ECONOMICS OF INEQUALITY

CEU, Economics Department

Lecturer: Prof.
Ivo Bicanic

Recurrent visiting Professor, Department of Economics, CEU, Budapest,

Full Professor, Faculty of Economics, University of Zagreb, Zagreb

Course: 2 credits

**Grading**

Economic inequality is a 2 credit course.
The grade will be determined by

(i) **in class presentation and
class participation which will be 11% of the grade** (maximum
11 points) The topic and

date for the in-class presentation will be arranged in consultation with the lecturer and will take place according to the lecture

schedule. The presentation will include a one page handout distributed to the students.

(ii)

and it can be written on the same topic as the presentation. The paper must be handed in at latest on the day of the exam.

(iii)

are answered as a 'closed book exam'. The first type of questions requires 'short' and the second type requires 'long' manswers.

The student will choose 3 'short' questions out of a list of 6 and each answer is worth a maximum of 10 points, maximum 30

points for this section of the exam. The sudent will choose 2 long essays questions out of a list of 4, each is worth a maximum

17 points, a maximum of 34 points for this section of the exam.

**Grading:** A (100-94
points), A- (95-91 points), B+ (90-86 points), B (85-81 points), B- (80-76
points), C+ (75-71 points),

C (70-66 points), C- (65-61 points), D+ (60-56 points) and D (55-50 points)

**Course recommended readings:**

There is no textbook for the course but
a there is a reader which will include an extensive bibliography and articles
or chapters

of books covering most of the material
dealt with in the lectures. Together with the course schedule there is
a list of additional

readings which are recommended in addition
to the reader.

**Seminar topics (class presentation)**

Class presentation will start after the
first week of teaching and will follow the lecture topics. The topics and
dates will be

determined during the first week of teaching.
The presentation will take 10-15 minutes and will include a one-page handout

for the other students. It will be followed
by a brief discussion. Students can prepare a written essay on the topic
which will

be their term paper. The topics cover
a wide range of topics relevant for the lecture they follow.

Students who are very anxious to present
a topic not coverred by the program are encouraged to propose their topic
and

discuss its possible inclusion into the
program with the lectures.

__Lecture schedule: Economic Inequality
0506 (Spring term)__

*WEEK:1*__1. Introduction: the inequality
of what? And Measurement axioms__

Monday, 24/4/06, 15:00-16:50 (110 minutes)
__2. Available data and Measuring
inequality__

Tuesday, 25/4/06, 15:00-16:50 (110 minutes)
__3. Measuring inequality and the
distribution of income__

Wednesday, 25/4/06, 9:00-10:50 (110 minutes)

*WEEK 2*__4. Theories of distribution of income
from employment__

Tuesday, 2/5/06, 15:00-16:50 (110 minutes)
__5. Determinants of economic inequality
and wealth__

Wednesday, 3/5/05, 9:00-10:50 (110 minutes)
__6. Poverty concepts and social exclusion
Student presentations I__

Thursday, 4/5/06, 11:00-12:50 (110 minutes)

*WEEK 3*__7. Redistribution of income I Student
presentations II__

Monday, 8/5/06, 15:00-16:50 (110 minutes)
__8. Redistribution of income II
Student presentations III__

Thursday, 9/5/06, 15:00-16:50 (110 minutes)
__9. The world distribution of income
and economic convergence__

Wednesday, 10/5/06, 9:00-10:50 (110 minutes)

*WEEK 4*__10. Distribution, inequality development
and growth and Student presentations IV__

Monday, 15/5/06, 15:00-16:50 (110 minutes)
__11. Changes in inequality and poverty
during the transition I and Student presentations V__

Tuesday, 16/5/06, 15:00-16:50(110 minutes)
__12. Inequality and caital market
failure__

Wednesday, 17/5/06, 9:00-10:50(110 minutes)

**Topics for student presentations I**

The final distribution of topics will depend on the number of students so rearrangmenets are possible.

If someone is very keen to present a topic
not on the list he is welcome to discuss his proposal with the

lecturer and fit it into the schedule.

