Secondary Sources: Gas and Income Gap, Income Variability, WTO

July 1st, 2008 | Wall Street Journal

A roundup of economic news from around the Web.

Gas and Wage Gap: On his blog, Robert Reich says that the rising price of gas is widening the gap between rich and poor. “On average, Americans now spend 4 percent of their income on gas. But this figure varies significantly. People who live in impoverished Wilcox County in Alabama, for example, spend 16 percent of their income on gas, while residents of affluent Hunterdon County in New Jersey spend 2 percent. Poorer Americans also tend to drive older cars that get lousy mileage. They dont trade them in as often as wealthier people do, and cant afford hybrids or new models that use gas more efficiently. And its not unusual for their jobs to require them to haul stuff from one place to another in pickup trucks or vans that guzzle even more gas.”

Income Volatility: The Congressional Budget Office has released a new paper that looks at income variability, or how much a workers earnings or a households income bounces around from year to year. “The bottom line from the analysis is that a substantial fraction of workers experience large changes in their earnings from one year to the next, though the trend in earnings variability has been roughly flat since the mid-1980s. A somewhat smaller percentage of households see large changes in their income; that trend has also been roughly flat over the same period. (Some other recent studies relying on other data sources have suggested increases in the volatility of household and family income, but various problems in the surveys used in those studies may be contaminating those results. The administrative data upon which CBO relies tend to be more consistent over time and more accurate in general than many survey results.)”

Chinese Inflows: Richard Baldwin writes for the voxeu blog that WTO may be at a tipping point. “The World Trade Organization is losing its place at the centre of the global trading system. Absent reforms, the rules-based architecture of international trade may collapse into a might makes right affair.”

Compiled by Phil Izzo