nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒02‒13
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. Poverty Persistence in Sweden By Hansen, Jörgen; Wahlberg, Roger
  2. Health Care Quality and Economic Inequality By Jappelli, Tullio; Pistaferri, Luigi; Weber, Guglielmo
  3. Changes in the Distribution of Male and Female Wages Accounting for Employment Composition Using Bounds By Blundell, Richard William; Gosling, Amanda; Ichimura, Hidehiko; Meghir, Costas
  4. Wage Differentials in the 1990s in Israel: Endowments, Discrimination and Selectivity By Neuman, Shoshana; Oaxaca, Ronald L
  5. Inequality, Technology and the Social Contract By Benabou, Roland
  6. Child-care quality and fee structure: Effects on labor supply and leisure composition By Brink, Anna; Nordblom, Katarina
  7. Capital-Skill Complementarity and Inequality in Sweden By Lindquist, Matthew J.
  8. Ceiling and Floors: Gender Wage Gaps by Education in Spain By de la Rica, Sara; Dolado, Juan J.; Llorens, Vanesa

  1. By: Hansen, Jörgen; Wahlberg, Roger
    Abstract: This Paper analyses the persistence of poverty in Sweden using a hazard rate model based on multiple spells. The model also accounts for unobserved heterogeneity and possibly endogenous initial conditions. We estimate the model on a large representative Swedish panel dataset, LINDA, for the years 1991-2001. The data contains precise information on household disposable income obtained from individual tax files. Poverty is defined using information on annual minimum needs standards determined by the Swedish National Board of Health and Welfare. The data indicates that poverty rates are highest for immigrants, especially refugee immigrants, and for households with children. Further, poverty rates declined, both for natives and for immigrants, between 1991 and 2001, partly as a result of improved labour market conditions. The empirical results suggest that there is significant negative duration dependence in both exit and entry hazard rates. Moreover, the transition rates are significantly affected by immigrant status, educational attainment, labour market conditions, age, and family status. Accounting for multiple spells shows that for two-parent families with two children who are represented by a male person, 44% of native households that fall into poverty at any given point in time remain poor in five or more out of the next ten years. For refugee and non-refugee households, the figures are 62% and 50%, respectively.
    Keywords: duration dependence; multiple spells; poverty persistence; unobserved heterogeneity
    JEL: C23 C41 D31 I32 J15 J61
    Date: 2004–08
  2. By: Jappelli, Tullio; Pistaferri, Luigi; Weber, Guglielmo
    Abstract: We argue that health care quality has an important impact on economic inequality and on saving behaviour. We exploit district-wide variability in health care quality provided by the Italian universal public health system to identify the effect of quality on income inequality, health inequality and precautionary saving. We find that in lower quality districts there is greater income and health dispersion and higher precautionary saving. The analysis carries important insights for the ongoing debate about the validity of the life-cycle model and interesting policy implications for the design of health care systems.
    Keywords: health care; Income inequality; precautionary saving
    JEL: D31 D91
    Date: 2004–08
  3. By: Blundell, Richard William; Gosling, Amanda; Ichimura, Hidehiko; Meghir, Costas
    Abstract: This Paper examines changes in the distribution of wages using bounds to allow for the impact of non-random selection into work. We show that bounds constructed without any economic or statistical assumptions can be informative. Since employment rates in the UK are often low they are not informative about changes in educational or gender wage differentials. Thus we explore ways to tighten these bounds using restrictions motivated from economic theory. With these assumptions we find convincing evidence of an increase in inequality within education groups, changes in the ‘return’ to education and increases in the relative wages of women.
    Keywords: bounds; selection models; wage differentials
    JEL: C24 J31
    Date: 2004–10
  4. By: Neuman, Shoshana; Oaxaca, Ronald L
    Abstract: The purpose of this Paper is to investigate wage structures of professional workers in the Israeli labour market, using data from the most recent 1995 Census and correcting for selectivity at the stage of entrance into the occupation. The sample of professionals is decomposed into several subsamples: men and women, and within each gender a distinction is made between Easterners (originating from Asian/African countries) and Westerners (from European/American countries of origin). Comparisons by gender and ethnicity can then be made. Characteristics (endowments) and wage structures of the four groups are presented.Wage equations include the Inverse of Mill's Ratio as a regressor to correct for selection into the professional occupations. Wage differences are then examined and decomposed into three components: endowments (human capital), discrimination and selectivity. Following the methodology presented in Neuman and Oaxaca (2004), four alternative decompositions are suggested and discussed.
