Saturday, May 28, 2022

Botswana’s historical income data compiled in Paris

Work is in progress to compile income data on Botswana in a World Top Incomes Database project by the Paris School of Economics in France. The study will cover the Bechuanaland Protectorate years when present-day Botswana was a colonial territory ruled by the British.

To date, the researchers (Alvaredo, Facundo, Anthony Atkinson, Thomas Piketty and Emmanuel Saez) have constructed top income share time series which they keep extending forwards and backwards for 29 countries. Denmark’s goes as far back as 1869 and ends in 2011.

So far the only African countries in the database are South Africa and Mauritius. With three breaks (1966-68, 1976-77 and 1994-96), current coverage of South Africa starts from 1914 and ends in 2012.
Mauritius’ series starts in 1932 and ends in 2012 with only one break between 1973 and 1974.
Botswana is one of 17 African countries to be added to the database and are currently under study. Results will be incorporated into the database once they are available.

The project studies income distribution using tax data following the pioneering work of Simon Kuznets, a Russian American economist noted for his empirical works on national income. It was Kuznets who formulated the concept of Gross National Product (GNP).

The Paris project says that it is surprising that Kuznets’ lead was not followed and adds that as a result, for many years the income tax data were under-utilised.

“This means however that the findings of recent research are of added interest, since the new data provide estimates covering nearly all of the twentieth century – a length of time series unusual in economics,” it says.

Beginning in 2001, Piketty undertook research work on the long-run distribution of top incomes in France; similar studies followed and the result is that there is a large volume of data “which are intended as a research resource for further analysis.”

Widely considered one of the world’s leading (if not the leading) scholars on income and wealth inequality, Piketty published a seminal economics book earlier this year that received rave reviews from academia and topped every international bestseller list that matters.

After studying 300 years’ worth of income and wealth data, the central argument that he makes in “Capital in the Twenty-First Century” is that minus aggressive tax policy, capitalism distributes income in a deeply unequal way.

In service of the latter proposition, the book makes the point that returns on capital typically grow much faster than the broader economy. As a result, the already wealthy usually accumulate more wealth more quickly than the average worker whose wages are more directly tied to the real economy.

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