Knowledge that Transforms

This paper uses data from income tax returns (191598), wage tax returns (191998), and inheritance tax returns (190294) in order to compute homogeneous, yearly estimates of income, wage, and wealth inequality for twentieth-century France. The main conclusion is that the decline in income inequality that took place during the first half of the century was mostly accidental. In France, and possibly in a number of other countries as well, wage inequality has been extremely stable in the long run, and the secular decline in income inequality is for the most part a capital income phenomenon. Holders of large fortunes were badly hurt by major shocks during the 191445 period, and they were never able to fully recover from these shocks, probably because of the dynamic effects of progressive taxation on capital accumulation and pretax income inequality.

The entry‐level market for American gastroenterologists was organized by a centralized clearinghouse from 1986 to 1996. Before, and since, it has been conducted via a decentralized market in which appointment dates have unraveled to well over a year before the start of employment. We find that, both before and after the years in which the centralized clearinghouse was used, gastroenterologists are less mobile and more likely to be employed at the same hospital in which they were internal medicine residents than when the clearinghouse was in use. This suggests that the clearinghouse not only coordinates the timing of appointments but also increases the scope of the market, compared to a decentralized market with early appointments.

In this paper, we study an important paradox of Deaton and Paxson (1998): Using the Barten model of economies of scale, Deaton and Paxson predict that the share of food consumption in total expenditure should increase as household size rises with per capita expenditure held constant, while their empirical evidence shows the opposite. This paradox has important implications for the measurement of poverty and inequality. Consistent with predictions of the Barten model, we show that the food share in food and a more public good (housing) increases with family size, and that the elasticity of the share of food with respect to family size is larger for poorer households. Therefore, the Deaton-Paxson Paradox cannot simply be due to an incorrect theoretical model. We provide evidence that food preparation time may be important in understanding this puzzle. Key Words: household consumption, economies of scale JEL Classification: D1, E2 # The corresponding author. Email: [email protected]; phone: (512)475-8540. + We thank participants of the Lonestar Conference, Peter Debaere, Don Fullerton, Dan Hamermesh, Gerald Oettinger, Dan Slesnick, Max Stinchcombe and Clayton Vernon for their helpful comments. We especially would like to thank Angus Deaton for his comments on an earlier version of this paper. All remaining errors are ours. 1