nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2006‒11‒18
seven papers chosen by
Maximo Rossi
Universidad de la Republica

  1. The Effect of Direct Democracy on Income Redistribution: Evidence for Switzerland By Lars P. Feld; Justina A.V. Fischer; Gebhard Kirchgässner
  2. Should We Maximize National Happiness? By Bruno S. Frey; Alois Stutzer
  3. Gender, Ethnic Identity and Work By Amelie Constant; Liliya Gataullina; Klaus F. Zimmermann
  4. Altruism in the (Social) Network. By Pablo Brañas-Garza; Ramón Cobo-Reyes; Maria Paz Espinosa; Natalia Jiménez; Giovanni Ponti
  5. Economic Conditions and Public Attitudes towards Welfare State Policies By Morten Blekesaune
  6. School Quality and the Black-White Achievement Gap By Eric A. Hanushek; Steven G. Rivkin
  7. The Effects of Education Quality on Income Growth and Mortality Decline By Eliot A. Jamison; Dean T. Jamison; Eric A. Hanushek

  1. By: Lars P. Feld; Justina A.V. Fischer; Gebhard Kirchgässner
    Abstract: There is an intensive dispute in political economics about the impact of institutions on income redistribution. While the main focus is on comparison between different forms of representative democracy, the influence of direct democracy on redistribution has attracted much less attention. According to theoretical arguments and previous empirical results, government policies of income redistribution are expected to be more in line with median voter preferences in direct than in representative democracies. In this paper, we find that institutions of direct democracy are associated with lower public spending and revenue, particularly lower welfare spending and broad-based income and property (wealth) tax revenue. Moreover, we estimate a model which explains the determinants of redistribution using panel data provided by the Swiss Federal Tax Office from 1981 to 1997 and a cross section of (representative) individual data from 1992. While our results indicate that less public funds are used to redistribute income and actual redistribution is lower, inequality is not reduced to a lesser extent in direct than in representative democracies for a given initial income distribution. This finding might well indicate the presence of efficiency gains in redistribution policies.
    Keywords: income redistribution, direct democracy, referenda, initiatives
    JEL: D70 D78 H11 I30
    Date: 2006
  2. By: Bruno S. Frey; Alois Stutzer
    Abstract: Cross-disciplinary ‘happiness research’ has made big progress in the measurement of individual welfare. This development makes it tempting to pursue the old dream of maximizing aggregate happiness as a social welfare function. However, we postulate that the appropriate approach is not to maximize aggregate happiness in seeking to improve outcomes by direct policy interventions. The goal of happiness research should rather be to improve the nature of the processes through which individuals can express their preferences. Individuals should become better able to advance their idea of the good life, both individually and collectively.
    Keywords: Economic policy; happiness; life satisfaction; political economy; social welfare; utility
    JEL: D60 D70 H11 I31
    Date: 2006–10
  3. By: Amelie Constant; Liliya Gataullina; Klaus F. Zimmermann
    Abstract: The European Union's strategy to raise employment is confronted with very low work participation among many minority ethnic groups, in particular among immigrants. This study examines the potential of immigrants' identification with the home and host country ethnicity to explain that deficit. It introduces a two-dimensional understanding of ethnic identity, as a combination of commitments to the home and host cultures and societies, and links it to the labour market participation of immigrants. Using unique German survey data, the paper identifies marked gender differences in the effects of ethnic identification on the probability to work controlling for a number of other determinants. While ethnically assimilated immigrant men outperform those who are ethnically separated and marginalized, they are not different from those with openness to both cultures. Assimilated immigrant women do better than those separated and marginalized, but those who develop an attachment to both cultures clearly fare the best.
    Keywords: Ethnicity, ethnic identity, acculturation, immigrant assimilation, immigrant integration, gender, work
    JEL: F22 J15 J16 Z10
    Date: 2006
  4. By: Pablo Brañas-Garza (Universidad de Granada); Ramón Cobo-Reyes (Universidad de Granada); Maria Paz Espinosa (Universidad del País Vasco); Natalia Jiménez (Universidad de Alicante); Giovanni Ponti (Università di Ferrara; Universidad de Alicante)
    Abstract: This paper explores the role of social integration on altruistic behavior. To this aim, we develop a two-stage experimental protocol based on the classic Dictator Game. In the first stage, we ask a group of 77 undergraduate students in Economics to elicit their social network; in the second stage, each of them has to unilaterally decide over the division of a fixed amount of money to be shared with another anonymous member in the group. Our experimental design allows to control for other variables known to be relevant for altruistic behavior: framing and friendship/acquaintance relations. Consistently with previous research, we find that subjects favor their friends and that framing enhances altruistic behavior. Once we control for these effects, social integration (measured by betweenness, a standard centrality measure in network theory) has a positive effect on giving: the larger social isolation within the group, the more likely it is the emergence of selfish behavior. These results suggest that information on the network structure in which subjects are embedded is crucial to account for their behavior.
    Keywords: altruism, social integration, social networks, experiments
    JEL: C91 D64 Z13
    Date: 2006–11–13
  5. By: Morten Blekesaune (Institute for Social and Economic Research)
    Abstract: Can changing economic conditions predict changes in public attitudes toward welfare state policies? More specifically, does public support for governmental provision and economic redistribution increase in periods of economic strain and low employment? This has been a popular hypothesis among political commentators but has been subject of limited empirical scrutiny. The hypothesis is tested using data from three waves of the World Value Survey and fixed effects models at country level following cross-sectional analyses at the level of respondents which control for individual characteristics. The hypothesis is supported by three out of four effects being tested. These effects are largely contextual as individual level compositional effects can only explain a minor part. The results also indicate that the formation of public opinions towards welfare state policies is predictable and rational.
    Keywords: attitudes, income redistribution, social protection
    Date: 2006–09
  6. By: Eric A. Hanushek; Steven G. Rivkin
    Abstract: Substantial uncertainty exists about the impact of school quality on the black-white achievement gap. Our results, based on both Texas Schools Project (TSP) administrative data and the Early Childhood Longitudinal Survey (ECLS), differ noticeably from other recent analyses of the black-white achievement gap by providing strong evidence that schools have a substantial effect on the differential. The majority of the expansion of the achievement gap with age occurs between rather than within schools, and specific school and peer factors exert a significant effect on the growth in the achievement gap. Unequal distributions of inexperienced teachers and of racial concentrations in schools can explain all of the increased achievement gap between grades 3 and 8. Moreover, non-random sample attrition for school changers and much higher rates of special education classification and grade retention for blacks appears to lead to a significant understatement of the increase in the achievement gap with age within the ECLS and other data sets.
    JEL: H4 H7 I2 J15 J7 I1
    Date: 2006–10
  7. By: Eliot A. Jamison; Dean T. Jamison; Eric A. Hanushek
    Abstract: Previous work shows that higher levels of education quality (as measured by international student achievement tests) increases growth rates of national income. This paper begins by confirming those findings in an analysis involving more countries over more time with additional controls. We then use the panel structure of our data to assess whether the mechanism by which education quality appears to improve per capita income levels is through shifting the level of the production function (probably not), through increasing the impact of an additional year of education (probably not), or through increasing a country's rate of technological progress (very likely). Mortality rates complement income levels as indicators of national well-being and we extend our panel models to show that improved education quality increases the rate of decline in infant mortality. Throughout the analysis, we find a stronger impact of education quality and of years of schooling in open than in closed economies.
    JEL: F4 I2 J0 J21 O4 I1
    Date: 2006–10

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