nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2007‒12‒08
ten papers chosen by
Maximo Rossi
University of the Republic

  1. The Effect of Obesity on Wages and Employment: The Difference Between Having a High BMI and Being Fat By Johansson, Edvard; Böckerman, Petri; Kiiskinen, Urpo; Heliövaara, Markku
  2. Genetic Influences on Economic Preferences By David, Cesarini; Dawes, Christopher T.; Johannesson, Magnus; Lichtenstein, Paul; Wallace, Björn
  3. "Earnings Functions and the Measurement of the Determinants of Wage Dispersion Extending Oaxaca’s Approach" By Joseph Deutsch; Jacques Silber
  4. Tenure and Output By Kathryn Shaw; Edward P. Lazear
  5. Wage Structure, Raises and Mobility: International Comparisons of the Structure of Wages Within and Across Firms By Edward P. Lazear; Kathryn L. Shaw
  6. Measuring ancient inequality By Williamson, Jeffrey G.; Lindert, Peter H.; Milanovic,Branko
  7. Using the P90/P10 Index to Measure US Inequality Trends with Current Population Survey Data: A View from Inside the Census Bureau Vaults* By Stephen P. Jenkins; Shuaizhang Feng; Richard V. Burkhauser
  8. Inequality and the GB2 income distribution By Stephen P. Jenkins
  9. Inequality and Happiness By Claudia Biancotti; Giovanni D'Alessio
  10. An alternative proposal for measuring occupational segregation By Coral del Río; Olga Alonso-Villar

