nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2008‒11‒18
eight papers chosen by
Maximo Rossi
University of the Republic

  1. The Returns to Cognitive Abilities and Personality Traits in Germany By Guido Heineck; Silke Anger
  2. The World Distribution of Household Wealth By Davies, James B.; Sandstrom, Susanna; Shorrocks, Anthony; Wolff, Edward N.
  3. Measurement and Explanation of Inequality in Health and Health Care in Low-Income Settings By van Doorslaer, Eddy; O'Donnell, Owen
  4. Bailing out the world's poorest By Ravallion, Martin
  5. A Distribution in Motion: The Case of Argentina By Guillermo Cruces; Leonardo Gasparini
  6. The Conflictive Relationship between Satisfaction and Income By Eduardo Lora; Juan Camilo Chaparro
  7. Comparing Life Satisfaction By Arie Kapteyn; James P. Smith; Arthur van Soest
  8. Peer Effects and the Impact of Tracking: Evidence from a Randomized Evaluation in Kenya By Esther Duflo; Pascaline Dupas; Michael Kremer

  1. By: Guido Heineck; Silke Anger
    Abstract: We provide the first joint evidence on the relationship between individuals' cognitive abilities, their personality and earnings for Germany. Using data from the German Socio-Economic Panel Study, we employ scores from an ultra-short IQ-test and a set of measures of personality traits, namely locus of control, reciprocity and all basic items from the Five Factor Personality Inventory. Our estimates suggest a positive effect of so-called fluid intelligence or speed of cognition on males' wages only. Findings for personality traits are more heterogeneous. There however is a robust wage penalty for an external locus of control for both men and women.
    Keywords: Cognitive abilities, personality traits, Five Factor Model, Locus of control, reciprocity, wages
    JEL: J24 J31 I21
    Date: 2008
  2. By: Davies, James B.; Sandstrom, Susanna; Shorrocks, Anthony; Wolff, Edward N.
    Abstract: There has been much recent research on the world distribution of income, but also growing recognition of the importance of other contributions -Date well-being, including those of household wealth. Wealth is important in providing security and opportunity, particularly in poorer countries that lack full social safety nets and adequate facilities for borrowing and lending. We find, however, that it is precisely in the latter countries where household wealth is the lowest, both in absolute and relative terms. Globally, wealth is more concentrated than income both on an individual and national basis. Roughly 30 per cent of world wealth is found in each of North America, Europe, and the rich Asian-Pacific countries. These areas account for virtually all of the world?s -Datep 1 per cent of wealth holders. On an official exchange rate basis India accounts for about a quarter of the adults in the bot-Datem three global wealth deciles while China provides about a third of those in the fourth -Date eighth deciles. If current growth trends continue, India, China and the transition countries will move up in the global distribution, and the lower deciles will be increasingly dominated by countries in Africa, Latin American and poor parts of the Asian-Pacific region. Thus wealth may continue -Date be lowest in areas where it is needed the most.
    Keywords: wealth, net worth, personal assets, wealth inequality, households, balance sheets, portfolios
    Date: 2008
  3. By: van Doorslaer, Eddy; O'Donnell, Owen
    Abstract: This paper describes approaches -Date the measurement and explanation of income-related inequality and inequity in health care financing, health care utilization and health and considers the applicability and the feasibility of these methods in low-income countries. Results Date a comparative study of 14 Asian countries are used -Date illustrate the main issues. The structure of health finance in low-income countries, in particular the heavy reliance on out-of-pocket payments, means that the equity issues in finance are quite different Date those of concern in high-income countries. Primary concern is not with the distribution of contributions -Date pre-payment mechanisms but with the deterrent effect of payments on utilization and the distribution of uninsured payment risks. Measurement of inequity in utilization of health care in low-income countries is constrained by the lack of reliable measures of health that can be used -Date standardize for need. Nonetheless, sufficient is known of the distribution of need in many circumstances in order -Date make inferences about equity Date inequality in health care use. The empirical analyses demonstrate that, in low-income countries, the better-off tend -Date pay more for health care, both absolutely and in relative terms. But they also consume more health care. Health care is financed is largely according -Date the benefit principle. Assessing the distributional performance of health systems in low-income settings therefore requires examination of finance and utilization simultaneously.
    Keywords: health inequality, equity
    Date: 2008
  4. By: Ravallion, Martin
    Abstract: While the 2008 financial crisis is global in nature, it is likely to have heterogeneous welfare impacts within the developing world, with some countries, and some people, more vulnerable than others. It also threatens to have lasting impacts for some of those affected, notably through the nutrition and schooling of children in poor families. These features point to the need for a differentiated social policy response, aiming to provide rapid income support to those in most need, while preserving the key physical and human assets of poor people and their communities. The paper points out some mistakes in past crisis responses and identifies key design features for safety net programs that can help compensate for the likely welfare losses in the short-term while also promoting longer-term recovery.
