nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2007‒04‒21
thirteen papers chosen by
Maximo Rossi
University of the Republic

  1. Globalization, growth and distribution in Spain 1500-1913 By Joan R. Roses; Kevin H. O'Rourke; Jeffrey G. Williamson
  2. Self-Perceived Job Insecurity and Social Context : Are there Different European Cultures of Anxiety? By Marcel Erlinghagen
  3. Women Labor Market: Gender Pay Gap and Its Determinants / Trh práce žen: Gender pay gap a jeho determinanty [available in Czech only] By Martina Mysíková
  4. On Gender Inequality and Life Satisfaction: Does Discrimination Matter? By Bjørnskov, Christian; Dreher, Axel; Fischer, Justina AV
  5. Income Satisfaction and Deprivation in Spain By José M. Labeaga; José Alberto Molina; María Navarro
  6. Total Work, Gender and Social Norms By Michael Burda; Daniel S. Hamermesh; Philippe Weil
  7. Are Youths on Income Support Less Happy? Evidence from Australia By Wang-Sheng Lee; Umut Oguzoglu
  8. Cohort-Level Sex Ratio Effects on Women’s Labor Force Participation By Shoshana Grossbard; Catalina Amuedo-Dorantes
  9. From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992-2001 By Stefan Bach; Giacomo Corneo; Viktor Steiner
  10. Agency in Health-Care: Are Medical Care-Givers Perfect Agents? By Einat Neuman; Shoshana Neuman
  11. Mums and Their Sons, Dads and Their Daughters: Panel Data Evidence of Interdependent Marginal Utilities across 14 EU Countries By José Alberto Molina; María Navarro; Ian Walker
  12. Comparing Subjective and Objective Measures of Health: Evidence from Hypertension for the Income/Health Gradient By David W. Johnston; Carol Propper; Michael A. Shields
  13. Two Types of Inequality: Inequality Between Persons and Inequality Between Subgroups By Guillermina Jasso; Samuel Kotz

  1. By: Joan R. Roses; Kevin H. O'Rourke; Jeffrey G. Williamson
    Abstract: The endogenous growth literature has explored the transition from a Malthusian world where real wages, living standards and labor productivity are all linked to factor endowments, to one where (endogenous) productivity change embedded in modern industrial growth breaks that link. Recently, economic historians have presented evidence from England showing that the dramatic reversal in distributional trends – from a steep secular fall in wage-land rent ratios before 1800 to a steep secular rise thereafter – must be explained both by industrial revolutionary growth forces and by global forces that opened up the English economy to international trade. This paper explores whether and how the relationship was different for Spain, a country which had relatively poor productivity growth in agriculture and low living standards prior to 1800, was a late-comer to industrialization afterwards, and adopted very restrictive policies towards imports for much of the 19th century. The failure of Spanish wagerental ratios to undergo a sustained rise after 1840 can be attributed to the delayed fall in relative agricultural prices (due to those protective policies) and to the decline in Spanish manufacturing productivity after 1898.
    Date: 2007–04
  2. By: Marcel Erlinghagen
    Abstract: Job insecurity causes far reaching negative outcomes. The fear of job loss damages the health of employees and reduces the productivity of firms. Thus, job insecurity should result in increasing social costs. Analyzing representative data from 17 European countries, this paper investigates self perceived job insecurity. Our multi level analysis reveals significant cross-country differences in individuals' perception of job insecurity. This finding is not only driven by social-structural or institutional differences, but job insecurity is also shown to be affected by cultural characteristics.
    Date: 2007
  3. By: Martina Mysíková (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This study is concerned with decomposing the gender pay gap in the Czech Republic. It aims not only to compare male and female wage-equations but also to uncover the gender pay gap structure. The decision of many women not to participate in the labor market can be influenced by potentially low wages. Their entry into the labor market could increase the gender pay gap in large measure. The advantage of this study is that it uses a selection method to estimate the male and female wage equations and this enables us to include the impact of non﷓participating individuals. The Oaxaca-Blinder decomposition divides the gender pay gap into several effects, which stem not only from discrimination but also from different male and female characteristics. The combination with the Heckman selection model enables one to separate the sample selection effect, which refers to the potential gender pay gap when non﷓participating individuals enter the labor market. The results of the decomposition confirm the hypothesis that the observed pay gap would increase if non-participating individuals enter the labor market. The study uses data from the new household survey Living Conditions 2005 (EU-SILC), which provides us with a large number of individual characteristics of working as well as non-working individuals, and therefore it enriches the existing empirical literature with new data.
