is priced the same as on in the US) • This measure of average income is called Purchasing Power Parity (PPP)

  25. Complexity of welfare • When we talk about welfare we need to have a full consideration of taxes, subsidies, transfer programs, health care reform, regulation, environmental policy, social security system, and educational reforms. • Daniel Slesnick (Empirical approaches to the measurement of welfare, Journal of economic literature, 1998)

  26. Social indicators for the early 1990s (GDP per capita, PPP)

  27. Important books • “Human development report” • “World development report” • “Development economics” Debraj Ray • “Hunger and Public action” Jean Dreze and Amartya Sen • “Gender Equality and Welfare States” Daine Sainsbury • “Growing Public: Social Spending and Economic Growth since the Eighteenth Century” Peter Lindert • “The Gender Division of Welfare: The impact of the British and German Welfare States” Mary Daly • “Women Welfare: Theory and Practice in the US and Europe”Hirschmann and Ulrike Liebert

  28. Thank You

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