Inequality in Income and Gender: New Perspectives and Evidence
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Inequality in Income and Gender: New Perspectives and Evidence Dissertation zur Erlangung des Grades eines Doktors der Wirtschaftswissenschaft der Rechts- und Wirtschaftswissenschaftlichen Fakultät der Universität Bayreuth vorgelegt von Alexander Maximilian Stimpfle aus München Dekan: Prof. Dr. Martin Leschke Erstberichterstatter: Prof. Dr. David Stadelmann Zweitberichterstatter: Prof. Dr. Bernhard Herz Tag der mündlichen Prüfung: 09. Februar 2017 Acknowledgments During the course of writing this dissertation, I have benefited from the support, suggestions, and encouragements of many people. First and foremost, I would like to express my deepest gratitude to my supervisor Professor David Stadelmann for his outstanding guidance and expertise, ongoing support, and truly collaborative spirit. It has been a privilege to work with him on this dissertation project. I also thank Professor Bernhard Herz for his kind cooperation, and for agreeing to serve as second examiner. I am indebted to the Economics faculty and research community of the University of Bayreuth. In particular I cordially thank participants of the Graduate Research Seminars of the University for helpful and encouraging discussions on all three topics. I highly appreciate the feedback received from faculty as well as from fellow doctoral students. I also thank all researchers affiliated with the University’s Chair of Development Economics for their kind support and encouragement. Further helpful comments from two conferences of the German Economic Association (Verein für Socialpolitik), and from the European Public Choice Society (EPCS) are gratefully acknowledged. The Konrad Adenauer Foundation provided crucial financial as well as intellectual support as I completed my dissertation, for which I am very thankful. I also owe special gratitude to McKinsey & Company for providing excellent research conditions and facilitating discussions with fellow doctoral colleagues. As an external student, this altogether helped me tremendously to stay on track with this work, and I could not have asked for a better overall study environment. Finally, I would also like to extend my deepest gratitude to my family and my partner. Their encouragement and backing especially at the beginning has been invaluable. Bayreuth, October 2016 i Abstract We provide three new empirical perspectives on inequality in the context of economic development, one focusing on income inequality, and the remaining two on gender inequality. First, we jointly analyze the causal effects of geography, trade integration, and institutional quality on different income groups for developing and developed countries from 1983 to 2012. Favorable geographic conditions tend to discriminate strongly between income groups as low incomes benefit from equator distance whereas high incomes decline. Controlling for institutional quality and geography, trade integration has a negative income effect which increases in absolute size and significance for richer percentiles. Institutional quality strongly and positively affects all income groups, however, high income groups tend to profit relatively more than low income groups. Using different instrumental variable strategies, these findings remain robust for different specification tests and they are consistent over time. In our second perspective, we offer empirical evidence that early female marriage age significantly decreases female education with panel data from 1980 to 2010. Socio-cultural customs serve as an exogenous identification for female age at marriage, and we apply fixed effects and a quasi diff-in-diff specification to address endogeneity issues. We also show that effects of spousal age gaps between men and women significantly affect female relative to male education. Each additional year between husband and wife reduces the female secondary schooling completion rate by 10 percentage points, the time women spend at university by one month, and overall affects female education significantly more negatively than male education. We also document that marriage age and conventional measures of gender discrimination are no substitutes. Finally, we examine whether immigrants have brought the missing women phenomenon to Germany and Switzerland. Using a range of micro data since 1990, we find no systematic gender selection of foreigners collectively, but a group of Balkan, Chinese and Indian immigrants display comparatively high sex ratios at birth. Employing different estimation methods we consistently calculate around 1,500 missing girls in Germany (2003-2014) and Switzerland (1990-2014) combined from these immigrant groups. With household survey data we attempt to identify reasons for sex selection at birth in Germany, but find no robust association for any socio-economic variable employed. However, the sex of older siblings tends to matter, and again Balkan, Chinese and Indian immigrants increase the boy-birth likelihood whereas immigrants collectively do not. ii Contents I. INEQUALITY AND ECONOMIC DEVELOPMENT: NEW PERSPECTIVES ON OLD QUESTIONS I. 1. INTRODUCTION ................................................................................................................ 1 I. 2. RESEARCH MOTIVATION................................................................................................... 2 I. 3. BRIEF OVERVIEW OF ECONOMIC THINKING ON INEQUALITY ........................................... 7 I. 4. NON-TECHNICAL SUMMARY OF MAIN DISSERTATION FINDINGS ................................... 19 II. THE IMPACT OF FUNDAMENTAL DEVELOPMENT FACTORS ON DIFFERENT INCOME GROUPS: INTERNATIONAL EVIDENCE II. 1. INTRODUCTION ............................................................................................................. 23 II. 2. LITERATURE REVIEW .................................................................................................... 25 II. 3. DATA AND IDENTIFICATION STRATEGY ....................................................................... 32 II. 4. EMPIRICAL RESULTS ..................................................................................................... 37 II. 5. REFINEMENTS AND ROBUSTNESS TESTS........................................................................ 49 II. 6. CONCLUDING REMARKS ................................................................................................ 65 II. 7. APPENDIX ..................................................................................................................... 67 III. MARRIAGE AGE AFFECTS EDUCATIONAL GENDER INEQUALITY III. 1. INTRODUCTION .......................................................................................................... 107 III. 2. RELATED LITERATURE AND THEORETICAL CONSIDERATIONS................................... 110 III. 3. DATA AND IDENTIFICATION STRATEGY ..................................................................... 119 III. 4. EMPIRICAL RESULTS .................................................................................................. 125 III. 5. ROBUSTNESS TESTS AND REFINEMENTS .................................................................... 137 III. 6. CONCLUDING REMARKS ............................................................................................ 150 III. 7. APPENDIX .................................................................................................................. 152 iii IV. DOES CENTRAL EUROPE IMPORT THE MISSING WOMEN PHENOMENON? IV. 1. INTRODUCTION.......................................................................................................... 166 IV. 2. LITERATURE REVIEW ................................................................................................ 169 IV. 3. DATA SOURCES AND DESCRIPTION ........................................................................... 179 IV. 4. EMPIRICAL RESULTS ................................................................................................. 184 IV. 5. CONCLUDING REMARKS............................................................................................ 208 IV. 6. APPENDIX.................................................................................................................. 210 V. GENERAL CONCLUSION AND RESEARCH OUTLOOK V. 1. NEW PERSPECTIVES ON INEQUALITY .......................................................................... 218 V. 2. SYNTHESIS OF DISSERTATION FINDINGS..................................................................... 219 V. 3. RESEARCH OUTLOOK ................................................................................................. 227 BIBLIOGRAPHY………….…………………………………………………………………...231 iv List of Tables II. THE IMPACT OF FUNDAMENTAL DEVELOPMENT FACTORS ON DIFFERENT INCOME GROUPS: INTERNATIONAL EVIDENCE Table 2.1: Descriptives …………...………………………………………………………..35 Table 2.2: Determinants of income: Base specification, ordinary least squares (OLS) estimates ...……………………………………………………………………...41 Table 2.3: Determinants of income: Instrumental variable estimates ...………………..44-45 Table 2.4: First stage results of two-stages least square estimates ...………………………47 Table 2.5: Marginal effect of institutions and other fundamental development factors ..……………………………………………………………..…………..51 Table 2.6: Determinants of income for high income groups: Specifications using World Top Incomes Database (WTID) ...……………………………………….60 Table 2.7: Determinants of income: Dynamic panel-data estimation, one step system GMM ......……………………...………………………………………………...63 Appendix Table 2.8: Determinants