    Keywords: gender pay gap, labor market participation, Heckman model, Oaxaca-Blinder decomposition, endowment effect, remuneration effect, sample selection effect
    JEL: J16 J31
    Date: 2007–04
  4. By: Bjørnskov, Christian (Aarhus School of Business); Dreher, Axel (ETH Zurich, KOF Swiss Economic Institute, and CESifo); Fischer, Justina AV (Dept. of Economics, Stockholm School of Economics)
    Abstract: This paper analyzes the impact of gender discrimination on individual life satisfaction using a cross-section of 66 countries. We employ measures of discrimination of women in the economy, in politics, and in society more generally. According to our results, discrimination in politics is important to individual well-being. Overall, men and women are more satisfied with their lives when societies become more equal. Disaggregated analysis suggests that our results for men are driven by the effect of equality on men with middle and high incomes, and those on the political left. To the contrary, women are more satisfied with increasing equality independent of income and political ideology. Equality in economic and family matters does overall not affect life satisfaction. However, women are more satisfied with their lives when discriminatory practices have been less prevalent in the economy 20 years ago.
    Keywords: Gender gap; happiness; well-being; discrimination; life satisfaction
    JEL: I31 J16
    Date: 2007–04–08
  5. By: José M. Labeaga (FEDEA and UNED, Madrid); José Alberto Molina (University of Zaragoza and IZA); María Navarro (FEDEA, Madrid)
    Abstract: The first objective of our paper is to identify the determinants of income satisfaction in Spain, with one of these being relative deprivation, and the second is to measure this relative deprivation, in both monetary and satisfaction terms. To that end, we use data from the eight waves of the Spanish section of the European Community Household Panel (1994-2001). With respect to the first objective, we estimate models for categorical variables in order to test whether subjective satisfaction measures depend on relative deprivation, as well as on other determinants. As for the second objective, we first calculate inequality and polarization indices and then we specifically analyze whether the Spanish tax-benefit system helped to reduce individual deprivation. Our results suggest that the more unequal the income distribution is in a group, the less income satisfied is the individual. Moreover, being unemployed is one of the main determinants of deprivation, although public transfers help to reduce individual deprivation. When we observe the amount of public transfers received, deprivation is reduced up to a certain threshold, beyond which it continues to decline, but at a lower rate.
    Keywords: income satisfaction, deprivation, inequality, polarization, Spain
    JEL: D31 D63 I31
    Date: 2007–03
  6. By: Michael Burda (Humboldt University of Berlin, CEPR and IZA); Daniel S. Hamermesh (University of Texas at Austin, NBER and IZA); Philippe Weil (Université Libre de Bruxelles (ECARES), Institut d’Études Politiques de Paris, CEPR and NBER)
    Abstract: Using time-diary data from 25 countries, we demonstrate that there is a negative relationship between real GDP per capita and the female-male difference in total work time per day - the sum of work for pay and work at home. In rich northern countries on four continents, including the United States, there is no difference - men and women do the same amount of total work. This latter fact has been presented before by several sociologists for a few rich countries; but our survey results show that labor economists, macroeconomists, the general public and sociologists are unaware of it and instead believe that women perform more total work. The facts do not arise from gender differences in the price of time (as measured by market wages), as women’s total work is further below men’s where their relative wages are lower. Additional tests using U.S. and German data show that they do not arise from differences in marital bargaining, as gender equality is not associated with marital status; nor do they stem from family norms, since most of the variance in the gender total work difference is due to within-couple differences. We offer a theory of social norms to explain the facts. The social-norm explanation is better able to account for within-education group and within-region gender differences in total work being smaller than inter-group differences. It is consistent with evidence using the World Values Surveys that female total work is relatively greater than men’s where both men and women believe that scarce jobs should be offered to men first.
