nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2009‒04‒25
eight papers chosen by
Maximo Rossi
University of the Republic

  1. SOEP as a Source for Research on Ageing : Issues, Measures and Possibilities for Improvement By Laura Romeu Gordo; Andreas Motel-Klingebiel; Susanne Wurm
  2. Are Maternal and Child Care Programs Reaching the Poorest Regions in the Philippines? By Lavado, Rouselle F.; Lagrada, Leizel P.
  3. Is Poland really ‘immune’ to the spread of cohabitation? By Anna Matysiak
  4. Happiness and Growth the World Over: Time Series Evidence on the Happiness-Income Paradox By Easterlin, Richard A.; Angelescu, Laura
  6. Conspicuous Leisure: Optimal Income Taxation when both Relative Consumption and Relative Leisure Matter By Aronsson, Thomas; Johansson-Stenman, Olof
  7. Household decision making and the influence of spouses’ income, education, and communist party membership: A field experiment in rural China By Carlsson, Fredrik; Martinsson, Peter; Qin, Ping; Sutter, Matthias
  8. (Un)Happiness in Transition By Guriev, Sergei; Zhuravskaya, Ekaterina

  1. By: Laura Romeu Gordo; Andreas Motel-Klingebiel; Susanne Wurm
    Abstract: Demographic change is a key consequence of the development of modern societies. The prolongation of life expectancy, shifts of mortality into later life and long-term low fertility rates cause essential changes in population structures – with an increase in the number and proportion of older people as a key feature. The changes in mortality patterns can be seen as a success of modern society. But demographic shifts imply new risks and challenges as well as opportunities for modern societies, as they affect individual life courses as well as societies as a whole. The present low birth rates also predict low birth numbers in the future, since the number of potential mothers decreases. At the same time, life expectancies are not expected to decrease. As a consequence, the relation between old and young people will change in Germany in the next decades. In 2050, just about half of the population will be of working age and more than 30 percent will be 65 years old or older. The number of the 20 to under 65-years-olds will decrease from 50 million to a figure between 35 and 39 million in the next 40 years (Federal Statistical Office, 2006). Furthermore, the working age population will undergo an ageing process, implying that in 2050, nearly 40 percent of the working-age population will be between 50 and 64 years old (Federal Statistical Office, 2006). In order to understand the labour market and the fiscal implications of these population trends, it is very illustrative to analyse the proportion of older individuals in relation to the working population, the so-called old-age dependency ratio. According to the Federal Statistical Office (2006) the old-age dependency ratio will grow from 32 percent in 2005 to 60 or 64 percent by 2050. This projection indicates that in 40 years, for every three persons of working-age in Germany there will be two persons receiving a pension. If we consider the age cut at 67, the results are not much more optimistic, indicating that increasing the legal retirement age alone is not a solution for the sustainability of the public pension systems and for the decrease in the labour force. The proportion of people of very old age is also growing. While the 80+ population was nearly 4 million in 2005, it will grow to 10 million by 2050 (Federal Statistical Office, 2006). This trend has inter alia, important consequences for health care provision. In this demographic context, interdisciplinary research of ageing and later life gains in relevance. Thus, research on ageing becomes an increasingly crucial task for major surveys like the German Socio-Economic Panel (SOEP). As part of the “research infrastructure” they are called upon to invest in its potentials and attractiveness for research on ageing and later life.
    JEL: J14
    Date: 2009
  2. By: Lavado, Rouselle F.; Lagrada, Leizel P.
    Abstract: While the national average for maternal and child health services utilization shows improvement, the Philippines is yet to achieve the MDG targets for maternal and child health. This study shows inequality in maternal and child health services utilization across economic classes and across regions. Moreover, based on regional Gini coefficient, there are various patterns of utilization and concentration of services across living standards. Interventions to increase the uptake of maternal and child health services based on these patterns are recommended.
    Keywords: utilization, inequality, maternal and child care, access
    Date: 2008
  3. By: Anna Matysiak (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Various data have constantly pointed out a low incidence of non-marital unions in Poland (at 1.4-4.9% among all unions). In this paper we demonstrate that these data, coming exclusively from cross-sectional surveys, clearly underestimate the scale of the phenomenon. By exploiting data on partnership histories we show that young Poles have been increasingly opting for cohabitation. Consequently, in the years 2004-2006 entries to cohabitation constituted about one third of all first union entries. Consensual unions are more widespread among the low social strata, but recently a clear increase in cohabitation has been observed also among the highly educated. Although the estimates of cohabitation incidence are far below those observed in Northern and Western Europe, our study suggests that Poland is not as ‘immune’ to the spread of consensual unions as it is commonly believed.
    JEL: J1 Z0
    Date: 2009–04
  4. By: Easterlin, Richard A. (University of Southern California); Angelescu, Laura (University of Southern California)
    Abstract: There is no significant relationship between the improvement in happiness and the long term rate of growth of GDP per capita. This is true for three groups of countries analyzed separately − 17 developed, 9 developing, and 11 transition − and also for the 37 countries taken together. Time series studies reporting a positive relationship confuse a short-term positive association between the growth of happiness and income, arising from fluctuations in macroeconomic conditions, with the long-term relationship, which is nil.
    Keywords: happiness, economic growth, developing countries, transition countries, developed countries
    JEL: I31 D60 O10 P27
    Date: 2009–03
  5. By: Aronsson, Thomas (Department of Economics, Umeå University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper concerns optimal income taxation under asymmetric information in a two-type overlapping generations model, where people care about their relative consumption compared to others. The appearance of positional concerns affects the policy choices via two channels: (i) the size of the average degree of positionality and (ii) positionality differences between the (mimicked) low-ability type and the mimicker. Under plausible empirical estimates, the marginal labor income tax rates become substantially larger, and the absolute value of the marginal capital income tax rate implemented for the low-ability type becomes substantially smaller, compared to the conventional optimal income tax model. In addition to measures of reference consumption based on the average consumption, results for the cases of withingeneration and upward comparisons are also presented.<p>
    Keywords: Optimal income taxation; asymmetric information; relative consumption; status; positional goods
    JEL: D62 H21 H23 H41
    Date: 2009–04–16
  6. By: Aronsson, Thomas (Department of Economics, Umeå University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Previous studies on public policy under relative consumption concerns have ignored the role of leisure comparisons. This paper considers a two-type optimal nonlinear income tax model where people care both about their relative consumption and their relative leisure. Increased consumption positionality typically implies higher marginal income tax rates for both the high-ability and the low-ability type, whereas leisure positionality has an offsetting role. However, this offsetting role is not symmetric; concern about relative leisure implies a progressive income tax component, i.e., a component that is larger for the high-ability than for the low-ability type. Moreover, leisure positionality does not modify the policy rule for public good provision when the income tax is optimally chosen.<p>
    Keywords: Optimal taxation; redistribution; public goods; relative consumption; status; positional goods
    JEL: D62 H21 H23 H41
    Date: 2009–04–21
  7. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Qin, Ping (Department of Economics, School of Business, Economics and Law, Göteborg University); Sutter, Matthias (Department of Public Finance, University of Innsbruck)
    Abstract: We study household decision making in a high-stakes experiment with a random sample of households in rural China. Spouses have to choose between risky lotteries, first separately and then jointly. We find that spouses’ individual risk preferences are more similar the richer the household and the higher the wife’s relative income contribution. A couple’s joint decision is typically determined by the husband, but women who contribute relatively more to the household income, women in high-income households, women with more education than their husbands, and women with communist party membership have a stronger influence on the joint decision.<p>
    Keywords: Household decision making; Risk; Field experiment; China
    JEL: C91 C92 C93 D10
    Date: 2009–04–20
  8. By: Guriev, Sergei; Zhuravskaya, Ekaterina
    Abstract: Despite strong growth performance in transition economies in the last decade, residents of transition countries report abnormally low levels of life satisfaction. Using data from the World Values Survey and other sources, we study various explanations of this phenomenon. First, we document that the disparity in life satisfaction between residents of transition and non-transition countries is much larger among the elderly. Second, we find that deterioration in public goods provision, an increase in macroeconomic volatility, and a mismatch of human capital of residents educated before transition which disproportionately affected the aged population explain a great deal of the difference in life satisfaction between transition countries and other countries with similar income and other macroeconomic conditions. The rest of the gap is explained by the difference in the quality of the samples. As in other countries, life satisfaction in transition countries is strongly related to income; but, due to a higher non-response of high-income individuals in transition countries, the survey-data estimates of the recent increase in life satisfaction, driven by 10-year sustained economic growth in transition region, are biased downwards. The evidence suggests that if the region keeps growing at current rates, life satisfaction in transition countries will catch up with the "normal" level in the near future.
    Keywords: happiness; satisfaction; transition; unhappiness
    JEL: A13 I21 P36
    Date: 2009–04

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