nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2009‒05‒16
six papers chosen by
Maximo Rossi
University of the Republic

  1. Poverty and Economic Growth in Russia’s Regions By Paul Mosley; Altay Mussurov
  2. Reservation Wages, Expected wages and the duration of Unemployment: evidence from British Panel data By Sarah Brown; Karl Taylor
  3. Early retirement and inequality in Britain and Germany: How important is health? By Jennifer Roberts; Nigel Rice; Andrew M. Jones
  4. Can risk averse competitive input providers serve farmers efficiently in developing countries ? By Makdissi, Paul; Wodon, Quentin
  5. May growth lead to higher deprivation despite higher satisfaction ? By Wodon, Quentin; Yitzhaki, Shlomo
  6. Marriage Meets the Joneses: Relative Income, Identity, and Marital Status By Tara Watson; Sara McLanahan

  1. By: Paul Mosley (Department of Economics, The University of Sheffield); Altay Mussurov
    Abstract: The extent of poverty reduction has varied enormously during the recovery period across the eighty-three regions of Russia, with some regions continuing to experience increases in poverty even though they have returned to growth. We attempt to understand and analyse the reasons for this regional variation. We focus on two principal causative factors: the changes in economic structure resulting from the liberalisation of the economy, and policy instruments aimed at poverty reduction. We find that many regions which experienced structural change under perestroika (notably those benefiting from the current oil and gas boom) experienced massive growth in GDP but little poverty reduction, because their prevailing production function is capital-intensive and thus they were unable to transmit much or any reduction in poverty through the labour market. Regions where the growth of the early 2000s was diversified, was based more on the service sector, and where the educational system made possible flexibility within the labour market, tended to be more effective at generating poverty reduction.
    Keywords: Russia, poverty, regional analysis
    JEL: I32 P26
    Date: 2009–04
  2. By: Sarah Brown (Department of Economics, The University of Sheffield); Karl Taylor
    Abstract: In this paper we analyse the role of wage expectations in an empirical model of incomplete spells of unemployment and reservation wages. To be specific, we model the duration of unemployment, reservation wages and expected wages simultaneously for a sample of individuals who are not in work, where wage expectations are identified via an exogenous policy shock based upon the introduction of Working Family Tax Credits (WFTC) in the UK. The results from the empirical analysis, which is based on the British Household Panel Survey, suggest that WFTC eligibility served to increase expected wages and that expected wages are positively associated with reservation wages. In addition, incorporating wage expectations into the econometric framework was found to influence the magnitude of the key elasticities: namely the elasticity of unemployment duration with respect to the reservation wage and the elasticity of the reservation wage with respect to unemployment duration.
    Keywords: Expected Wages.
    JEL: J13 J24 J64
    Date: 2009–01
  3. By: Jennifer Roberts (Department of Economics, The University of Sheffield); Nigel Rice; Andrew M. Jones
    Abstract: Both health and income inequalities have been shown to be much greater in Britain than in Germany. One of the main reasons seems to be the difference in the relative position of the retired, who, in Britain, are much more concentrated in the lower income groups. Inequality analysis reveals that while the distribution of health shocks is more concentrated among those on low incomes in Britain, early retirement is more concentrated among those on high incomes. In contrast, in Germany, both health shocks and early retirement are more concentrated among those with low incomes. We use comparable longitudinal data sets from Britain and Germany to estimate hazard models of the effect of health on early retirement. The hazard models show that health is a key determinant of the retirement hazard for both men and women in Britain and Germany. The size of the health effect appears large compared to the other variables. Designing financial incentives to encourage people to work for longer may not be sufficient as a policy tool if people are leaving the labour market involuntarily due to health problems.
    Keywords: health, early retirement, hazard models
    JEL: J26 I10 C23 C41
    Date: 2008–11
  4. By: Makdissi, Paul; Wodon, Quentin
    Abstract: Under price ceilings and quality floors for agricultural inputs in cash crop sectors in developing countries where credit markets are weak, imperfect information on the ability of farmers to pay for their inputs at the end of the cropping season may lead the decentralized production of those inputs by risk averse private input providers to be inefficient. A coordinating agency and/or subsidies for new farmers could help to produce and distribute more agricultural inputs, thereby increasing the profits for input providers while also enabling more farmers to produce the crops that are key to their livelihood.
    Keywords: Rural Poverty Reduction,Economic Theory&Research,Crops&Crop Management Systems,Access to Finance,Rural Development Knowledge&Information Systems
    Date: 2009–04–01
  5. By: Wodon, Quentin; Yitzhaki, Shlomo
    Abstract: In a relative deprivation framework, unless inequality is reduced, growth is associated with both higher satisfaction and higher deprivation. This may help explain the discontent with growth despite its benefits. As is well known in the literature, knowledge of the population's mean income and Lorenz curve is all that is needed to analyze a distribution, so that this can also be used to assess the satisfaction and deprivation of each individual. Given the normalization used to derive the satisfaction and deprivation measures, satisfaction and deprivation add up to the mean income for the population as a whole as well as for each individual.
    Keywords: Economic Theory&Research,Inequality,Poverty Impact Evaluation,,Labor Policies
    Date: 2009–04–01
  6. By: Tara Watson (Williams College, University of Michigan, and NBER); Sara McLanahan (Princeton University)
    Abstract: In this paper we investigate the effect of relative income on marital status. We develop an identity model based on Akerlof and Kranton (2000) and apply it to the marriage decision. The empirical evidence is consistent with the idea that people are more likely to marry when their incomes approach a financial level associated with idealized norms of marriage. We hypothesize that the “marriage ideal” is determined by the median income in an individual’s local reference group. After controlling flexibly for the absolute level of income and a number of other factors, the ratio between a man’s income and the marriage ideal is a strong predictor of marital status – but only if he is below the ideal. For white men, relative income considerations jointly drive coresidence, marriage, and fatherhood decisions. For black men, relative income affects the marriage decision only, and relative income is tied to marital status even for those living with a partner and children. Relative income concerns explain 10-15 percent of the decline in marriage since 1970 for low income white men, and account for more than half of the persistent marriage gap between high- and low-income men.
    Keywords: marriage, relative income, inequality, identity
    JEL: J12
    Date: 2009–02

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