    Keywords: time use, gender differences, household production, paid work
    JEL: J22 J16 D13
    Date: 2007–03
  7. By: Wang-Sheng Lee (University of Melbourne); Umut Oguzoglu (University of Melbourne and IZA)
    Abstract: The central research question addressed in this paper is how receipt of income support payments affects the well-being of youths. Using 1997-2004 panel data from a nationally representative survey of Australian youths, we attempt to estimate the size of the welfare stigma faced by Australian youths, where stigma is defined as the effect of welfare receipt on reported happiness levels. In analysing the determinants of happiness, we argue that it is important to control for dynamics and initial conditions. The latter arguably measures an initial setpoint of happiness which the psychological literature has found strong support for. In contrast to the general findings of the existence of a welfare stigma for adults, based on our results using dynamic panel probit models, our findings suggest that for Australian youths, there is a small negative but not statistically significant stigma associated with welfare receipt.
    Keywords: well-being, happiness, welfare stigma, youths
    JEL: I31 I38 C33
    Date: 2007–03
  8. By: Shoshana Grossbard (San Diego State University and IZA); Catalina Amuedo-Dorantes (San Diego State University and IZA)
    Abstract: It follows from a number of theoretical models of marriage that the scarcer women are relative to men, i.e. the higher the sex ratio, the less married women are likely to participate in the labor force. Such sex ratio effects may be stronger among less educated women. These predictions are tested using individual data from Current Population Surveys for four regions of the U.S. (Northeast, Midwest, South and West), and for the U.S. as a whole, covering the period 1965 to 2005 at five-year intervals. Within-region sex ratio variation results from variation in cohort size (due principally to large fluctuations in number of births) and limited fluctuations in the difference between male and female age at marriage. As hypothesized, we find that sex ratios are inversely related to women’s labor force participation, reflecting that ceteris paribus women born in years of peak baby-boom are more likely to be in the labor force than women born in years of peak baby-bust. Additionally, weaker sex ratio effects are found among educated women in two of the four regions of the United States.
    Keywords: female labor force participation, sex ratios, cohorts, education, marriage markets
    JEL: J1 J2
    Date: 2007–04
  9. By: Stefan Bach (DIW Berlin); Giacomo Corneo (Free University of Berlin and IZA); Viktor Steiner (DIW Berlin, Free University of Berlin and IZA)
    Abstract: We analyze the distribution and concentration of market incomes in Germany in the period 1992 to 2001 on the basis of an integrated data set of individual tax returns and the German Socio-Economic Panel. The unique feature of this integrated data set is that it encompasses the whole spectrum of the population, from the very poor to the very rich. We find a modest increase in overall inequality of market incomes as measured by the Gini coefficient. However, we also document a substantial drop of median income and a remarkable income growth at the top 0.1% of the income distribution. The increase of income inequality was stronger in East Germany than in West Germany. In both regions, the income concentration process strongly benefited the economic elite, which we define as the richest 0.001% persons in the population. While the elite mainly obtains its income from business and capital, the income share that it receives in form of wage income is increasing.
    Keywords: income distribution, top incomes, inequality
    JEL: D31 D33 H24
    Date: 2007–04
  10. By: Einat Neuman (Academic College of Tel-Aviv-Yaffo); Shoshana Neuman (Bar-Ilan University, CEPR and IZA)
    Abstract: It has been suggested in the literature that a source of incompleteness in the agency relationship between the doctor and the patient is that the provider may respond to an incomplete or biased perception of the patient’s interests. However, this has not been shown empirically. This paper is novel in presenting an empirical test of the fundamental assumption of the agency model that health care professionals understand what their patients want. Discrete Choice Experiments (DCEs) are conducted simultaneously within samples of patients (women who gave birth) and care-givers (doctors and nurses), to elicit and contrast patients’ authentic preferences (for five maternity ward attributes) with what care-givers believe them to be. Conclusion: agents have a biased perception of principals’ preferences, and therefore a complete agency relationship does not exist. Our findings add a novel empirical contribution to the agency relationship literature. Moreover, parallel preference patterns of patients and care-givers are certainly of much interest to the field of health economics: Informing the unaware medical care-givers about the patients' preferences, will improve treatment and patients' satisfaction.
