nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒10‒04
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Education Policy and Equality of Opportunity By Gabriela Schuetz; Heinrich Ursprung; Ludger Woessmann
  2. Inequality and Crime: Separating the Effects of Permanent and Transitory Income By Dahlberg, Matz; Gustavsson, Magnus
  3. Uncovering Gender Differences in the Effects of Early Intervention: A Reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects By Michael Anderson
  4. Keeping up with the Joneses, reference dependence, and equilibrium indeterminacy By Livio Stracca; Ali al-Nowaihi
  5. Unions, wage setting and monetary policy uncertainty By Hans Peter Grüner; Bernd Hayo; Carsten Hefeker

  1. By: Gabriela Schuetz; Heinrich Ursprung; Ludger Woessmann
    Abstract: We provide a measure of equality of educational opportunity in 54 countries, estimated as the effect of family background on student performance in two international TIMSS tests. We then show how organizational features of the education system affect equality of educational opportunity. Our model predicts that late tracking and a long pre-school cycle are beneficial for equality, while pre-school enrollment is detrimental at low levels of enrollment and beneficial at higher levels. Using cross-country variations in education policies and their interaction with family background at the student level, we provide empirical evidence supportive of these predictions.
    Keywords: equality of opportunity, educational production, family background, student performance, tracking, pre-school, efficiency-equity tradeoff
    JEL: H52 I21 J62
    Date: 2005
  2. By: Dahlberg, Matz (Department of Economics); Gustavsson, Magnus (Department of Economics)
    Abstract: Earlier studies on income inequality and crime have typically used total income or total earnings. However, it is quite likely that it is changes in permanent rather than in transitory income that affects crime rates. The purpose of this paper is therefore to disentangle the two effects by, first, estimating region-specific inequality in permanent and transitory income and, second, estimating crime equations with the two separate income components as explanatory variables. The results indicate that it is important to separate the two effects; while an increase in the inequality in permanent income yields a positive and significant effect on total crimes and three different property crimes, an increase in the inequality in transitory income has no significant effect on any type of crime. Using a traditional, aggregate, measure of income yields mainly insignificant effects on crime.
    Keywords: Crime; Earnings dynamics; Inequality
    JEL: C33 D31 J39 K40
    Date: 2005–06–27
  3. By: Michael Anderson (Massachusetts Institute of Technology Economics Department)
    Abstract: The view that the returns to public educational investments are highest for early childhood interventions stems primarily from several influential randomized trials - Abecedarian, Perry, and the Early Training Project - that point to super-normal returns to preschool interventions. This paper presents a de novo analysis of these experiments, focusing on core issues that have received little attention in previous analyses: treatment effect heterogeneity, over-rejection of the null hypothesis due to multiple inference, and robustness of the findings to attrition and deviations from the experimental protocol. The primary finding of this reanalysis is that girls garnered substantial short- and long-term benefits from the interventions, particularly in the domain of total years of education. However, there were no significant long-term benefits for boys. These conclusions change little when allowance is made for attrition and possible violations of random assignment.
    Keywords: preschool early intervention human capital education treatment effects
    JEL: I20 I21 I29 J13
    Date: 2005–09–25
  4. By: Livio Stracca (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Ali al-Nowaihi (Department of Economics, University of Leicester, University Road, Leicester LE1 7RH, United Kingdom.)
    Abstract: This model extends the keeping up with the Joneses (KUJ) model to incorporate the notion that positional concerns in consumption are best modelled with a reference dependence specification of preferences, as postulated by Tversky and Kahneman (1991) in the context of riskless choice. In line with this specification, which has received substantial empirical support in the literature, we assume that the marginal returns on the own consumption are increasing below the aggregate per capita levels of consumption (which is the reference point in our model). The main conclusion of the paper is that in our KUJ model aggregate consumption may be subject to sunspot fluctuations and the equilibrium level of consumption is not uniquely pinned down. The paper also discusses the role that fiscal policy can play in order to undo the effect of consumption externalities on both the determinacy and the desirability of the equilibrium.
    Keywords: Consumption externalities; keeping up with the Joneses; reference dependence; equilibrium indeterminacy; optimal taxation.
    JEL: D11 H21
    Date: 2005–02
  5. By: Hans Peter Grüner (University of Mannheim, IZA, Bonn, and CEPR, London. Postal Address: University of Mannheim, Department of Economics, L7, 3-5, D-68131 Mannheim, Germany); Bernd Hayo (Philipps-University Marburg and ZEI, University of Bonn; Postal Address: Philipps-University Marburg, Department of Economics, (FB02), Universitaetsstr. 24, D-35032 Marburg, Germany); Carsten Hefeker (University of Siegen,HWWA, Hamburg, and CESifo, Munich; Postal Address:HWWA Institute of International Economics, Neuer Jungfernstieg 21, 20347 Hamburg, Germany)
    Abstract: Recent theoretical research has studied extensively the link between wage setting and monetary policymaking in unionized economies. This paper addresses the question of the role of monetary uncertainty from both an empirical and theoretical point of view. Our analysis is based on a simple model that derives the influence of monetary uncertainty on unionized wage setting. We construct an indicator of monetary policy uncertainty and test our model with data for the G5 countries. The central finding is that monetary policy uncertainty has a negative impact on nominal wage growth in countries where wage setting is relatively centralized. This result is consistent with recent theoretical approaches to central bank transparency and wage setting.
    Keywords: Monetary policy uncertainty; centralized wage setting; union behavior.
    JEL: E58
    Date: 2005–06

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