Econ 133 Graphs
• Each year of education having proportional effects on income is pretty accurate •pretty linear trend in increased wage for every extra year of education
mean log hourly wage vs. mean years of education
•For every country except China Consumption is greatest % of GDP •NX is negative for everyone, but Germany, Canada, and China
International Comparison
•US highest Gini of income inequality - almost 0.4 •UK second •lowest Denmark
Gini coefficients of income inequality in selected OECD countries, 1975-2011/12
•Seems to be steadily increasing as a trend •now at about 45,000 per capita •started around 2,500 in 1870
Per Capita GDP in the US, 1870-2009
• Africa is red •between 4.34.8% prevalence of adult HIV •global prevalence is 0.8%
Adult HIV prevalence (15-49 years), 2014 By WHO region
• Northern Africa is doing pretty well - more Mediterranean countries culturally different - strong connection to Europe •South Africa is also doing pretty well
Africa by GDP/CAP 2002
• Big French influence in Northern Africa •Middle is Belgium •Bottom and some North is Britain
Africa, by colonizers in 1914
• Oil production • Gas production • Diamonds • Uranium • Copper • Magnesium • Gold • Rich in natural resources - sometimes resource curse - economy focused on availability of natural resource • Extracting and selling elsewhere
Africa: natural resources
• GDP most growing in the middle • Solow growth model - if you are far away from your equilibrium capital level you are growing faster - lower GDP but higher growth
African GDP
• Most of Africa gained independence in 50s and 60s •latest was 1980+
African independence
•Seems that greater growth of per capita income leads to lower Infant mortality rates
Annual growth rate of per capita income, 1960-2000
•Germany highest around 8% - started around 10% in 1975 •US second highest around 7%
Average return on private wealth 1975-2010
• Germany at the top o Capital shares are high and increasing o Japan shares are decreasing •France is at the bottom
Capital share in factor national income 1970-2010
• Growing at a constant rate (straight line) • First there is a jump down taking people from producing things into producing ideas • Then it eventually catches up and increases since the growth of Y is increasing so new slope is steeper •A rise in the fraction of population engaged in R&D decreases Short-run per capita output but leads to a permanent increase in per capita output growth
Change in Alpha
• There is an initial jump down since there is a drop in GDP per capita then it catches up • Growth rate going up so will be steeper •An increase in total population decreases short-run per capita output but leads to a permanent increase in per capita output growth
Change in N
• Changes the slope but no drop down • Growth rate of A is higher and growth rate of Y is higher •An increase in the productiveness of R&D immediately leads to higher per capita output growth
Change in Theta
An index includes several measures of gender equality: o Economic Participation and opportunity o Education attainment o Health o Political Empowerment •farthest from equality with politics far, but not as far for economy
Global gender gap index
•Personal consumption largest ~ 70% of GDP •G second largest ~ 20% •I about 11% •NX negative ~ -2%
Components of GDP
• Distribution around the mean •Highest Gender Gap Index in High income •lowest gender gap index for lower-middle income
Global gender gap index by income
• Distribution around the mean •highest mean in North America •Lowest in Middle East and North Africa •higher mean means more equal
Global gender gap index by region
• They ask people for their perception of corruption of their country •People believe Russia, Africa, Mexico, South America, China, Middle East to be very corrupt
Corruption Perceptions Index 2016
• Africa is very dark - high incidence •India is also very dark and middle east
Deaths form unsafe water, sanitation and hygiene
• Really high for sub-Saharan Africa o Even with economic recovery - debt will drag down growth •Sub-Saharan Africa around 80% of GDP •LA and China about 40% of GDP
Debt as % of GDP
• Total enrollment spiked after this bill when people came back to be schooled - veterans contributed a large difference in the spike in enrollment Benefits included dedicated payments of tuition and living expenses to attend high school, college or vocational/technical school
Earning, education, & the Canadian G.I. Bill
• Definitely positive correlation • Mean Wage and Salary Income and Foreign born as % of population • Endogeneity and selection bias together • Economic theory tells us that more immigrants or more people means lower wages, but the data tells the opposite • Since people are deciding to live in higher income areas how can we separate that from the effect of immigration itself on income
Earnings and Immigrant Densities in the 30 largest SMSAs
