nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒11‒05
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. Sustainable Social Spending By Lindbeck, Assar
  2. Stressed Out on Four Continents: Time Crunch or Yuppie Kvetch? By Daniel S. Hamermesh; Jungmin Lee
  3. Age Structure of the Workforce and Firm Performance By Christian Grund; Niels Westergård-Nielsen
  4. Are US Wages Really Determined by European Labor-Market Institutions? By Jürgen Meckl
  5. Young Women's Religious Affiliation and Participation as Determinants of High School Completion By Evelyn L. Lehrer
  6. SSI, Labor Supply, and Migration By David Neumark; Elizabeth T. Powers
  7. Household Time Allocation and Modes of Behavior: A Theory of Sorts By Daniela Del Boca; Christopher J. Flinn
  8. Why Not Retire? The Time and Timing Costs of Market Work By Daniel S. Hamermesh
  9. Changing Looks and Changing %u201CDiscrimination:%u201D The Beauty of Economists By Daniel S. Hamermesh
  10. Evidence of Returns to Schooling in Africa from Household Surveys: Monitoring and Restructuring the Market for Education By T. Paul Schultz

  1. By: Lindbeck, Assar (Institute for International Economic Studies, Stockholm University)
    Abstract: The paper discusses a number of threats to the financial sustainability of social spending: increased internationalization of national economies, gradually higher relative costs of producing a number of human services, the “graying” of the population, slower productivity growth in the private sector, low employment rates, and various types of disincentive effects related to the welfare state itself, including moral hazard. I argue that threats from gradually rising costs of providing human services and disincentive effects of welfare-state arrangements, in particular moral hazard and benefit dependency, are more difficult to deal with than the other threats. I also discuss the choice between ad hoc policy reforms and automatic adjustment mechanisms, delegated to administrative bodies, for dealing with these threats.
    Keywords: Sustainable fiscal policy; Baumol’s disease; moral hazard; automatic adjustment mechanisms
    JEL: E62 H31 H53
    Date: 2005–10–06
  2. By: Daniel S. Hamermesh (University of Texas at Austin NBER and IZA Bonn); Jungmin Lee (University of Arkansas-Fayetteville and IZA Bonn)
    Abstract: Social commentators have pointed to problems of workers who face "time stress" - an absence of sufficient time to accomplish all their tasks. An economic theory views time stress as reflecting how tightly the time constraint binds households. Time stress will be more prevalent in households with higher full earnings and whose members work longer in the market or on "required" homework. Evidence from Australia (2001), Germany (2002), the United States (2003) and Korea (1999) corroborates the theory. Adults in households with higher earnings perceive more time stress for the same amount of time spent in market work and household work. The importance of higher full earnings in generating time stress is not small, particularly in U.S. - much is "yuppie kvetch."
    Keywords: time stress, household production, feeling rushed
    JEL: J22
    Date: 2005–10
  3. By: Christian Grund (University of Bonn, RWTH Aachen, CCP and IZA Bonn); Niels Westergård-Nielsen (CCP, Aarhus School of Business and IZA Bonn)
    Abstract: In this contribution, we examine the interrelation between corporate age structures and firm performance. In particular, we address the issues, whether firms with young rather than older employees are successful and whether firms with homogeneous or heterogeneous workforces are doing well. Several theoretical approaches are discussed with respect to these questions and divergent hypotheses are derived. Using Danish linked employeremployee data, we find that both mean age and dispersion of age in firms are inversely ushaped related to firm performance.
    Keywords: firm performance, corporate age structures, demographic change
    JEL: M54 J21 L25
    Date: 2005–10
  4. By: Jürgen Meckl (University of Giessen and IZA Bonn)
    Abstract: This paper integrates institutionally determined wage rigidities into an otherwise standard Heckscher-Ohlin model of international trade. It accounts for differences in individual productivities and their implications for individual wage incomes and demand for education. Although preserving the factor-price-equalization property of the global equilibrium approach, the model does not support the view expressed by Davis (1998) that global equilibrium links insulate the US labor market from exogenous shocks. It provides a foundation of the derived from comparative studies that do not consistently account for the global general equilibrium links.
    Keywords: wage rigidities, international trade, education, skill-specific unemployment
    JEL: F11 J31
    Date: 2005–10
  5. By: Evelyn L. Lehrer (University of Illinois at Chicago and IZA Bonn)
    Abstract: The far-reaching consequences of failing to complete secondary schooling are well known. The central questions addressed in this study are: Does religion make a difference in the likelihood of successfully completing the transition to high-school graduation? If so, how large are the influences? Based on a human capital framework, the paper develops hypotheses about the effects of two dimensions of religion during childhood - affiliation and participation - and tests them with data on non-Hispanic white, African-American, and Hispanic female respondents from the 1995 National Survey of Family Growth. The results are generally consistent with the hypotheses, revealing sizeable differentials in high-school graduation rates by affiliation and participation. The results also uncover pronounced differences by race/ ethnicity.
