New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2007‒12‒15
seven papers chosen by

  1. Spend It Like Beckham?Inequality and Redistribution in the UK, 1983-2004 By Andreas Georgiadis; Alan Manning
  2. Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis By Andrew E. Clark; Yannis Georgellis; Richard E. Lucas
  3. The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer? By Christopher A. Pissarides
  4. Poverty reduction without economic growth ? explaining Brazil ' s poverty dynamics, 1985-2004 By Ravallion, Martin; Leite, Phillippe G.; Ferreira, Francisco H. G.
  5. Is Well-being U-Shaped over the Life Cycle? By Blanchflower, David G.; Oswald, Andrew J.
  6. Death, Happiness, and the Calculation of Compensatory Damages By Oswald, Andrew J.; Powdthavee, Nattavudh
  7. Hypertension and Happiness across Nations By Blanchflower, David G.; Oswald, Andrew J.

  1. By: Andreas Georgiadis; Alan Manning
    Abstract: A main activity of the state is to redistribute resources. Models of the political processgenerally predict that a rise in inequality will lead to more redistribution. This paper showsthat, for the UK in the period 1983-2004, a plausibly exogenous rise in income inequality hasnot been associated with increased redistribution. We then explore this further usingattitudinal data. We show that the demand for redistribution, having shown considerablevariation over time, is at an all-time low. We argue that the decline in the demand forredistribution can mostly be accounted for by an increasing belief in the importance ofincentives though changes in preferences over the distribution of income have been importantin some sub-periods.
    Keywords: Taxation, Inequality, Redistribution
    JEL: H20 D72
    Date: 2007–08
  2. By: Andrew E. Clark; Yannis Georgellis; Richard E. Lucas
    Abstract: We look for evidence of habituation in twenty waves of German panel data: do individuals, after lifeand labour market events, tend to return to some baseline level of well-being? Although the strongestlife satisfaction effect is often at the time of the event, we find significant lag and lead effects. Wecannot reject the hypothesis of complete adaptation to marriage, divorce, widowhood, birth of child,and layoff. However, there is little evidence of adaptation to unemployment. Men are somewhat moreaffected by labour market events (unemployment and layoffs) than are women, but in general thepatterns of anticipation and adaptation are remarkably similar by sex.
    Keywords: life satisfaction, anticipation, adaptation, baseline satisfaction, labour market and lifeevents
    JEL: I31 J12 J13 J63 J64
    Date: 2007–11
  3. By: Christopher A. Pissarides
    Abstract: I study the cyclical behavior of an equilibrium search model with endogenous job creationand destruction, with focus on the model's failure to match the observed cyclical volatility ofunemployment. Job creation in the model is influenced by wages in new matches. Isummarize microeconometric evidence on wages in new matches and show that the keymodel elasticities are consistent with the evidence. Therefore explanations of theunemployment volatility puzzle have to preserve the cyclical volatility of wages. I discusssome extensions of the model that can increase cyclical unemployment volatility throughmechanisms other than wage stickiness.
    Keywords: wages, unemployment, wage stickiness, job creation
    JEL: J63 J64 E3
    Date: 2007–11
  4. By: Ravallion, Martin; Leite, Phillippe G.; Ferreira, Francisco H. G.
    Abstract: Brazil ' s slow pace of poverty reduction over the last two decades reflects both low growth and a low growth elasticity of poverty reduction. Using GDP data disaggregated by state and sector for a twenty-year period, this paper finds considerable variation in the poverty-reducing effectiveness of growth-across sectors, across space, and over time. Growth in the services sector was substantially more poverty-reducing than was growth in either agriculture or industry. Growth in industry had very different effects on poverty across different states and its impact varied with initial conditions related to human development and worker empowerment. The determinants of poverty reduction changed around 1994: positive growth rates and a greater (absolute) elasticity with respect to agricultural growth contributed to faster poverty reduction. But because there was so little of it, economic growth played a relatively small role in accounting for Brazil ' s poverty reduction between 1985 and 2004. The taming of hyperinflation (in 1994) and substantial expansions in social security and social assistance transfers, beginning in 1988, accounted for a larger share of the overall reduction in poverty.
    Keywords: Rural Poverty Reduction,Achieving Shared Growth,Population Policies,Inequality
    Date: 2007–12–01
  5. By: Blanchflower, David G. (Dartmouth College, USA, University of Stirling, NBER, IZA, CESifo and Member, Monetary Policy Committee Bank of England); Oswald, Andrew J. (Department of Economics, University of Warwick UK)
    Abstract: We present evidence that psychological well-being is U-shaped through life. A difficulty with research on this issue 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 can control for cohort effects. Holding other factors constant, we show that a typical individual’s happiness reaches its minimum -- on both sides of the Atlantic and for both males and females -- in middle age. Second, evidence is provided for the existence of a similar U-shape through the life-course in East European, Latin American and Asian nations. Third, a U-shape in age is found in separate well-being regression equations in 72 developed and developing nations. Fourth, using measures that are closer to psychiatric scores, we document a comparable well-being curve across the life cycle in two other data sets : (i) in GHQ-N6 mental health levels among a sample of 16,000 Europeans, and (ii) in reported depression and anxiety levels among 1 million U.K. citizens. Fifth, we discuss some apparent exceptions, particularly in developing nations, to the U-shape. Sixth, we note that American male birth-cohorts seem to have become progressively less content 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 ; mental-health ; depression ; life-course
    JEL: D1 I3
    Date: 2007
  6. By: Oswald, Andrew J. (Department of Economics, University of Warwick); Powdthavee, Nattavudh (Institute of Education, University of London)
    Abstract: This paper studies the mental distress caused by bereavement. The largest emotional losses are from the death of a spouse; the second-worst in severity are the losses from the death of a child; the third-worst is the death of a parent. The paper explores how happiness regression equations might be used in tort cases to calculate compensatory damages for emotional harm and pain-and-suffering. We examine alternative well-being variables, discuss adaptation, consider the possibility that bereavement affects someone’s marginal utility of income, and suggest a procedure for correcting for the endogeneity of income. Although the paper’s contribution is methodological, and further research is needed, some illustrative compensation amounts are discussed
    Date: 2007
  7. By: Blanchflower, David G. (Dartmouth College, USA, University of Stirling, NBER, IZA, CESifo and Member, Monetary Policy Committee Bank of England); Oswald, Andrew J. (Department of Economics, University of Warwick UK)
    Abstract: In surveys of well-being, countries such as Denmark and the Netherlands emerge as particularly happy while nations like Germany and Italy report lower levels of happiness. But are these kinds of findings credible? This paper provides some evidence that the answer is yes. Using data on 16 countries, it shows that happier nations report systematically lower levels of hypertension. As well as potentially validating the differences in measured happiness across nations, this suggests that blood-pressure readings might be valuable as part of a national well-being index. A new ranking of European nations’ GHQ N6 mental-health scores is also given.
    Keywords: Health ; hypertension ; Gross National Happiness ; GNH index ; GWB index ; ghq ; blood pressure ; national well-being index.
    JEL: I1 I3
    Date: 2007

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