nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2006‒02‒26
eleven papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Knowing what is good for you: Empirical analysis of personal preferences and the “objective good” By Orsolya Lelkes
  2. Perceptions of Redistribution: Report on exploratory qualitative research By Alan Hedges
  4. The determinants of subjective poverty: A comparative analysis in Madagascar and Peru By Javier Herrera; Mireille Razafindrakoto; François Roubaud
  5. Social Segregation in Secondary Schools : How Does England Compare with Other Countries ? By Stephen P. Jenkins; John Micklewright; Sylke V. Schnepf
  6. Longer Life, Higher Welfare? By Michael Grimm; Kenneth Harttgen
  7. A Model of Income Insurance and Social Norms By Lindbeck, Assar; Persson, Mats
  8. The Polarization of the U.S. Labor Market By David H. Autor; Lawrence F. Katz; Melissa S. Kearney
  9. How's Your Government? International Evidence Linking Good Government and Well-Being By John F. Helliwell; Haifang Huang
  10. Time to Eat: Household Production Under Increasing Income Inequality By Daniel S. Hamermesh
  11. Assessing the Wellbeing of the Spanish Elderly By Michele Boldrin; Sergi Jiménez-Martín

  1. By: Orsolya Lelkes
    Abstract: This paper aims to test empirically if certain frequently used measures of well-being, which are regarded as valuable properties of human life, are actually desired by people. In other words, it investigates whether the "expert judgments" in social science overlap with social consensus on what the "good life" is. The starting hypothesis is that there is an overlap between these two in the case of basic needs. For the analysis, individuals' self-reported life satisfaction is used as a proxy for "utility", based on survey data, which includes about 30 000 individuals from 21 different European countries. The results indicate that the commonly used measures of well-being - labour market situation, health, housing conditions and social relations - significantly influence people's satisfaction, ceteris paribus. Next, the stability of preferences is tested using Hungarian data from the 1990s. The results indicate that there was only very limited change in the relationship between life satisfaction and basic measures of well-being despite the landslide of societal and economic transformation.
    Keywords: quality of life, capabilities, happiness, basic needs, economic transition
    JEL: D63 I31 P36
    Date: 2005–03
  2. By: Alan Hedges
    Abstract: This paper represents the results of a small-scale qualitative study, exploring public perceptions of the redistributive effects of taxation and public spending in the UK. Redistribution is not at the top of people's minds when they consider these issues and it is a complex subject on which they have thought little. People appear to apply separate principles of 'fairness' and 'mutuality' to the structures of taxation and public spending. Fairness in taxation may involve more progressivity than the current system, and those with low incomes may need more help. The support this implies for the redistributive impact of government does not appear to be primarily motivated by concerns about making incomes more equal, but rather the outcome of belief in a system in which everyone can get help when they need it, and everyone contributes according to their means.
    Keywords: Redistribution, attitudes, taxation, public spending
    JEL: I38
    Date: 2005–03
  3. By: Justina A.V. Fischer; Benno Torgler
    Abstract: behaviour is sorely lacking. Therefore, this paper assesses such positional impact on social capital by applying 14 different measurements to International Social Survey Programme data from 25 countries. We find support for a positional concern effect or 'envy' whose magnitude in several cases is quite substantial. The results indicate that such an effect is non-linear. In addition, we find an indication that absolute income level is also relevant. Lastly, changing the reference group (regional versus national) produces no significant differences in the results.
    Keywords: Relative income position, envy, positional concerns, social capital, social norms, happiness
    JEL: Z13 H26 I31 D00 D60
    Date: 2006–02
  4. By: Javier Herrera (DIAL, IRD, Paris); Mireille Razafindrakoto (DIAL, IRD, Paris); François Roubaud (DIAL, IRD, Paris)
    Abstract: (english) The multidimensionality of poverty is now fully acknowledged. A number of studies show a weak correlation between the monetary approach to poverty and household's subjective perception of wellbeing. Recent studies in developed countries demonstrate that well-being is not only based on monetary income or consumption, but also on other factors such as employment and health. This paper examines the factors that determine households’ subjective evaluation of their living standards, through a comparative analysis in two developing countries, Peru and Madagascar. Our study is based on a first-hand database grouping objective individual variables (the households’ socio-economic characteristics, environment and individual trajectories, provided by the two surveys’ panel studies), and identical questions on subjective well-being for both countries. How much do income levels influence households' welfare perceptions? Do these depend on the level of income and/or the relative position with respect to a given reference group? Apart from income, does the type of labour market inclusion or job quality have a significant impact on subjective well-being? To what extent do individual trajectories and local environment affect well-being (social origin, spatial inequalities in the district)? Finally, how important are the new dimensions of poverty such as vulnerability and social and political exclusion? _________________________________ (français) Le caractère multidimensionnel de la pauvreté est aujourd'hui universellement reconnu. Un certain nombre d'études montrent une faible corrélation entre l'approche monétaire de la pauvreté et la perception des ménages de leur bien-être. Des travaux récents ont pu montrer que, dans les pays développés, cette dernière ne dépend pas seulement du niveau de revenu ou de consommation, mais aussi d'autres facteurs (emploi, santé, etc.). Cette contribution se propose d'explorer les facteurs qui déterminent l'évaluation subjective des ménages de leur niveau de vie à partir d'une analyse comparative portant sur deux pays en développement, le Pérou et Madagascar. Pour ce faire, l'étude mobilise une base de données originale, comptant à la fois des variables individuelles objectives (caractéristiques socio-économiques des ménages, environnement et trajectoires individuelles obtenues grâce à la dimension panel des deux enquêtes), ainsi que des mesures subjectives du bienêtre identiques pour les deux pays. Quelle est la contribution du revenu à la perception du bien-être ? Celle-ci dépend-elle du niveau de revenu et/ou de la position relative par rapport à un groupe de référence qu'il convient d'identifier ? Au-delà des revenus, le type d'insertion sur le marché du travail et la qualité de l’emploi ont-ils une influence significative sur le bien-être subjectif ? Dans quelle mesure la trajectoire d’un individu et son environnement immédiat jouent sur son bien-être (origine sociale, inégalités spatiales au niveau du quartier) ? Enfin, quel est le poids des nouvelles dimensions de la pauvreté telles que la vulnérabilité et l’exclusion sociale et politique ?