• Per capita GDP has been growing during the industrial revolution • Can see divergence - a lot of countries in sub-saharan Africa who are keeping with trend, while others growth shot up • Convergence happened after WW2 with many European countries • Some countries experienced negative growth
Economic Growth over the Very Long Run in Six Countries
• Tax foundation is non partisan •Was around $35-40 now about $20
Estate Tax receipts are declining
• Part of why there is an increase after the 70s was an increase in trade and globalization • UK and US had increase in financial capital wealth which increased disparities •Global inequality has increased over time (0.5~0.65)
Global inequality, Gini coefficient vs Top 1% income share, %
•Consumption levels way above others •NX was close to zero in 1950 but has slowly gone more negative •Investment shares have also dropped
Expenditure Shares US GDP
• Trend shown that increase in savings rate changes capital intensity - seen in equality (K/Y = s/depreciation rate) •horizontal axis is capital-labor ratio, kt •Japan is near the top for both investment rate and capital output •African countries are near the bottom •The US is near the middle •There is a positive correlation between investment rate and Capital-output ratio (K/Y)
Explaining Capital in the Solow Model
• Global picture • How many females are in the labor force • Sub-Saharan Africa has not changed •Middle East has improved a lot from 24-30% •world has improved
Female Labor Force
• Women's pay as percent of men pay ~ 75% • Broken down by education level • Around 70% lower •While the gap in pay between men and women narrowed in the 1980s and 1990s, some groups of women are actually losing ground. •Highly educated women are faring less well than a decade ago, and women making the most face a larger gap than those with lower income •high school graduate still doing better for women than before
Few Cracks in the Glass Ceiling
• Significant improvement •Even without Chinas contribution to decrease in world poverty the trend is still decreasing •China does contribute a lot of the decrease in poverty •East Asia and the Pacific have the highest number of people living on under $1.25 a day - above 1 billion •Second highest is China •Middle East and North Africa, Eastern Europe and Central Asia aren't bad
Global poverty
• East/Asia and the Pacific is the most noticeable trend - huge decrease •Highest percent is now Sub-Saharan Africa (70%), lowest is Europe/Central Asia (almost 0%) •Developing world total has decreased from 70-about 40%
Percent of Population living on under $2 per day
• CA, NY, NJ highest •Mid-west and other southern states + ME and VT are really low
Foreign-born Population as percent of State Population
• All over the GDP map - many with educational attainment •Chad and Yemen have very low educational attainment •Ireland, Sweden, Finland, Iceland and many others have almost perfect equality with educational attainment
GDP per capita vs educational attainment
•Almost all countries are near equality for health and survival rate •Qatar has highest GDP per capita
GDP per capita vs health and survival subindex
• Finland, Iceland, Norway, Sweden at the top •Not a clear correlation •Russia, Saudi Arabia, Yemen, Chad, Singapore, Kuwait, Qatar all have very low political empowerment equality
GDP per capita vs politcal empowerment
• More noise not much of a trend •Economic participation and GDP per capita don't seem to have much correlation
GDP per capita vs. economic participation and opportunity subindex 2014
• Sweden, Finland, Ireland high equality and higher GDP per capita •trend for more equal countries to have higher GDP per capita, PPP •Yemen, Pakistan on bottom •Qatar, Kuwait, Luxembourg way off graph with higher GDP than equality
GDP per capita vs. global gender gap index 2014
• GDP per capita and ASR • Higher ASR is better • Upward trend - many sub-Saharan countries are towards the bottom - their ASR is low even though their GDP per capita is high •Botswana has higher GDP per worker but lower life expectancy than other Sub-Saharan African countries
GDP per worker vs. adult survival rate
•South Africa has extremely high Gini coefficient •US is .45-.49 but not terrible - same as China and Mexico •Canada, Norway, Sweden, Finland, Australia have pretty low Gini
GINI coefficient
•Italy has the highest gross and net saving at about 15% •lowest are the UK and then US with 7.3% and 7.7% •private saving (% national income) - capital depreciation = net private saving
Gross and net saving in rich countries, 1970-2010
• Closer you are to your steady state the slower you are growing •Switzerland has low growth and high per capita GDP •Ireland, Japan, Spain, Portugal, Greece high growth lower GDP per capita •It seems higher GDP per capita seems to have slower growth •US is about 0.025 GDP growth per capita
Growth rates in the OECD, 1960-2007
• For 16 years of education it is the highest - college level education • This gap is uncontested •Hourly Wage vs. Age
Hourly wage profile for men
• 17.9% women - house • 20% women - senate
House of Rep and Senate rep.
