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IT IS WIDELY HELD that an increase in the money supply, resulting say from an open-market purchase, causes income to rise. The purpose of this paper is to question this apparently incontrovertible result. In particular, it is argued that in the widely analyzed case of an open-market purchase generating a short-run increase in money income, the long-run effect of the increase in the money stock is a reduction in income. The basic relation for the analysis is the government budget restraint.

It is important to ask how governmental expenditures on education affect economic equality. Arrow (1971) has shown that public expenditure on different individuals with different ability should be input progressive in order to maximize the utilitarian objective function if ability and public expenditure are substitute as the arguments in the individual utility function. There the word ‘input progressive’ is used in the sense that expenditure should be higher for individuals with low ability. Green et al. (1971) have recently argued that the case for input regressivity can be made under alternaiive assumptions, in particular, when the output of educational process is public goods and when expenditures themselves are produced commodities. On the other hand, the analysis of the optimal income taxation in the presence of educational process has been made by Sheshinski (1973) and Atkinson (1973). This approach takes account of the rational choice between education and work under a given tax schedule, but it does not take into account explicitly the possibility of educational expenditure by the government. The purpose of this paper is to investigate the question of public expenditure on education in the framework of education-work choice in the presence of income tax. The possibility of proportional subsidy on the cost of education is introduced and the interrelationship between linear income tax and linear educational subsidy (tax) is studied. It will be shown below that if the objective function is the utilitarian, that is, the sum of individual utilities, then (1) some educational tax is desirable in the absence of income tax; (2) if we compare the optimal linear income taxation in the absence of educational tax (subsidy) with the optimal linear educational taxation in the absence of income taxation, the first is always more desirable than the latter; (3) if both policies are available and if the collection cost of tax

The increasingly popular strategy which postulates that a redistribution of income can automatically produce a higher level of employment and in turn, a better distribution of income, is discussed in this paper with special reference to the industrial sector. On the basis of data from Ecuador, Peru and Venezuela and utilizing a Leontieff type of model disaggregated by technological strata, the author concludes that the redistribution of income does not significantly affect employment in the industrial sector, since the two fundamental assumptions on which the positive results are expected are of doubtful validity. On one hand, the structure of consumption of industrial goods is inelastic to changes in income distribution and on the other, the production of wage goods does not necessarily imply the use of more labour intensive techniques. Given the need to improve the distribution of income, the author maintains that for such redistribution to be used to promote employment creation, special attention should be given to the direction of consumption of those benefited with the redistribution and to the channelling of the additional demand towards those establishments which use more labour intensive techniques.

The adjusted national income approach and the net national product approach to the analysis of income distribution are discussed. Use of the national income approach implies a total income concept before taxes, which is already net of indirect taxes. On the other hand, use of the net national product approach in effect includes indirect taxes in the basic pretax income. Operationally, the significance of this distinction is the avoidance of an exaggerated measure of average tax burden. From another perspective, the respective, the resource claims called indirect taxes represent purchasing power for government. However, since the logic of budget incidence analysis requires that all output be distributed to private claimants, net national product analysis becomes the relevant concept precisely because it exceeds factor payments or national income by the amount of such resource claims. This conclusion makes even more difficult the task of generating pretax incomes to estimate tax incidence. However, the estimation of tax incidence is simplified when the analyst remembers that increasing the factor incomes of various income brackets by the presumed incidence of indirect taxes is an invalid approach.

This article surveys recent attempts to measure and analyze household savings behaviour in developing economies. Studies of the relationships between savings and current income, permanent income, wealth, interest rates, the price level, household demographic characteristics, occupation, income distribution, direct taxation, and other factors are reviewed and evaluated.

The paper sets out two adjustments for taxation data when income distribution is relevant. The adjustments are used on income series for primary producers and wholesale-retail trading and results compared. Little difference is found between the two income series though the latter, years show the wholesale-retail traders series continuing on an upward trend, while the primary producers series appears to climb at a slower rate or has flattened out. An examination of income led to similar conclusions though these figures seem to imply that in both industries there is a hard core of poverty, individuals who can neither raise their income nor move out of the industry.

(1962). Government's Share of the National Income. Review of Social Economy: Vol. 20, No. 1, pp. 72-81.

