nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2006‒09‒03
four papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Are Earnings Inequality and Mobility Overstated? The Impact of Non-Classical Measurement Error By Peter Gottschalk; Minh Huynh
  2. Wage Distribution in Japan: 1989-2003 By Ryo Kambayashi; Daiji Kawaguchi; Izumi Yokoyama
  3. A Survey of the Effects of the Minimum Wage on Prices By Sara Lemos
  4. Do School-to-Work Programs Help the “Forgotten Half”? By David Neumark; Donna Rothstein

  1. By: Peter Gottschalk (Boston College); Minh Huynh (U.S. Social Security Administration)
    Abstract: Measures of inequality and mobility based on self-reported earnings reflect attributes of both the joint distribution of earnings across time and the joint distribution of measurement error and earnings. While classical measurement error would increase measures of inequality and mobility there is substantial evidence that measurement error in earnings is not classical. In this paper we present the analytical links between non-classical measurement error and measures of inequality and mobility. The empirical importance of non-classical measurement error is explored using the Survey of Income and Program Participation matched to tax records. We find that the effects of non-classical measurement error are large. However, these non-classical effects are largely offsetting when estimating mobility. As a result SIPP estimates of mobility are similar to estimates based on tax records, though SIPP estimates of inequality are smaller than estimates based on tax records.
    Date: 2006–08–02
  2. By: Ryo Kambayashi; Daiji Kawaguchi; Izumi Yokoyama
    Abstract: Diverging economic inequality has become a common focus of economic debate in developed countries. In particular, the recent experience of Japan has started attracting international attention. We take advantage of a rich micro-level data set from the Basic Survey on Wage Structure (1989-2003) to perform an in-depth analysis of the change in the inequality and distribution of the hourly wage. We observe that lower returns to education and years of tenure contribute to diminishing income disparity between groups for both sexes. A larger variance within a group contributes to the wage disparity for males, while an increased heterogeneity of workers' attributes contributes to the wage disparity for females. The Dinardo, Fortin, and Lemieux decomposition also confirms the basic findings from a parametric variance decomposition.
    Keywords: Wage Distribution, Wage Equation, Variance Decomposition
    JEL: J31
    Date: 2006–08
  3. By: Sara Lemos
    Abstract: It is well established in the literature that minimum wage increases compress the wage distribution. Firms respond to these higher labour costs by reducing employment, reducing profits, or raising prices. While there are hundreds of studies on the employment effect of the minimum wage, there are merely a handful of studies on its profit effects, and only a couple of dozen studies on its price effects. Furthermore, a comprehensive survey on minimum wage price effects is not available in the literature. Given the policy relevance of this neglected issue, in this paper we summarise and critically compare the available evidence on the effects of minimum wages on prices.
    Keywords: minimum wage; employment; labour costs; cost shock; pass-through
    JEL: J38
    Date: 2006–05
  4. By: David Neumark (Department of Economics, University of California-Irvine); Donna Rothstein (Bureau of Labor Statistics, U.S. Department of Labor)
    Abstract: This paper tests whether school-to-work (STW) programs are particularly beneficial for those less likely to go to college in their absence—often termed the “forgotten half” in the STW literature. The empirical analysis is based on the NLSY97, which allows us to study six types of STW programs, including job shadowing, mentoring, coop, school enterprises, tech prep, and internships / apprenticeships. For men there is quite a bit of evidence that STW program participation is particularly advantageous for those in the forgotten half. For these men, among the strongest evidence is that mentoring and coop programs increase post-secondary education, and coop, school enterprise, and internship / apprenticeship programs boost employment and decrease idleness after leaving high school. There is less evidence that STW programs are particularly beneficial in increasing schooling among women in the forgotten half, although internship / apprenticeship programs do lead to positive earnings effects concentrated among these women.
    JEL: I28 J15 J24
    Date: 2005–10

This nep-ltv issue is ©2006 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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.