nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2009‒03‒22
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Health and Income: a Robust Comparison of Canada and the US By Jean-Yves Duclos; Damien Échevin
  2. More equal but heavier: A longitudinal analysis of income-related obesity inequalities in an adult Swedish cohort By Ljungvall , Åsa; Gerdtham , Ulf-G
  3. Active Labor Market Policy Evaluations – A Meta-analysis By David Card; Jochen Kluve; Andrea Weber
  4. Modeling earnings dynamics By Joseph Altonji; Anthony Smith; Ivan Vidangos
  5. The labor supply effect of in-kind transfers By P Bingley; Ian Walker
  6. On Inequity Aversion A Reply to Binmore and Shaked By Ernst Fehr; Klaus M. Schmidt
  7. The Economics of Discrimination: Evidence from Basketball By Lawrence M. Kahn
  8. Alternative Labor Market Policies to Increase Economic Self-Sufficiency: Mandating Higher Wages, Subsidizing Employment, and Increasing Productivity By David Neumark
  9. The Analytics of the Wage Effect of Immigration By George J. Borjas
  10. The Economics & Psychology of Inequality and Human Development By Flavio Cunha; James J. Heckman

  1. By: Jean-Yves Duclos; Damien Échevin
    Abstract: This paper uses sequential stochastic dominance procedures to compare the joint distribution of health and income across space and time. It is the first application of which we are aware of methods to compare multidimensional distributions of income and health using procedures that are robust to aggregation techniques. The paper's approach is more general than comparisons of health gradients and does not require the estimation of health equivalent incomes. We illustrate the approach by contrasting Canada and the US using comparable data. Canada dominates the US over the lower bi-dimensional welfare distribution of health and income, though not generally in terms of the uni-dimensional distribution of health or income. The paper also finds that welfare for both Canadians and Americans has not unambiguously improved during the last decade over the joint distribution of income and health, in spite of the fact that the uni-dimensional distributions of income have clearly improved during that period.
    Keywords: Health inequality, self-reported health status, income distribution, stochastic dominance, social welfare
    JEL: I10 I32 I38 D63 D30 H51
    Date: 2009
  2. By: Ljungvall , Åsa (Department of Economics, Lund University); Gerdtham , Ulf-G (Department of Economics, Lund University)
    Abstract: Using longitudinal data over a 17 year period for a Swedish cohort aged 20-68 in 1980/81, this study analyses income-related inequalities in obesity. By use of the concentration index and decomposition techniques we answer the following questions: 1) Does obesity inequality favour or disfavour the poor? 2) What factors explain this inequality at different points in time? 3) How can the pattern of inequality over time be explained? We find that among females, inequalities in obesity favour the rich, but the estimated inequality declines over time. Income and marital status are the main driving forces behind obesity inequality, and income explains the majority of the declined obesity inequality over time. The results indicate that the main reason for the reduced obesity inequality is increased obesity prevalence, because in absolute terms obesity has increased uniformly across income groups. Thus we conclude that the reduced inequality is not due to any health policy success. Since the income elasticity of obesity is the individual most important contributor to the observed inequality, policies directed towards this factor might be the most effective. Similar trends are found for males, although less pronounced. This should be taken into account when evaluating obesity reducing policies.
    Keywords: obesity; income; inequality; ageing; women; concentration index; decomposition; Oaxaca; panel data
    JEL: I12 I18
    Date: 2009–03–09
  3. By: David Card; Jochen Kluve; Andrea Weber
    Abstract: This paper presents a meta-analysis of recent microeconometric evaluations of active labor market policies. Our sample consists of 199 program estimates drawn from 97 studies conducted between 1995 and 2007. In about one-half of these cases we have both a short-term impact estimate (for a one-year postprogram horizon) and a medium-term estimate (two-year horizon).We characterize the program estimates according to the type and duration of the program, the characteristics of the participants, and the evaluation methodology. Heterogeneity in all three dimensions affects the likelihood that an impact estimate is significantly positive, significantly negative, or statistically insignificant. Comparing program types, subsidized public sector employment programs have the least favorable impact estimates. Job search assistance programs have relatively favorable short-run impacts, whereas classroom and on-the-job training programs tend to show better outcomes in the mediumrun than the short-run. Programs for youths are less likely to yield positive impacts than untargeted programs, but there are no large or systematic differences by gender. Methodologically, we find that the outcome variable used to measure program effectiveness matters. Evaluations based on registered unemployment durations are more likely to show favorable short-term impacts. Controlling for the outcome measure, and the type of program and participants, we find that experimental and non-experimental studies have similar fractions of significant negative and significant positive impact estimates, suggesting that the research designs used in recent non-experimental evaluations are unbiased.
    Keywords: Meta-analysis, active labor market policy, program evaluation
    JEL: H53 J08
    Date: 2009–02
  4. By: Joseph Altonji; Anthony Smith; Ivan Vidangos
    Abstract: In this paper we use indirect inference to estimate a joint model of earnings, employment, job changes, wage rates, and work hours over a career. Our model incorporates duration dependence in several variables, multiple sources of unobserved heterogeneity, job-specific error components in both wages and hours, and measurement error. We use the model to address a number of important questions in labor economics, including the source of the experience profile of wages, the response of job changes to outside wage offers, and the effects of seniority on job changes. We provide estimates of the dynamic response of wage rates, hours, and earnings to various shocks and measure the relative contributions of the shocks to the variance of earnings in a given year and over a lifetime. We find that human capital accounts for most of the growth of earnings over a career although job seniority and job mobility also play significant roles. Unemployment shocks have a large impact on earnings in the short run as well a substantial long long-term effect that operates through the wage rate. Shocks associated with job changes and unemployment make a large contribution to the variance of career earnings and operate mostly through the job-specific error components in wages and hours.
