nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2007‒10‒13
six papers chosen by
Maximo Rossi
University of the Republic

  1. Maternal Education, Home Environments and the Development of Children and Adolescents By Carneiro, Pedro; Meghir, Costas; Parey, Matthias
  2. Income distribution and inequality measurement: The problem of extreme values By Emmanuel Flachaire; Frank A. Cowell
  3. The Lifetime Costs and Benefits of Medical Technology By David M. Cutler
  4. Personnel Economics By Edward P. Lazear; Paul Oyer
  5. Wealth, Social Capital and Happiness: The Case of Status Sensitive People By Amnon Levy
  6. Fertility, Female Labor Force Participation, and the Demographic Dividend By David E. Bloom; David Canning; Guenther Fink; Jocelyn E. Finlay

  1. By: Carneiro, Pedro; Meghir, Costas; Parey, Matthias
    Abstract: We study the intergenerational effects of maternal education on children's cognitive achievement, behavioural problems, grade repetition and obesity. We address endogeneity of maternal schooling by instrumenting with variation in schooling costs when the mother grew up. Using matched data from the female participants of the National Longitudinal Survey of Youth 1979 (NLSY79) and their children, we can control for mother's ability and family background factors. Our results show substantial intergenerational returns to education. For children aged 7-8, for example, our IV results indicate that an additional year of mother's schooling increases the child's performance on a standardized math test by almost 0.1 of a standard deviation, and reduces the incidence of behavioural problems. Our data set allows us to study a large array of channels, which may transmit the effect of maternal education to the child, including family environment and parental investments at different ages of the child. We find that income effects, delayed childbearing, and assortative mating are likely to be important, and we show that maternal education leads to substantial differences in maternal labour supply. We investigate heterogeneity in returns, and we present results focusing both on very early stages in the child's life as well as adolescent outcomes. We present a falsification exercise to support the validity of our instruments, and our results are found to be robust in a sensitivity analysis. We discuss policy implications and relate our findings to intergenerational mobility.
    Keywords: Child Development; Education; Intergenerational Mobility
    JEL: J31
    Date: 2007–10
  2. By: Emmanuel Flachaire (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Frank A. Cowell (STICERD - [London School of Economics])
    Abstract: We examine the statistical performance of inequality indices in the presence of extreme values in the data and show that these indices are very sensitive to the properties of the income distribution. Estimation and inference can be dramatically affected, especially when the tail of the income distribution is heavy, even when standard bootstrap methods are employed. However, use of appropriate semiparametric methods for modelling the upper tail can greatly improve the performance of even those inequality indices that are normally considered particularly sensitive to extreme values.
    Keywords: inequality measures ; statistical performance ; robustness
    Date: 2006–10
  3. By: David M. Cutler
    Abstract: Measuring the lifetime costs and benefits of medical technologies is essential in evaluating technological change and determining the productivity of medical care. Using data on Medicare beneficiaries with a heart attack in the late 1980s and 17 years of follow up data, I evaluate the long-term costs and benefits of revascularization after a heart attack. I account for non-random selection into treatment with instrumental variables; following McClellan, McNeil, and Newhouse, the instrument is the differential distance to a hospital capable of providing revascularization. The results show that revascularization is associated with over 1 year of additional life expectancy, at a cost of about $40,000. Revascularization, or other treatments correlated with it, appears to be highly cost-effective.
    JEL: I11
    Date: 2007–10
  4. By: Edward P. Lazear; Paul Oyer
    Abstract: In this review of the personnel economics literature, we introduce key topics of personnel economics, focus on some relatively new findings that have emerged since prior reviews of some or all of the personnel economics literature, and suggest open questions in personnel economics where future research can make valuable contributions to the literature. We explore five aspects of the employment relationship - incentives, matching firms with workers, compensation, skill development, and the organization of work - reviewing the main theories, empirical tests of those theories, and the open questions in each area.
    JEL: J3 J41 M5
    Date: 2007–10
  5. By: Amnon Levy (University of Wollongong)
    Abstract: Sensitivity of sincere social communication to economic status disparity is incorporated into the construction of sincere social-capital index. The consideration of this index leads to the depiction of the happiness-wealth relationship as an inverted U-shaped curve that peaks at a larger than the average personal wealth. The deviation of the happiness-maximizing wealth from the community average is positively related to the ratio of the rates of return on wealth and sincere social capital and is compounded by the actual and desired community sizes and by the minimum sincere social capital associated with becoming the community’s ultimate wealth holder.
    Keywords: Economic status disparity; Community size; Social capital; Interpersonal communication; Happiness.
    JEL: D01 D3
    Date: 2007
  6. By: David E. Bloom (Harvard School of Public Health); David Canning (Harvard School of Public Health); Guenther Fink (Harvard School of Public Health); Jocelyn E. Finlay (Harvard School of Public Health)
    Abstract: We estimate the effect of fertility on female labor force participation in a cross-country panel data set using abortion legislation as an instrument for fertility. We find a large negative effect of the fertility rate on female labor force participation. The direct effect is concentrated among those aged 20–39, but we find that cohort participation is persistent over time giving an effect among older women. We present a simulation model of the effect of fertility reduction on income per capita, taking into account these changes in female labor force participation as well as population numbers and age structure.
    Keywords: fertility, labor supply, demographic dividend
    Date: 2007–10

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