Enrico D'Elia

In the second half of 1950 the Italian Central Institute of Statistics published a special volume containing the results of an exhaustive investigation into the structure and recent trends of Italy’s national income. The present article describes and comments on the recapitulative data, pointing out the essential features of Italy’s national product and national income. The author calls attention to the war disturbances, the post-war recovery movement, the changes that have occurred since 1938 in the percentage weight of the several component items (private activities, public sector, indirect taxes, incomes from abroad and donations), and especially to the industrial and agricultural income. The statistical analysis is preceded by explanatory remarks as to clear up certain problems of method and definition.

Functional distribution is an important driver of inequality. When market remuneration of labour and capital are very uneven, as they have been in recent decades, personal distribution tends to polarise, jeopardising social cohesion. This fact explains a renewed interest in functional distribution. Nevertheless, in the estimates on functional distribution the role of self-employed income has been undervalued. National accounts provide estimates of the compensation of employees and the operating surplus, but do not refer to self-employed workers as a specific productive factor and implicitly include their income in the ‘mixed income’ and in some minor items. Most analysts estimate self-employed income by attributing the same average unit compensation of the corresponding employees to each worker, that in fact is not necessarily consistent with the GDP estimates.Other estimates take a fixed share of the ‘mixed income’, usually the same for every country. When national accounts are very detailed, as in the case of Italy, it is possible to estimate self-employment income from non-financial accounts by sectors with some accuracy, under some weak assumptions. In this paper we analyse four workable estimates, since only the total amount of ‘mixed income’ received by households is available for most countries. We analyse the data of the OECD countries focusing mainly on eight large countries: the US, Japan, the UK, Germany, France, the Netherlands, Spain and Italy. The results are somehow unexpected. First of all, evaluating the income of the self employed properly, the overall labour share is declining much faster than reported by the official data in some countries, and more countries showed a decrease in the 2000s. Indeed, the real unit compensation of the self employed reduced significantly in most of the eight countries (and in some of the others) after the mid or the end of the nineties, since self-employment has been used extensively to reduce the overall labour cost. Unit labour cost (ULC) also increased much slower (or even declined more) after 2000 in most countries, shedding new light on the pattern of international competitiveness and the drivers of inflation. The share of operative surplus of non-financial and financial corporations, properly recalculated, has had different dynamics, whereas the component related to imputed rentals of owner occupied houses played an unexpectedly important role. Finally, the mark-up on variable production costs has been higher than expected and its dynamic has been faster in most countries, showing a minor sensitivity to the business cycle. Indeed, statistical data on self-employment income is not fully satisfactory in many countries, thus our estimation of self-employment income represents only a first step towards a deeper comprehension of the dynamic of primary distribution. Indirect evidence of the reliability of our estimates is in their capacity to explain some key variables more accurately, strictly related to labour share, mark-up and ULC, which are income inequality, inflation and export performance.

... Le opinioni espresse nei “Documenti di Lavoro” riflettono esclusivamente il pensiero degli autorie non ... that Y lays just in the middle point, say di, of the two bounds of the inequality. ... of data both in standard likelihood and in Bayesian inference, unless bracketing itself induces a ...

A special qualitative questionnaire attached to the Business Surveys carried on in February 2016 by Istat sheds some light on the labour demand after the Great Recession, also related to the output perspectives, the utilized productive capacity and the specific conditions and strategies of the firms. An ordered logit model is used to analyse the characteristics of the firms with different levels of employment response to a 10% permanent output increase. The first result is that the employment elasticity to output lies only between 0.10 and 0.25, with little differences by sector and firm’s size. It could be a sign that labour intensity of output is low and possibly reducing (and that productivity is increasing as well), or that jobs are created mainly by newborn firms (necessarily underrepresented in the survey sample). The estimated models also support the relevance of thresholds in firm’s behavior. For instance, capacity utilization and firm’s size apparently raise employment only...