__Student presentations I__

Thursday, 4/5/06, 11:00-12:50 (week 2)

1. Stochastic process and inequality generation

2. Technical progress and wage differentials

3. The inheritence of Wealth

4. Intergenerational inequality transfers

__Student presentations II__

Monday, 8/5/06, 15:00-16:50 (week 3)

1. Inequality in rich economies

2. Distributional effects of stabilization
policies

3. Optimal taxation theory

4. The political economy of tax progression

__Student presentations III__

Thursday, 9/5/06, 15:00-16:50 (week 3)

1. Poverty in rich economies and European
social charter

2. Poverty in developing economies and
social exclusions

3. Sen's Theory of entitlements

4. Gender inequality

*Student presentations IV*

Monday, 15/5/06, 15:00-16:50 (week 4)

1. Empirical evidence of the Kuznets hypothesis

2. 'Trickle down' and economic growth

3. Regional inequality levels, development
and growth

4. Empirical evidence of inequality generated
poverty traps

__Student presentations V__

Tuesday, 16/5/06, 15:00-16:50(week 4)

1. The distributional effects of privatization

2. Social exclusion in transition economies

3. Case study: Inequality and poverty
generation in a transition economy

4. Case study: Inequality and poverty
generation in a transition economy

**READER CONTENTS**

__INTRODUCTION__

- Kanbur Ravi and Lustig Nora (2000):
"Why is Inequality Back on the Agenda" Annual World Bank Conference on

Development Economics 1999, The World
Bank, Washington 2000, pp: 285-306

- Sen Amartya (1993):chapters: "Inequality
of What? ", chapter 1, pp12-30 and "Welfare Economics and Inequality",

chapter 6, pp: 88-101 in Inequality Reexaminedc
Clarendon Press, Oxford

__MEASURING INEQUALITY__

- Cowell Frank (2000): "Measurement of
inequality", chapter 2, pp: 87-166 in Atkinson Anthony and Bourguignone
Francois,

editors (2000): Hanbook of Income Distribution,
North Holland Elsevier, Amsterdam

- Cowell Frank (1995):chapters: "Charting
inequality", chapter 2, pp: 15-34 and "Analysing inequality", chapter 3,
pp: 35-68

in Measuring inequality, 2nd edition,
Prentice Hall, London

__THEORIES OF DISTRIBUTION OF INCOME
FROM EMPLOYMENT__

- Neal Derek and Rosen Sherwin (2000):
"Theories of the Distribution of Earning", chapter 7, pp: 379-425 in Atkinson

Anthony and Bourguignone Francois, editors
(2000): Hanbook of Income Distribution, North Holland Elsevier, Amsterdam

__POVERTY__

- Lambert Peter (2001): "Poverty", chapter
6, pp: 133-166 of Lambert Peter (2002): The distribution and Redistribution
of

Income, 3rd edition, Manchester UP, Machester

__REDISTRIBUTION__

- Boadway Robin Keen Michael (2000): "Redistribution",
chapter 12, pp: 677-790 in Atkinson Anthony and Bourguignone

Francois, editors (2000): Hanbook of Income
Distribution, North Holland Elsevier, Amsterdam

- Lambert Pater (2001): "A progressive
income tax schedule", chapter 8, pp: 187-218 of Lambert Peter (2002): The

distribution and Redistribution of Income,
3rd edition, Manchester UP, Machester

__GROWTH AND INEQUALITY__

- Aghion Philippe, Caroli Eve and Garcia-Penalosa
Cecilia (1999): "Inequality and Economic Growth: The Perspective

of the New Growth Theories", Journal of
Economic Literature, Vol:37 (December 1999), pp:1615-1600

- Helpman Ephrain (2004):"Inequality",
chapter 6, (pp: 86-110) in The Myth of Economic Growth. MIT Press, Cambridge,
Mass

- Ray Debraj (1998): "Inequality and Development:
Interconnections" chapter 7 (pp: 197-247), in Development Economics,

Princeton UP. Princeton NJ

__WORLD DISTRIBUTION__

- Milanovic Branko (2002): "Decomposing
World Income Distribution: Does the World Have a Middle Class?" Review
of

Income and Wealth, Vol: 48, No: 2 (June
2002), pp: 155-178

- Snowden Brian i Vane Howard (2004):
The Convergence Debate, sections 11.12 (pp: 614-622)

A Modern Guide to Macroeconokics,

__POVERTY AND INEQUALITY DURING
THE TRANSITION__

- Milanovic Branko (1999): "Explaining
the increase in inequality during the transition" Economics of Transition

Vol: 7(No:1), pp: 299-341

- Gorniak Jaroslaw (2001): "Poverty in
Transition, Lessons from Eastern and Central Europe", chapter 6, (pp: 145-172)
,

in Grinspun, Alejandro (ed.) (2001), Choices
for the Poor: Lessons from national poverty strategies, New York: UNDP

- Grun Carola and Klasen Stephen (2001):
"Growth, income distribution and well-being in transition countries", Economics

of Transition, Vol: 9 (No:2), pp: 359-394

- UN ECE (2004): "Poverty in Eastern Europe",
Economic Survey of Europe, No: 3, pp: 163-176