New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2008‒11‒25
ten papers chosen by

  1. Testing for Poverty Dominance: an Application to Canada By Wen-Hao Chen; Jean-Yves Duclos
  2. A Comparison of the Poverty Impact of Transfers, Taxes and Market Income across Five OECD Countries By Sami Bibi; Jean-Yves Duclos
  3. Does Relative Income Matter for the Very Poor? Evidence from Rural Ethiopia By Akay, Alpaslan; Martinsson, Peter
  4. Intergenerational Top Income Mobility in Sweden: A Combination of Equal Opportunity and Capitalistic Dynasties By Björklund, Anders; Roine, Jesper; Waldenström, Daniel
  5. An Experimental Study of Sex Segregation in the Swedish Labour Market: Is Discrimination the Explanation? By Carlsson, Magnus; Rooth, Dan-Olof
  6. Happiness, habits and high rank: Comparisons in economic and social life By Andrew E. Clark
  7. DRG prospective payment system: refine or not refine? By Nattavudh Powdthavee; Paul Dolan, Robert Metcalfe
  8. Stabilization Theory and Policy: 50 Years after the Phillips Curve By Stephen J. Turnovsky
  9. Understanding PPPs and PPP-based national accounts By Angus Deaton; Alan Heston
  10. Life Satisfaction and Quality of Development By John F. Helliwell