Functional distribution is an important driver of inequality. When market remuneration of labour and capital are very uneven, as they have been in recent decades, personal distribution tends to polarise, jeopardising social cohesion. This fact explains a renewed interest in functional distribution. Nevertheless, in the estimates on functional distribution the role of self-employed income has been undervalued. National accounts provide estimates of the compensation of employees and the operating surplus, but do not refer to self-employed workers as a specific productive factor and implicitly include their income in the ‘mixed income’ and in some minor items. Most analysts estimate self-employed income by attributing the same average unit compensation of the corresponding employees to each worker, that in fact is not necessarily consistent with the GDP estimates.Other estimates take a fixed share of the ‘mixed income’, usually the same for every country. When national accounts are ver...

In Italy, as in other countries, inflation and nominal interest rates showed a strong positive correlation in the short run during the seventies. Depending on the share of inflation transferred on rates, this empirical evidence has often been regarded as consistent with a causal relation running from inflation to rates, according to the hypothesis that the real rate is substantially constant over time1.

Economic agents are aware of incurring a loss in basing their decisions on their own extrapolations instead of on sound statistical data, but this loss may be smaller than the one related to waiting for the dissemination of the final data. Broad guidelines on deciding when statistical offices should release preliminary and final estimates of the key statistics may come from comparing the loss attached to users’ predictions with the loss associated to possible preliminary estimates from incomplete samples. Furthermore, the cost of delaying decisions may support the dissemination of very early estimates of economic indicators, even if their accuracy is not fully satisfactory from a strict statistical viewpoint. Analysing the vintages of releases of quarterly Euro area GDP supports the view that even very inefficient predictions may beat some official preliminary releases of GDP, suggesting that the current calendar of data dissemination requires some adjustment. In particular, actual ...

... market, possibly related also to demographic unbalances, and tends to widen inequality. The aim of ... the fund F0 should be less than the investment in the fund itself. ... pension funds which can be granted on the long run is necessarily lower or equal to the real growth ...

Abstract Firms change their size through a row of discrete leaps. A basic model allowing for discontinuous growth can be based on several assumptions that entail testable consequences: profitability is not a continuous function of the firms’ size, but exhibits peaks, each corresponding to a locally optimal size. The model has been tested by using a panel of Italian manufacturing firms. Both the non-parametric analysis and a panel estimation confirm the presence of ‘peaks’ in the distribution of profitability by size.

The BanksB are very timely and quite inexpensive; are more robust against misreporting than traditional surveys. A number of statistical techniques allow converting the results of qualitative surveys in quantitative indicators. In general, the survey was a successful experiment that shed some light on the structure and dynamics of the Albanian economy. In particular, the survey confirmed that Italy and Apulia are among the most interesting markets for the Albanian firms, and vice versa, also thanks to subcontracting agreements. Also, many Albanian firms declared to compete with Italian firms on the same markets. The majority of respondents seem to have balanced and “modern” relationships with the bank system, even though the local small Albanian banks seem to be unable to follow the fast evolution of the most dynamic firms. This fact suggests the need for restructuring the Albanian credit sector. The survey confirmed that Albanian economy is fast growing, and that entrepreneurs are ...

Typically, firms change their size through a row of discrete leaps over time. A very basic model allowing for discontinuous growth can be based on a couple of assumptions: (a) in the short run, the firm’s equipment and organization provide the maximum profit only for a given production level, and diverging form it is costly; and (b) in the long run, the firm adjusts its size as if the current equipment had to be exploited until overall profits exceed a given threshold and those expected from the new desired plant for the current production level. Combining the latter two hypotheses entails a number of testable consequences, usually regarded as nuisance facts according to the traditional theories. First of all, the profitability should not be a continuous function of the firms’ size, but exhibits a number of peaks, each corresponding to a different locally optimal size. Secondly, when demand is growing, investment are expected to increase just when profits falls shorter some given threshold. The model has been tested by using a panel of data on the size and performances of Italian manufacturing firms from 1998 to 2007. Indeed, both the non-parametric analysis and a panel estimation confirm the presence of several “peaks” in the distribution of profitability by size. Furthermore, a negative statistical relationship is apparent between investment and profitability, controlling for the size of firms.

