nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2005‒12‒09
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Modelling Poverty by not Modelling Poverty: An Application of a Simultaneous Hazards Approach to the UK By Arnstein Aassve; Simon Burgess; Matt Dickson; Carol Propper
  2. Social Security and Longevity By Torben Andersen
  3. Sustainable Social Spending By Assar Lindbeck
  4. Crime and Conformism By Patacchini, Eleonora; Zenou, Yves
  5. Jobs and Unemployment in Macroeconomic Theory: A Turbulence Laboratory By Ljungqvist, Lars; Sargent, Thomas J
  6. An Analysis of the Impact of Affirmative Action Programs on Self-Employment in the Construction Industry By David G. Blanchflower; Jon Wainwright
  7. Sex Differences in Pay in a "New Monopsony" Model of the Labor Market By Michael R. Ransom; Ronald L. Oaxaca
  8. Well-Being, Social Capital and Public Policy: What%u2019s New? By John Helliwell
  9. The Effect of Firm-Level Contracts on the Structure of Wages: Evidence from Matched Employer-Employee Data By David Card; Sara de la Rica

  1. By: Arnstein Aassve; Simon Burgess; Matt Dickson; Carol Propper
    Abstract: We pursue an economic approach to analysing poverty. This requires a focus on the variables that individuals can influence, such as forming or dissolving a union or having children. We argue that this indirect approach to modelling poverty is the right way to bring economic tools to bear on the issue. In our implementation of this approach, we focus on endogenous demographic and employment transitions as the driving forces behind changes in poverty. We construct a dataset covering event histories over a long window and estimate five simultaneous hazards with unrestricted correlated heterogeneity. The model fits the demographic and poverty data reasonably well. We investigate the important parameters and processes for differences in individuals’ poverty likelihood. Employment, and particularly employment of disadvantaged women with children, is important.
    Keywords: poverty dynamics; poverty transitions; simultaneous hazards
    JEL: I32
    Date: 2005–10
    URL: http://d.repec.org/n?u=RePEc:bri:cmpowp:05/134&r=ltv
  2. By: Torben Andersen
    Abstract: Many countries face the problem of how to reform social security systems to cope with increasing life expectancy. This raises questions concerning both distribution and risk sharing across generations. These issues are addressed within an OLG model with stochastic life expectancy across generations and endogenous retirement decisions. The social optimum is shown to imply that retirement age should be proportional to longevity. Moreover, increasing longevity calls for pre-funding even if the utility of all generations is weighted equal to the objective discount rate. The social optimum cannot be decentralized due to a conflict between incentives and risk sharing. The implications of stylized social security systems for risk sharing and retirement incentives are analyzed.
    JEL: H55 J11 J14 J18
    Date: 2005
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_1577&r=ltv
  3. By: Assar Lindbeck
    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
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_1594&r=ltv
  4. By: Patacchini, Eleonora; Zenou, Yves
    Abstract: We propose a simple conformism model that explains how parental education and peer pressure impact on criminal activities. We then test the model using the U.S. National Longitudinal Survey of Adolescent Health (AddHealth), which contains unique information on friendship relationships among delinquent teenagers. We find that conformity is very strong within groups of delinquents and that the higher the taste for conformity of an individual, the lower the deviation from the norm's group. These results suggest that, for teenagers, the decision to commit crimes is not a simple choice based primarily on individual considerations but is strongly affected by their environment and peers.
    Keywords: conformism; juvenile crime; norms; parents' education
    JEL: A14 I21 K42
    Date: 2005–11
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:5331&r=ltv
  5. By: Ljungqvist, Lars; Sargent, Thomas J
    Abstract: We use three general equilibrium frameworks with jobs and unemployed workers to study the effects of government mandated unemployment insurance (UI) and employment protection (EP). To illuminate the forces in these models, we study how UI and EP affect outcomes when there is higher 'turbulence' in the sense of worse skill transition probabilities for workers who suffer involuntary layoffs. Matching and search-island models have labour market frictions and incomplete markets. The representative family model with employment lotteries has no labour market frictions and complete markets. The adverse welfare state dynamics coming from high UI indexed to past earnings that were isolated by Ljungqvist and Sargent (1998) are so strong that they determine outcomes in all three frameworks. Another force stressed by Ljungqvist and Sargent (2005), through which higher layoff taxes suppress frictional unemployment in less turbulent times, prevails in the models with labour market frictions, but not in the frictionless representative family model. In addition, the high aggregate labour supply elasticity that emerges from employment lotteries and complete insurance markets in the representative family model makes it impossible to include generous government-supplied unemployment insurance in that model without getting the unrealistic result that economic activity virtually shuts down.