    Keywords: Subjective wellbeing, peer group effects, capacity to aspire, relative income, panel data Madagascar, Peru, Bien-être subjectif, pauvreté, groupes de comparaison, aspirations, revenu relatif, données de panel, Madagascar, Pérou.
    JEL: I31 I32 D60 C25
    Date: 2006–01
  5. By: Stephen P. Jenkins; John Micklewright; Sylke V. Schnepf
  6. By: Michael Grimm; Kenneth Harttgen
  7. By: Lindbeck, Assar (The Research Institute of Industrial Economics); Persson, Mats (Institute for International Economic Studies)
    Abstract: A large literature on ex ante moral hazard in income insurance emphasizes that the individual can affect the probability of an income loss by choice of lifestyle and hence, the degree of risk-taking. The much smaller literature on moral hazard ex post mainly analyzes how a “moral hazard constraint” can make the individual abstain from fraud (“mimicking”). The present paper instead presents a model of moral hazard ex post without a moral hazard constraint; the individual's ability and willing­ness to work is represented by a continuous stochastic variable in the utility function, and the extent of moral hazard depends on the generosity of the insurance system. Our model is also well suited for analyzing social norms concerning work and benefit dependency.
    Keywords: Moral Hazard; Sick Pay Insurance; Labor Supply; Asymmetric Information  
    JEL: G22 H53 I38 J21
    Date: 2006–01–25
  8. By: David H. Autor; Lawrence F. Katz; Melissa S. Kearney
    Abstract: This paper analyzes a marked change in the evolution of the U.S. wage structure over the past fifteen years: divergent trends in upper-tail (90/50) and lower-tail (50/10) wage inequality. We document that wage inequality in the top half of distribution has displayed an unchecked and rather smooth secular rise for the last 25 years (since 1980). Wage inequality in the bottom half of the distribution also grew rapidly from 1979 to 1987, but it has ceased growing (and for some measures actually narrowed) since the late 1980s. Furthermore we find that occupational employment growth shifted from monotonically increasing in wages (education) in the 1980s to a pattern of more rapid growth in jobs at the top and bottom relative to the middles of the wage (education) distribution in the 1990s. We characterize these patterns as the “polarization” of the U.S. labor market, with employment polarizing into high-wage and low-wage jobs at the expense of middle-wage work. We show how a model of computerization in which computers most strongly complement the non-routine (abstract) cognitive tasks of high-wage jobs, directly substitute for the routine tasks found in many traditional middle-wage jobs, and may have little direct impact on non-routine manual tasks in relatively low-wage jobs can help explain the observed polarization of the U.S. labor market.
    JEL: J3 D3 O3
    Date: 2006–01
  9. By: John F. Helliwell; Haifang Huang
    Abstract: In this paper we employ World Values Survey measures of life satisfaction as though they were direct measures of utility, and use them to evaluate alternative features and forms of government in large international samples. We find that life satisfaction is more closely linked to several World Bank measures of the quality of government than to real per capita incomes, in simple correlations and more fully specified models explaining international differences in life satisfaction. We test for differences in the relative importance of different aspects of good government, and find a hierarchy of preferences that depends on the level of development. The ability of governments to provide a trustworthy environment, and to deliver services honestly and efficiently, appears to be of paramount importance for countries with worse governance and lower incomes. The balance changes once acceptable levels of efficiency, trust and incomes are achieved, when more value is attached to building and maintaining the institutions of electoral democracy.
    JEL: H11 I31 P52
    Date: 2006–01
  10. By: Daniel S. Hamermesh
    Abstract: Eating requires the food materials that make up meals and also time devoted to buying food, preparing meals and eating them, and cleaning up afterwards. Using time-diary and expenditure data for the U.S. for 1985 and 2003, I examine how income and time prices affect time and goods input into this household-produced commodity. Focusing on these two years, between which income and earnings inequality increased, allows examining how household production is affected by changing economic opportunities. The results demonstrate that both inputs into eating increase with income, and that higher time prices at a given level of income reduce time inputs. Over this period the goods intensity of producing this commodity increased, especially at the lower part of the income distribution, and the average time input dropped substantially. The results are consistent with goods-time substitution in eating being relatively difficult and with substitution becoming relatively more difficult as production expands. This is confirmed by direct estimates using matched time-use and food spending data on the same households for 2003 and 2004. The findings imply that projecting food expenditures alone overestimates the amount spent on food in a growing economy.
    JEL: J22 Q11
    Date: 2006–02
  11. By: Michele Boldrin; Sergi Jiménez-Martín
    Abstract: In this paper we use a variety of data sources, both micro and macro, time series, cross section, and panel data to provide an empirical evaluation of the current level of economic wellbeing of the Spanish elderly, and of its determinants. We focus, in particular on the role played by the pension system and its generosity in terms of minimum pension supplements and non-contributive pensions. In an IV context, we find that actual Social Security benefits contribute substantially to explain income and consumption poverty levels and trends of low income and consumption percentiles. Thus we offer support to previous evidence for Spain emphasizing the role of minimum benefit policies.
    Keywords: Welfare State, Social Security, Retirement, Income Inequality, Poverty
    JEL: I3 H5 J14 J26
    Date: 2006–02

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