  1. By: Johansson, Edvard (Swedish School of Economics and Business Administration); Böckerman, Petri (Labour Institute for Economic Research); Kiiskinen, Urpo (National Public Health Institute); Heliövaara, Markku (National Public Health Institute)
    Abstract: In this paper, we re-examine the relationship between overweight and labour market success, using indicators of individual body composition along with BMI (Body Mass Index). We use the dataset from Finland in which weight, height, fat mass and waist circumference are not self-reported, but obtained as part of the overall health examination. We find that waist circumference, but not weight or fat mass, has a negative effect on wages for women, whereas all measures of obesity have negative effects on women’s employment probabilities. For men, the only obesity measure that is significant for men’s employment probabilities is fat mass. One interpretation of our findings is that the negative wage effects of overweight on wages run through the discrimination channel, but that the negative effects of overweight on employment have more to do with ill health. All in all, measures of body composition provide a more refined picture about the effects of obesity on wages and employment.
    Keywords: wages; employment; bmi; overweight; obesity; fatness; adiposity
    Date: 2007–06–13
  2. By: David, Cesarini (Department of Economics, Massachusetts Institute of Technology); Dawes, Christopher T. (Political Science Department, University of California, San Diego); Johannesson, Magnus (Dept. of Economics, Stockholm School of Economics); Lichtenstein, Paul (Department of Medical Epidemiology and Biostatistics, Karolinska Institutet); Wallace, Björn (Dept. of Economics, Stockholm School of Economics)
    Abstract: We use the classical twin design to provide estimates of genetic and environmental influences on experimentally elicited preferences for risk and altruism. Our estimates provide strong prima facie evidence that economic preferences are heritable. Approximately 30 percent of the variation in behavior is explained by genetic effects in the best-fitting models. The results suggest a modest role for common environment as a source of phenotypic variation. Based on the findings, we encourage economists to move beyond a black-box treatment of preference formation and suggest that the further study of the codetermination of preferences by genes and environment will lead to a more comprehensive economic science.
    Keywords: Genetics; Altruism; Risk Aversion; Preferences; Experiments
    JEL: C90 D01 D64
    Date: 2007–11–22
  3. By: Joseph Deutsch; Jacques Silber
    Abstract: This paper extends the famous Blinder (1973) and Oaxaca (1973) discrimination in several directions. First, the wage difference breakdown is not limited to two groups. Second, a decomposition technique is proposed that allows analysis of the determinants of the overall wage dispersion. The authors’ approach combines two techniques. The first of these is popular in the field of income inequality measurement and concerns the breakdown of inequality by population subgroup. The second technique, very common in the literature of labor economics, uses Mincerian earnings functions to derive a decomposition of wage differences into components measuring group differences in the average values of the explanatory variables, in the coefficients of these variables in the earnings functions, and in the unobservable characteristics. This methodological novelty allows one to determine the exact impact of each of these three elements on the overall wage dispersion, on the dispersion within and between-groups, and on the degree of overlap between the wage distributions of the various groups. However, this paper goes beyond a static analysis insofar as it succeeds in breaking down the change over time in the overall wage dispersion and its components (both between and within group dispersion and group overlapping) into elements related to changes in the value of the explanatory variables and the coefficients of those variables in the earnings functions, in the unobservable characteristics, and in the relative size of the various groups.
    Date: 2007–11
  4. By: Kathryn Shaw; Edward P. Lazear
    Abstract: A key tenet of the theory of human capital is that investment in skills results in higher productivity. The previous literature has estimated the degree of investment in human capital for individuals by looking at individual wage growth as a proxy for productivity growth. In this paper, we have both wage and personal productivity data, and thus are able to measure of the increase in workers' output with tenure. The data is from an autoglass company. Most of production occurs at the individual level so measures of output are clear. We find a very steep learning curve in the year on the job: output is 53 percent higher after one year than it is initially when hired. These output gains with tenure are not reflected in equal percentage pay gains: pay profiles are much flatter than output profiles in the first year and a half on the job. For these data, using wage profiles significantly underestimates the amount of investment compared to the gains evident in output-tenure profiles. The pattern of productivity rising more rapidly than pay reverses after two years of tenure. Worker selection is also important. Workers who stay longer have higher output levels and faster early learning.
    JEL: J01 J24 J31 J33
    Date: 2007–11
  5. By: Edward P. Lazear; Kathryn L. Shaw
    Abstract: The returns to talent or performance have grown over time in developed countries. Is talent concentrated in a few firms or are firms virtual microcosms of the economy, each having close to identical distributions of talent? The data show that talent is not concentrated in a few companies, but is widely dispersed across companies. Wage dispersion within firms is nearly as high as the wage dispersion overall. The standard deviation of wages within the firm is about 80% of the standard deviation across all workers in the economy. Firms are more similar than they are dissimilar, but they are not identical: the firm mean wage displays considerable dispersion across the population of firms. There is evidence that talent is becoming more concentrated over time within some firms relative to others. In four countries that estimated wage regressions with firm fixed effects, the firm fixed effects are contributing more to the R-squared of the wage regression over time. Law firms have more lawyers than janitors. Janitorial firms have more janitors than lawyers and the differences between firms have become more pronounced. Still, the variance of wages within the average firms remains high.
    JEL: J01 J2 J24 J3 J31
    Date: 2007–11
  6. By: Williamson, Jeffrey G.; Lindert, Peter H.; Milanovic,Branko
    Abstract: Is inequality largely the result of the Industrial Revolution? Or, were pre-industrial incomes and life expectancies as unequal as they are today? For want of sufficient data, these questions have not yet been answered. This paper infers inequality for 14 ancient, pre-industrial societies using what are known as social tables, stretching from the Roman Empire 14 AD, to Byzantium in 1000, to England in 1688, to Nueva España around 1790, to China in 1880 and to British India in 1947. It applies two new concepts in making those assessments - what the authors call the inequality possibility frontier and the inequality extraction ratio. Rather than simply offering measures of actual inequality, the authors compare the latter with the maximum feasible inequality (or surplus) that could have been extracted by the elite. The results, especially when compared with modern poor countries, give new insights in to the connection between inequality and economic development in the very long run.
    Keywords: Inequality,Rural Poverty Red uction,Poverty Impact Evaluation,,Services & Transfers to Poor
    Date: 2007–11–01
  7. By: Stephen P. Jenkins (ISER, University of Essex); Shuaizhang Feng (Shanghai University of Finance and Economics); Richard V. Burkhauser (Cornell University)
    Abstract: The March Current Population Survey (CPS) is the primary data source for estimation of levels and trends in labor earnings and income inequality in the USA. Time-inconsistency problems related to top coding in theses data have led many researchers to use the ratio of the 90th and 10th percentiles of these distributions (P90/P10) rather than a more traditional summary measure of inequality. With access to public use and restricted-access internal CPS data, and bounding methods, we show that using P90/P10 does not completely obviate time-inconsistency problems, especially for household income inequality trends. Using internal data, we create consistent cell mean values for all top-coded public use values that, when used with public use data, closely track inequality trends in labor earnings and household income using internal data. But estimates of longer-term inequality trends with these corrected data based on P90/P10 differ from those based on the Gini coefficient. The choice of inequality measure matters.
    Keywords: inequality, income, earnings, Current Population Survey, decile ratio, Gini coefficient
    JEL: D3 J3 C8
    Date: 2007
  8. By: Stephen P. Jenkins (ISER, University of Essex)
    Abstract: The generalized entropy class of inequality indices is derived for Generalized Beta of the Second Kind (GB2) income distributions, thereby providing a full range of topsensitive and bottom-sensitive measures. An examination of British income inequality in 1994/95 and 2004/05 illustrates the analysis.
    Keywords: inequality, generalized entropy indices, generalized Beta of the second kind distribution, GB2 distribution, Singh-Maddala distribution, Dagum distribution
    JEL: C16 C46 D31
    Date: 2007
  9. By: Claudia Biancotti (Bank of Italy, Economics and Financial Statistics Department); Giovanni D'Alessio (Bank of Italy, Economics and Financial Statistics Department)
    Abstract: This paper examines the relationship between inequality and happiness through the lens of heterogeneous values, beliefs and inclinations. Drawing upon opinion data from the European Social Survey for twenty-three countries, we find that individual views on a wide range of themes can be effectively summarized by two orthogonal dimensions: moderation and inclusiveness. The former is defined as a tendency to take mild stands on issues rather than extreme ones; the latter is defined as the degree of support for a social model that grants equal rights and opportunities to everyone who willingly subscribes to a shared set of rules, regardless of background and circumstances. These traits matter when it comes to how inequality affects subjective well-being; specifically, those who are either more moderate or more inclusive than their average compatriot tend to dislike inequality. With reference to moderation, inequality aversion can be read in terms of a desire for stability: people who are reluctant to take strong stands probably dislike conflict, tension and unrest, which normally accompany inequalities. With reference to inclusiveness, the main element at play is likely to be distress accruing to a perception of unfairness.
    Keywords: Happiness, inequality, heterogeneity
    JEL: D31 D63
    Date: 2007
  10. By: Coral del Río (Universidade de Vigo); Olga Alonso-Villar (Universidade de Vigo)
    Abstract: This paper offers a general framework in which to study the occupational segregation of a target group when involving a categorization of individuals in two or more groups. For this purpose, it proposes to compare the distribution of the target group against the distribution of total employment across occupations. In doing so, this paper first presents an axiomatic set-up within which segregation measures can be evaluated and defines an alternative segregation curve. Next, a class of additive segregation indexes, related to the generalized entropy family and consistent with the above curves, is characterized. Finally, decompositions of these measures by subgroups of occupations and by subgroups of individuals are proposed.
    Keywords: Occupational segregation; Segregation curves; Inequality measures; Gender
    JEL: J71 J16 D63
    Date: 2007

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.