    Keywords: discouraged worker; employment protection; job; matching; search; skills; turbulence; unemployment; unemployment insurance
    JEL: E24 J64
    Date: 2005–11
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:5340&r=ltv
  6. By: David G. Blanchflower (Dartmouth College, NBER and IZA Bonn); Jon Wainwright (NERA Economic Consulting)
    Abstract: The main findings of this paper are that despite the existence of various affirmative action programs designed to improve the position of women and minorities in public construction, little has changed in the last twenty five years. We present evidence showing that where race conscious affirmative action programs exist they appear to generate significant improvements: when these programs are removed or replaced with race-neutral programs the utilization of minorities and women in public construction declines rapidly. We show that the programs have not helped minorities to become self-employed or to raise their earnings over the period 1979-2004, using data from the Current Population Survey and the Census, but have improved the position of white females. There has been a growth in incorporated self-employment rates of white women in construction such that currently their rate is significantly higher than that of white men. The data are suggestive of the possibility that some of these companies are 'fronts' which are actually run by their white male spouses or sons to take advantage of the affirmative action programs.
    Keywords: discrimination
    JEL: J70
    Date: 2005–11
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1856&r=ltv
  7. By: Michael R. Ransom (Brigham Young University and IZA Bonn); Ronald L. Oaxaca (University of Arizona and IZA Bonn)
    Abstract: We use a simple framework, adopted from general equilibrium search models, to estimate the extent to which monopsony power (or labor market frictions) can account for gender differences in pay, using data from a chain of regional grocery stores. In this framework, the elasticity of labor supply to the firm can be inferred from estimates of the elasticity of the separation rate with respect to the wage. We identify elasticities of separation from differences in wages and separation rates across job titles and across different years. We estimate elasticities of labor supply to the firm of about 3.5 for men and about 2.7 for women, suggesting significant wage-setting power for the firm. The differences in estimated elasticities of labor supply predict wage differences that are close to the observed male/female wage differences at the firm.
    Keywords: monopsony, gender, discrimination
    JEL: J42 J71
    Date: 2005–12
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp1870&r=ltv
  8. By: John Helliwell
    Abstract: This paper summarizes recent empirical research on the determinants of subjective well-being. Results from national and international samples suggest that measures of social capital, including especially the corollary measures of specific and general trust, have substantial effects on well-being beyond those flowing through economic channels. Cross-national samples (supported by parallel analysis of suicide data) show large well-being effects from social capital and from the quality of government. Finally, Canadian life-satisfaction data show that several non-financial job characteristics, and especially the climate of workplace trust, have very large income-equivalent effects.
    JEL: I31 Z13 P52
    Date: 2005–12
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11807&r=ltv
  9. By: David Card; Sara de la Rica
    Abstract: In many European countries sectoral bargaining agreements are automatically extended to cover all firms in an industry. Employers and employees can also negotiate firm-specific contracts. We use a large matched employer-employee data set from Spain to study the effects of firm-level contracting on the structure of wages. We estimate a series of wage determination models, including specifications that control for individual characteristics, co-worker characteristics, the bargaining status of the workplace, and the probability the workplace is covered by a firm-level contract. We find that firm-level contracting is associated with a 5-10 percent wage premium, with larger premiums for more highly paid workers. Although we cannot decisively test between alternative explanations for the firm-level contracting premium, workers with firm-specific contracts have significantly longer job tenure, suggesting that the premium is at least partially a non-competitive phenomenon.
    JEL: J31 J50
    Date: 2005–12
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:11829&r=ltv

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