    Date: 2009
  5. By: P Bingley; Ian Walker
    Abstract: We estimate a model of labor supply and participation in multiple programs for UK lone mothers which exploits a reform of in-work transfers. Cash entitlements increased but eligibility to in-kind child nutrition programs was lost. We find that in-work cash and in-work in-kind transfers both have large positive labor supply effects. There is, however, a utility loss from program participation which is estimated to be larger for cash than for child nutrition. This implies that the partial cash out of the in-kind benefits reduced labor supply.
    Keywords: labor supply, program participation, in-kind transfers
    Date: 2009
  6. By: Ernst Fehr; Klaus M. Schmidt (Institute for Empirical Research in Economics, University of Zurich, Bluemlisalpstrasse 10, CH-8006 Zurich, Switzerland; Department of Economics, University of Munich, Ludwigstrasse 28, D-80539 Munich, Germany)
    Abstract: In this paper we reply to Binmore and Shaked’s criticism of the Fehr-Schmidt model of inequity aversion. We put the theory and their arguments into perspective and show that their criticism is not substantiated. Finally, we briefly comment on the main challenges for future research on social preferences.
    Keywords: Experiments, other-regarding preferences, inequity aversion
    JEL: B41 C90
    Date: 2009–02
  7. By: Lawrence M. Kahn (Cornell University)
    Abstract: This Chapter reviews evidence on discrimination in basketball, primarily examining studies on race but with some discussion of gender as well. I focus on discrimination in pay, hiring, and retention against black NBA players and coaches and pay disparities by gender among college coaches. There was much evidence for each of these forms of discrimination against black NBA players in the 1980s. However, there appears to be less evidence of racial compensation, hiring and retention discrimination against black players in the 1990s and early 2000s than the 1980s. This apparent decline is consistent with research on customer discrimination in the NBA: in the 1980s, there was abundant evidence of fan preference for white players; however, since the 1980s, these preferences seem much weaker. There appears to be little evidence of pay, hiring or retention discrimination against black NBA coaches, and while male college basketball coaches outearn females, this gap is accounted for by differences in revenues and coaches’ work histories. There is some dispute over whether these revenue differences are themselves the result of employer discrimination.
    Keywords: discrimination, race, gender, basketball
    JEL: J71 L83
    Date: 2009–02–16
  8. By: David Neumark
    Abstract: I review evidence on alternative labor market policies that could potentially improve economic self-sufficiency via mandating higher wages, subsidizing employment, or increasing productivity. The evidence indicates that the minimum wage is an ineffective policy to promote economic self-sufficiency, entailing employment losses without any corresponding distributional benefits via higher wages. In contrast, living wage laws appear to present a more favorable tradeoff. Labor supply incentives, in particular the EITC, appear effective, as a more generous EITC boosts employment of single mothers and in so doing raises incomes and earnings of low-income families. There is some evidence that wage subsidies increase employment and earnings, but problems of stigmatization resulting from eligibility for wage subsidy programs can dissipate the gains, and wage subsidies entail substantial administrative difficulties. Finally, a newer but growing literature on school-to-work provides some evidence that school-to-work programs boost labor market attachment, skill formation, wages, and earnings.
    JEL: J08 J18
    Date: 2009–03
  9. By: George J. Borjas
    Abstract: The theory of factor demand has important implications for the study of the impact of immigration on wages in both sending and receiving countries. This paper examines the implications of the theory in the context of a model of a competitive labor market where the wage impact of immigration is influenced by such factors as the elasticity of product demand, the rate at which the consumer base expands as immigrants enter the country, the elasticity of supply of capital, and the elasticity of substitution across inputs of production. The analysis reveals that the short-run wage effect of immigration is negative in a wide array of possible scenarios, and that even the long run effect of immigration may be negative if the impact of immigration on the potential size of the consumer base is smaller than its impact on the size of the workforce. The closed-form solutions permit numerical back-of-the-envelope calculations of the wage elasticity. The constraints imposed by the theory can be used to check the plausibility of the many contradictory claims that appear throughout the immigration literature.
    JEL: J23 J31 J61
    Date: 2009–03
  10. By: Flavio Cunha (University of Pennsylvania); James J. Heckman (University of Chicago & University College Dublin)
    Abstract: Recent research on the economics of human development deepens under- standing of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequal- ities in family environments and investments in children are substantial. They causally aect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for dierent out- comes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies dier depending on target outcomes of interest and on the nature of adversity in a child's early years. For some congurations of early disadvantage and for some desired outcomes, it is ecient to invest relatively more in the later years of childhood than in the early years.
    Keywords: inequality, capabilities, noncognitive traits, human development, technology of capability formation, policy targeting
    Date: 2009–03–09

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