nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2008‒09‒29
nine papers chosen by
Maximo Rossi
University of the Republic

  1. Documentation of Sample Sizes and Panel Attrition in the German Socio Economic Panel (SOEP) (1984 until 2007) By Martin Kroh; Martin Spieß
  2. Earnings Mobility in Times of Growth and Decline: Argentina from 1996 to 2003 By Fields, Gary S.; Sanchez Puerta, Maria Laura
  3. The Impact of the Recent Expansion of the EU on the UK Labour Market By Blanchflower, David G.; Lawton, Helen
  4. Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model By Cahuc, Pierre; Le Barbanchon, Thomas
  5. Escaping the Unemployment Trap: The Case of East Germany By Merkl, Christian; Snower, Dennis J.
  6. Estimating Trends in US Income Inequality Using the Current Population Survey: The Importance of Controlling for Censoring By Burkhauser, Richard V.; Feng, Shuaizhang; Jenkins, Stephen P.; Larrimore, Jeff
  7. Measuring International Inequity Aversion By Tol, Richard S. J.
  8. Field Experiments in Economics: The Past, The Present, and The Future By Steven D. Levitt; John A. List
  9. Can the West Save Africa? By William Easterly

  1. By: Martin Kroh; Martin Spieß
    Date: 2008
  2. By: Fields, Gary S.; Sanchez Puerta, Maria Laura
    Abstract: In recent years, the economy of Argentina has experienced both rapid economic growth and severe economic decline. In this paper, we use a series of one-year long panels to study who gained the most in pesos when the economy grew and who lost the most in pesos when the economy contracted. To answer these questions, we test two hypotheses both unconditionally and conditionally. The ?divergence of earnings? hypothesis holds that in any given year, the highest earning individuals are those who experienced the largest earnings gains or the smallest earnings losses in pesos. The ?symmetry of gains and losses? hypothesis holds that those groups that gained the most in pesos when the economy grew are those that lost the most in pesos when the economy contracted. Both hypotheses are decisively rejected in the data. Rather, we find that it is the lowest income individuals and groups who gain the most in pesos, whether in good times or in bad. Thus, the panel data analysis performed in this paper presents a picture of economic growth that is much more pro-poor than one gets from cross sectional inequality comparisons.
    Keywords: finance, growth, inequality, Argentina, survey, gains, losses
    Date: 2008
  3. By: Blanchflower, David G. (Dartmouth College); Lawton, Helen (Bank of England)
    Abstract: We examine the impact on the UK of the influx of workers from Eastern Europe. We look at the characteristics of the workers who have come to the UK since 2004. We also use data from a number of Eurobarometers 2004-2007 as well as the 2005 Work Orientation module International Social Survey Programme to look at the attitudes of residents of these countries. East Europeans report that they are unhappy with their lives and the country they live in, are dissatisfied with their jobs and would find difficulties in finding a new job or keeping their existing job. Relatively high proportions express a desire to move abroad. Expectations for the future for both their economy and their personal situations remain low but have improved since 2004. There has been some deterioration in the availability of jobs in the UK economy as the economy moves into recession. The UK is an attractive place to live and work for these workers. We argue that rather than dissipate, flows to the UK could remain strong well into the future.
    Keywords: EU expansion, migration, attitudes
    JEL: J61
    Date: 2008–09
  4. By: Cahuc, Pierre (Ecole Polytechnique, Paris); Le Barbanchon, Thomas (CREST-INSEE)
    Abstract: We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the non-counseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.
    Keywords: evaluation, equilibrium effect, labor market policy
    JEL: J64 J68
    Date: 2008–09
  5. By: Merkl, Christian (Kiel Institute for the World Economy); Snower, Dennis J. (Kiel Institute for the World Economy)
    Abstract: This paper addresses the question of why high unemployment rates tend to persist even after their proximate causes have been reversed (e.g., after wages relative to productivity have fallen). We suggest that the longer people are unemployed, the greater is their cumulative likelihood of falling into a low-productivity "trap," through the attrition of skills and work habits. We develop a model along these lines, which allows us to bridge the gap between high macroeconomic employment persistence versus relatively high microeconomic labor market flow numbers. We calibrate the model for East Germany and examine the effectiveness of three employment policies in this context: (i) a weakening of workers’ position in wage negotiations due to a drop in the replacement rate or firing costs, leading to a fall in wages, (ii) hiring subsidies, and (iii) training subsidies. We show that the employment effects of these policies depend crucially on whether low-productivity traps are present.