• Sub-Saharan Africa again is very red and has high incidence of undernourishment
Hunger still a major problem
There has been a significant increase through the 19th century then a huge decline o Political backlash o After significant influx of immigrants from Europe o Decline between 1900 and 1940 After around 1940 it started to increase again and now we are again facing a backlash o Threshold for immigration feelings
Immigrant Flows to the US
• Sample of 155 countries • As income grows we have life expectancy that is growing in general
Income and life expectancy 2005
• Percent of estate tax •Japan highest at 55% •Italy lowest at 4% •US has 40%, UK same
Inheritance/Estate Tax around the world
• After WW2 • WW2 solidified the trend of increase female participation in the labor force - started with WW1 • Because of a lot of men going to the military women filled the gaps • Also racial - African Americans - increase in labor force participation • Male participation decreased a little bit •About 75% for women •About 70% for men
Labor force participation rate by gender
• When there is a straight line on a ratio scale it means it grows at a constant rate •on a standard scale it looks like a curved line, but on a ratio scale a constant growth looks straight
Level vs. Ratio Scale Plots
•No convergence, the gaps remain the same •Growth is shown at the same rate for each of the three
Log GDP per capita for initially rich, middle income, and poor countries
• Divided by rich, middle income, and poor countries • Convergence
Log life expectancy at birth for initially rich, middle income, and poor countries
• Closer Lorenz curve is to equality line the more equal the country is • The Gini coefficient is the ratio of area A over the entire area (A+B) • Higher the Gini is the higher the inequality • The closer to 1, the higher the inequality
Lorenz Curve & Gini coefficient
•US was below Europe (around 90%) until around 1960 when the US inequality for wealth began diverging and increasing past Europe •Europe has decreased (about 63%) mainly over time, while the US has increased (about 70%)
Wealth inequality: Europe and the US, 1870-2010
• It is useful to model the growth of output-per-capita: o Allows for cross-country comparisons •closer alpha is to 1 the less diminishing returns you have
Modeling Growth
$192 billion out of Africa each year
Money out of Africa each year
•Tons of coal in south Africa
Most oil and gas reserves concentrated in north Africa and Nigeria
• We think Japan has a high saving rate, but over time even in Japan the saving rate dropped and is low •All have recently experienced decrease in net national savings •Japan started highest above 15%, most other countries started between 5 and 10%
Net national saving rates as % of GDP
• Central Africa and India are pretty significant
Number of malaria reported confirmed cases, 2010
Consumption is Output - Investment.
Output & Consumption in the Solow model
• Growing at a slower rate •The growth rate of world population was above 1% [er year from 1950-2012 and should return toward 0% by the end of the 21st century
Population Growth
• Relatively pretty constant •US 1.3% •France lowest 0.5% •Ethiopia highest 3.2%
Population Growth
•Many areas in Africa are over 60% •North America ~ 10-20% •China is <10%
Population Living Below National Poverty Line
• Red is more the 50% • Most of sub-Saharan Africa is red •China also very red and India
Population with no access to sanitation in % of the total population, 2004
• Over 100% means that more females are literate than men • With literacy and GDP, is GDP increasing because of more literate females or that GDP increases female literacy
Positive correlation between literacy ratio and GDP per capita
•Seems that higher ratio of girls to boys in primary and secondary education correlates to higher GDP per capita
Positive correlation between student ratio and GDP per capita
•India highest poverty reduction •China second •Tanzania, Ghana, Cambodia all near bottom
Poverty reduction, Select countries
• Do we want more saving or consumption • We need saving for long run growth to increase capital stock •US -2.4% including public saving, 7.6% with private saving, national (private and public) 5.2% •Japan highest with only positive public saving, national 14.6%
Private and public saving in rich countries, 1970-2010
• Government wealth decreasing •Private wealth is increasing - Italy highest - almost 700% national income •Government wealth has always been lower than private wealth
Private vs. government wealth 1970-2010
Top Executive jobs o Women are held to higher standards o Not ready to hire women o Family responsibilities High political offices o Women are held to higher standards o People are not ready to hire women o Family connections o Don't have enough party support
What's Holding women back from top jobs
• Big change in Europe • Big improvement in Sub-Saharan Africa and Arab states •overall improvement •US 19-27%
Proportion of women in parliaments: progress over the last decade
• Overtime there is improvement •LA and C have highest ratio of girls to boys - higher than high income OECD •lowest is South Asia •all have improved - Sub-Saharan Africa not much improvement - Middle East a lot
Ratio of Girls to Boys in Primary & Secondary schools