Income maintenance programs such as the negative income tax have been extensively discussed, but thus far little has been written about their impact on farm operators. This paper focuses on the effects of alternative definitions of income, including imputed returns to assets, on the accounting practices of farmers, and on the eligibility of farm families for payments. The influence of income maintenance on decision making of farm operators is analyzed, and attention is called to the need for further study of the consequences of major welfare reforms on the farm economy.

HE COMMISSION on Intergovernmental Relations concluded that "the National Government and the States should be regarded not as competitors for authority but as two levels of government co-operating with or complementing each other in meeting the growing demands on both."' Recent political science literature also reflects this co-operativepartnership theme as essential in meeting problems of mutual concern and perfecting our federal-state system. John Gaus has succinctly summarized this literature as follows: "We have now, it seems, a wide agreement that a most fruitful line of inquiry into a federal system of government will not be confined to a striking of balance as to functions, powers, and conflicts of rival entities, but a continuing series of functional working 'relations.' " 2 The field of public agricultural programs provides political scientists a variety of federal-state relationships which can be subjected to critical study, analysis, and evaluation. Prominent attention, for example, has been given by political scientists to problems connected with federal grants-in-aid to state land-grant educational institutions," and technical assistance to statecreated soil conservation districts through the federal Soil Conservation Service.4

In both political discussions and scientific literature the income distribution has come to occupy a central position for the consideration of social welfare and economic equalization. It has been assumed that an individual's income reflects his consumption opportunities and therefore his standard of living or economic welfare. The thesis of this paper is, however, that there are reasons for being quite pessimistic about drawing meaningful conclusions from income distribution data. As illustrated by the use of Swedish data, the distribution of income gives an extremely incomplete picture of the distribution of consumption for a wide variety of definitional and statistical reasons. The distribution of consumption, furthermore, cannot be transformed into a corresponding distribution of welfare, since there is no well defined concept of welfare. The treatment of public consumption in empirical analysis of the distribution of welfare also raises problems. The paper closes with the presentation of the conceptual basis for an alternative to the traditional method of analyzing the distribution of income.

This paper argues that the aspects of the employment problem not taken into account by the conventional efficiency shadow wages used in social cost-benefit analysis is essentially distributional in nature. A poverty redressal index is then developed to take account of these distributional effects. It is a rough and ready measure which does not involve the specification of a full social utility function, and only requires very simple and probably generally acceptable value-judgments about income distribution. Hence, it may be a simple and practical way of taking some account of the important distributional dimensions of projects.

This type of policy was introduced into British Life Office practice some three years ago and rapidly proved most attractive; so much so that a leading office announced that it obtained over £2,000,000 new Sums Assured under this class of contract within a year of issuing the prospectus. Details of the schemes of no less than forty-six offices are available. On the academic side, the examiners have shown their appreciation of its possibilities by setting questions concerning calculation of premiums, valuation, etc., in the examinations of both the Institute and the Faculty of Actuaries.Sufficient time has now elapsed since the commencement of this type of business for the problems involved to force themselves into notice. Certain of these problems are dealt with in the following note.

This paper examines the returns to educational investment in Malaysia and their implications for public-sector resource allocation policies. These policies largely define the accessibility of educational facilities for most groups in Malaysian society, and since the resultant pattern of educational attainment impinges directly on personal incomes, attention will also be given to the distributional aspects of public investment in education. The focus of the latter will be upon urban-rural divergences, which in Malaysia touch directly on the question of racial equity. The indigenous Malays now constitute exactly one-half the total population but four-fifths of all rural residents; the Chinese account for just over one-third of the total population, but two-thirds of all urban residents are Chinese. (The remainder of the population is mainly of south Indian extraction and not notably concentrated.) A locational breakdown-if employed with proper caution-can therefore serve as a simple proxy for racial differences. This is the basic reason why existing economic imbalances in Malaysia are felt so keenly: urban-rural disparities are popular nowhere, but fairly extreme ones have been tolerated over long periods of time; racial disparities arewith good cause-universally regarded as more oppressive and less tolerable. The coincidence of economic imbalances by location and by race does not simply complicate the regional problems which Malaysia shares with virtually every nation in the world: it adds a whole new dimension.'

