nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2006‒12‒01
four papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Social Networks and Employment - An Experimental Analysis By Siegfried Berninghaus; Sven Fischer; Werner Güth
  2. Evidence on Gender Wage Discrimination in Portugal: parametric and semi-parametric approaches By Aurora Galego; João Pereira
  3. Inequality and Trust in Sweden: Some Inequalities are More Harmful than Others By Jordahl, Henrik; Gustavsson, Magnus
  4. Is There Really a Foreign Ownership Wage Premium? Evidence from Matched Employer-Employee Data By Heyman, Fredrik; Gustavsson Tingvall, Patrik; Sjöholm, Fredrik

  1. By: Siegfried Berninghaus; Sven Fischer; Werner Güth
    Abstract: There is robust field data showing that a frequent and successful way of looking for a job is via the intermediation of friends and relatives. Here we want to explore this experimentally. Participants first play a simple public good game with two interaction partners ("friends"), and share whatever they earn this way with two different sharing partners ("cousins") who in turn have different friends. Thus a participant's social network contains two "friends" and two "cousins". In the second phase of the experiment participants learn about a job opportunity for themselves and one additional vacancy and decide whom of their network they want to recommend and, if so, in which order. In case of coemployment, both employees compete for a bonus. Will others be recommend for the additional job in spite of this competition, will "friends" or "cousins" be preferred and how does this depend on contributions (of "friends") or shared profits (with "cousins")? Our findings are partly puzzling. Most participants, for instance, recommend quite actively but compete very fiercely for the bonus.
    Keywords: Unemployment, Social Networks, Job Search
    JEL: C91 J65
    Date: 2006–11
  2. By: Aurora Galego (Department of Economics, University of Évora); João Pereira (Department of Economics, University of Évora)
    Abstract: In this paper we use two alternative approaches to study the extent of gender wage discrimination in Portugal. Both methods involve the estimation of wage equations for males and females and the Blinder [1973] and Oaxaca [1973] decomposition. However, to take into account possible sample selection bias, we consider both parametric and semi-parametric methods. First, we consider a parametric approach that relies on distributional assumptions about the distribution of the error terms in the model (Vella (1992, 1998) and Wooldridge (1998)). Within this approach, if the distributional assumption is not satisfied, the parameters’ estimates may be inconsistent. Secondly, we apply Li and Wooldridge [2002] semi-parametric estimator, which does not assume any known distribution on the joint distribution of the errors of the wage equation and of the sample selection equation; the distribution has an unknown form and is estimated through non-parametric kernel techniques. We employ micro data for Portugal from the European Community Household Panel (ECHP). The results from both approaches provide evidence in favour of the existence of gender wage discrimination in Portugal. However, the extent of labour market discrimination decreases when sample selection bias corrections are taken into account.
    JEL: J31 J71 C14
    Date: 2006
  3. By: Jordahl, Henrik (Research Institute of Industrial Economics); Gustavsson, Magnus (Uppsala University)
    Abstract: We present new evidence on the influence of income inequality on generalized trust. Using individual panel data from Swedish counties together with an instrumental variable strategy, we find that differences in disposable income, and especially differences among people in the bottom half of the income distribution, are associated with lower trust. The relationship between income inequality and trust is particularly strong for people with a strong aversion against income differentials. We also find that the proportion of people born in a foreign country is negatively associated with trust.
    Keywords: Trust; Social capital; Inequality
    JEL: C23 D31 Z13
    Date: 2006–11–14
  4. By: Heyman, Fredrik (Research Institute of Industrial Economics); Gustavsson Tingvall, Patrik (Stockholm School of Economics); Sjöholm, Fredrik (Stockholm School of Economics)
    Abstract: Numerous studies on firm-level data have reported higher average wages in foreign-owned firms than in domestically-owned firms. This, however, does not necessarily imply that the individual worker’s wage increase with foreign ownership. Using detailed matched employer-employee data on the entire Swedish private sector, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign owned firms with both domestic multinationals and local firms. Our results show a considerably smaller wage premium in foreign owned firms than what has been found in studies conducted at a more aggregate level. Moreover, foreign takeovers of Swedish firms tend to have no or even a negative effect on wages.
    Keywords: FDI; Foreign Ownership; Wages; Matched Employer-Employee Data; Propensity Score Matching
    JEL: C23 F23 J31
    Date: 2006–11–14

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