Estimating Lorenz and concentration curves in Stata

Lorenz and concentration curves are widely used tools in inequality research. In this paper I present a new Stata command called -lorenz- that estimates Lorenz and concentration curves from individual-level data and, optionally, displays the results in a graph. The -lorenz- command supports relative as well as generalized, absolute, unnormalized, or custom-normalized Lorenz or concentration curves, and provides tools for computing contrasts between different subpopulations or outcome variables. Variance estimation for complex samples is fully supported.

Essays on Inequality and Integration

Inequality and integration have been sociology’s two key paradigms since the classics, associated with the names of Marx and Durkheim and Europe’s current economic crisis has forcefully reinvigorated their joint relevance. Above all, the debt crisis has fueled the wheel of social inequality: cash-starved states are further forced to cut back on public expenditures, to minimize the margin for redistribution and to raise new challenges for the integration policies addressing the emerging disparities. At the same time, global environmental and demographic problems, intertwined with escalating migration pressure, tear at the texture of European and all Western societies, in particular, the unequal impact of climate change and the unequal distribution of population growth make migration and integration paramount public policy issues and a soaring source of social conflict. In principle, the inequalities engendered by these cascading processes are also an opportunity. They increase the diversity of society and can bring about innovation and growth. Our desire and ability for social integration depends, above all, on the ultimate balance between these advantages and disadvantages. The chapters in the volume concentrate on the opportunities as well as the risks associated with these social changes from various angles. They are a handpicked set of outstanding contributions from the Congress of the Swiss Sociological Association that took place at the University of Bern, June 26–28, 2013.

Influence of Social Institutions on Inequality in China

This study analyses the impact of changes in social institutions, i.e. in the informal and formal social security system, on income inequality in China. This study uses an inequality decomposition analysis approach comparing household survey data for 1988 with 1995.Three main results emerge from the analysis: first, it findsthat the family based social security is losing its importance mainly through the changes in employment pattern in a household. This change contributes to rising income inequality. Second, thestudy shows that the introduction of new formal social security system helped to equalise the distribution of retired household members' income in urban areas in 1995. Third, however, these changes have only benefited a restricted number of persons. Benefits for rural migrants are low and most of the rural population has still no access to the new system.

Economic Reforms and Income Inequality in Urban China

This paper reports the results of an analysis of changes in income inequality, and in its determinants, in urban China since the economic reforms that began in 1978. The intention is to identify new characteristics of economic inequality. It first shows that income differentials acrossand in provinces widened and that their economic rankings were becoming fixed during the period from 1988 to 1995. Second, age was the major factor in inequality in 1988, while education became the important factor in 1995. Third, education significantly contributed to increasing inequality during the period. Fourth, the higher education-level groups had less within-group inequality. These changes reflect the penetration of the market mechanism into China after the reforms. However, this will be problematic without equality of opportunity.

Changes in the causes of earnings inequality in urban China from 1988 to 2002

This paper analyzes the causes of earnings inequality in urban China from 1988 to 2002. Earnings inequality in urban China continuously increased, even when adjusting for regional price differences. This paper reveals how the causes of earnings inequality changed between the periods 1988-1995 and 1995-2002 by reflecting labor-related institutional reform in China. Contrary to the situation from 1988 to 1995, between 1995 and 2002, employment status became the largest disequalizer, and the decline of inter-provincial inequality contributed to a reduction in entire earnings inequality. Individual ability, represented by education and occupation, received much greater rewards. Throughout the period from 1988 to 2002, a large part of the explained inequality increase was due to change in price (valuation of each individual's attributes) and not due to change in quantity (composition of individual attributes).

The contribution of supply and demand shifts to earnings inequality in urban China

This paper examines the degree to which supply and demand shift across skill groups contributed to the earnings inequality increase in urban China from 1988 to 2002. Product demand shift contributed to an equalizing of earnings distribution in urban China from 1988 to 1995 by increasing the relative product for the low educated. However, it contributed to enlarging inequality from 1995 to 2002 by increasing the relative demand for the highly educated. Relative demand was continuously higher for workers in the coastal region and contributed to a raising of interregional inequality. Supply shift contributed essentially nothing or contributed only slightly to a reduction in inequality. Remaining factors, the largest disequalizer, may contain skill-biased technological and institutional changes, and unobserved supply shift effects due to increasing numbers of migrant workers.

Chapter 8 Location Choice of Japanese Multinationals: Country Characteristics or Region Characteristics?