  1. By: Wen-Hao Chen; Jean-Yves Duclos
    Abstract: The paper proposes and applies statistical tests for poverty dominance that check for whether poverty comparisons can be made robustly over ranges of poverty lines and classes of poverty indices. This helps provide both normative and statistical confidence in establishing poverty rankings across distributions. The tests, which can take into account the complex sampling procedures that are typically used by statistical agencies to generate household-level surveys, are implemented using the Canadian Survey of Labour and Income Dynamics (SLID) for 1996, 1999 and 2002. Although the yearly cumulative distribution functions cross at the lower tails of the distributions, the more recent years tend to dominate earlier years for a relatively wide range of poverty lines. Failing to take into account SLID's sampling variability (as is sometimes done) can inflate significantly one's confidence in ranking poverty. Taking into account SLID's complex sampling design (as has not been done before) can also decrease substantially the range of poverty lines over which a poverty ranking can be inferred.
    Keywords: Stochastic dominance, empirical likelihood, Canada, income distribution
    JEL: C12 C15 D31 D63 I30
    Date: 2008
  2. By: Sami Bibi; Jean-Yves Duclos
    Abstract: This paper compares the poverty reduction impact of income sources, taxes and transfers across five OECD countries. Since the estimation of that impact can depend on the order in which the various income sources are introduced into the analysis, it is done by using the Shapley value. Estimates of the poverty reduction impact are presented in a normalized and un-normalized fashion, in order to take into account the total as well as the per dollar impacts. The methodology is applied to data from the Luxembourg Income Study (LIS) database.
    Keywords: Poverty reduction, transfers, taxes, Shapley value, OECD countries
    JEL: D31 I32 I38
    Date: 2008
  3. By: Akay, Alpaslan (IZA); Martinsson, Peter (University of Gothenburg)
    Abstract: We studied whether relative income has an impact on subjective well-being among extremely poor people. Contrary to the findings in developed countries, where relative income has shown a significant and negative impact on subjective well-being, we cannot reject the hypothesis that relative income has no impact on subjective well-being in rural areas of northern Ethiopia.
    Keywords: absolute income, relative income, subjective well-being
    JEL: D10 I31 I32
    Date: 2008–11
  4. By: Björklund, Anders (SOFI, Stockholm University); Roine, Jesper (Stockholm Institute of Transition Economics); Waldenström, Daniel (Research Institute of Industrial Economics)
    Abstract: This paper presents new evidence on intergenerational income and earnings mobility in the top of the distributions. Using a large dataset of matched father-son pairs in Sweden we are able to obtain results for fractions as small as 0.1 percent of the population. Overall, mobility is lower for incomes than for earnings and it appears to decrease the higher up in the distribution one goes. In the case of incomes, however, we find that mobility decreases dramatically within the top percentile of the population. Our results suggest that Sweden, well-known for its egalitarian achievements, is a society where equality of opportunity for a large majority of wage earners coexists with capitalistic dynasties.
    Keywords: intergenerational income mobility, top incomes, earnings inequality, income inequality, welfare state, non-linear regression, quantile regression
    JEL: D31 J62
    Date: 2008–10
  5. By: Carlsson, Magnus (Kalmar University); Rooth, Dan-Olof (Kalmar University)
    Abstract: This paper studies whether sex discrimination is the cause of sex segregation in the Swedish labour market. The correspondence testing (CT) method was used, which entails two qualitatively identical applications, one with a female name and one with a male name, being sent to employers advertising for labour. The results show that females have a somewhat higher callback rate to interview in female-dominated occupations, while in male-dominated occupations there is no evidence of any difference. The conclusion is that the sex segregation prevailing in the Swedish labour market cannot be explained by discrimination in hiring. Instead, the explanation must be found on the supply side.
    Keywords: sex discrimination, segregation, exit from unemployment
    JEL: J64 J71
    Date: 2008–11
  6. By: Andrew E. Clark
    Abstract: The role of money in producing sustained subjective well-being seems to be seriously compromised by social comparisons and habituation. But does that necessarily mean that we would be better off doing something else instead? This paper suggests that the phenomena of comparison and habituation are actually found in a variety of economic and social activities, rendering conclusions regarding well-being policy less straightforward.
    Date: 2008
  7. By: Nattavudh Powdthavee; Paul Dolan, Robert Metcalfe
    Abstract: What causes us to vote and what do we get out of it? We approach these questions using data on voting and subjective well-being (SWB) from a large household panel dataset in the UK. We find some evidence that SWB can affect voting intention but no evidence that the results of three recent elections have any effect on SWB.
    Keywords: Voting, life satisfaction, subjective wellbeing
    JEL: D7
    Date: 2008–10
  8. By: Stephen J. Turnovsky
    Date: 2008–05
  9. By: Angus Deaton; Alan Heston
    Abstract: PPP-based national accounts have become an important part of the database for macroeconomists, development economists, and economic historians. Frequently used global data come from the Penn World Table (PWT) and the World Bank's World Development Indicators; a substantial fraction of the world is also covered in the PPP accounts produced by the OECD and the European Union. This paper provides an overview of how these data are constructed, and discusses both the theory and the practical problems of implementing it. All of these data are underpinned by the International Comparison Program (ICP), which collects data on prices worldwide. The most recent round of the ICP was for 2005 with final results published in early 2008; version 7.0 of the Penn World Table will soon incorporate these results. The 2005 ICP, like earlier rounds, involved substantial revisions to previous data, most notably revising downwards the size of the Chinese (40 percent smaller) and Indian (36 percent) economies. We discuss the reasons for the revisions, and assess their plausibility. We focus on four important areas: how to handle international differences in quality, the treatment of urban and rural areas of large countries such as China, India, and Brazil, how to estimate prices for government services, health, and education, and the effects of the regional structure of the ICP. All of these affect the interpretation of previous data, as well as the current revisions. We discuss previous revisions of the PWT, and their effects on various kinds of econometric analysis. The paper concludes with health warnings that should be kept in mind when using these data, which are not always suitable for the purposes to which they are put. Some international comparisons are close to impossible, even in theory, and in others, the practical difficulties make comparison exceedingly hazardous.
    JEL: E01 N1 O47
    Date: 2008–11
  10. By: John F. Helliwell
    Abstract: This paper argues that measures of life satisfaction, now being collected annually by the Gallup World Poll in more than 130 countries, permit a much broader view of the quality and consequences of development than other common measures. While these data show the importance of conventionally measured economic development, they also show the importance of many other elements of life that are also affected, whether deliberately or not, by community, national, and international institutions and policies. In estimating the importance of these other factors, this paper pays special attention to the social context of well-being: the norms, networks and relationships within which lives are lived.
    JEL: D6 I3 J1 O0 O10 P51
    Date: 2008–11

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