Economics 15: Economic Poverty and Inequality

Swarthmore College Professor Jefferson, Kohlberg 209 Spring 2015 Office Hours: Tues. 1-2:30pm & by appt. pjeffer1@swarthmore.edu This course examines the causes and consequences of poverty and income/wealth inequality. Topics covered include measurement, mobility, and the impact of globalization, technical change, taxation, and aid. Micro interventions and macro initiatives are contrasted. Public policies and programs aimed at prevention, alleviation, and redistribution are analyzed and evaluated. The developed and developing country contexts are considered. TEXT: Jefferson, P., ed. (2012): The Oxford Handbook of the Economics of Poverty, Oxford University Press, New York. (Required, denoted by OHEP below).

GROUPS: You will be randomly assigned to a small working group. PRESENTATIONS: Your group will present one (or more) of the structured classroom discussions/presentations. Your group will be randomly assigned one of the topics below. PRESENTATION GUIDELINES: Presentations should be accompanied by Power Point slides. The goal of the presentation is to foster understanding of and insight into the topic under study. This requires that the structure of the presentation be thought out and coherent. A good place to start is to think hard about the following questions: What question or issue does this article address? Why is this question or issue important? How do the authors propose to answer this question? What theory, data, and statistical methods, do the authors use? Are these methods appropriate? Not all of these questions are relevant for all papers. Nor does this list of questions exhaust the set of interesting questions that can be asked about any particular article. Use your judgment and be creative. The presentation should run 20-25 minutes.

Coursework Due Date Grading

Group Presentations Throughout the semester

15%

Group Papers Day of Group Presentation

15%

Midterm Exam Tuesday 17 March, in class

30%

Final Exam Set by Registrar

40%

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PAPERS: Your group will write short paper. The papers topic will be the same as the groups presentation topic. PAPER GUIDELINES: Typed 1,000 words or less, double spaced, 12 point font, word count reported at top, NO FOOTNOTES, pages numbered. The 1,000 word count limit only applies to the main body of the paper. The front matter (authors names, date, paper title, etc.) and the back matter (tables, graphs, reference section, etc.) do not count against the word count limit. The paper is an opportunity for your group to analyze an important topic and to demonstrate your understanding of public policy options/debates related to poverty and inequality. The first third to a half of the paper should be a very concise overview of the assigned readings for your topic. The remainder of the paper should be a comment on, or critique of, the readings. (In the remainder portion of the paper, you should feel free to draw upon sources beyond those on the syllabus. Should you choose to go in this direction, however, it is essential that you scrupulously document and cite your references!) A premium will be placed on clear and concise writing. Therefore, points will be deducted from your paper for poor writing unless you turn it in with a complete WAed draft signed by one of this semesters Writing Associates. SUBMISSION OF GROUP WORK: With one exception, your group assignments should be submitted electronically via the Moodle site for this course. (i) Group Presentation: Upload your presentation slides. The file should be a Power Point document. To upload your file, click on the presentation upload link for your topic. So that everyone in your group gets credit: (i) the file name should include the last name of everyone in the group. For example, WashingtonLincolnRoosevelt.pptx; (ii) the e-mail address of each person in the group should be listed within the file. Uploaded by: presenter(s) only (ii) Group Paper: Upload your paper. The file should be a MS Word document. Click on the paper upload link for your topic. So that everyone in your group gets credit: (i) the file name should include the last name of everyone in the group. For example, WashingtonLincolnRoosevelt.docx; (ii) the e-mail address of each person in the group should be listed within each file. Uploaded by: presenter(s) only (iii) Complete WAed draft of Group Paper: If your group decides to purchase writing insurance, then the group should submit to me a hard copy only of a complete draft of the group paper signed by one of this semesters Writing Associates. This hard copy should be submitted at the time of the group presentation.

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COURSE TOPICS & READINGS Texts followed by (GR) are on General Reserve at McCabe Library. Selected articles, in PDF format, are on the Moodle site for this course.