In the present global era in which firms choose the location of their plants beyond national borders, location characteristics are important for attracting multinational enterprises (MNEs). The better access to countries with large market is clearly attractive for MNEs. For example, special treatments on tariffs such as the Generalized System of Preferences (GSP) are beneficial for MNEs whose home country does not have such treatments. Not only such country characteristics but also region characteristics (i.e. province-level or city-level ones) matter, particularly in the case that location characteristics differ widely between a nation's regions. The existence of industrial concentration, that is, agglomeration, is a typical regional characteristic. It is with consideration of these country-level and region-level characteristics that MNEs decide their location abroad. A large number of academic studies have investigated in what kinds of countries MNEs locate, i.e. location choice analysis. Employing the usual new economic geography model (i.e. constant elasticity of substitution (CES) utility function, Dixit-Stiglitz monopolistic competition, and ice-berg trade costs), the literature derives the profit function, of which coefficients are estimated using maximum likelihood procedures. Recent studies are as follows: Head, Rise, and Swenson (1999) for Japanese MNEs in the US; Belderbos and Carree (2002) for Japanese MNEs in China; Head and Mayer (2004) for Japanese MNEs in Europe; Disdier and Mayer (2004) for French MNEs in Europe; Castellani and Zanfei (2004) for large MNEs worldwide; Mayer, Mejean, and Nefussi (2007) for French MNEs worldwide; Crozet, Mayer, and Mucchielli (2004) for MNEs in France; and Basile, Castellani, and Zanfei (2008) for MNEs in Europe. At the present time, three main topics can be found in this literature. The first introduces various location elements as independent variables. The above-mentioned new economic geography model usually yields the profit function, which is a function of market size, productive factor prices, price of intermediate goods, and trade costs. As a proxy for the price of intermediate goods, the measure of agglomeration is often used, particularly the number of manufacturing firms. Some studies employ more disaggregated numbers of manufacturing firms, such as the number of manufacturing firms with the same nationality as the firms choosing the location (e.g., Head et al., 1999; Crozet et al., 2004) or the number of firms belonging to the same firm group (e.g., Belderbos and Carree, 2002). As part of trade costs, some investment climate measures have been examined: free trade zones in the US (Head et al., 1999), special economic zones and opening coastal cities in China (Belderbos and Carree, 2002), and Objective 1 structural funds and cohesion funds in Europe (Basile et al., 2008). Second, the validity of proxy variables for location elements is further examined. Head and Mayer (2004) examine the validity of market potential on location choice. They propose the use of two measures: the Harris market potential index (Harris, 1954) and the Krugman-type index used in Redding and Venables (2004). The Harris-type index is simply the sum of distance-weighted real GDP. They employ the Krugman-type market potential index, which is directly derived from the new economic geography model, as it takes into account the extent of competition (i.e. price index) and is constructed using estimators of importing country dummy variables in the well-known gravity equation, as in Redding and Venables (2004). They find that "theory does not pay", in the sense that the Harris market potential outperforms Krugman's market potential in both the magnitude of its coefficient and the fit of the model to be estimated. The third topic explores the substitution of location by examining inclusive values in the nested-logit model. For example, using firm-level data on French investments both in France and abroad over the 1992-2002 period, Mayer et al. (2007) investigate the determinants of location choice and assess empirically whether the domestic economy has been losing attractiveness over the recent period or not. The estimated coefficient for inclusive value is strongly significant and near unity, indicating that the national economy is not different from the rest of the world in terms of substitution patterns. Similarly, Disdier and Mayer (2004) investigate whether French MNEs consider Western and Eastern Europe as two distinct groups of potential host countries by examining the coefficient for the inclusive value in nested-logit estimation. They confirm the relevance of an East-West structure in the country location decision and furthermore show that this relevance decreases over time. The purpose of this paper is to investigate the location choice of Japanese MNEs in Thailand, Cambodia, Laos, Myanmar, and Vietnam, and is closely related to the third topic mentioned above. By examining region-level location choice with the nested-logit model, I investigate the relative importance of not only country characteristics but also region characteristics. Such investigation is invaluable particularly in the case of location choice in those five countries: industrialization remains immature in those countries which have not yet succeeded in attracting enough MNEs, and as a result, it is expected that there are not yet crucial regional variations for MNEs within such a nation, meaning the country characteristics are still relatively important to attract MNEs. To illustrate, in the case of Cambodia and Laos, one of the crucial elements for Japanese MNEs would be that LDC preferential tariff schemes are available for exports from Cambodia and Laos. On the other hand, in the case of Thailand and Vietnam, which have accepted a relatively large number of MNEs and thus raised the extent of regional inequality, regional characteristics such as the existence of agglomeration would become important elements in location choice. Our sample countries seem, therefore, to offer rich variations for analyzing the relative importance between country characteristics and region characteristics. Our empirical strategy has a further advantage. As in the third topic in the location choice literature, the use of the nested-logit model enables us to examine substitution patterns between country-based and region-based location decisions by MNEs in the concerned countries. For example, it is possible to investigate empirically whether Japanese multinational firms consider Thailand/Vietnam and the other three countries as two distinct groups of potential host countries, by examining the inclusive value parameters in nested-logit estimation. In particular, our sample countries all experienced dramatic changes in, for example, economic growth or trade costs reduction during the sample period. Thus, we will find the dramatic dynamics of such substitution patterns. Our rigorous analysis of the relative importance between country characteristics and region characteristics is invaluable from the viewpoint of policy implications. First, while the former characteristics should be improved mainly by central government in each country, there is sometimes room for the improvement of the latter characteristics by even local governments or smaller institutions such as private agencies. Consequently, it becomes important for these smaller institutions to know just how crucial the improvement of region characteristics is for attracting foreign companies. Second, as economies grow, country characteristics become similar among countries. For example, the LCD preferential tariff schemes are available only when a country is less developed. Therefore, it is important particularly for the least developed countries to know what kinds of regional characteristics become important following economic growth; in other words, after their country characteristics become similar to those of the more developed countries. I also incorporate one important characteristic of MNEs, namely, productivity. The well-known Helpman-Melitz-Yeaple model indicates that only firms with higher productivity can afford overseas entry (Helpman et al., 2004). Beyond this argument, there may be some differences in MNEs' productivity among our sample countries and regions. Such differences are important from the viewpoint of "spillover effects" from MNEs, which are one of the most important results for host countries in accepting their entry. The spillover effects are that the presence of inward foreign direct investment (FDI) aises domestic firms' productivity through various channels such as imitation. Such positive effects might be larger in areas with more productive MNEs. Therefore, it becomes important for host countries to know how much productive firms are likely to invest in them. The rest of this paper is organized as follows. Section 2 takes a brief look at the worldwide distribution of Japanese overseas affiliates. Section 3 provides an empirical model to examine their location choice, and lastly, we discuss future works to estimate our model.

