nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒09‒11
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. At the Lower End of the Table: Determinants of Poverty among Immigrants to Denmark and Sweden By Blume, Kræn; Gustafsson, Björn; Pedersen, Peder J.; Verner, Mette
  2. What Buys Happiness? Analyzing Trends in Subjective Well-Being in 15 European Countries, 1973-2002 By Christian Bjørnskov; Nabanita Datta Gupta; Peder J. Pedersen
  3. Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond By James J. Heckman; Lance J. Lochner; Petra E. Todd
  4. Is the New Immigration Really So Bad? By David Card
  5. The Economics of Workaholism: We Should Not Have Worked on This Paper By Daniel S. Hamermesh; Joel Slemrod
  6. Fertility: The Role of Culture and Family Experience By Raquel Fernández; Alessandra Fogli
  7. Diversity and Redistribution By Raquel Fernández; Gilat Levy

  1. By: Blume, Kræn (Institute for Local Government Studies, Copenhagen); Gustafsson, Björn (University of Gothenburg and IZA Bonn); Pedersen, Peder J. (University of Aarhus, National Institute of Social Research, Copenhagen and IZA Bonn); Verner, Mette (Aarhus School of Business)
    Abstract: In this paper we study determinants of relative poverty among immigrants and natives in Denmark and Sweden during the 1980s and 1990s. Denmark and Sweden share the same properties in a range of labour market and welfare state characteristics. At the same time they differ very much in cyclical profiles and immigration experiences during recent decades. Both countries have followed the same principles regarding immigration policy, i.e. immigration from low income countries has been restricted to tied movers and refugees. We use 60 percent of the median in the distribution of equivalent disposable as poverty line. Data comes from two large panels based on administrative data. We find that immigrants have higher poverty rates than natives in both countries and that this difference has clearly increased in both countries. The paper reports results based on running probability models of poverty incidence. Explanatory variables include measures of years since immigration, demographic characteristics, and variables measuring country of origin. We conclude that a significant part of the difference in aggregate immigrant poverty rates reflect differences in composition by country of origin and differences in the structure of benefits to families with children.
    Keywords: poverty, immigrants, panel data
    JEL: F22 J15
    Date: 2005–03
  2. By: Christian Bjørnskov (Aarhus School of Business); Nabanita Datta Gupta (Danish National Institute of Social Research and IZA Bonn); Peder J. Pedersen (University of Aarhus, Danish National Institute of Social Research and IZA Bonn)
    Abstract: Trends in life satisfaction are examined across 15 European countries employing a modified version of Kendall’s Tau. Analyses show that GDP growth relative to growth in the preceding period is a significant determinant of the trends; the same holds for the growth in life expectancy while the contemporaneous growth in the current account balance exerts a positive influence. Relative unemployment growth becomes significant when interacted with a measure of the long-run political ideology of the median voter. The effects of relative GDP growth vary with the political ideology variable.
    Keywords: subjective well-being, economic factors
    JEL: I31
    Date: 2005–07
  3. By: James J. Heckman; Lance J. Lochner; Petra E. Todd
    Abstract: This paper considers the interpretation of "Mincer rates of return." We test and reject the Mincer model. It fails to track the time series of true returns. We show how repeated cross section and panel data improves the ability of analysts to estimate the ex ante and ex post marginal rate of returns. Accounting for sequential revelation of information calls into question the validity of the internal rate of return as a tool for policy analysis. The large estimated psychic costs of schooling found in recent work helps to explain why persons do not attend school even though the financial rewards for doing so are high. We present methods for computing distributions of ex post and ex ante returns.
    JEL: C31
    Date: 2005–08
  4. By: David Card
    Abstract: This paper reviews the recent evidence on U.S. immigration, focusing on two key questions: (1) Does immigration reduce the labor market opportunities of less-skilled natives? (2) Have immigrants who arrived after the 1965 Immigration Reform Act successfully assimilated? Looking across major cities, differential immigrant inflows are strongly correlated with the relative supply of high school dropouts. Nevertheless, data from the 2000 Census shows that relative wages of native dropouts are uncorrelated with the relative supply of less-educated workers, as they were in earlier years. At the aggregate level, the wage gap between dropouts and high school graduates has remained nearly constant since 1980, despite supply pressure from immigration and the rise of other education-related wage gaps. Overall, evidence that immigrants have harmed the opportunities of less educated natives is scant. On the question of assimilation, the success of the U.S.-born children of immigrants is a key yardstick. By this metric, post-1965 immigrants are doing reasonably well: second generation sons and daughters have higher education and wages than the children of natives. Even children of the least- educated immigrant origin groups have closed most of the education gap with the children of natives.
    JEL: J61
    Date: 2005–08
  5. By: Daniel S. Hamermesh; Joel Slemrod
    Abstract: A large literature examines the addictive properties of such behaviors as smoking, drinking alcohol and eating. We argue that for some people addictive behavior may apply to a much more central aspect of economic life: working. Workaholism is subject to the same concerns about the individual as other addictions, is more likely to be a problem of higher-income individuals, and can, under conditions of jointness in the workplace or the household, generate negative spillovers onto individuals around the workaholic. Using the Retirement History Survey and the Panel Study of Income Dynamics, we find evidence that is consistent with the idea that high-income, highly educated people suffer from workaholism with regard to retiring, in that they are more likely to postpone earlier plans for retirement. The evidence and theory suggest that the negative effects of workaholism can be addressed with a more progressive income tax system than would be appropriate in the absence of this behavior.
    JEL: J22 H24 D91
    Date: 2005–08
  6. By: Raquel Fernández; Alessandra Fogli
    Abstract: This paper attempts to disentangle the direct effects of experience from those of culture in determining fertility. We use the GSS to examine the fertility of women born in the US but from different ethnic backgrounds. We take lagged values of the total fertility rate in the woman's country of ancestry as the cultural proxy and use the woman's number of siblings to capture her direct family experience. We find that both variables are significant determinants of fertility, even after controlling for several individual and family-level characteristics.
    JEL: J13 J16 Z10
    Date: 2005–08
  7. By: Raquel Fernández; Gilat Levy
    Abstract: This paper examines how preference heterogeneity affects the ability of the poor to extract resources from the rich. We study the equilibrium of a game in which coalitions of individuals form parties, parties propose platforms, and all individuals vote, with the winning policy chosen by plurality. Political parties are restricted to offering platforms that are credible (in that they belong to the Pareto set of their members). The platforms specify the values of two policy tools: a general redistributive tax which is lumpsum rebated and a series of taxes whose revenue is used to fund specific (targeted) goods. We show that taste conflict first dilutes but later reinforces class interests. When the degree of taste diversity is low, the equilibrium policy is characterized by some amount of general income redistribution and some targeted transfers. As taste diversity increases in society, the set of equilibrium policies becomes more and more tilted towards special interest groups and against general redistribution. As diversity increases further, however, only general redistribution survives.
    JEL: D30 D72
    Date: 2005–08

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