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China has ceased to be communist, but is not entirely capitalist

LiveMint logoLiveMint 05-05-2017 Ragini Bhuyan

Thomas Piketty of Capital in the Twenty-First Century fame has come up with another joint paper which gives details about income inequality and related indicators in China. The paper, which is based on recently released income tax data on high worth individuals, shows that inequality in China is much higher than what is claimed by official estimates and it has increased significantly during the reform process which is credited for high growth in the Chinese economy. However, the paper also notes that the Chinese economy is still different from other major economies, with a public property accounting for 30% of the country’s total wealth in 2015. This share is close to zero or even negative in most countries due to high government debt. Piketty and his co-authors also add that unavailability of detailed tax data still poses a lot of difficulties in analyzing China’s inequality.

Also Read: Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015

Anirban Mitra from the University of Kent has co-authored research which tries to give tangible evidence of vote-buying in Indian elections. The researchers have used National Sample Survey Office’s (NSSO) consumption data from 2004-2011 to compare difference in consumption patterns before and after elections. They do this by matching election dates in states with dates of the NSSO survey. The paper finds that there is a clear consumption spike just before elections, which the authors claim is evidence of vote-buying. The exercise also shows interesting results such as a bigger consumption spike for branded liquor over country liquor.

Also Read: Consumption Spikes and Election Days

Political access can result in significant business benefits for firms, according to a new paper published in the National Bureau of Economic Research (NBER) by Jeffrey R. Brown and Jiekun Huang from the University of Illinois. The researchers looked at data on visitors to the White House from 2009 to 2015. They found that executives’ meetings with key policymakers resulted in their stocks receiving a positive, abnormal boost. Meetings with government officials were also likely to result in more government contracts and lesser burden of regulations. After the results of the 2016 presidential elections, firms that had access to the Obama administration saw lower stock returns in comparison to firms that were otherwise similar.

Also Read: All The President’s Friends: Political Access and Firm Value

Energy reforms in India have been largely targeted at reducing subsidies till now. A recent IMF working paper has called for using energy price-reforms to further environmental goals in the future. The paper argues that an annual increase in coal tax by Rs150 per tonne of coal from 2107 to 2030 can avoid more than 270,000 pollution-related deaths and cut down CO2 emissions by 12%. The paper also notes that such a task would not come without political difficulties, and suggests a two-pronged approach to handle these. This should include setting clearly defined time-bound targets for the reform programme as well as an awareness campaign which educates the public about benefits of such reforms. The paper emphasizes on having clarity about estimating additional revenue mobilization from such reforms and the areas where it would be put to use. Among groups which would need special attention are the poor households who need to be compensated for high energy prices, workforce in coal sector which would be displaced, and energy intensive sectors, which would require temporary subsidies.

Also Read: Reforming Energy Policy in India: Assessing the Options

Sleep deprivation can be detrimental to productivity, income and job satisfaction, according to an article by Joan Costa-i-Font and Sarah Fleche from the London School of Economics and Political Science. The authors looked at a dataset of 14,000 families, and looked at the quality of sleep enjoyed by mothers, based on the number of times they were interrupted by children during the night. The authors found that improving the mother’s average nightly sleep duration by one hour resulted in an increase in the number of hours worked by 7%, household income by 10-11% and job satisfaction by 0.01 points.

Also Read: Sleep deprivation and employment

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