Page - 23 - in options, Volume summer 2015

americas 23summer 2015 + optionswww.iiasa.ac.at regional focus New clues to the growing gap between rich and poor The gap between rich and poor has grown larger over the last four decades, with a significant increase in income inequality measures worldwide. A joint IIASA research study published  in The Review of Income and Wealth helps explain why. To date, several factors have been put forward to explain increasing income inequality. These range from the declining importance of labor unions and other protective labor market institutions, to globalization’s influence on wages. “Until now, research has concentrated on evaluating each one of a vast range of factors individually,” explains IIASA’s Jesus Crespo Cuaresma. “But no single study has been able to disentangle which of these potential explanations was backed up by empirical evidence when tested against each other, so we decided to do precisely that.” The study took a comprehensive approach to unveiling the drivers of inequality in the developed world, using data for 32 developed countries spanning the last four decades and modern econometric methods. “In particular, we included explanatory factors for income inequality related to theories of technological change, international trade, and political conditions and institutions,” Crespo Cuaresma says. The research particularly emphasized the role of international trade in shaping inequality dynamics. “Our findings show that trade globalization, changes in political and labor market institutions, and skill-based technological progress have all played a robust role as determinants of inequality dynamics in developed economies,” he continues. “A  crucial finding is that any explanation which concentrates on only one of these explanatory factors is missing a vital part of the story.” JO Further info Roser M, Crespo Cuaresma J. Why is income inequality increasing in the Developed World? The Review of Income and Wealth (published online 14 November 2014) [doi:10.1111/roiw.12153]. Jesus Crespo Cuaresma crespo@iiasa.ac.at Biofuel could offer sustainable energy solutions for Hawaii Hawaii, like most small island groups, is  heavily dependent on imported fossil fuel to meet its energy requirements. Up to 85% of Hawaii’s energy, for example, comes from imported oil. Finding a creative way to use the islands’ indigenous resources to produce home-grown fuel would clearly pay dividends, says IIASA’s Junko  Mochizuki, co-author of a study published in Renewable  Energy. Refining biofuels, Mochizuki points out, has potential as a locally grown source of renewable and sustainable energy for islands like those in the Hawaiian archipelago. “Biorefining uses natural materials such as crops, grasses, and algae to produce a variety of fuels, industrial chemicals, pharmaceuticals, and food items,” she explains. However, this technology (known as second-generation biofuel) is still in its infancy. “Although biorefining clearly promises much, there are problems,” she says, “it’s difficult for small islands to achieve a scale that will make the process economically competitive. One aim of our study, therefore, was to investigate ways to reduce the cost of biorefining, improve revenue stream through the creation of high value co-products, and ensure environmental sustainability.” In Hawaii, researchers experimented by harvesting napier grass (a fast-growing sugar cane-like grass), using the juice from the plant to grow fungi that can be made into fish/livestock feed and turning the left-over grass into fuel. “The project has addressed the issue not only of energy but also of sustainable feed, which is increasingly important as global agriculture and aquaculture industries expand,” Mochizuki says. “This project, which brings together a range of scientists, is an exciting example of the kind of creative and collective work that is needed to create sustainable food, fuel, and water solutions.” JO Further info Mochizuki J, Coffman M, Yanagida JF (2015). Market, welfare and land-use implications of lignocellulosic bioethanol in Hawai‘i. Renewable Energy 76:102–114 [doi:10.1016/j.renene.2014.10.071]. Junko Mochizuki mochizuk@iiasa.ac.at©