If the model is to be meaningful, it must possess two basic characteristics. First, it must be consistent with the historical facts of labor surplus economies. Second, it must suggest qualitative, and hopefully quantitative, factors to be considered by policy-makers in formulating educational and labor market policies consistent with national objectives.

Work of this nature must progress through three definite phases. First is the formulation of the model. Next comes the solution of the model, which is used to describe the historical time paths of interesting magnitudes and to suggest optimal paths for the control variables for planning purposes. Finally, as much empirical evidence as possible is needed to make the study operationally meaningful for planners.

I am here concerned only with phase one: a statement of the model. I hope to formulate the basic relationships, including the essential institutional facts of life. As will become evident, such an exercise leads to a conceptually straightforward but mathematically complex model. An analytical solution may prove to be impossible. Perhaps computer simulations of the basic relationships are all that can be found. In any event, a clear statement of the model is a prerequisite for further study.

]]>Currently, there is much interest in how globalization (change in the economic environments) is affecting Southeast Asia. On this note, I'd like to briefly examine how the Asian financial crisis (arguably deepened by the integration of financial markets globally) has affected workers in selected Southeast Asian countries (Singapore, Malaysia, Thailand, and the Philippines). I will also attempt to explain why workers in some of these countries fared better than workers in others.

]]>- The logic of economic analysis of educational planning

- Three approaches to educational planning

- Evaluating the social rate-of-return approach in a developing country context.

The data set used in this paper is described in Section I. The decomposition of Colombian inequality by functional income source is presented in Section II for micro data. Section III examines the robustness of source decomposition procedures to data aggregation. Section IV presents inequality decompositions by city, and Section V by other income-determining characteristics. Conclusions appear in Section VI.

]]>There are two points of contention. One is the issue of cardinality vs. ordinality. Practitioners of the cardinal approach compare distributions by means of summary measures such as a Gini coefficient, variance of logarithms, and the like. For purposes of ranking the relative inequality of two distributions, the cardinality of the usual measures is not only a source of controversy, but it is also redundant. Accordingly, some researchers prefer an ordinal approach, adopting Lorenz domination as their criterion. The difficulty with the Lorenz criterion is its incompleteness, affording rankings of only some pairs of distributions but not others. Current practice in choosing between a cardinal or an ordinal approach is now roughly as follows: Check for Lorenz domination in the hope of making an unambiguous comparison; if Lorenz domination fails, calculate one or more cardinal measures.

This raises the second contentious issue: which of the many cardinal measures in existence should one adopt? The properties of existing measures have been discussed extensively in several recent papers. Typically, these studies have started with the measures and then examined their properties.

In this paper, we reverse the direction of inquiry. Our approach is to start by specifying as axioms a relatively small number of properties which we believe a “good” index of inequality should have and then examining whether the Lorenz criterion and the various cardinal measures now in use satisfy those properties. The key issue is the reasonableness of the postulated properties. Work to date has shown the barrenness of the Pareto criterion. Only recently have researchers begun to develop an alternative axiomatic structure. The purpose of this paper is to contribute to such a development.

]]>Based on this “new view,” this paper seeks to gauge the impact of the American system of unemployment insurance (UI) on the labor market. The evaluative issues are: the efficiency of UI as a tool for income maintenance, the extent to which UI leads to greater unemployment, and UI’s income distribution effects.

]]>- high income sector enrichment,
- low income sector enrichment,
- high income sector enlargement, in which the high income sector expands and absorbs persons from the low income sector.

The two enrichment types pose no problem for assessing inequality change in the course of economic growth: for high income sector enrichment growth, inequality might reasonably be said to increase, whereas for low income sector enrichment, inequality might be said to decrease. These adjustments are non-controversial and non-problematical. Where problems arise is in the case of high income sector enlargement growth. In that case, the two alternative approaches have been shown in this paper to yield markedly results:

- The traditional inequality indices generate an
*inverted-U pattern*of inequality. That is, inequality rises in the early stages of high income sector enlargement growth and falls thereafter. - The new approach suggested here, based on axioms of gap inequality and numerical inequality, generates a
*U pattern*of inequality. That is, inequality falls in the early stages of high income sector enlargement growth and rises thereafter.

The discrepancy between the familiar indices and the alternative approach based on axioms of gap inequality and numerical inequality bears further scrutiny. Two courses of action are possible. One might try to axiomatize inequality in ways that generate an inverted-U pattern in high income sector enlargement growth, thereby rationalizing the continued use of the usual inequality indices with the inverted-U property. Alternatively, one might retain the axioms proposed here, embed them into a more formal structure, and construct a family of inequality indices consistent with them. Others might wish to pursue the first course; I am at work on the second.

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