Typically, firms change their size through a row of discrete leaps over time. A very basic model allowing for discontinuous growth can be based on a couple of assumptions: (a) in the short run, the firm’s equipment and organization provide the maximum profit only for a given production level, and diverging form it is costly; and (b) in the long run, the firm adjusts its size as if the current equipment had to be exploited until overall profits exceed a given threshold and those expected from the new desired plant for the current production level. Combining the latter two hypotheses entails a number of testable consequences, usually regarded as nuisance facts according to the traditional theories. First of all, the profitability should not be a continuous function of the firms’ size, but exhibits a number of peaks, each corresponding to a different locally optimal size. Secondly, when demand is growing, investment are expected to increase just when profits falls shorter some given th...

The concept of inflation perceived by consumers came in the recent debate on inflation since it may affect consumer behaviour even if the perception was completely wrong. A misperception of inflation occurs particularly when households tend to label incorrectly inflation what really is a reduction in their disposable income, as in declining or stagnant economies and during public budget consolidation processes. Also a cash changeover may alter the perception of price changes. Nevertheless, even in a perfect perception framework, each consumer evaluates the inflation rate taking into account only his own consumption basket and the dynamics of the particular prices he pays. Hence, perceived inflation may differ systematically from the official one calculated by the statistical agencies, that necessarily make use of a common basket of consumption and the average market price of each product. The official inflation rate may be either beyond or below the average individual inflation rate...

In general, rational economic agents trade off the cost of waiting for the statistical agencies disseminate the final results of the relevant surveys before making a decision, on the one hand, and of making use of some model based predictions. Thus, from the viewpoint of agents, predictions and preliminary results from surveys often compete against each other. Comparing the loss attached to predictions, on the one hand, and to possible preliminary estimate from incomplete samples, on the other, provides a broad guidance in deciding if and when statistical agencies should release preliminary and final estimates. In this paper, the case of the dissemination of figures on quarterly GDP in the Euro Area is examined. The main conclusion is that the so called “flash estimates” actually provide valuable information to the users, while intermediate releases, published before three months from the end of the reference quarter can be substituted by model based estimation without any loss of a...

Functional income distribution can be an important driver of inequality. When the market remuneration of labour and capital is very uneven across individuals, as they have been in recent decades, the personal distribution of income tends to polarise, jeopardising social cohesion. This explains a renewed interest in functional distribution. Nevertheless, the role of self-employed income has been often misunderstood in estimating factor income shares. National accounts provide estimates of the compensation of employees and the operating surplus, but do not refer to self-employed workers as a specific productive factor, implicitly including their income in the ‘mixed income’ aggregate and in some other minor items. Most analysts estimate the income of self-employed workers by attributing to them the average unit compensation of the employees, although in fact this is not necessarily consistent with the GDP estimates. Other estimates take a fixed share of the ‘mixed income’, usually the...

The paper compares different procedures to convert in ordinary quantitative indicators the results of qualitative tendency surveys. The main result is that different procedures tend to produce quantitative indicators with a very similar dynamics. A new quantification method based on the unobservable variables approach is also proposed.

During 2002, the discrepancy between the official inflation rate and that perceived by consumers picked up to an all time record in the Eurozone. A measure of this misperception is provided by the results of the monthly qualitative consumer surveys carried out by the European Commission. Of course, many reasons may explain the misperception by part of consumers. Here the latter is related to the fact that almost everybody in Eurozone still tends to evaluate prices by using former national currencies and, what is more, adopts proxy exchange rates against euro instead of the official ones, that are computationally too demanding. By accident, in almost every Eurozone countries the use of a feasible proxy of exchange rate against euro implies some overestimation of price changes between 2001 and 2002 (1.4% on average in the Eurozone). The impact of this effect is confirmed by the evidence that in most countries inflation misperception is positively related to the discrepancy between pro...

