Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.
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Transcript of Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.
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Global Inequality
Jan Luiten van Zanden
UU/Groningen/Stellenbosch
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Three issues
• Global Inquality & long-term trends in world economy 1500-2010: the GDP evidence
• Beyond GDP: OECD report
• Why: theories and speculations
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The questions
• Why are some countries rich and others poor?
• Why are some countries less unequal than others?
• Are we measuring economic performance ‘correctly’?
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Recent trends in research
• Trying to get the ‘big picture’, and searching for the ‘deep’ roots of development and underdevelopment (Engermann & Sokoloff, Acemoglu et.al., Nunn)
• New research on non-western world: China, Japan, India (‘Great Divergence debate’)
• The ‘problem’ of Africa
![Page 5: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/5.jpg)
Recent trends in research
• From research focused on nation state to international-comparative and ‘global’ research
• Need for large global datasets, example Maddison estimates of GDP and population
• To answer questions about when (did global inequality begin to increase?) and why?
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What we need:
• Better estimates of the ‘usual’ indicators (such as GDP)
• Alternative indicators: real wages, life expectancy, biological standard of living, ‘agency’ (Sen)
• Datasets about proximate and ultimate causes of growth and stagnation: human capital, institutions, family systems, culture and religion, knowledge production (books?), geography etc.
• How does growth affect sustainability? • For the period 1500-2010, for the whole world
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Approach CLIO INFRA
• Set of specialized hubs that produce global datasets
• Central website at International Institute for Social History (IISH)
• Cooperation with Gapminder and Statplanet
• And with Data Archive DANS for datastorage
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CLIO INFRA consists of
Thematic datahubs: • National Accounts: the Maddison project
(Groningen)• Biological Standard of Living and Age heaping
(Tuebingen) • Human Capital Formation (Debrecen/Utrecht)• Demography, Gender, Labour Status (IISH)• Prices and Wages (IISH)• Institutions & Agency (UU)• Sustainability (UU)
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Black Death1086
Industrial Revolution
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Golden Age
French Occupation
Black Death
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Stable growth between 1348 and 1800
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Sung peak
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Peak Arab World Ottoman Empire
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Results
• Charting long-term trajectories of various parts of world economy 1000-2000
• Also Middle East/Ottoman Empire, India, Japan
• Transition from Malthusian economy to ‘modern growth’: in North Sea area in two steps: Late Middle Ages (Black Death), ca. 1800 (Industrial Revolution)
• Rest of the world: gradual spread of Industrial Revolution
• Combination with dataset of income inequality within countries: global inequality
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The aim: various dimensions of inequalityGlobal Income Inequality 1820-2000
GDP per capita
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
10 100 1000 10000 100000
1990 2000 1980
1970 1960 1950
1929 1910 1890
1870 1850 1820
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World income inequality
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Within-country income inequality
![Page 22: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/22.jpg)
GDP and Beyond
• OECD: Better Life Initiative: multi-dimensional approach to well-being, resulting a.o. in the How’s Life? report
• Clio Infra project, global network of economic historians to measure various dimensions of long-term evolution of world economy 1500-2010.
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Well-being and the OECD
Better policies for better lives
Better measures Subjective well-beingSocial contactGovernance…
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The How’s Life Well-being Framework
26
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Measuring well-being
27
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Aim of cooperation
• Present state-of-the-art estimates on various dimensions of development of well-being in world economy from 1820 to present (“GDP and beyond”)
• Contribute to the discussion about the broadening of the welfare concept used to characterize socio-economic development
• Indicate relevance of going “beyond GDP”, also in historical analysis
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The importance of historical statistics
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Dimensions covered in “How Was Life?” bookDimension Indicator(s)
Economic standard of living GDP per capita
Inequality Income inequality; Real unskilled wages
Health Status Life Expectancy; Height
Education and Skills Educational attainment
Personal security Homicide, Incidence of warfare
Civic Engagement and Governance
Political institutions
Environmental Quality SO2; CO2; Species abundance
Gender Inequality Various indicators + composite index
Overall indicator of Well-Being Composite indicator (experimental)
![Page 29: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/29.jpg)
Results
• In general very strong correlation of each indicator with GDP per capita, though less unequally distributed
• Exceptions: low/negative correlations in Inequality, Security, and Environmental quality domains
• Relationship between GDP per capita and other measures of well-being changes over time
![Page 30: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/30.jpg)
Correlation with GDP/c over time
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Changing relationship
• 19th century: early growth paradox
• Rapid industrialization and growth did not result in increased well-being
• Early urbanization and industrialization had strong negative externalities
• Standard of Living debates
• Changes after about 1870
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Changing Relationship
• After 1950: increases in well-being become (increasingly) autonomous
• Africa after 1970; Latin America 1980s; Japan after 1990: slowdowns of economic growth do not necessarily result in slowdown increase well-being
• Different ranking of western Europe and Offshoots
• Relevant for Europe after 2007?
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Composite variable/region
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Composite indicator & std. GDP/c
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Preston-curve: GDP/c & life expectancy
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Segmented relation per capita GDP & combined wellbeing indicators
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New results
• Changing link between GDP per capita and Income Inequality
• 19th century: rich countries are more unequal (have larger surplus that can be distributed)
• After 1980: poor countries are more unequal• Rich countries went through ‘egalitarian
revolution’• Recent increase in inequality (after 1980) more
marked in poor countries
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Resulting HDI
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Resulting HDI
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Resulting HDI
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Resulting HDI
![Page 42: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/42.jpg)
Resulting HDI
![Page 43: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/43.jpg)
But why?
