nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2008‒06‒21
six papers chosen by
Maximo Rossi
University of the Republic

  1. Flexicurity – labour market performance in Denmark By Torben M. Andersen; Michael Svarer
  2. Easterlin-types and Frustrated Achievers: the Heterogeneous Effects of Income Changes on Life Satisfaction By Becchetti, L.; Corrado, L.; Rossetti , F.
  3. Religion and Income By L. Bettendorf; E. Dijkgraaf
  4. "Household specialisation and gender equality in transition. Paid and unpaid work of women and men in Soviet and post-Soviet Taganrog" By Katz, Katarina; Sand, Lena
  5. Do you do what you say or do you do what you say others do? By Carlsson, Fredrik; Daruvala, Dinky; Jaldell, Henrik
  6. Poverty and Inequality among Ethnic Groups in Chile By Claudio Agostini; Phillip Brown; Andrei Roman

  1. By: Torben M. Andersen; Michael Svarer (School of Economics and Management, University of Aarhus, Denmark)
    Abstract: Unemployment is at a low and stable level in Denmark. This achievement is often attributed to the so-called flexicurity model combining flexible hiring and firing rules for employers with income security for employees. Whatever virtues this model may have, a low and stable unemployment rate is not automatically among them since the basic flexicurity properties were also in place during the 1970s and 1980s where high and persistent unemployment was prevalent. Labour market performance has changed due to a series of reforms during the 1990s, the main thrust of which were a shift from a passive focus of labour market policies to a more active focus on job search and employment. The policy tightened eligibility for unemployment benefits and their duration as well as introduced workfare elements into unemployment insurance and social policies in general. Thereby policy makers attempted to strengthen the incentive structure without taking resort to general benefit reductions. We argue that the workfare policies have played an important role running primarily via motivation/threat and wage effects. However, active labour market policies are resource demanding, and although the workfare reforms have improved cost effectiveness, there is still an issue as to whether the resources going into active labour market policies are used efficiently.
    Keywords: Flexicurity, workfare
    JEL: J0
    Date: 2007–08–21
  2. By: Becchetti, L.; Corrado, L.; Rossetti , F.
    Abstract: Most philosophers and social scientists argue that the relationship between life satisfaction and its determinants is intermediated by cultural drivers (education, race, gender, religion, regional cultural background, etc.) and that (as suggested by descriptive evidence on "frustrated achievers") the relationship between changes in income and changes in life satisfaction is not necessarily positive. We investigate such relationship across the waves of the British Household Panel Study. By using a latent class approach which accounts for slope heterogeneity, omitted variable bias and departures from normality assumptions we have the unique opportunity of identifying determinants of the income-life satisfaction relationship and testing econometrically for the existence of “frustrated achievement". Our findings reveal the presence of a vast majority of "Easterlin-type" individuals with positive but very weak relationship between changes in income and changes in life satisfaction and a small minority (2 percent) of frustrated achievers with negative relationship. Such share is much below descriptive evidence on frustrated achievement (17.5 percent). The probability of belonging to such group is shown to be positively related with divorced status and negatively related to education and relative (personal to reference group) income. Our interpretation of these results is that the standard concave money-life satisfaction relationship provides a partial and incomplete picture of the complex nexus between life satisfaction and income as it does not take into account two important phenomena: the role of peers and of reference group income and that of the dynamics between realisations and expectations. The paradox of a negative relationship between changes in income and changes in life satisfaction may be explained by the fact that, in spite of a positive income change, the change in individual expectations and of peers income may be even higher, thereby generating the negative change in satisfaction.
    Keywords: income-life satisfaction relationship, frustrated achievement, mixture models.
    JEL: C14 C23 I30
    Date: 2008–04
  3. By: L. Bettendorf (Erasmus University Rotterdam); E. Dijkgraaf (SEOR-ECRi, Erasmus University Rotterdam)
    Abstract: This paper tests whether the behaviour of households in different countries is homogeneous with respect to the influence of religion on income. The violation of the homogeneity assumption would have two consequences. First, results based on country studies might not be applicable to other countries. Second, one should be careful when pooling cross-country data in this type of research. Data at household level of the European and World Values Survey are pooled for 25 Western countries. We estimate simultaneously an income and a religion equation to correct for the endogeneity of religiosity. We find that estimation outcomes are different between low and high-income countries. Whereas church membership is found to have a positive effect on income for high-income countries, this effect is negative for low-income countries. This result is robust to denominational distribution, participation effects and alternative measures of religiosity.
    Keywords: Income; Religious Membership; Religious Participation
    JEL: Z12 D31
    Date: 2008–01–29
  4. By: Katz, Katarina (Department of Economics, School of Business, Economics and Law, Göteborg University); Sand, Lena (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Using unique survey data from the Russian industrial city Taganrog in 1989 and 1998, we analyse changes in the gender division of labour among gainfully employed women and men, pre- and post-transition. In Soviet Taganrog, dual earner families predominated, but nevertheless men were usually primary earners, while women did the bulk of housework. After transition, contrary to early predictions, aggregate female and male employment rates have declined to a similar extent but the time-use data indicate increased gender specialisation among the employed .Thus, the dual earner norm mainly remains but the pre-existing gender difference within it has increased considerably, particularly among couples with pre-school children.<p>
    Keywords: Non-market work; gender division of labour; Russia
    JEL: D13 J16 J22 P39
    Date: 2008–06–09
  5. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Daruvala, Dinky (Department of Economics, Karlstad University); Jaldell, Henrik (Department of Economics, Karlstad University)
    Abstract: We design a donations vs. own money choice experiment comparing three different treatments. In two of the treatments the pay-offs are hypothetical. In the first of these, a short cheap talk script was used, and subjects were required to state their own preferences in this scenario. In the second, subjects were asked to state how they believed an average student would respond to the choices. In the third treatment the pay-offs were real, allowing us to use the results to compare the validity of the two hypothetical treatments. We find a strong hypothetical bias in both hypothetical treatments where the marginal willingness to pay for donations are higher when subjects state their own preferences but lower when subjects state what they believe are other students preferences. The explanation is probably a self-image effect in both cases. We find that it is mainly women who are prone to hypothetical bias in this study.<p>
    Keywords: Stated preferences; cheap talk; hypothetical bias; third person approach; choice experiment
    JEL: C91 D64 Q51
    Date: 2008–06–12
  6. By: Claudio Agostini (ILADES-Georgetown University, Universidad Alberto Hurtado); Phillip Brown (Colby College, Waterville, Maine, United States and International Food Policy Research Institute, Washington, D.C., United States.); Andrei Roman (Colby College, Waterville, Maine, United States)
    Abstract: Despite two decades of rapid growth, indigenous Chileans are disproportionately poor. However, income data obtained from non-representative surveys yield imprecise estimates of poverty and inequality. This paper therefore estimates poverty and inequality using poverty mapping methods. In contrast to previous studies, however, we use ethnicity rather than geography as a basis for disaggregation. We find that indigenous Chileans are significantly poorer than non-indigenous people, but that inequality rates are also lower for indigenous groups. These reliable estimates of poverty and inequality may augment the antipoverty targeting criteria used in Chile, helping policy-makers to better identify poor households.
    Keywords: Latin America; Chile; Poverty; Inequality; Ethnicity; Poverty Mapping
    JEL: I32 J15 D31 C53 O54
    Date: 2008–06

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