• Gap in South Asia, Sub-Saharan Africa and Middle East (large gender gaps) •All have been improving over time - even world average
Ratio of female to Male Youth literacy rates
•Started at about 7.5% in 1975 and generally has decreased over time •fell below 0 from about 1997-2008 and is still below 5%
Saving rate of the bottom 90%
• Bottom 90 saves very little • The saving rate of the 9% has declined •saving rate of the top 1% have stayed above 30%, was once almost negative from 1930-40 •the rich save more as a fraction of their income, except in the 1930's when there was a large dissaving through corporations •The average private saving rate has been 9.8% over 1913-2013
Saving rates by wealth class (decennial averages)
• In 1951-60 the European immigrants composed over 50% of the immigration • After WW2 many came to the US • Immigration from Asia increased quite a bit • Immigration from Mexico is the least educated • Usually immigrants who come from other countries are in their peak productivity o As a receiving country we are getting them at the time they can be productive members of society - many also end up retiring in their home country o They help the economy and don't carry many burdens as children or elderly • Immigrants are mainly spaced and concentrated in the lower education level or at the very top • Affects the country they are leaving since their productive labor are leaving and they are often the ones to take care of these people when they are old • Remittances is wealth that is created when people leave
Source Country and Educational Composition of US Immigration
• Output growth divided into 3 factors • Capital growth and labor growth means factor (capital) accumulation • Productivity refers to A and alphas - if labor is more productive A is going to go up, alpha will also change • Solow model wants to explain where long run growth comes from • Factor accumulation (L and K changing) •Productivity growth highest in 1948-1973 when output growth was highest
Sources of Growth
• US has about 2% employed in agriculture • Africa has very high rates of agriculture labor- most between 80-90%
Sub-Saharan Africa, Agriculture labor force as a percentage of total labor force
• Almost 50% of Tajikistan's GDP income comes from outside their borders •Top 10 recipients of migrant remittances - India, China, Mexico, Phillipines, Nigeria, France, Egypt, Germany, Pakistan, Bangladesh, UK Top 10 recipients of migrant remittances as % of GDP •Tajikistan, Liberia, Kyrgyzstan, Lesotho, Moldova, Nepal, Samoa, Haiti, Lebanon, Kosovo
Where the money goes
•per capita output was 0 from 0-1700 •now 0.8% •world output grew from 0.1% to 1.6% •growth rate of world GDP on average was 3.0% from 1913-2012 - can be broken down between 1.4% for world population and 1.6% for per capita GDP
World growth since the industrial revolution
•capital will move to reach the steady state point
The Solow Diagram
• Exemption went up - less people needed to pay tax • In 2010 the Estate Tax was revoked for one year • People give the money away before they pass the tax level •below 1,000,000 in 2001, above 5,000,000 in 2015
The US Estate Tax Exemption had grown with time
•India and China shares of poor has shrunk •Sub-Saharan Africa still has a lot of global poverty
The changing landscape of global poverty (millions of poor)
• Change in agricultural land prominent in 1700 until 20th century • Housing much more significant - price of real estate in UK high • More foreigners own stock in the UK •Foreign assets became 0 or lower in 1950 - other domestic capital increased
The changing nature of national wealth: UK 1700-2010
• Canada send the most cash back to their home o Per capita - $688.57 • Then UK and the US US - Mexico, India, China UK - France, Nigeria, India Canada - India, China, Phillipines
The global flow of remittances
•the growth rate of world output surpassed 4% from 1950 to 1990 •if the convergence process goes on it will drop below 2% by 2050
The growth rate of world output from Antiquity until 2100
• The trend levels off before 2010 • After Trump was elected many people left apartments - affects the economy here where people are leaving from
US Unauthorized Immigrant Population Levels Off
• All three have been increasing steadily •Total GDP growing at 3.5% •Per capita GDP growing at about 2% •Population growing at about 1.5%
US population, GDP, an per capita GDP, 1870-2009
• Top is India even after all of their improvements - 33% •China second - 13% •Nigeria 3rd
Top 10 countries with largest share of the global extreme poor
• Mainly on the straight line meaning constant growth ~ 2%
US GDP on a Ratio Scale
For one person you have to make $11,770, for each extra person its about $4,160
US Poverty Threshold
•net national savings rate and Personal savings rate have both declined •Both around 0 now, personal going below zero •Both started around 8% of income
US Savings Rates
• Looked at historical mandatory schooling rules and showed that people who were born in the first quarter of the year were eligible to drop out of school earlier than others o They do have less amount of schooling o Completely random in a way o Compare income of people born in first quarter to those in third and fourth - showed significant impact
Years of completed education vs. year of birth