• Explain success and failure in world economy
• Institutions versus Geography
• Agency
![Page 44: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/44.jpg)
Jared Diamond: Guns, Germs and Steel
• Importance geography:
• Why did Neolitihic revolution start in Middle East?
• EurAsia: easy spread crops and ideas: first cities, states, iron technology
![Page 45: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/45.jpg)
Daron Acemoglu en James Robinson
• Institutions: extractive versus inclusive
• Reversal of Fortune 1500-present (Peru versus North America)
![Page 46: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/46.jpg)
Amartya Sen
• Development as Freedom
• Capabilities approach
• Agency enhances economic development
• Female Agency: smart economics
• Quality-Quantity switch
![Page 47: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/47.jpg)
Institutions as explanation
• New Institutional Economics (North, Acemoglu & Robinson) most promising explanation of such trends
• Institutions: ‘rules of the game’ of society: informal (customs) vs. formal (laws)
• Determine how people interact
• Related to trust
• Embedded in culture, religion
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Institutions and power
• Institutions are related to power
• They determine who are powerholders and how much power they have, and whether it is constrained or not
• At various levels: the state, the firm, the family
• NIE: power structures determine economic development (Acemoglu & Robinson)
![Page 49: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/49.jpg)
How to test these ideas
• Example: did female agency matter
• Classification family systems on basis of antropological data
• Inheritance, monogamy/polygamy, consensus/arranged marriage, nuclear/extended families
• Female-friendly index Eurasia
![Page 50: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/50.jpg)
Agency of women in historic family systems
(-0.00475,0.528](0.528,1.06](1.06,1.58](1.58,2.11](2.11,2.64](2.64,3.17](3.17,3.69](3.69,4.22](4.22,4.75]
Gfriendly
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Hypothesis Emmanuel Todd
• Original family system of hunter-gatherers was relatively female friendly
• Rise of settled agriculture resulted in decline position women (heavy plough)
• State formation after Neolithic Revolution reinforced this process
• Strong position of women only in ‘marginal’ regions EurAsia, at distance from centers Neolithic Revolution (Middle East, Northern India, North China)
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Example: marriage system
• Europe: rise of European Marriage Pattern (EMP): marriage based on consensus between spouses, who select their partner themselves and set up their own household (De Moor and Van Zanden 2010)
• China: patriarchical marriage system, where marriage is arranged by family, and girl moves in with household boy
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Consequences
• Age of Marriage: low in China (women: 12-15), high in Europe (women: 25-28)
• Son-preference in China, no gender preferences in Europe
• Europe: more agency for women• China: all education invested in sons (for
exams); Europe: education more balanced between males and females
• Europe: gradual rise of overall level of human capital; China: stagnation?
![Page 54: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/54.jpg)
Age at marriage ca. 1900
(17.2,20.4](20.4,23.6](23.6,26.8](26.8,30](30,33.2]
SMAM
![Page 55: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/55.jpg)
Marriage and agency
• ‘balanced’ power relations in Europe led to high age of marriage, no son preference, more investment in education women, and gradual shift from quantity to quality
• Less ‘balanced’ power relations in China resulted in high fertility for women (who married very early)
![Page 56: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/56.jpg)
Effects on human capital formation
• China: highly trained civil servants, but big gap between men and women (Qing: 40%/10%)
• China: stagnation state demand for public service leads to stagnation in level of human capital formation (van Leeuwen et.al. 2013)
• Europe: gender gap much smaller, women also receive (basic) education; better preconditions for quantity-quality shift
![Page 57: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/57.jpg)
Results of recent work
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Example 2: State Formation
• Reversal of fortune in state formation:• China: from very strong state under Sung to
weak state during Qing (Liu Guanglin: 8% of GDP to 2-3% of GDP)
• Europa: process of state formation resulting in high state capabilities of 19th/20th centuries (8-12% of GDP in 19th century)
• Rooted in different relationships between state and inhabitants
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Fundamental problem of the state
• Agency: state is agent of population, should work in ‘common interest’
• But may turn against citizens – has its own logic/independence
• Why support a state (by paying taxes) which can use its power against its own citizens?
• Required: institutions that constrain power of the executive
• Or institutions that ensure that power state will be used for interest of citizens
![Page 60: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/60.jpg)
State formation in Western Europe
• Tradition of citizenships: cooperative relationship between citizens and state; emerged in city states of Middle Ages
• Feudal tradition of power sharing and bargaining: between King and his nobles; between King and cities (in Parliaments), between state and church
• Most successful European states (England after 1688; Netherlands after 1572; France after 1789) combine these traditions; taxation and representation – resulting in democratization
![Page 61: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/61.jpg)
State Formation in China
• State based on professional bureaucracy, recruited via examination system – guarantee against using state for own interest
• But all power in principle concentrated in emperor • No ‘contract’ between ‘subjects’ and state; • Dramatic changes in relationship between state and
citizens (for example early Ming – late Ming)• Problem of legitimacy of ‘foreign’ dynasties such as
Manchus• Qing: stagnation state, growing corruption
![Page 62: Global Inequality Jan Luiten van Zanden UU/Groningen/Stellenbosch.](https://reader035.fdocuments.us/reader035/viewer/2022070407/56649e295503460f94b17219/html5/thumbnails/62.jpg)
Conclusion
• Much work on measuring global inequality 1500-2010: GDP and beyond GDP
• Exciting theories about development paths of regions/countries
• Western Europe: balance between agency and institutions (freedom and rules)
• Old Centres of Neolithic Revolution: ‘too much’ hierarchy (ergo: reversal of fortune)