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8/6/2019 How to Define and Measure Welfare (1)
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Welfare Economics
Aravinda Guntupalli
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G overnment welfare spending in
developed and developing countries
Nita Rudra (2002) Globalization and the decline of the welfare states inLess-Developed countries. Industrial organization. Vol 56(2).
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Why is it important?
All nations are being challenged by the crucialtask of improving income, well-being andeconomic capabilities of people.
Every year aid is distributed, investments aremade, policies are framed, and elaborated plansare hatched to achieve this goal.It is always complex issue that is debated byeconomists, media, politicians and layperson.
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D ifferent topics
May 2 General discussion on welfareMay 9 Types of welfare states and history
May 16 Child welfareMay 23 Inequality and welfareMay 30 Gender and Welfare
Room 332 and Tuesdays 12:00-14:00
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Additional lectures
J une 13 (pclabor)We will work on SPSS and use data of WorldBankRegression analyses
J uly 4th (Discussion on special problems withanalyses of the data)
Office hours (Wednesday 2 to 4) Room 422
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FAQ ( Frequently Asked Q uestions)
Open an account in the PC labor as soon aspossible to have access to computers for J uneThe course has 4 point weightWe will have to give both assignment and apresentation for 10 minutesBrushing up your old statistics lectures would
help you analyze the dataLanguage of the course, presentation and theexam is English
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P resentation and Assignment
Presentation datesSaturday and Sunday ( J uly 22 and 23 ???)
AssignmentDeadline for the submission is 29 th J uly
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V arious topics
Does a GDP growth rate reduces poverty?How to measure Welfare?Welfare in Germany from 1900 onwards
Great divergence (Asia, Ottoman Empire andEurope)Child welfareEmployment of the womenFertility and welfare: Is there a relation?
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C ontd
Age structure and its impact on welfare (if any)Missing women concept (declining sex ratio in some
Asian countries)Health and welfare relationGender differences in education, and health (specialemphasis on Germany)Latin American inequality and its relation to welfare
Democracy and welfareMigrants and their welfare
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www.uni-tuebingen.de/uni/wwl/meera.html
Dont hesitate to send me an email if
you have [email protected]
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H ow to define and measure
welfare? Aravinda Guntupalli
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D efinition of welfare
Welfare refers to the economic well being of an individual, group, or economy.For individuals, it is conceptualized by a utilityfunction.For groups, including countries and the world,it is a complex concept, since individuals faredifferently.
In trade theory, an improvement in welfare isoften inferred from an increase in realnational income.
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C ontemporary measurement
Measurement of economic developmentGNP and GDPHuman Development Index (HDI)
InequalityLorenz curveGini concentration ratio
PovertyBoth Absolute and relative income are important
Measurement of povertyPoverty linePoverty head count
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C omplexity of welfare measurement
(Tata and Schultz, 1988)Physical systemthe total value of primary industry output per capita and population
per square kilometer of arable land.E conomic system
GDP/capita and manufacturing value-added per capita are twocommon and useful measures of output in economic systemsS ocial system
A social system has the role in providing in situations for satisfying peoples needs, safety, security and humandevelopment.
As there are no direct measures for cross-country comparisonswe have to use proxy measures like infant death rates,percentage of highly educated people, and percentage of ruralpopulation.
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C ontd..
Political systemThe role of political system is to establish order, justice insociety and to manage human and physical resourcesefficiently.
We can measure it using various measures likedemocracy. (freedom house or polity data)Psychological measurement (???)
Happiness, good mental health and some psychologicalindicators also reflect the wellbeing of people
Gender differences in Welfare (?)Welfare of Children(?)
