New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2006‒07‒15
four papers chosen by

  1. Changes in the Labor Supply Behavior of Married Women: 1980-2000 By Francine D. Blau; Lawrence M. Kahn
  2. Wage Dispersion, Markets and Institutions: The Effects of the Boom in Education on the Wage Structure By Erling Barth; Claudio Lucifora
  3. Wages, Employment, and Capital in Capitalist and Worker-Owned Firms By John Pencavel; Luigi Pistaferri; Fabiano Schivardi
  4. Human Development: beyond the HDI By Gustav Ranis, Frances Stewart and Emma Samman

  1. By: Francine D. Blau (Cornell University, NBER, CESifo and IZA Bonn); Lawrence M. Kahn (Cornell University, CESifo and IZA Bonn)
    Abstract: Using March Current Population Survey (CPS) data, we investigate married women’s labor supply behavior from 1980 to 2000. We find that their labor supply function for annual hours shifted sharply to the right in the 1980s, with little shift in the 1990s. In an accounting sense, this is the major reason for the more rapid growth of female labor supply observed in the 1980s, with an additional factor being that husbands’ real wages fell slightly in the 1980s but rose in the 1990s. Moreover, a major new development was that, during both decades, there was a dramatic reduction in women’s own wage elasticity. And, continuing past trends, women’s labor supply also became less responsive to their husbands’ wages. Between 1980 and 2000, women’s own wage elasticity fell by 50 to 56 percent, while their cross wage elasticity fell by 38 to 47 percent in absolute value. These patterns hold up under virtually all alternative specifications correcting for: selectivity bias in observing wage offers; selection into marriage; income taxes and the earned income tax credit; measurement error in wages and work hours; and omitted variables that affect both wage offers and the propensity to work; as well as when age groups, education groups and mothers of small children are analyzed separately.
    Keywords: labor supply, married women, wages
    JEL: J16 J22
    Date: 2006–06
  2. By: Erling Barth (Institute for Social Research, University of Oslo and IZA Bonn); Claudio Lucifora (Catholic University of Milan, ERMES and IZA Bonn)
    Abstract: In this paper, we investigate the effects of the boom in education on the wage structure in Europe. We use detailed information on the distribution of wages, estimated from microdata from 12 European countries from the beginning of the 1980’s to the present, to analyse the changes both between and within groups. We specify and estimate a model with supply and demand for different types of labour, as well as institutions affecting the bargained relative wage. Our results show that the boom in education closely matched the shifts in demand due to (skill biased) technological change, which in turn explains why the wage premia for education only rose moderately. We use the conditional wage spread within tertiary education, predicted from quantile log wage regressions, to investigate the hypothesis of skills erosion as a result of the large expansion in tertiary education. We find no evidence in favour of the hypothesis that the boom in higher education lead to an erosion of skills within the group of tertiary education, nor evidence of increasing “over-education” in Europe. Labour market institutions also matter: bargaining co-ordination and employment protection are shown to have a compressing effect on wages, but at different points of the wage distribution.
    Keywords: wage inequality, education, labour market institutions
    JEL: J3 J5 P5
    Date: 2006–06
  3. By: John Pencavel (Stanford University and IZA Bonn); Luigi Pistaferri (Stanford University); Fabiano Schivardi (Bank of Italy and CEPR)
    Abstract: Differences in wages, employment, and capital between worker-owned and capitalist enterprises are computed from a matched employer-worker panel data set from Italy, the market economy with the greatest incidence of worker-owned and worker-managed firms. These differences are related to orthodox models of the capitalist firm and worker co-op. The estimates of the wage, employment, and capital equations largely corroborate the implications of the behavioral models of the two types of enterprise. Co-op wages are about 14 percent lower on average and they are more volatile (and employment less volatile) than those in capitalist enterprises. Given the breadth of the data set analyzed, the results can claim to constitute general findings about capitalist and co-op enterprises.
    Keywords: worker-owned firms, capitalist firms, wages, employment, capital
    JEL: J54 D21 L21
    Date: 2006–06
  4. By: Gustav Ranis, Frances Stewart and Emma Samman
    Abstract: The well-known Human Development Index (HDI) encompasses only three rather basic aspects of human welfare. This paper aims to go beyond this, by identifying 11 categories of human development. We next propose plausible candidates as indicators of these categories. We then estimate correlations among the indicators within each category, discarding those that are highly correlated with others. This left 39 indicators to encompass the categories. Of these, eight indicators are highly correlated with the HDI and may therefore be represented by it. But 31 are not highly correlated, suggesting that a full assessment of human development requires a much broader set of indicators than the HDI alone. Repeating the same exercise, we find that under five mortality rates do equally well as HDI, and PPP income per capita is less representative of other dimensions of human development. The HDI (and the other two broad indicators) are shown to be worse indicators of the extended categories of human development for OECD countries than for developing countries.

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.