nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2007‒10‒06
six papers chosen by
Maximo Rossi
University of the Republic

  1. Finance and Welfare States in Globalizing Markets By Bertola, Giuseppe
  2. The Persistence of Welfare Participation By Andrén, Thomas
  3. Employment Protection and Sickness Absence By Olsson, Martin
  4. Job Changes and Hours Changes: Understanding the Path of Labour Supply Adjustment By Richard Blundell; Mike Brewer; Marco Francesconi
  5. Is Well-Being U-Shaped over the Life Cycle? By David G. Blanchflower; Andrew J. Oswald
  6. Total Work, Gender and Social Norms By Michael Burda; Daniel S. Hamermesh; Philippe Weil

  1. By: Bertola, Giuseppe
    Abstract: It is theoretically clear and may be verified empirically that efficient financial markets can make it less necessary for policy to try and offset the welfare effects of labour income risk and unequal consumption dynamics. The literature has also pointed out that, since international competition exposes workers to new sources of risk at the same time as it makes it easier for individual choices to undermine collective policies, international economic integration makes insurance-oriented government policies more beneficial as well as more difficult to implement. This paper reviews the economic mechanisms underlying these insights and assesses their empirical relevance in cross-country panel data sets. Interactions between indicators of international economic integration, of government economic involvement, and of financial development are consistent with the idea that financial market development can substitute public schemes when economic integration calls for more effective household consumption smoothing. The paper’s theoretical perspective and empirical evidence suggest that to the extent that governments can foster financial market development by appropriate regulation and supervision, they should do so more urgently at times of intense and increasing internationalization of economic relationships.
    Keywords: openness; redistribution
    JEL: D30 F15
    Date: 2007–09
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:6480&r=ltv
  2. By: Andrén, Thomas (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Welfare persistence is estimated in and compared between Swedish-born and foreignborn households. This is done within the framework of a time-stationary dynamic discrete choice model controlling for the initial condition and unobserved heterogeneity. Three different types of persistence are controlled for in terms of observed and unobserved heterogeneity, serial correlation, and structural state dependence, the focus being on the latter measure. In a second step we analyze the long-run effects of receiving social assistance on future household earnings and disposable income. The results show that state dependence in Swedish welfare participation is strong in both Swedish-born and foreign-born. However, the size of the effect is three times as large for the latter group. When the effect is distributed over time, it disappears after three years for both groups. The effect of structural state dependence is decomposed into a number of observed explanatory factors. Surprisingly small effects are found from typical foreign-born factors such as time in the country and country of origin, both important determinants for welfare participation in general. When investigating the effect of social assistance participation on future earnings, we find a strong and persistent effect over the whole observation window, while no such effect could be found for disposable income. This indicates that the economic incentives to leave the dependency are very weak. The picture is similar for both Swedish-born and foreign-born, even though the negative earnings effect is somewhat larger for the latter.<p>
    Keywords: welfare participation; immigrants; dynamic probit model; persistence; state dependence; unobserved heterogeneity; initial condition; GHK simulator; earnings; disposable income
    JEL: I30 I38 J18
    Date: 2007–09–28
    URL: http://d.repec.org/n?u=RePEc:hhs:gunwpe:0266&r=ltv
  3. By: Olsson, Martin (Research Institute of Industrial Economics (IFN))
    Abstract: An exemption in the Swedish Employment Security Act (LAS) in 2001 made it possible for employers with a maximum of ten employees to exempt two workers from the seniority rule at times of redundancies. Using this within-country enforcement variation, the relationship between employment protection and sickness absence among employees is examined. The average treatment effect from the exemption is found to decrease sickness absence by more than 13 percent at those establishments that were treated relative to those that were not and this was due to a behavioral, rather than a compositional, effect. The results suggest that the exemption had the largest impact on shorter spells and among establishments with a relatively low share of females or temporary contracts.
    Keywords: Employment Protection; Sickness Absence; Economic Incentives
    JEL: I19 J63 J88
    Date: 2007–09–19
    URL: http://d.repec.org/n?u=RePEc:hhs:iuiwop:0717&r=ltv
  4. By: Richard Blundell (University College London, Institute for Fiscal Studies and IZA); Mike Brewer (Institute for Fiscal Studies); Marco Francesconi (University of Essex, Institute for Fiscal Studies and IZA)
    Abstract: This paper uses British panel data to investigate single women’s labour supply changes in response to three tax and benefit policy reforms that occurred in the 1990s. These reforms changed individuals’ work incentives and we use them to identify changes in labour supply. We find evidence of small hours of work effects for two of such reforms. A third reform in 1999 instead led to a significant increase in single mothers’ hours of work. The mechanism by which the labour supply adjustments were made occurred largely through job changes rather than hours changes with the same employer. These results are confirmed when we look at hours changes by stated labour supply preferences. Finally, we find little overall effect of the reforms on wages.
    Keywords: job mobility, hours flexibility, labour supply preferences, hours-wage trade-off, monopsony
    JEL: C23 H31 I38 J12 J13 J22
    Date: 2007–09
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp3044&r=ltv
  5. By: David G. Blanchflower (Dartmouth College and IZA); Andrew J. Oswald (University of Warwick and IZA)
    Abstract: We explore the idea that happiness and psychological well-being are U-shaped in age. The main difficulty with this argument is that there are likely to be omitted cohort effects (earlier generations may have been born in, say, particularly good or bad times). First, using data on 500,000 randomly sampled Americans and West Europeans, the paper designs a test that controls for cohort effects. A robust U-shape is found. Ceteris paribus, a typical individual’s well-being reaches its minimum - on both sides of the Atlantic and for both males and females - in middle age. We demonstrate this with a quadratic structure and non-parametric forms. Second, some evidence is presented for a U-shape in developing countries and the East European nations. Third, using measures that are closer to psychiatric scores, we document a comparable well-being curve across the life course in two other data sets: (i) in GHQ-N6 mental health levels for a sample of 16,000 Europeans, and (ii) in reported depression and anxiety among approximately 1 million U.K. citizens. Fourth, we document occasional apparent exceptions, particularly in developing nations, to the U-shape. Fifth, we note that American male birth cohorts seem to have become progressively less happy with their lives. Our paper’s results are based on regression equations in which other influences, such as demographic variables and income, are held constant.
    Keywords: happiness, aging, well-being, GHQ, cohorts
    JEL: D1 I3
    Date: 2007–09
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp3075&r=ltv
  6. By: Michael Burda; Daniel S. Hamermesh; Philippe Weil
    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 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 withineducation 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: 2007–09
    URL: http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2007-058&r=ltv

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