Measuring Inequality

1. Measuring Inequality A practical workshop On theory and technique San Jose, Costa Rica August 4 -5, 2004

2. Panel Session on: Major Findings From UTIP

3. by James K. Galbraith and Enrique Garcilazo The University of Texas Inequality Project http://utip.gov.utexas.edu Session 4

4. Correspondence to known events… Revolution War Tiananmen Banking Crisis GATT Entry Falklands War Military Coup Data for China drawn partly from State Statistical Yearbook

6. Russia

7. This figure shows the evolution of inequality in Russia measured across regions and across sectors. Note that the increases across regions are larger. Source data are from Goskomstat; Calculations by L. Krytynskaia.

8. A stacked bar chart of Theil elements can show the changing contribution of each sector to inequality over time; values above zero indicate above-average incomes, and conversely… Industry Transport Finance Agriculture Education

10. 1990 Maps provide a useful way to visualize the increasing regional polarization of income. High values (yellow to red) indicate concentrations of relative wealth, low values (light \to dark blue) show concentrations of relative poverty.

11. 1994

12. 1998

13. 2000 Important Note: These measures do not take account of relative changes in the regional cost of living.

14. These stacked line graphs show the contribution to inequality in Russia of each sector in each region. Two facts emerge clearly: the general decline of agriculture, education and health in all regions, and the rise of industrial production (energy), construction, transport and finance in a very few specific regions. 1990 Note that in 2000 the bottom of the income structure is marked by agriculture; finance meanwhile has moved up past management and science. 2000

15. China

20. 1987

21. 2000

22. These stacked line graphs show the contribution to inequality in China of each sector in each region.Two facts emerge clearly: the rise of monopolized activities such as transport, utilities and banking, especially in the richer areas, and the general relative decline of manufacturing and construction. 1987 2000 Note that the relative position of education and science has held up much better in China than in Russia. The decline in agriculture has also not been as severe.

23. Conclusions • Inequality rose in both Russia and China • Regional inequalities rose most sharply • Liberalization favored monopolies and the export regions and sectors • Agriculture lost ground • In China, the capacity to provide key public services withstood the pressures of liberalization much better than in Russia

24. Regional Inequality in the United States, 1969-2000 Inequality measured between counties

25. The NASDAQ… in case you don’t remember…

26. Contribution to Inequality between Counties(Components of the Theil T Statistic) Relatively Impoverished Neutral Prosperous (income above national mean)

27. 1969

28. 1970

29. 1971

30. 1972 The Soviet wheat deal….

31. 1973

32. 1974

33. 1975

34. 1976

35. 1977

36. 1978

37. 1979 Energy boom….

38. 1980

39. 1981

40. 1982

41. 1983

42. 1984

43. 1985

44. 1986

45. 1987 … and bust

46. 1988

47. 1989

48. 1990 Polarization of the West…

49. 1991

50. 1992