nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒01‒23
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Forecasting the labour market by occupation and education: Some key issues By Cörvers,Frank; Heijke,Hans
  2. Personnel training: a theoretical and empirical review By Ericson, Thomas
  3. Free to Trust? Economic Freedom and Social Capital By Berggren, Niclas; Jordahl, Henrik
  4. The Part-Time Wage Penalty: A Career Perspective By Russo, Giovanni; Hassink, Wolter
  5. Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence By Branko Milanovic; Lyn Squire
  6. Investing in Health: The Long-Term Impact of Head Start By Kathryn Anderson; James Foster; David Frisvold
  7. An Experimental Study of the Effects of Inequality and Relative Deprivation on Trusting Behavior By Lisa R. Anderson; Jennifer M. Mellor; Jeffrey Milyo

  1. By: Cörvers,Frank; Heijke,Hans (ROA wp)
    Abstract: In this paper, we focus on two key characteristics of ROA’s forecasting approach of the labour market by occupation and education. These concern the use of the gap approach, and the substitution of education programmes within occupations. We show that the gap between supply and demand constitutes a useful and informative concept, which can be justifiably used as long as too little is known about the adjustment process in the labour market. Then we discuss the structure of the substitution process, mainly focusing on substitution as a result of the initially expected gaps between supply and demand. We distinguish between active substitution, resulting from supply-demand mismatches for the education programme concerned, and passive substitution, which is due to spillover effects from supply-demand mismatches for other education programmes. Passive substitution between education programmes is included in the forecasts when the final gaps between supply and demand are calculated. Recent ROA forecasts are used to illustrate the meaning of the various substitution processes for expected labour demand and the gaps between supply and demand. We find that omitting substitution demand from the forecasting model results in future labour market prospects that are generally too pessimistic for the higher educated.
    Keywords: education, training and the labour market;
    Date: 2005
  2. By: Ericson, Thomas (Gothenburg School of Economics and Commercial Law)
    Abstract: This report provides an introduction to personnel training (on-the-job training) literature in the economics field. Theoretical models dealing with the initiation of training programmes and their effects on pay at the individual level are discussed, and empirical research on wage effects is reported. In addition, there is an overview of sources of data and the extent of personnel training in the EU and the United States.
    Keywords: Training; human capital; investment; wage effect
    JEL: J24 J31
    Date: 2004–05–26
  3. By: Berggren, Niclas (The Ratio Institute); Jordahl, Henrik (Uppsala University)
    Abstract: We present new evidence on how generalized trust is formed. Unlike previous studies, we look at the explanatory power of economic institutions, we use newer data, we incorporate more countries, and we use instrumental variables to handle the causality problem. A central result is that legal structure and security of property rights (area 2 of the Economic Freedom Index) increase trust. The idea is that a market economy, building on voluntary transactions and interactions with both friends and strangers within the predictability provided by the rule of law, entails both incentives and mechanisms for trust to emerge between people.
    Keywords: social capital; trust; economic freedom; rule of law; property rights; legal system
    JEL: K42 O40 Z13
    Date: 2005–01–14
  4. By: Russo, Giovanni (Utrecht University); Hassink, Wolter (Utrecht University and IZA Bonn)
    Abstract: Part-time employment has become an extremely popular work arrangement in the Netherlands because it renders employment compatible with non-work activities. We posit that there may be a downside to part-time employment, which is related to its negative effects on workers’ career. This may be the case when firms use promotions to stimulate skill acquisition and human capital accumulation or when they base their work incentive schemes on performance measures that are affected by the number of hours worked or when they screen workers on the basis of the number of hours worked. Because promotions are an important source of wage growth, the low incidence of promotion among part-time workers may contribute to the emergence of the part-time wage penalty (i.e., the wage difference between a part-time worker and an otherwise equal full-time worker) in due time. Consistent with this view, we find that (male and female) workers in part-time jobs are characterized by a lower incidence of promotion relative to workers in full-time jobs and that promotions account for a wage growth of eight log points. Moreover, we find that the part-time wage penalty does not arise at the onset of a career as young workers join the labor market but that it tends to develop over time as labor market experience and the effect of missed promotions cumulate.
    Keywords: wages, wage gap, part-time employment, promotions
    JEL: J31 J24 J22
    Date: 2005–01
  5. By: Branko Milanovic; Lyn Squire
    Abstract: The objective of the paper is to answer an often-asked question : if tariff rates are reduced, what will happen to wage inequality ? We consider two types of wage inequality : between occupations (skills premium), and between industries. We use two large data bases of wage inequality that have become recently available and a large dataset of average tariff rates all covering the period between 1980 and 2000. We find that tariff reduction is associated with higher inter-occupational and inter-industry inequality in poorer countries (those below the world median income) and the reverse in richer countries. The results for inter-occupational inequality though must be treated with caution.
    JEL: F1 F13 D31 J31
    Date: 2005–01
  6. By: Kathryn Anderson (Department of Economics, Vanderbilt University); James Foster (Department of Economics, Vanderbilt University); David Frisvold (Graduate Student at Vanderbilt University)
    Abstract: Head Start is a comprehensive, early childhood development program designed to augment the human capital and health capital levels of disadvantaged children. Grossman's (1972) health capital model suggests that early investments of this type should have lasting effects on health outcomes. This research evaluates the impact of Head Start on long-term health by comparing health outcome and behavioral indicators of adults who attended Head Start with those of siblings who did not. The results suggest that there are long-term health benefits from participation in Head Start and that these benefits result from lifestyle changes.
    Keywords: Early childhood education, Head Start, health, health capital, health disparities, human capital, program evaluation
    JEL: H51 I12 I21 I38
    Date: 2004–12
  7. By: Lisa R. Anderson (Department of Economics, College of William and Mary); Jennifer M. Mellor (Department of Economics, College of William and Mary); Jeffrey Milyo (Department of Economics and Truman School of Public Affairs, University of Missouri)
    Abstract: Several non-experimental studies report that income inequality and other forms of population-based heterogeneity reduce levels of trust in society. However, recent work by Glaeser et al. (2000) calls into question the reliability of widely used survey-based measures of trust. Specifically, survey responses regarding trust attitudes did not reflect subjects' actual behavior in a trust game. In this paper, we conduct a novel experimental test of the effects of inequality on trust and trustworthiness. Our experimental design induces inequality by varying the show-up fees paid to subjects, in contrast to previous experiments that focus on broad cultural or national differences in trust. We do not find robust support for the hypothesis that inequality per se dampens trusting behavior among all subjects; however, we do find some evidence that trust and trustworthiness are influenced by an individual's relative position in the group. Finally, we confirm previous findings that common survey-based measures of social trust are not associated with actual trusting behavior.
    Keywords: Trust, social capital, heterogeneity, inequality, experiment
    JEL: C9 Z13
    Date: 2005–01–13

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