Part I Topic 1: Some Facts and First Principles Krugman, P. and R. Wells (2013): The Economics of the Welfare State, Chapter 18 in Economics, 3rd Edition, Worth Publishers, New York, NY. Johnson, C. and P. Mason (2012): Theories of Poverty: Traditional Explanations and New Directions, Chapter 4 in OHEP, pp. 105-138. Poverty and Inequality IQ quiz, The Stanford Center for Poverty and Inequality (Online exercise). http://www.stanford.edu/group/scspi/cgi-bin/ezquiz_test.php Topic 2: Overview of Basic Statistics and Linear Regression Newbold, P., W. Carlson, & B. Thorne (2013): Chapters 1 5 in Statistics for Business and Economics, 8th ed., Pearson, New York; (GR) Lewis-Beck, M. (1980): Applied Regression: An Introduction, Sage University Paper on Quantitative Applications in the Social Sciences, 07-022. Newbury Park, CA. (GR)

Part II Topic 3: Income Inequality: Definition and Measurement Morelli, S., T. Smeeding, J. Thompson, (2014): Post-1970 Trends in Within-Country Inequality and Poverty: Rich and Middle Income Countries, (Section 4a Only) IRP Discussion Paper, No. 1419-14. Nussbaum, M. (1999): Women and Equality: The Capabilities Approach, International Labour Review, Vol. 138, No. 3, pp. 227-245. Topic 4: Poverty: Definition and Measurement Ravallion, M. (2012): Poverty Lines across the World, Chapter 3 in OHEP, pp. 75- 104. Jefferson, P. (2012): A New Statistic: The U.S. Census Bureaus Supplemental Poverty Measure, Chapter 25 in OHEP, pp. 797-806.

Part III Topic 5: Wealth Inequality: Local and Global McKernan, S., C. Ratcliffe, and T. Shanks (2012): Is Poverty Incompatible with Asset Accumulation? Chapter 14 in OHEP, pp. 463-493. Piketty, T. (2014): Income and Output, Chapter 1 in Capital in the Twenty-First Century, pp. 39-71, Harvard University Press, Cambridge. (GR) Topic 6: Distribution Rawls, J. (1971): Distributive Shares, Chapter V in A Theory of Justice, Harvard University Press, Cambridge, MA. pp. 258-332. Mankiw, N. (2013): Defending the One Percent, Journal of Economic Perspectives, Volume 27, Number 3, pp. 2134.

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Part IV Topic 7: Economic Mobility The Pew Charitable Trusts (2012): Pursuing the American Dream: Economic Mobility across Generations, Washington, D.C., http://www.pewtrusts.org/en/research-and- analysis/reports/0001/01/01/pursuing-the-american-dream Reeves, R and I. Sawhill (2014): Equality of Opportunity: Definitions, Trends, and Interventions, presented at Federal Reserve Bank of Boston 58th Economic Conference: Inequality of Economic Opportunity, Boston, MA. Topic 8: Education and Skills Pew Research Center (2014): The Rising Cost of Not Going to College, (Overview and Chapter1), http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not- going-to-college/ Barrow, L. and D. Schanzenbach (2012): Education and the Poor, Chapter 10 in OHEP, pp. 316-343.

Part V Topic 9: The Labor Market Fields, G. (2012): Poverty and Low Earnings in the Developing World, Chapter 8 in OHEP, pp. 249-273. Duncan, B. and S. Trejo (2012): Low-Skilled Immigrants and the US Labor Market, Chapter 7 in OHEP, pp. 203-248. Topic 10: Discrimination Hellerstein, J. and D. Neumark (2012): Employment in Black Urban Labor Markets: Problems and Solutions, Chapter 6 in OHEP, pp. 164-202. Gray, W., R. Shadbegian, and A. Wolverton (2012): Environmental Justice: Do Poor and Minority Populations Face More Hazards? Chapter 18 in OHEP, pp. 605- 637.

Part VI Topic 11: Public Policy and Poverty Alleviation Acemoglu, D. and J. Robinson (2012): The Making of Prosperity and Poverty, Chapter 3 in Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Crown Business, New York. (GR) Ben-Shalom, Y., R. Moffitt, and J. Scholz (2012): An Assessment of the Effectiveness of Anti-Poverty Programs in the United States, Chapter 22 in OHEP, pp. 709- 749. Topic 12: Redistributive Policies and Inequality Piketty, T. (2014): Rethinking the Progressive Income Tax, Chapter 14 in Capital in the Twenty-First Century, pp. 493-514, Harvard University Press, Cambridge. (GR) Ostry, J., A. Berg, and C. Tsangarides (2014): Redistribution, Inequality, and Growth, IMF Staff Discussion Note, SDN/14/02, http://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf