Paris School of Economics

BACKGROUND: The Global Burden of Diseases, Injuries, and Risk Factors Study 2015 provides an up-to-date synthesis of the evidence for risk factor exposure and the attributable burden of disease. By providing national and subnational assessments spanning the past 25 years, this study can inform debates on the importance of addressing risks in context. METHODS: We used the comparative risk assessment framework developed for previous iterations of the Global Burden of Disease Study to estimate attributable deaths, disability-adjusted life-years (DALYs), and trends in exposure by age group, sex, year, and geography for 79 behavioural, environmental and occupational, and metabolic risks or clusters of risks from 1990 to 2015. This study included 388 risk-outcome pairs that met World Cancer Research Fund-defined criteria for convincing or probable evidence. We extracted relative risk and exposure estimates from randomised controlled trials, cohorts, pooled cohorts, household surveys, census data, satellite data, and other sources. We used statistical models to pool data, adjust for bias, and incorporate covariates. We developed a metric that allows comparisons of exposure across risk factors-the summary exposure value. Using the counterfactual scenario of theoretical minimum risk level, we estimated the portion of deaths and DALYs that could be attributed to a given risk. We decomposed trends in attributable burden into contributions from population growth, population age structure, risk exposure, and risk-deleted cause-specific DALY rates. We characterised risk exposure in relation to a Socio-demographic Index (SDI). FINDINGS: Between 1990 and 2015, global exposure to unsafe sanitation, household air pollution, childhood underweight, childhood stunting, and smoking each decreased by more than 25%. Global exposure for several occupational risks, high body-mass index (BMI), and drug use increased by more than 25% over the same period. All risks jointly evaluated in 2015 accounted for 57·8% (95% CI 56·6-58·8) of global deaths and 41·2% (39·8-42·8) of DALYs. In 2015, the ten largest contributors to global DALYs among Level 3 risks were high systolic blood pressure (211·8 million [192·7 million to 231·1 million] global DALYs), smoking (148·6 million [134·2 million to 163·1 million]), high fasting plasma glucose (143·1 million [125·1 million to 163·5 million]), high BMI (120·1 million [83·8 million to 158·4 million]), childhood undernutrition (113·3 million [103·9 million to 123·4 million]), ambient particulate matter (103·1 million [90·8 million to 115·1 million]), high total cholesterol (88·7 million [74·6 million to 105·7 million]), household air pollution (85·6 million [66·7 million to 106·1 million]), alcohol use (85·0 million [77·2 million to 93·0 million]), and diets high in sodium (83·0 million [49·3 million to 127·5 million]). From 1990 to 2015, attributable DALYs declined for micronutrient deficiencies, childhood undernutrition, unsafe sanitation and water, and household air pollution; reductions in risk-deleted DALY rates rather than reductions in exposure drove these declines. Rising exposure contributed to notable increases in attributable DALYs from high BMI, high fasting plasma glucose, occupational carcinogens, and drug use. Environmental risks and childhood undernutrition declined steadily with SDI; low physical activity, high BMI, and high fasting plasma glucose increased with SDI. In 119 countries, metabolic risks, such as high BMI and fasting plasma glucose, contributed the most attributable DALYs in 2015. Regionally, smoking still ranked among the leading five risk factors for attributable DALYs in 109 countries; childhood underweight and unsafe sex remained primary drivers of early death and disability in much of sub-Saharan Africa. INTERPRETATION: Declines in some key environmental risks have contributed to declines in critical infectious diseases. Some risks appear to be invariant to SDI. Increasing risks, including high BMI, high fasting plasma glucose, drug use, and some occupational exposures, contribute to rising burden from some conditions, but also provide opportunities for intervention. Some highly preventable risks, such as smoking, remain major causes of attributable DALYs, even as exposure is declining. Public policy makers need to pay attention to the risks that are increasingly major contributors to global burden. FUNDING: Bill & Melinda Gates Foundation.

This paper develops a model based on Schumpeter's process of creative destruction. It departs from existing models of endogenous growth in emphasizing obsolescence of old technologies induced by the accumulation of knowledge and the resulting process or industrial innovations. This has both positive and normative implications for growth. In positive terms, the prospect of a high level of research in the future can deter research today by threatening the fruits of that research with rapid obsolescence. In normative terms, obsolescence creates a negative externality from innovations, and hence a tendency for laissez-faire economies to generate too many innovations, i.e too much growth. This business-stealing effect is partly compensated by the fact that innovations tend to be too small under laissez-faire. The model possesses a unique balanced growth equilibrium in which the log of GNP follows a random walk with drift. The size of the drift is the average growth rate of the economy and it is endogenous to the model ; in particular it depends on the size and likelihood of innovations resulting from research and also on the degree of market power available to an innovator.

A recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics. Top incomes represent a small share of the population but a very significant share of total income and total taxes paid. Hence, aggregate economic growth per capita and Gini inequality indexes are sensitive to excluding or including top incomes. We discuss the estimation methods and issues that arise when constructing top income share series, including income definition and comparability over time and across countries, tax avoidance, and tax evasion. We provide a summary of the key empirical findings. Most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks. Top income shares do not recover in the immediate postwar decades. However, over the last thirty years, top income shares have increased substantially in English speaking countries and in India and China but not in continental European countries or Japan. This increase is due in part to an unprecedented surge in top wage incomes. As a result, wage income comprises a larger fraction of top incomes than in the past. Finally, we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open. (JEL D31, D63, H26, N30)

Abstract How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970–2010 national balance sheets recently compiled in the top eight developed economies. For the United States, United Kingdom, Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise` of wealth-income ratios in recent decades, from about 200–300% in 1970 to 400–600% in 2010. In effect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600–700%). This can be explained by a long-run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the β=sg Harrod-Domar-Solow formula. That is, for a given net saving rate s = 10%, the long-run wealth-income ratio β is about 300% if g = 3% and 600% if g = 1.5%. Our results have implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares.

Income Distribution

We look for evidence of habituation in twenty waves of German panel data: do individuals tend to return to some baseline level of well‐being after life and labour market events? Although the strongest life satisfaction effect is often at the time of the event, we find significant lag and lead effects. We cannot reject the hypothesis of complete adaptation to marriage, divorce, widowhood, birth of child and layoff. However, there is little evidence of adaptation to unemployment for men. Men are somewhat more affected by labour market events (unemployment and layoffs) than are women but in general the patterns of anticipation and adaptation are remarkably similar by sex.

International audience

In the last decade, economists have produced a considerable body of research suggesting that the historical origin of a country's laws is highly correlated with a broad range of its legal rules and regulations, as well as with economic outcomes. We summarize this evidence and attempt a unified interpretation. We also address several objections to the empirical claim that legal origins matter. Finally, we assess the implications of this research for economic reform.

This Review presents basic facts regarding the long-run evolution of income and wealth inequality in Europe and the United States. Income and wealth inequality was very high a century ago, particularly in Europe, but dropped dramatically in the first half of the 20th century. Income inequality has surged back in the United States since the 1970s so that the United States is much more unequal than Europe today. We discuss possible interpretations and lessons for the future.

International audience

The top 1 percent income share has more than doubled in the United States over the last 30 years, drawing much public attention in recent years. While other English-speaking countries have also experienced sharp increases in the top 1 percent income share, many high-income countries such as Japan, France, or Germany have seen much less increase in top income shares. Hence, the explanation cannot rely solely on forces common to advanced countries, such as the impact of new technologies and globalization on the supply and demand for skills. Moreover, the explanations have to accommodate the falls in top income shares earlier in the twentieth century experienced in virtually all high-income countries. We highlight four main factors. The first is the impact of tax policy, which has varied over time and differs across countries. Top tax rates have moved in the opposite direction from top income shares. The effects of top rate cuts can operate in conjunction with other mechanisms. The second factor is a richer view of the labor market, where we contrast the standard supply-side model with one where pay is determined by bargaining and the reactions to top rate cuts may lead simply to a redistribution of surplus. Indeed, top rate cuts may lead managerial energies to be diverted to increasing their remuneration at the expense of enterprise growth and employment. The third factor is capital income. Overall, private wealth (relative to income) has followed a U-shaped path over time, particularly in Europe, where inherited wealth is, in Europe if not in the United States, making a return. The fourth, little investigated, element is the correlation between earned income and capital income, which has substantially increased in recent decades in the United States.

On 19 December 2014, the Centre for Economic Policy Research and the Bank of England hosted a discussion forum based around Thomas Piketty’s book, Capital in the twenty-first century, with a number of economists from academia, public sector bodies and private sector institutions. Four speakers presented research on various issues relating to inequality, including: access to education; wealth and taxation policy; and the role of governance and institutions. This article presents each speaker’s key arguments, and includes a summary of the open-floor debate that followed.

This paper derives optimal top tax rate formulas in a model where top earners respond to taxes through three channels: labor supply, tax avoidance, and compensation bargaining. The optimal top tax rate increases when there are zero-sum compensation-bargaining effects. We present empirical evidence consistent with bargaining effects. Top tax rate cuts are associated with top one percent pretax income shares increases but not higher economic growth. US CEO “pay for luck” is quantitatively more prevalent when top tax rates are low. International CEO pay levels are negatively correlated with top tax rates, even controlling for firms' characteristics and performance. (JEL D31, H21, H24, H26, M12)

This paper investigates the relationship between economic growth and pollutant emissions for a small and open developing country, Tunisia, during the period 1961–2004. The investigation is made on the basis of the environmental Kuznets curve hypothesis, using time series data and cointegration analysis. Carbon dioxide (CO2) and sulfur dioxide (SO2) are used as the environmental indicators, and GDP as the economic indicator. Our results show that there is a long-run cointegrating relationship between the per capita emissions of two pollutants and the per capita GDP. An inverted U relationship between SO2 emissions and GDP has been found, with income turning point approximately equals to $1200 (constant 2000 prices) or to $3700 (in PPP, constant 2000 prices). However, a monotonically increasing relationship with GDP is found more appropriate for CO2 emissions. Furthermore, the causality results show that the relationship between income and pollution in Tunisia is one of unidirectional causality with income causing environmental changes and not vice versa, both in the short-run and long-run. This implies that an emission reduction policies and more investment in pollution abatement expense will not hurt economic growth. It could be a feasible policy tool for Tunisia to achieve its sustainable growth in the long-run.

The paper studies how high household leverage and crises can be caused by changes in the income distribution. Empirically, the periods 1920–1929 and 1983–2008 both exhibited a large increase in the income share of high-income households, a large increase in debt leverage of low- and middle-income households, and an eventual financial and real crisis. The paper presents a theoretical model where higher leverage and crises are the endogenous result of a growing income share of high-income households. The model matches the profiles of the income distribution, the debt-to-income ratio and crisis risk for the three decades preceding the Great Recession. (JEL D14, D31, D33, E32, E44, G01, N22)

This article provides unprecedented direct evidence from large‐scale survey data on both the intensity (how much?) and direction (to whom?) of income comparisons. Income comparisons are considered to be at least somewhat important by three‐quarters of Europeans. They are associated with both lower levels of subjective well‐being and a greater demand for income redistribution. The rich compare less and are happier than average when they do, which latter is consistent with relative income theory. With respect to the direction of comparisons, colleagues are the most frequently‐cited reference group. Those who compare to colleagues are happier than those who compare to other benchmarks.

Abstract I provide an overall empirical assessment of the motivations of ODA granted by rich countries to developing countries, as revealed by aid allocation behaviors. Aid motives combine self‐interested and altruistic objectives. I use a three‐dimensional panel dataset, combining the donor, recipient and time dimensions, which shows a lot of heterogeneity in donor behavior. Thanks to the width of this dataset, I can test differences of parameters among donors and, in particular, compare their degrees of altruism. Switzerland, Austria, Ireland and most Nordic countries are among the most altruistic. Australia, France, Italy, and to some extent Japan and the United States are among the most egoistic.

This paper summarizes the main findings and perspectives emerging from a collective research project on the dynamics of income and wealth distribution. The primary objective of this project is to construct a high-quality, longrun, international database on income and wealth concentration, using historical tax statistics. The resulting database now includes annual series covering most of the twentieth century for a number of (mostly Western) countries. 1 The main motivation for this project comes from a general dissatisfaction with existing income inequality databases. Existing international databases display little homogeneity over time or across countries. They cover only a few isolated years per country, generally restricted to the post-1970 or post-1980 period. They almost never offer any decomposition of income inequality into a labor-income and a capitalincome component. Economic mechanisms can be very different for the distribution of labor income (demand and supply of skills, labor market institutions, etc.) and the distribution of capital income (capital accumulation, credit constraints, inheritance law and taxation, etc.), so that it is difficult to test any of these mechanisms using existing data. The fact that existing data are not long run is also problematic, because structural changes in income and wealth distribution often span several decades.

An exogenous expansion in mortgage credit has significant effects on house prices. This finding is established using US branching deregulations between 1994 and 2005 as instruments for credit. Credit increases for deregulated banks, but not in placebo samples. Such differential responses rule out demand-based explanations, and identify an exogenous credit supply shock. Because of geographic diver-sification, treated banks expand credit: housing demand increases, house prices rise, but to a lesser extent in areas with elastic housing supply, where the housing stock increases instead. In an instrumental variable sense, house prices are well explained by the credit expansion induced by deregulation. (JEL G21, G28, R21, R31)

We provide a new compilation of data on ethnic, linguistic, and religious composition at the subnational level for a large number of countries. Using these data, we measure segregation of groups within the country. To overcome the endogeneity problem that arises because of mobility and endogenous internal borders, we construct an instrument for segregation. We find that more ethnically and linguistically segregated countries, i.e., those where groups live more spatially separately, have a lower quality of government; there is no relationship between religious segregation and governance. Trust is an important channel of influence; it is lower in more segregated countries. (JEL H11, H77, J15, O17, Z12, Z13)