Income inequality in the process of economic development : An empirical approach

This thesis studies the effect of income inequality on economic growth. This is done by analyzing panel data from several countries with both short and long time dimensions of the data. Two of the chapters study the direct effect of inequality on growth, and one chapter also looks at the possible indirect effect of inequality on growth by assessing the effect of inequality on savings. In Chapter two, the effect of inequality on growth is studied by using a panel of 70 countries and a new EHII2008 inequality measure. Chapter contributes on two problems that panel econometric studies on the economic effect of inequality have recently encountered: the comparability problem associated with the commonly used Deininger and Squire s Gini index, and the problem relating to the estimation of group-related elasticities in panel data. In this study, a simple way to 'bypass' vagueness related to the use of parametric methods to estimate group-related parameters is presented. The idea is to estimate the group-related elasticities implicitly using a set of group-related instrumental variables. The estimation results with new data and method indicate that the relationship between income inequality and growth is likely to be non-linear. Chapter three incorporates the EHII2.1 inequality measure and a panel with annual time series observations from 38 countries to test the existence of long-run equilibrium relation(s) between inequality and the level of GDP. Panel unit root tests indicate that both the logarithmic EHII2.1 inequality measure and the logarithmic GDP per capita series are I(1) nonstationary processes. They are also found to be cointegrated of order one, which implies that there is a long-run equilibrium relation between them. The long-run growth elasticity of inequality is found to be negative in the middle-income and rich economies, but the results for poor economies are inconclusive. In the fourth Chapter, macroeconomic data on nine developed economies spanning across four decades starting from the year 1960 is used to study the effect of the changes in the top income share to national and private savings. The income share of the top 1 % of population is used as proxy for the distribution of income. The effect of inequality on private savings is found to be positive in the Nordic and Central-European countries, but for the Anglo-Saxon countries the direction of the effect (positive vs. negative) remains somewhat ambiguous. Inequality is found to have an effect national savings only in the Nordic countries, where it is positive.

Behavioural responses to anthropogenic disturbances

When a habitat undergoes change, the first response of an individual is often behavioural adjustment. This immediate response can determine whether the population will survive or not, as behavioural flexibility gives time for genetic changes to arise later on. Habitat changes that alter reproductive behaviours can have long-lasting effects on populations. If the selective regime has changed under the new conditions, mate choice cues may no longer reliably reflect an individual s quality. Thus, animals have to be able to adjust their reproductive behaviours to the local conditions. The aim of my thesis was to discuss if and how animals are able to respond to rapid anthropogenic environmental change, and to study the mechanisms of the responses and the evolutionary consequences. The main focus was on the effects of human-induced eutrophication on the reproductive behaviour of fishes. Eutrophication is the result of increased nutrient input and can cause dense underwater vegetation and algal blooms. I used fishes from two very different ecosystems as model species, the Baltic Sea threespine stickleback (Gasterosteus aculeatus) and the desert goby (Chlamydogobius eremius), an endemic species of the Lake Eyre region in Central Australia. I investigated the effects of increased habitat complexity on courtship behaviour and the possibility of local differentiation in courtship and nest building behaviour depending on the level eutrophication in the habitat of origin. Furthermore, I observed the effect of turbidity on stickleback nest building behaviour. The results show that threespine stickleback males, which were born in areas that have been eutrophied for decades, court females at a higher intensity than males from clear water areas. Similarly, male desert gobies increased their courtship effort in dense vegetation. Intense courtship could be an adjustment to reduced visibility and lowered predation risk in the densely vegetated sites. However, there were no clear differences in nest building between males from clear and eutrophied areas under standardized conditions. This was expected as Baltic Sea sticklebacks prefer to nest under vegetation cover and are fairly rigid in adjusting their nest characteristics. Nest building was affected by increased turbidity: males built smaller nests with a larger nest entrance in turbid water. The large variation in the magnitude of phytoplankton blooms may require a rapid adjustment of the optimal nest structure to the current conditions. This thesis highlights the complex interactions that are set- off by human-induced changes in habitats and are followed by the immediate behavioural responses. It also encourages more research to tease apart the phenotypic and genetic components of the observed behavioural differences.

The decline of malaria in Finland – the impact of the vector and social variables

Background: Malaria was prevalent in Finland in the 18th century. It declined slowly without deliberate counter-measures and the last indigenous case was reported in 1954. In the present analysis of indigenous malaria in Finland, an effort was made to construct a data set on annual malaria cases of maximum temporal length to be able to evaluate the significance of different factors assumed to affect malaria trends. Methods: To analyse the long-term trend malaria statistics were collected from 1750–2008. During that time, malaria frequency decreased from about 20,000 – 50,000 per 1,000,000 people to less than 1 per 1,000,000 people. To assess the cause of the decline, a correlation analysis was performed between malaria frequency per million people and temperature data, animal husbandry, consolidation of land by redistribution and household size. Results: Anopheles messeae and Anopheles beklemishevi exist only as larvae in June and most of July. The females seek an overwintering place in August. Those that overwinter together with humans may act as vectors. They have to stay in their overwintering place from September to May because of the cold climate. The temperatures between June and July determine the number of malaria cases during the following transmission season. This did not, however, have an impact on the longterm trend of malaria. The change in animal husbandry and reclamation of wetlands may also be excluded as a possible cause for the decline of malaria. The long-term social changes, such as land consolidation and decreasing household size, showed a strong correlation with the decline of Plasmodium. Conclusion: The indigenous malaria in Finland faded out evenly in the whole country during 200 years with limited or no counter-measures or medication. It appears that malaria in Finland was basically a social disease and that malaria trends were strongly linked to changes in human behaviour. Decreasing household size caused fewer interactions between families and accordingly decreasing recolonization possibilities for Plasmodium. The permanent drop of the household size was the precondition for a permanent eradication of malaria.