    Keywords: principal-agent relationship, health-care, maternity wards, discrete choice experiment, preferences
    JEL: I1
    Date: 2007–04
  11. By: José Alberto Molina (University of Zaragoza and IZA); María Navarro (FEDEA, Madrid); Ian Walker (University of Warwick, Princeton University and IZA)
    Abstract: We study how fathers and mothers income satisfaction correlates with the income satisfaction of their sons and daughters, as well as with other economic and sociodemographic variables. We estimate these correlations using data on parents and children in households surveyed in the eight waves of the European Community Household Panel- ECHP (1994-2001) for 14 EU countries. To assess the robustness of these correlations, we use siblings in the Panel and we investigate the sensitivity of the estimates with the inclusion of other control variables. We also adopt a multi-level random effects ordered probit specification, that uses step-parents in the data, to allow us to distinguish nature effects from nurture effects. Our main results show evidence of strong altruism effects, but these estimated effects differ across countries, differ between mothers and fathers, and differ between sons and daughters.
    Keywords: parents and children, income satisfaction, interdependent marginal utilities, altruism, Europe
    JEL: D13 D60 D64 C33
    Date: 2007–04
  12. By: David W. Johnston (University of Melbourne); Carol Propper (CMPO, University of Bristol, CASE and CEPR); Michael A. Shields (University of Melbourne and IZA)
    Abstract: Economists rely heavily on self-reported measures of health status to examine the relationship between income and health. In this paper we directly compare survey responses to a self-reported measure of health that is commonly available in nationally-representative individual and household surveys, with objective measures of the same health condition. Our particular focus is on hypertension, which is the most prevalent health condition in Western countries. Using data from the Health Survey for England, we find that there is a substantial difference in the percentage of adult survey respondents reporting that they have hypertension as a chronic health condition compared to that from repeated measurements by a trained nurse. Around 85% of individuals measured as having hypertension do not report having it as a chronic illness. Importantly, we find no evidence of an income/health gradient using self-reported hypertension, but a large (about 14 times the size) gradient when using objectively measured hypertension. We also find that the probability of false negative reporting, that is an individual not reporting to have chronic hypertension when in fact they have it, is significantly higher for individuals living in low income households. Given the wide use of such self-reported chronic health conditions in applied research, and the asymptomatic nature of many major illnesses such as hypertension, diabetes, heart disease and cancer at moderate and sometimes very elevated levels, we show that using commonly available self-reported chronic health measures is likely to lead to an underestimate of true income-related inequalities in health. This has important implications for policy advice.
    Keywords: hypertension, objective health, self-reported health, reporting error, income
    JEL: I10 I18 C42
    Date: 2007–04
  13. By: Guillermina Jasso (New York University and IZA); Samuel Kotz (George Washington University)
    Abstract: Social scientists study two kinds of inequality: inequality between persons (as in income inequality) and inequality between subgroups (as in racial inequality). This paper analyzes the mathematical connections between the two kinds of inequality. The paper proceeds by exploring a set of two-parameter continuous probability distributions widely used in economic and sociological applications. We define a general inequality parameter, which governs all measures of personal inequality (such as the Gini coefficient), and we link this parameter to the gap (difference or ratio) between the means of subdistributions. In this way we establish that, at least in the two-parameter distributions analyzed here, and for the case of two nonoverlapping subgroups, as personal inequality increases, so does inequality between subgroups. This general inequality parameter also governs Lorenz dominance. Further, we explore the connection between subgroup inequality (in particular, the ratio of the bottom subgroup mean to the top subgroup mean) and decomposition of personal inequality into between-subgroup and within-subgroup components, focusing on an important decomposable measure, Theil’s MLD, and its operation in the Pareto case. This allows us to establish that all the quantities in the decomposition are monotonic functions of the general inequality parameter. Thus, the general inequality parameter captures the "deep structure" of inequality. We also introduce a whole-distribution graphical tool for assessing personal and subgroup inequality. Substantively, this work suggests that in at least some societies, characterized by special income distributions, whenever inequality disrupts social harmony and social cohesion, it attacks on two fronts, via subgroup inequality as well as personal inequality.
    Keywords: continuous univariate distributions, two-parameter distributions, lognormal distribution, Pareto distribution, power-function distribution, Gini coefficient, Atkinson measure, Theil’s MLD, coefficient of variation, Lorenz curve, decomposition of inequality measures, between component, within component
    JEL: C02 C16 D31 D6 I3
    Date: 2007–04

This nep-ltv issue is ©2007 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.
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