nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2006‒09‒16
seven papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Product Market Integration, Comparative Advantages and Labour Market Performance By Andersen, Torben M.; Skaksen , Jan Rose
  2. Wage dispersion between and within plants: Sweden 1985-2000 By Nordström Skans, Oskar; Edin, Per-Anders; Holmlund, Bertil
  3. A Note on Decomposing Differences in Poverty Incidence Using Regression Estimates: Algorithm and Example By Sumon Kumar Bhaumik; Ira N. Gang; Myeong-Su Yun
  4. Phillips Curves and Unemployment Dynamics: A Critique and a Holistic Perspective By Marika Karanassou; Hector Sala; Dennis J. Snower
  5. The Distribution of Total Work in the EU and US By Michael C. Burda; Daniel S. Hamermesh; Philippe Weil
  6. Smoking Habits: Like Father, Like Son, Like Mother, Like Daughter By Maria L. Loureiro; Anna Sanz-de-Galdeano; Daniela Vuri
  7. Exploring Gender Differences in Employment and Wage Trends Among Less-Skilled Workers By Rebecca M. Blank; Heidi Shierholz

  1. By: Andersen, Torben M. (Department of Economics, Copenhagen Business School); Skaksen , Jan Rose (Department of Economics, Copenhagen Business School)
    Abstract: In this paper, we set up a two-country general equilibrium model where trade unions have wage bargaining power. We show that a decrease in trade distortions inducing further product market integration gives rise to specialization gains as well as a labour market reform effect. The implications of the specialization gains are similar to an increase in labour productivity, whereas the labour market reform effect is similar to an increase in the degree of competition in the labour market. Wages, employment and welfare increase as a result of further product market integration. It is interesting to note that the labour market reform effect of product market integration is achieved despite an increase in the wage level.
    Keywords: Trade frictions; wage formation; employment; welfare
    JEL: F15 J30 J50
    Date: 2006–09–07
  2. By: Nordström Skans, Oskar (IFAU - Institute for Labour Market Policy Evaluation); Edin, Per-Anders (IFAU - Institute for Labour Market Policy Evaluation and Department of Economics, Uppsala University); Holmlund, Bertil (Department of Economics, Uppsala University)
    Abstract: The paper describes the Swedish wage distribution and how it correlates with worker mobility and plant-specific factors. It is well known that wage inequality has increased in Sweden since the mid-1980s. However, little evidence has so far been available as to whether this development reflects increased dispersion between plants, between individuals in the same plant, or both. We use a new linked employer-employee data set and discover that a trend rise in between-plant wage inequality account for the entire increase in wage dispersion. This pattern, which remains when we control for observable individual human capital characteristics, may reflect increased sorting of workers by skill levels and/or increased scope for rent sharing in local wage negotiations. Our discussion suggests that both factors may have become more important.
    Keywords: Wage inequality; labour turnover
    JEL: J31 J63
    Date: 2006–08–29
  3. By: Sumon Kumar Bhaumik (Brunel University and IZA Bonn); Ira N. Gang (Rutgers University and IZA Bonn); Myeong-Su Yun (Tulane University and IZA Bonn)
    Abstract: This paper decomposes differences in poverty incidence (head count ratio) using estimates from a regression equation, synthesizing the approaches proposed in World Bank (2003) and Yun (2004). A significance test is developed for characteristics and coefficients effects when decomposing differences in poverty incidence. The proposed method is implemented for studying differences in poverty incidence between Serbians and Albanians in Kosovo using Living Standard Measurement Survey.
    Keywords: poverty incidence, head count ratio, OLS, probit, decomposition
    JEL: C20 I30
    Date: 2006–08
  4. By: Marika Karanassou (Queen Mary, University of London and IZA Bonn); Hector Sala (Universitat Autònoma de Barcelona and IZA Bonn); Dennis J. Snower (Kiel Institute for World Economics, University of Kiel, CEPR and IZA Bonn)
    Abstract: The conventional wisdom that inflation and unemployment are unrelated in the long-run implies that these phenomena can be analysed by separate branches of economics. The macro literature tries to explain inflation dynamics and estimates the NAIRU. The labour macro literature tries to explain unemployment dynamics and determine the real economic factors that drive the natural rate of unemployment. We show that the orthodox view that the New Keynesian Phillips curve is vertical in the long-run and that it cannot generate substantial inflation persistence relies on the implausible assumption of a zero interest rate. In the light of these results, we argue that a holistic framework is needed to jointly explain the evolution of inflation and unemployment.
    Keywords: natural rate of unemployment, NAIRU, New Keynesian Phillips Curve, inflation-unemployment tradeoff, inflation dynamics, unemployment dynamics
    JEL: E24 E31
    Date: 2006–08
  5. By: Michael C. Burda (Humboldt University of Berlin, CEPR and IZA Bonn); Daniel S. Hamermesh (University of Texas at Austin, NBER and IZA Bonn); Philippe Weil (Université Libre de Bruxelles (ECARES), Institut d’Études Politiques de Paris, CEPR and NBER)
    Abstract: Using two time-diary data sets each for Germany, Italy the Netherlands and the U.S. from 1985-2003, we demonstrate that Americans work more than Europeans: 1) in the market; 2) in total (market and home production)-- there is no one-for-one tradeoff across countries in total work; 3) at unusual times of the day and on weekends. In addition, gender differences in total work within a given country are significantly smaller than variation across countries and time. We conclude that some of the transatlantic differences could reflect inferior equilibria that are generated by social norms and externalities. While an important outlet for total work, home production by females appears very sensitive to tax rates in the G-7 countries. We adapt the theory of home production to account for fixed costs of market work and adduce evidence that they, in contrast to other relative costs, vary significantly across countries.
    Keywords: time use, gender inequality, household production, hours of work
    JEL: J22 E24 D13
    Date: 2006–08
  6. By: Maria L. Loureiro (IDEGA, University of Santiago de Compostela); Anna Sanz-de-Galdeano (University of Girona and IZA Bonn); Daniela Vuri (University of Florence, CHILD and IZA Bonn)
    Abstract: We analyze data from the 1994-2002 waves of the British Household Panel Survey to explore the influence of parental smoking habits on their children’s smoking decisions. In order to account for the potential endogeneity of parental smoking habits we use instrumental variable methods. We find that mothers play a crucial role in determining their daughters’ smoking decisions, while fathers’ smoking habits are transmitted primarily to their sons.
    Keywords: youth smoking, intergenerational habit transmission, multivariate probit, instrumental variables
    JEL: I1 C5
    Date: 2006–08
  7. By: Rebecca M. Blank; Heidi Shierholz
    Abstract: In contrast to less-skilled men, less-skilled women have experienced growing labor force involvement and moderate wage increases. Compared to more-skilled women, less-skilled women have fallen behind. We investigated the reasons behind these trends in labor force participation and wages for male and female workers of different skill levels over the past 25 years, from 1979-2004. We find that less-skilled women have found themselves in an 'intermediate' place in the labor market. Like less-skilled men, they experienced deteriorating returns to education but, unlike the men, they benefited from a growing positive impact of accumulated experience on labor market outcomes. More-skilled women experienced both growing returns to education and greater accumulation of experience, leading to faster wage growth. In addition, at the same time that experience levels have grown, the returns to experience on wages and labor force participation have also risen among less-skilled women, while the returns to experience have declined among less-skilled men. The negative effect of children and marital status on wages and labor force participation has also declined markedly among women of all skill levels.
    JEL: J16 J31
    Date: 2006–08

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