An efficient procedure is proposed for making welfare payments to low income farm families. This is a negative income tax. It uses the income tax system for linking directly transfer payments to income needs, without unduly adverse effects on resource allocation. The negative income tax proposal is considered in relation to rural adjustment and reconstruction.

families. It was suggested by Dr. Woofter to the senior author of this article that an analysis be made of data on Negro families in the southern region. This article undertakes such an analysis of nonfarm Negro families. In Table 1 there is presented a comparison of the situation regarding children and income in nonwhite (practically all Negro) families and all the families in the southern region.2 The first fact of importance is that among Negroes 51 percent of the families as compared with 37 percent of all the families in the South have no children. Although the disparity is not as great, the percentage of Negro families with 1, 2, and 3 or more children is smaller in each instance than in the entire population. As the size of the Negro families increases, the differences between the percentage of Negro families and all familes in each category decreases. When the entire child population is considered, the percentage of children in Negro families with 1 or 2 children is smaller than the percentage for the entire child population of the South. But in Negro families with 3 or more children, one finds 65 percent of the children as compared with 58 percent for all families in the South. Thus it results that, though a smaller percentage of Negro families have 1, 2, and 3 or more children, a much higher percentage of Negro children is to be found in the families with 3 or more children than in the population as a whole. In less than a fifth of the Negro families there are nearly two-thirds of the Negro children in the South. In Table 1 the median family unit income of Negro families is 44 percent less than that for all families in the South.3 But when we compare TABLE 1

textabstractSince the phrase income distribution covers a large number of different concepts, it is necessary to define these and to indicate the choice made in this article. Income for a given recipient may cover lists of items which are not always the same. Apart from popular misunderstandings about which items to include and exclude, statistical sources on incomes use varying definitions, often because of the data available. Tax statistics, which are among the most important sources for income data, sometimes exclude items because tax legislation contains allowances or includes items because of traditional concepts of income. The data from this source have been processed by a number of authors seeking to approximate the economic income concept, and it is assumed that this aim more or less has been attained. In other words, the article assumes that, in principle, the income figures used in the more sophisticated studies available cover the economic income concept and, more precisely, primary income, which is considered identical to income before tax.

The estimation of a per capita income distribution which is consistent with the provisions of the national economic plan has a double task. First in order to delimit prospective consumer demand, the calculations must yield information about the changes in the stratification of income over the plan period. The second, and proably more important task is to assess in advance the consequences on income stratification of the economic decisions and of the changes in economic proportions involved in the plan. In the latter case, from the possible decisions those bringing about the most suitable income proportions from the point of view of economic policy, might be chosen. In a quantitative estimation of prospective income distribution - particularly in the case of plans covering relatively shorter periods, - the distribution functions expressing the formal rules of income distribution might be also relied upon with relative safety. In computations covering longer periods and for assessing the effect of economic decisions influencing the distribution of income, however, a special model is needed. The formation of and the changes in the distribution of personal income are rather complicated to follow. The greatest difficulty in analysing and planning work arises from the fact that the socio-economic units where income is generated and those where it is spent, are different. The individual types of income (such as wages, sick-pay, old-age pension, family allowance, etc.) are received by definite persons. The extent and the conditions of their share are regulated by economic policy on

Summary The adequacy of income of a household may be defined as the ratio of its income to the income level required to achieve the conventional standard of living in the socio‐economic group to which the household belongs. This concept has greater relevance than that of income for the study of consumer behaviour (e.g. propensity to save) and other social behaviour and pathologies. Income and need for income in a country do not necessarily rise proportionately over time, thus resulting in periods of declining, as well as periods of rising, income adequacy. Furthermore, in spite of the international demonstration effect, the need for income in developing countries is significantly lower than in developed countries resulting in a much smaller gap between income adequacies than between incomes.

ARM programs in the United States have long had the improvement of farm income as their professed goal. Explicit or implied in this goal has been the desire to adopt those farm policies that improve the income of low income farmers. In fact, Congress and farm organizations continue to use this justification for our farm legislation. However, recent publicity about extremely large payments to some producers and very small payments to others has caused many to question whether our farm programs have been an effective means of maintaining minimum farm income standards. It is the purpose of this paper to analyze the distributive effects of our agricultural programs and examine whether government payments have increased or reduced the inequality in the distribution of income in agriculture over the past few years.'

