nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2008‒11‒04
four papers chosen by
Maximo Rossi
University of the Republic

  1. Self-selection and Subjective Well-being : Copula Models with an Application to Public and Private Sector Work By Simon Luechinger; Alois Stutzer; Rainer Winkelmann
  2. Unemployment as a Social Norm in Germany By Andrew E. Clark; Andreas Knabe; Steffen Rätzel
  3. Optimum income taxation and layoff taxes By Pierre Cahuc; André Zylberberg

  1. By: Simon Luechinger; Alois Stutzer; Rainer Winkelmann
    Abstract: We discuss a new approach to specifying and estimating ordered probit models with endogenous switching, or with binary endogenous regressor, based on copula functions. These models provide a framework of analysis for self-selection in economic well-being equations, where assigment of regressors may be choice based, resulting from well-being maximization, rather than random. In an application to public and private sector job satisfaction, and using data on male workers from the German Socio-Economic Panel, we find that a model based on Frank's copula is preferred over two alternative models with independence and normal copula, respectively. The results suggest that public sector workers are negatively selected.
    Keywords: Ordered probit, switching regression, Frank copula, job satisfaction, German Socio-Economic Panel
    JEL: I31 C23
    Date: 2008
  2. By: Andrew E. Clark; Andreas Knabe; Steffen Rätzel
    Abstract: This paper investigates the relationship between the subjective well-being of both the employed and unemployed and regional unemployment rates. While employed men suffer from regional unemployment, unemployed men are significantly less negatively affected. This is consistent with a social-norm effect of unemployment in Germany. We find no evidence of such an offsetting effect for women.
    Keywords: Social norms, unemployment, life satisfaction
    JEL: I31 Z13 J64
    Date: 2008
  3. By: Pierre Cahuc (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); André Zylberberg (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper analyzes optimum income taxation in a model with endogenous job destruction that gives rise to unemployment. It is shown that optimal tax schemes comprise both payroll and layoff taxes when the state provides public unemployment insurance and aims at redistributing income. The optimal layoff tax is equal to the social cost of job destruction, which amounts to the sum of unemployment benefits (that the state pays to unemployed workers) and payroll taxes (that the state does not get when workers are unemployed).
    Keywords: Layoff taxes, Optimal taxation, Job destruction.
    Date: 2008
  4. By: Arne Bigsten (Department of Economics, University of Gothenburg, Gothenburg, Sweden.); Sven Tengstam (Department of Economics, University of Gothenburg, Gothenburg, Sweden.)
    Abstract: This paper investigates the relationship between income diversification and income change within Zambian smallholder households, and investigates what the constraints of income diversification are in this group. A panel data set of roughly 7000 smallholder farmer households interviewed in 2001 and 2004 is used. Different combinations of the four main income generating activities – farm income, agricultural wage work, non-agricultural wagework, and own-business income – are analyzed.
    Keywords: food security, policy, Zambia, Africa, smallholder, income
    JEL: Q18
    Date: 2008

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.