nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2008‒07‒05
five papers chosen by
Maximo Rossi
University of the Republic

  1. Relative distribution methods in Stata By Ben Jann
  2. Development of Wage Inequality for Natives and Immigrants in Germany : Evidence from Quantile Regression and Decomposition By Heiko Peters
  3. Are Shrinking and Leisure Substitutable? An Empirical Test of Efficiency Wages Based on Urban Economic Theory By Ross, Stephen L.; Zenou, Yves
  4. Wages, Unemployment and Inequality with Heterogeneous Firms and Workers By Elhanan Helpman; Oleg Itskhoki; Stephen Redding
  5. Does immigration affect the Phillips curve? Some evidence for Spain By Samuel Bentolila; Juan J. Dolado; Juan F. Jimeno

  1. By: Ben Jann (ETH Zurich)
    Abstract: The concept of the relative density seems like a fruitful nonparametric approach to studying distributional differences between groups (Handcock and Morris 1999), yet it appears that the technique has gone more or less unnoticed in applied social science research. A scarcity of canned software might be one of the reasons the method is underutilized. Therefore, I present a new Stata command called reldist to plot the relative density, decompose distributional differences into location and shape effects, and compute relative distribution summary measures. The command is illustrated by an application comparing earnings by sex.
    Date: 2008–07–03
  2. By: Heiko Peters
    Abstract: To study the development of wage inequality is important for the economic performance as well as for the development of employment. First, I estimate the remuneration to personal characteristics for Germans and immigrants across the wage distribution using quantile regression. My database is the German socio-economic panel for the period 1984-2006. I find a higher inequality between skill groups for Germans relative to immigrants. The returns to skill for the highest educational attainment are higher for Germans across the wage distribution compared to immigrants. But within-group inequality for the group with the highest educational attainment is higher for immigrants. Both groups have concave experience-earnings profiles. One more year of work experience increases the wage more for Germans. Secondly I use the decomposition method of Melly (2006). Decomposition methods are suitable to get further insights into the question as to whether or not the observable differences in the distribution are caused by the difference in the composition or differences in the estimated coefficients. Immigrants have a negative wage gap relative to Germans. The wage gap rises across the distribution and is due to a rising discrimination of immigrants across the wage distribution for the years 1992 and 2006. For the year 1984 the characteristic effect is responsible for the wage gap. Inequality rises for both groups between the year 1992 and 2006. The increase is much stronger for Immigrants. The coefficient effect is mainly responsible for the wage increase across time for both groups.
    Keywords: Wage inequality, immigrants, Germany, decomposition, quantile regression
    JEL: C2 D30 J31
    Date: 2008
  3. By: Ross, Stephen L. (University of Connecticut); Zenou, Yves (Research Institute of Industrial Economics (IFN))
    Abstract: Recent theoretical work has examined the spatial distribution of unemployment using the efficiency wage model as the mechanism by which unemployment arises in the urban economy. This paper extends the standard efficiency wage model in order to allow for behavioral substitution between leisure time at home and effort at work. In equilibrium, residing at a location with a long commute affects the time available for leisure at home and therefore affects the trade-off between effort at work and risk of unemployment. This model implies an empirical relationship between expected commutes and labor market outcomes, which is tested using the Public Use Microdata sample of the 2000 U.S. Decennial Census. The empirical results suggest that efficiency wages operate primarily for blue collar workers, i.e. workers who tend to be in occupations that face higher levels of supervision. For this subset of workers, longer commutes imply higher levels of unemployment and higher wages, which are both consistent with shirking and leisure being substitutable.
    Keywords: Efficiency Wage; Leisure; Urban Unemployment
    JEL: J41 R14
    Date: 2008–06–19
  4. By: Elhanan Helpman; Oleg Itskhoki; Stephen Redding
    Abstract: In this paper we develop a multi-sector general equilibrium model of firm heterogeneity, worker heterogeneity and labor market frictions. We characterize the distributions of employment, unemployment, wages and income within and between sectors as a function of structural parameters. We find that greater firm heterogeneity increases unemployment, wage inequality and income inequality, whereas greater worker heterogeneity has ambiguous effects. We also find that labor market frictions have non-monotonic effects on aggregate unemployment and inequality through within- and between-sector components. Finally, high-ability workers have the lowest unemployment rates but the greatest wage inequality, and income inequality is lowest for intermediate ability. Although these results are interesting in their own right, the main contribution of the paper is in providing a framework for analyzing these types of issues.
    JEL: D21 D24 D31 D43 J31 J64
    Date: 2008–06
  5. By: Samuel Bentolila (CEMFI); Juan J. Dolado (Universidad Carlos III de Madrid); Juan F. Jimeno (Banco de España)
    Abstract: The Phillips curve has flattened in Spain over 1995-2006: unemployment has fallen by 15 percentage points, with roughly constant inflation. This change has been more pronounced than elsewhere. We argue that this stems from the immigration boom in Spain over this period. We show that the New Keynesian Phillips curve is shifted by immigration if natives' and immigrants' labor supply or bargaining power differ. Estimation of the curve for Spain indicates that the fall in unemployment since 1995 would have led to an annual increase in inflation of 2.5 percentage points if it had not been largely offset by immigration.
    Keywords: Phillips curve, immigration
    JEL: E31 J64
    Date: 2008–06

This nep-ltv issue is ©2008 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.