    Keywords: labor market, labor market trap, East Germany
    JEL: E24 J30 J31 J64
    Date: 2008–09
  6. By: Burkhauser, Richard V. (Cornell University); Feng, Shuaizhang (Shanghai University of Finance and Economics); Jenkins, Stephen P. (University of Essex); Larrimore, Jeff (Cornell University)
    Abstract: Using internal and public use March Current Population Survey data, we analyze trends in US income inequality (1975–2004). Using a multiple imputation approach where values for censored observations are imputed using draws from a Generalized Beta distribution of the Second Kind, we find that the upward trend in income inequality significantly slowed after 1993. Our results closely match the income share trends reported by Piketty and Saez (2003) except for within the top 1 percent of the distribution. Thus, we argue that if inequality has increased substantially since 1993, such increases are confined to this very high income group.
    Keywords: US income inequality, time trend, CPS, censoring, topcoding, inequality
    JEL: D31 C81
    Date: 2008–09
  7. By: Tol, Richard S. J. (Economic and Social Research Institute (ESRI))
    Abstract: I measure the rate of aversion to inequality in consumption as expressed in the development aid given by rich countries to poor ones between 1965 and 2005. Over time, OECD countries have become less concerned about international inequity. Even for a fairly leaky bucket, the consumption rate of inequity aversion is less than the rate of risk aversion, which implies that the pure rate of inequity aversion is negative. That is, rich countries would prefer to see greater inequality between rich and poor countries.
    Keywords: Inequity aversion, risk aversion, income distribution, development aid
    JEL: D31 D63
    Date: 2008–09
  8. By: Steven D. Levitt; John A. List
    Abstract: This study presents an overview of modern field experiments and their usage in economics. Our discussion focuses on three distinct periods of field experimentation that have influenced the economics literature. The first might well be thought of as the dawn of "field" experimentation: the work of Neyman and Fisher, who laid the experimental foundation in the 1920s and 1930s by conceptualizing randomization as an instrument to achieve identification via experimentation with agricultural plots. The second, the large-scale social experiments conducted by government agencies in the mid-twentieth century, moved the exploration from plots of land to groups of individuals. More recently, the nature and range of field experiments has expanded, with a diverse set of controlled experiments being completed outside of the typical laboratory environment. With this growth, the number and types of questions that can be explored using field experiments has grown tremendously. After discussing these three distinct phases, we speculate on the future of field experimental methods, a future that we envision including a strong collaborative effort with outside parties, most importantly private entities.
    JEL: C9 C93 D0 H0
    Date: 2008–09
  9. By: William Easterly
    Abstract: In the new millennium, the Western aid effort towards Africa has surged due to writings by well-known economists, a celebrity mass advocacy campaign, and decisions by Western leaders to make Africa a major foreign policy priority. This survey contrasts the predominant "transformational" approach (West saves Africa) to occasional swings to a "marginal" approach (West takes one small step at a time to help individual Africans). Evaluation of "one step at a time" initiatives is generally easier than that of transformational ones either through controlled experiments (although these have been much oversold) or simple case studies where it is easier to attribute outcomes to actions. We see two themes emerge from the literature survey: (1) escalation. As each successive Western transformational effort has yielded disappointing results, the response has been to try an even more ambitious effort. (2) the cycle of ideas. Rather than a progressive testing and discarding of failed ideas, we see a cycle in aid ideas in many areas in Africa, with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience. Both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the "transformational" approach. In contrast, the "marginal" approach has had some successes in improving the well-being of individual Africans, such as the dramatic fall in mortality.
    JEL: O1 O11 O12 O13 O15 O23 O24 O4 O55
    Date: 2008–09

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