Unfortunately, at least from our point of view, much greater attention has been given to statistics of wealth than to those of income. The figures of national wealth are by no means as important for the purpose in hand as are the figures of national income. They are of some importance, however, as bearing upon the nation's productive capacity. The. wealth of the nation consists largely of its technological equipment-of the things, that is, which assist the people in bringing forth the national income. Other things being equal, the larger this equipment the greater will be the income out of which new capital can be accumulated.

(1967). Low Income and Consumer Spending: Comment. Review of Social Economy: Vol. 25, No. 1, pp. 102-106.

In a capitalist economy, income distribution is compounded out of the distribution of capital income, the dis tribution of labor income and the shares of capital and labor in total income. As capital inequality is much greater than in come inequality, a decrease in capital's share would decrease income inequality. Keynes held that euthanasia of the rentier —that is, a decrease in capital's share of total income—would result from the investment that takes place during sustained full employment. Tolerably full employment has been sus tained ever since World War II, but capital's share of income has not fallen. Full employment over the postwar period has been the result of policy which conformed to a private invest ment strategy. This strategy operates by sustaining and in creasing the returns on capital and also carries threats of finan cial instability and inflation. An alternative public employ ment strategy for full employment policy is available. This strategy would probably lead to a partial euthanasia of the rentier and would tend to diminish the likelihood of financial instability and inflation. Highly stylized examples show that the effects of a partial euthanasia of the rentier, when com bined with mildly equalitarian taxes, transfers and government services, can lead to a substantial decrease in income in equality.

It goes without saying that the standard of living attained does not depend simply upon income. The natural environmentclimate, the free gifts of nature-the social environment, whether urban or rural, the efficiency of government, the opportunities for recreation and education which are provided gratuitouslyall these have a marked influence upon the plane of life that men attain. Furthermore, the actual comfort enjoyed by a given family depends hardly less upon the amount of its income than upon the wisdom displayed in applying it to the diverse wants which it may be made to meet. The woman who "looketh well to the ways of her household" is as important a factor in our time as she was in the days of King Lemuel. But into these wide aspects of the question it is not my business to enter. I shall deal with the influence upon the standard of living of income alone, and I purpose to consider the effect upon the standard, first, of variations in amount of income; second, of variations in sources of income. I shall draw for illustration largely upon the results of an investigation into the standard of living in New York City carried on in I907 under the direction of a committee of the New York State Conference of Charities. Returns were compiled from 39I families of four, five, and six persons each, 3I8 having incomes between $6oo and $i,Ioo. I. Variations in amount of income.-It is plain that the larger the income, the larger are the possibilities of satisfaction. One of the evidences of a general rise of real wages in the nineteenth century is the increase in the number and kind of goo-d things that are within reach of the ordinary man, and actually in his possession. We know, that is, that the rise of the standard

T IS a common practice in comparative state policy research to use per capita income figures as a measure of economic development. Often employed as a test factor in elaborating observed relationships between politics and policy, per capita income statistics have proved to be a convenient tool of cross-sectional policy analysis. The purpose of this brief note is to encourage certain refinements in the use of aggregate personal income data and to point out some of the conceptual and theoretical advantages of these refinements for future research. What is proposed here is the practice of identifying the component parts or types of personal income in order to treat each component separately in our research. One very promising classification scheme devised by Harvey Perloff and his associates divides personal income into three component parts: participation income, property income, and net transfer payments.? Participation income comprises wages and salaries, other labor income, and proprietor's income. Participation income thus consists largely of income from labor services. Property incomes "consist of dividends, interest, and rent payments. These depend primarily upon the pattern of ownership of capital, which at any given moment is historically determined." 2 Net transfer payments include payments "such as pension and relief which are not related to current production."3 Table 1 shows the proportionate share of each type of income over the period 1880-1957.

Improving personal income in low income rural communities is of widespread interest in many areas of the United States, Canada and in other parts of the world. This paper suggests a useful method of analyzing inter-area income differences and identifying factors that are useful in developing alternative policies to raise low per capita income levels as wetl as in delineating areas for public investment. While the results of the study are of special relevance to the Omro area of the United States, the mythology and the general reacts have much wider implications.