    Keywords: Safety Nets and Transfers,Rural Poverty Reduction,Services&Transfers to Poor,Achieving Shared Growth
    Date: 2008–10–01
  5. By: Guillermo Cruces (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata); Leonardo Gasparini (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata)
    Abstract: This paper documents the changes in the income distribution in Argentina from the mid-1970s to the mid-2000s. Over the period inequality increased substantially. Two types of episodes have shaped this upward trend: deep macroeconomic crises and periods of sudden and intense economic liberalization. The sizeable rise in inequality in the 1990s seems to be associated to reallocations against unskilled-labor intensive sectors, and skilled-biased technological change within most sectors, both factors stimulated by the process of economic integration. The depth and speed of the reforms and the scarcity of public policies to ease the transition contributed to the particular severity of the income distribution changes. The macro crises and the subsequent recoveries contributed to the volatility of inequality along this upward trend. The large macroeconomic crisis of 2001/02 triggered a large jump in inequality, although income disparities returned to pre-crisis levels as the economy recovered fast, and large cash transfer programs were implemented.
    Keywords: inequality, distribution, integration, wages, Argentina
    JEL: C15 D31 I21 J23 J31
    Date: 2008–11
  6. By: Eduardo Lora; Juan Camilo Chaparro
    Abstract: This paper makes use of the 2006 Gallup World Survey, which includes opinions on satisfaction with various aspects of life in 130 countries. Although a very solid relationship is found between satisfaction and income (both across and within countries), raising doubts regarding the well-known Easterlin Paradox, a new paradox arises: “unhappy growth,” where faster growth rates are accompanied by lower levels of satisfaction. The losses of satisfaction associated with growth are more pronounced in the material domains of life and are greater in richer and more urban societies. At the individual level, although higher incomes tend to be reflected in greater satisfaction, an increase in the income of the social group to which an individual belongs has the opposite effect. The conflictive relationship between satisfaction and income has implications for political economy. In particular, it suggests a simple mechanism for explaining various characteristic traits of economic and social populism.
    JEL: D63 E61 I31 O21
    Date: 2008–11
  7. By: Arie Kapteyn; James P. Smith; Arthur van Soest
    Abstract: This paper analyzes the determinants of global life satisfaction in two countries (The Netherlands and the U.S.), by using both self-reports and responses to a battery of vignette questions. The authors find global life satisfaction of happiness is well-described by four domains: job or daily activities, social contacts and family, health, and income. Among the four domains, social contacts and family have the highest impact on global life satisfaction, followed by job and daily activities and health. Income has the lowest impact. As in other work, they find that American response styles differ from the Dutch in that Americans are more likely to use the extremes of the scale (either very satisfied or very dissatisfied) than the Dutch, who are more inclined to stay in the middle of the scale. Although for both Americans and the Dutch, income is the least important determinant of global life satisfaction, it is more important in the U.S. than in The Netherlands. Indeed life satisfaction varies substantially more with income in the U.S. than in The Netherlands.
    JEL: I31 J28 D31
    Date: 2008–10
  8. By: Esther Duflo; Pascaline Dupas; Michael Kremer
    Abstract: This paper provides experimental evidence on the impact of tracking primary school students by initial achievement. In the presence of positive spillover effects from academically proficient peers, tracking may be beneficial for strong students but hurt weaker ones. However, tracking may help everybody if heterogeneous classes make it difficult to teach at a level appropriate to most students. We test these competing claims using a randomized evaluation in Kenya. One hundred and twenty one primary schools which all had a single grade one class received funds to hire an extra teacher to split that class into two sections. In 60 randomly selected schools, students were randomly assigned to sections. In the remaining 61 schools, students were ranked by prior achievement (measured by their first term grades), and the top and bottom halves of the class were assigned to different sections. After 18 months, students in tracking schools scored 0.14 standard deviations higher than students in non-tracking schools, and this effect persisted one year after the program ended. Furthermore, students at all levels of the distribution benefited from tracking. A regression discontinuity analysis shows that in tracking schools scores of students near the median of the pre-test distribution score are independent of whether they were assigned to the top or bottom section. In contrast, in non-tracking schools we find that on average, students benefit from having academically stronger peers. This suggests that tracking was beneficial because it helped teachers focus their teaching to a level appropriate to most students in the class.
    JEL: I20 O1
    Date: 2008–11

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