In general, rational economic agents are not in the position to wait for the statistical agencies disseminate the final results of the relevant surveys before making a decision, and have to make use of some model based predictions, even when agents are not assumedly forward looking. Thus, from the viewpoint of agents, predictions and preliminary results from surveys often compete against each other. Agents are aware to incur in a loss basing their decisions on predictions instead of sound statistical data, but the loss could be smaller than the one related to waiting for the dissemination of final data. Comparing the loss attached to predictions, on the one hand, and to possible preliminary estimate from incomplete samples, on the other, provides a broad guidance in deciding if and when statistical agencies should release preliminary and final estimates of the key variables. The main result of the analysis is that, in general, preliminary sample estimates are useful for the users on...

Inflation is currently low and falling in the OECD area. A side effect of these facts is that they made harder the task of price index compilers. First of all, researchers and analysts are moving their attention from aggregate price dynamics to price differentials (among products, markets, consumers groups, and countries), since relative differences among single prices did not tend to narrow as inflation falls. Thus the distribution of price changes (and underlying price dispersion) has become more and more relevant for users. In addition, important factors, such as market segmentation and consumers stratification, should be taken into account both in CPIs and in harmonised indexes, above and beyond usual “consumption purpose” of goods and services. For instance, the relation between price level, on the one side, and price dynamics cannot be disregarded Finally, the “trivial” problem of rounding should be considered. This paper provides some empirical evidence concerning price chang...

Quality adjustment of price indexes affects the analysis of many sensitive economic issues, such as real growth, productivity, international competitiveness, real wages, per-capita consumption and poverty, other than inflation. Hedonic methods are often recommended and increasingly used in the compilation of consumer price indexes. Nevertheless many official statistical agencies continue adopting traditional methods considering only the dynamics of prices of products matching in two adjacent periods of time. Indeed, a number of studies have even recently remarked that hedonic methods sometimes provide results very similar to the traditional matching models approach, particularly when models included in price index sample are replenished frequently. This paper briefly surveys the economic theory behind hedonic and traditional quality adjustment methods, and demonstrates that average price changes estimated by hedonic regressions differ from matched models estimation only because of t...

Typically, firms change their size through a row of discrete leaps over time. Sunk costs, regulatory, financial and organizational constraints, talent distribution and other factors may explain this fact. However, firms tend to grow or fall discontinuously even if those inertial factors were removed. For instance, a very essential model of discontinuous growth can be based on a couple of assumptions concerning only technology and entrepreneurs’ strategy, that is: (a) in the short run, the firm’s equipment and organization provide the maximum profit only for a given production level, and diverging form it is costly; and (b) in the long run, the firm adjusts its size as if the current equipment had to be exploited until overall profit exceeds the profit expected from the new desired plant at the current production level. Combining the latter two hypotheses entails a number of testable consequences, usually regarded as nuisance facts within the traditional theoretical framework. First ...

This paper analyzes trade and financial openness effects on growth and income inequality in 35 OECD countries. Our model takes into account both short run and long run effects of factors explaining income divergence between and within the countries. We estimate, for the period 1995-2016, an error correction model in which per capita GDP and inequality are driven by changes over time of selected factors and by the deviation from a long run relationship. Stylised facts suggest that trade and financial openness reduce the growth gaps across the countries but not income inequality, and the effects of finance are stronger in high income countries. Nevertheless, low and middle income countries benefit more from international trade. Our contribution to the existing literature is threefold: i) we study the short and long run effects of trade and financial openness on income level and distribution, ii) we focus on developed countries (OECD) rather than on developing and iii) we provide a sen...

The answers to qualitative questions put to economic operators can be integrated in standard macro-economic analysis by using a “quantification” procedure chosen among the probabilistic approach, the regression methods or the latent factor approach. The first one is the most commonly used. It is based on the assumption that the respondents reply that the value of the reference variable x