Factor decomposition of income inequality change : Japan's regional income disparity from 1955 to 1998

We propose a method for the decomposition of inequality changes based on panel data regression. The method is an efficient way to quantify the contributions of variables to changes of the Theil T index while satisfying the property of uniform addition. We illustrate the method using prefectural data from Japan for the period 1955 to 1998. Japan experienced a diminishing of regional income disparity during the years of high economic growth from 1955 to 1973. After estimating production functions using panel data for prefectures in Japan, we apply the new decomposition approach to identify each production factor’s contributions to the changes of per capita income inequality among prefectures. The decomposition results show that total factor productivity (residual) growth, population change (migration), and public capital stock growth contributed to the diminishing of per capita income disparity.

Variational Stereo Imaging of Oceanic Waves with Statistical Constraints

An image processing observational technique for the stereoscopic reconstruction of the wave form of oceanic sea states is developed. The technique incorporates the enforcement of any given statistical wave law modeling the quasi Gaussianity of oceanic waves observed in nature. The problem is posed in a variational optimization framework, where the desired wave form is obtained as the minimizer of a cost functional that combines image observations, smoothness priors and a weak statistical constraint. The minimizer is obtained combining gradient descent and multigrid methods on the necessary optimality equations of the cost functional. Robust photometric error criteria and a spatial intensity compensation model are also developed to improve the performance of the presented image matching strategy. The weak statistical constraint is thoroughly evaluated in combination with other elements presented to reconstruct and enforce constraints on experimental stereo data, demonstrating the improvement in the estimation of the observed ocean surface.

Offshore stereo measurements of gravity waves: classical epipolar and novel variational techniques

Stereo video techniques are effective for estimating the space-time wave dynamics over an area of the ocean. Indeed, a stereo camera view allows retrieval of both spatial and temporal data whose statistical content is richer than that of time series data retrieved from point wave probes. Classical epipolar techniques and modern variational methods are reviewed to reconstruct the sea surface from the stereo pairs sequentially in time. Current improvements of the variational methods are presented.