    Keywords: age; education; employment spells; ethnicity; gender; marital status; non-employment
    JEL: J12 J15 J16 J21 J22
    Date: 2004–10
  5. By: Benabou, Roland
    Abstract: The distribution of human capital and income lies at the center of a nexus of forces that shape a country’s economic, institutional and technological structure. I develop here a unified model to analyse these interactions and their growth consequences. Five main issues are addressed. First, I identify the key factors that make both European-style ‘welfare state’ and US-style ‘laissez-faire’ social contracts sustainable; I also compare the growth rates of these two politico-economic steady states, which are not Pareto-rankable. Second, I examine how technological evolutions affect the set of redistributive institutions that can be durably sustained, showing in particular how skill-biased technical change may cause the welfare state to unravel. Third, I model the endogenous determination of technology or organizational form that results from firms’ tailoring the flexibility of their production processes to the distribution of workers’ skills. The greater is human capital heterogeneity, the more flexible and wage-disequalizing is the equilibrium technology. Moreover, firms’ choices tend to generate excessive flexibility, resulting in suboptimal growth or even self-sustaining technology-inequality traps. Fourth, I examine how institutions also shape the course of technology; thus, a worldwide shift in the technology frontier results in different evolutions of production processes and skill premia across countries with different social contracts. Finally, I ask what joint configurations of technology, inequality and redistributive policy are feasible in the long run, when all three are endogenous. I show in particular how the diffusion of technology leads to the ‘exporting’ of inequality across borders; and how this, in turn, generates spillovers between social contracts that make it more difficult for nations to maintain distinct institutions and social structures.
    Keywords: human capital; inequality; political economy; redistribution; skill bias; social contract; technical change; welfare state
    JEL: D31 H10 J30 O33
    Date: 2004–11
  6. By: Brink, Anna (Department of Economics, School of Economics and Commercial Law, Göteborg University); Nordblom, Katarina (Department of Economics, School of Economics and Commercial Law, Göteborg University)
    Abstract: This paper studies the effects of public child-care subsidies on parental time allocation. We develop a model where parents are allowed to utilize subsidized care during both working and leisure hours. The model distinguishes between subsidies to child-care quality and to fees. Three types of fees are considered: flat, based on time spent in care, and based on parental income. We show that parental time allocation depends on whether quality or fees are subsidized, and also that fee subsidies have dierent eects depending on the fee structure. We further show that even if a subsidy increases the use of public care, the effect on labor supply may be unclear due to the possibility of using child care also when not working. <p>
    Keywords: Public child care; Child-care quality; Child-care fees; Time allocation; Labor supply
    JEL: H42 J13 J22
    Date: 2005–01–23
  7. By: Lindquist, Matthew J. (Swedish Institute for Social Research, Stockholm University)
    Abstract: Income inequality increased in Sweden during the 1980’s and 90’s as did the returns to higher education. The main conclusion of this study is that increased income inequality between high and low skilled workers is demand driven and is due to the presence of capital-skill complementarity in production. Increased investments in new, more efficient capital equipment, together with a slowdown in the growth rate of skilled labor, have raised the ratio of effective capital inputs per skilled worker, which, in turn, has increased the relative demand (and market return) for skilled labor through the capital-skill complementarity mechanism.
    Keywords: capital-skill complementarity; inequality; relative wages; skill premium; university wage premium
    JEL: J31
    Date: 2005–02–08
  8. By: de la Rica, Sara (Universidad del País Vasco and IZA Bonn); Dolado, Juan J. (Universidad Carlos III, CEPR and IZA Bonn); Llorens, Vanesa (LECG Consulting Spain)
    Abstract: This paper analyses the gender wage gaps by education throughout the wage distribution in Spain using individual data from the ECHP (1999). Quantile regressions are used to estimate the wage returns to the different characteristics at the more relevant percentiles and a suitable version of the Oaxaca-Blinder decomposition is then implemented to estimate the component of the gender gap not explained by different characteristics. Our main findings are two-fold. First, in contrast with the steep pattern found for other countries, the flatter evolution of the gap in Spain hides a composition effect when the sample is split by education. On the one hand, for the group with college/tertiary education, we find a higher unexplained gap at the top than at the bottom of the distribution, in accordance with the conventional glass ceiling hypothesis. On the other, for the group with lower education, the gap is much higher at the bottom than at the top of the distribution. We label this novel pattern as glass floors and argue that it is due to statistical discrimination exerted by employers in view of the low participation rate of women in this group. Such a hypothesis is confirmed when using the panel structure of the ECHP.
    Keywords: gender gap, glass ceilings, glass floors, quantile regressions
    JEL: J16 J71
    Date: 2005–01

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