    Keywords: religion, education
    JEL: J24 J15 J22
    Date: 2005–10
  6. By: David Neumark (Public Policy Institute of California, NBER and IZA Bonn); Elizabeth T. Powers (University of Illinois at Urbana-Champaign)
    Abstract: The Supplemental Security Income (SSI) program in the United States creates incentives for potential aged recipients to reduce labor supply prior to becoming eligible, and our past research finds that older men likely to be eligible for SSI at age 65 reduce their labor supply in the years immediately before the age of eligibility. However, given the dramatic supplementation of SSI benefits in some states, a migration response to these benefits cannot be dismissed, and migration that is associated with SSI benefits can lead to bias in estimates of the effects of SSI benefits on labor supply; depending on retirement and migration behavior, the disincentive effects can be overstated or understated. Migration responses to SSI benefits are also important in their own right, as another instance of the potential problem of "welfare magnets." We fail to find any statistically significant evidence that older individuals likely to be eligible for SSI in the near future, or already eligible for SSI, are more likely to move from low benefit to high benefit states. These findings are robust to the use of a number of different comparison groups to try to capture the state-to-state migration patterns that exist independently of a response to SSI. The evidence indicates that labor supply disincentive effects of SSI do not stem from migration behavior that could, in principle, spuriously generate these findings.
    Keywords: SSI, labor supply, migration
    JEL: J14 J22 I38 R23
    Date: 2005–10
  7. By: Daniela Del Boca (University of Turin and IZA Bonn); Christopher J. Flinn (New York University and IZA Bonn)
    Abstract: We develop a simple model of household time allocation decisions under strong functional form assumptions regarding preferences and household production technology. We argue that the specification is general when allowing for unrestrictive forms of population heterogeneity in the parameters characterizing these functions. Moreover, we argue that the model is not capable of distinguishing among elements of a class of behavioral rules, including Nash bargaining and Nash equilibrium, without restricting population heterogeneity in arbitrary ways. However, preferences over mates for any given set of male and female characteristics will be a function of the behavioral rules used in married households. Using data from the PSID on market hours and time spent in household production, we estimate the marginal distribution of male and female characteristics and our two alternative behavioral assumptions, and perform some formal and informal comparisons of the Nash bargaining and Nash equilibrium rules’ ability to predict the marital sorts observed in the data. Given the simplicity of the model of household behavior and marriage market equilibrium, it is perhaps not surprising that neither model provides good predictions. Overall, the evidence is slightly more supportive of the hypothesis that households behave noncooperatively.
    Keywords: bilateral matching, household time allocation, Nash bargaining
    JEL: D13 J12 J22
    Date: 2005–10
  8. By: Daniel S. Hamermesh (University of Texas at Austin)
    Abstract: Retirement ages among older Americans have only recently begun to increase after their precipitous fifty-year decline. Early retirement may result from incentives provided by retirement systems; but it may also result from the rigidities imposed by market work schedules. Using the American Time Use Survey of 2003, I first examine whether additional market work is neutral with respect to the mix of non-market activities. The estimates indicate that there are fixed time costs of remaining in the labor market that alter the pattern of non-market activities, reducing leisure time and mostly increasing time devoted to household production. These costs impose a larger burden on households with lower full incomes, since wealthier households apparently purchase market substitutes that allow them to maintain the mix of non-market activities when they undertake market work. Market work also raises the set-up costs of switching among different non-market activities, thus raising the costs of generating utility-increasing variety. It also alters the daily distribution of a fixed amount of non-market activities, away from the distribution chosen when the constraint of a work schedule is not present. All these effects are mitigated by higher family income, presumably because higher-income people can purchase market substitutes that enable them to overcome the fixed time costs of market work.
    Date: 2005–09
  9. By: Daniel S. Hamermesh
    Abstract: I estimate the effects of changing an ascriptive characteristic on a market outcome while keeping the average amount of information unchanged. Taking advantage of candidates' multiple appearances in elections to office in a professional association and of the presence of different photographs accompanying the ballots, I show that exogenous increases in beauty raise a candidate's chance of success. The results support the inference that differential outcomes are inherent in agents' responses to an ascriptive characteristic and do not stem from correlations with unobserved differences in productivity-enhancing characteristics.
    JEL: J7
    Date: 2005–10
  10. By: T. Paul Schultz (Economic Growth Center, Yale University)
    Abstract: Wage-differentials by education of men and women are examined from African household surveys to suggest private wage returns to schooling. It is commonly asserted that returns are highest at primary school levels and decrease at secondary and postsecondary levels, whereas private returns in six African countries are today highest at the secondary and post secondary levels, and rates are similar for women as for men. The large public subsidies for postsecondary education in Africa, therefore, are not needed to motivate students to enroll, and those who have in the past enrolled in these levels of education are disproportionately from the better-educated families. Higher education in Africa could be more efficient and more equitably distributed if the children of well-educated parents paid the public costs of their schooling, and these tuition revenues facilitated the expansion of higher education and financed fellowships for children of the poor and less educated parents.
    Keywords: Africa, Wage Returns to Schooling, Inequality, HIV/AIDS
    JEL: O15 O55 J31 J24
    Date: 2003–12

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