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GN H measure (Bhutan)
(BBC)
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Silver wages of unskilled labourers, 1500-1849(grams of silver per day )
0
2
4
6
8
10
12
14
16
18
1500-49
1550-99
1600-49
1650-99
1700-49
1750-99
1800-49
London
AmsterdamAntwerp
Paris
Barcelona
Leipzig
Istanbul
Source : Allen (2001 ), Broadberr y and Gupta (2005 )Istanbul f rom zmucur andPamu k (2002
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C onsumer prices in Europe, 1500-1799
(1500-49=100)
100
150
200
250
300
350
400
450
500
550
600
1500-49
1550-99
1600-49
1650-99
1700-49
1750-99
1800-49
London
Amsterdam Antwerp
Paris
Florence/Milan
Augsburg
Source : Allen (2001 ), Broadberr y and Gupta (2005 )
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Urban shares of the population, 1500-1850 (%)
1500 1600 1700 1800 1850 EuropeEngland & Wales 3.1 5.8 13.3 20.3 40.8
Netherlands 15.8 24.3 33.6 28.8 29.5Belgium 21.1 18.8 24.3 18.9 20.5France 4.2 5.9 9.2 8.8 14.5Spain 6.1 11.4 9.0 11.1 17.3Italy 12.4 15.1 13.2 14.6 20.3Poland 0.0 0.4 0.5 2.4 9.3Austria/Bohemia 1.7 2.1 3.9 5.2 6.7Germany 3.2 4.1 4.8 5.5 10.8Total Europe 5.6 7.6 9.2 10.0 16.7
Asia
Yangzi delta 5.6Total China 4.9 4.9 6.0 3.8
Note: Based on the percentage of the population living in towns of at least 10,000inhabitants.Source: Derived from de Vries (1984: 30, 36, 45); Rozman (1973: 282-283, 205-247).
See also Broadberry and Guptas research papers from Warwick
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H eight for measuring welfare
GDP and other statistical data are mostlyavailable for country level
Also there is paucity of information regarding
gdp of various countries before 1960Economic Historians employed the finding of human biologists that average (not individual)human stature was influenced by the quality
of nutrition, the disease environment andphysical exertion. (see papers by Baten,Komlos and Steckel)
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Baten and Wagner (2002)
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C lassification of economies
1996 World Bank income classificationLess than $785 per capita - Low income$785-$3115 - Lower Middle income
$3115 to $9636 - Upper middle incomeOver $9636 - High income economies
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GN P and GD P
The GDP is defined as the market value of allfinal goods and services produced within acountry in a given period of time.Until the 1980s the term GN P or grossnational product was used.The most common approach to measuringand understanding GDP is the expenditure
methodGDP = consumption + investment + government spending + (exports imports)
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L imitations
Poor quality statisticsDefinition - Goods and services that are sold in the market(unpaid work ????)Exchange rate problemsTo overcome this problem, common set of prices are used tomeasure output of every country (hair cut in India is priced thesame as on in the US)This measure of average income is called Purchasing Power Parity (PPP)
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C omplexity of welfare
When we talk about welfare we need to havea full consideration of taxes, subsidies,transfer programs, health care reform,
regulation, environmental policy, socialsecurity system, and educational reforms.Daniel Slesnick (Empirical approaches to themeasurement of welfare, J ournal of economicliterature, 1998)
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Social indicators for the early 1990s (GDP per capita, PPP)
< 1000$ 1000-2000$ 2000-5000$ 5000-10,000$ >10,000$
Infantdeaths/1000live births
107 73 33 30 6
Life expectancy 49 57 68 69 76Physicians per 1000
33 88 161 181 231
Energyconsumptionper capita
46 189 977 2029 4857
Adult literacy 52 60 85 83 96
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I mportant books
Human development report World development report Development economics Debraj Ray Hunger and Public action J ean Dreze and Amartya Sen Gender Equality and Welfare States Daine Sainsbury Growing Public: Social Spending and Economic Growth sincethe Eighteenth Century Peter Lindert The Gender Division of Welfare: The impact of the British andGerman Welfare States Mary Daly Women Welfare: Theory and Practice in the US andEuropeHirschmann and Ulrike Liebert
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Thank You