New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2009‒07‒03
seven papers chosen by
  1. Why is the World Getting Older? : The Influence of Happiness on Mortality By Cahit Guven; Rudolph Saloumidis
  2. Are Happier People Better Citizens? By Cahit Guven
  3. Optimal Taxation and Monopsonistic Labor Market: Does Monopsony justify the Minimum Wage? By Pierre Cahuc; Guy Laroque
  4. Labor Market Policy Evaluation in Equilibrium: Some Lessons of the Job Search and Matching Model By Pierre Cahuc; Thomas Le Barbanchon
  5. Attitudes toward Uncertainty among the Poor: Evidence from Rural Ethiopia By Akay, Alpaslan; Martinsson, Peter; Medhin, Haileselassie; Trautmann, Stefan T.
  6. Wage Dispersion in a Partially Unionized Labor Force By Addison, John T.; Bailey, Ralph; Siebert, W. Stanley
  7. Boon or Bane? Others' Unemployment, Well-being and Job Insecurity By Clark, Andrew E.; Knabe, Andreas; Rätzel, Steffen
  1. By: Cahit Guven; Rudolph Saloumidis
    Abstract: World life expectancy has risen by around 20 years in the last 50 years. This period has also witnessed rising happiness levels around the world suggesting that happiness might be one of the causes behind the decline in mortality. We investigate the relationship between happiness and mortality using the German Socio-Economic Panel. We consider doctor visits, self-reported health, and presence of chronic illness as health measures. After controlling for initial health conditions, we find that happiness extends life expectancy. 10 percent increase in happiness decreases probability of death by four percent, and this effect is more pronounced for men and younger people. Happiness plays a more important role for chronically ill people in decreasing mortality than for those who are not chronically ill. The positive influence of happiness on mortality can offset the negative impact of chronic illness. Marriage decreases mortality and this effect appears to work through increased happiness.
    Keywords: Happiness, mortality, health, chronic illness
    JEL: I10 I12
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp198&r=ltv
  2. By: Cahit Guven
    Abstract: This paper presents evidence on causal influence of happiness on social capital and trust using German Socio-Economic Panel. Exploiting the unexplained cross-sectional variation in individual happiness (residuals) in 1984 to eliminate the endogeneity problem, the paper finds that happier people trust others more, and importantly, help create more social capital. Specifically, they have a higher desire to vote, perform more volunteer work, and more frequently participate in public activities. They also have a higher respect for law and order, hold more association memberships, are more attached to their neighborhood, and extend more help to others. Residual happiness appears to be an indicator of optimism, and has an inverse U-shaped relationship with social capital measures. The findings also suggest that the relationship between happiness and social capital strengthened in the world in the last decade.
    Keywords: happiness, trust, social capital, optimism
    JEL: Z13
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp199&r=ltv
  3. By: Pierre Cahuc (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, IZA - Institute for the Study of Labor, Center for Economic Research - CEPR); Guy Laroque (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, Department of Economics, University College London - University College London)
    Abstract: Does monopsony on the labor market in itself justify the implementation of a minimum wage when it would not be used in a competitive economy? This issue is studied in a model of optimal taxation. We adopt a definition most favorable to the minimum wage: the minimum wage is useful whenever it can replace a non negligible part of the tax schedule. The minimum wage is useful to correct the inefficiencies associated with the monopsony when there is a single skill. But the minimum wage is not useful any more when there are a continuum of skills.
    Keywords: Minimum wage, Optimal taxation, Monopsony.
    Date: 2009–06–17
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00396252_v1&r=ltv
  4. By: Pierre Cahuc (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, Center for Economic Research - CEPR, IZA - Institute for the Study of Labor); Thomas Le Barbanchon (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, Unité de gestion de la direction de l'action régionale et des relations avec l'enseignement supérieur (DARES) - INRA)
    Abstract: We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the noncounseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.
    Keywords: evaluation, equilibrium effect, labor market policy
    Date: 2009–06–17
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00396295_v1&r=ltv
  5. By: Akay, Alpaslan (IZA); Martinsson, Peter (University of Gothenburg); Medhin, Haileselassie (University of Gothenburg); Trautmann, Stefan T. (Tilburg University)
    Abstract: We looked at risk and ambiguity attitudes among Ethiopian peasants in one of the poorest regions of the world and compared their attitudes to a standard Western university student sample elicited by the same decision task. Strong risk aversion and ambiguity aversion were found with the Ethiopian peasants. Ambiguity aversion was similar for peasants and students, but peasants were more risk averse. Testing for the effect of socio-economic variables on uncertainty attitudes showed that poor health increased both risk and ambiguity aversion.
    Keywords: risk attitudes, ambiguity attitudes, poverty, cultural differences
    JEL: D81 C93 O12
    Date: 2009–06
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4225&r=ltv
  6. By: Addison, John T. (University of South Carolina); Bailey, Ralph (University of Birmingham, UK); Siebert, W. Stanley (University of Birmingham, UK)
    Abstract: Taking as our point of departure a model proposed by David Card (2001), we suggest new methods for analyzing wage dispersion in a partially unionized labor market. Card's method disaggregates the labor population into skill categories, which procedure entails some loss of information. Accordingly, we develop a model in which each worker individually is assigned a union-membership probability and predicted union and nonunion wages. The model yields a natural three-way decomposition of variance. The decomposition permits counterfactual analysis, using concepts and techniques from the theory of factorial experimental design. We examine causes of the increase in U.K. wage dispersion between 1983 and 1995. Of the factors initially considered, the most influential was a change in the structure of remuneration inside both the union and nonunion sectors. Next in importance was the decrease in union membership. Finally, exogenous changes in labor force characteristics had, for most groups considered, only a small negative effect. We supplement this preliminary three-factorial analysis with a five-factorial analysis that allows us to examine effects from the wage-equation parameters in greater detail.
    Keywords: wage dispersion, three-way variance decomposition, bivariate kernel density smoothing, union membership, deunionization, factorial experimental design
    JEL: D3 J31 J51
    Date: 2009–06
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4202&r=ltv
  7. By: Clark, Andrew E. (PSE); Knabe, Andreas (Free University of Berlin); Rätzel, Steffen (University of Magdeburg)
    Abstract: The social norm of unemployment suggests that aggregate unemployment reduces the well-being of the employed, but has a far smaller effect on the unemployed. We use German panel data to reproduce this standard result, but then suggest that the appropriate distinction may not be between employment and unemployment, but rather between higher and lower levels of labour-market security, at least for men. Men with good job prospects, both employed and unemployed, are strongly negatively affected by regional unemployment. However, insecure employed men and poor-prospect unemployed men are less negatively, or even positively, affected. There is however no clear relationship for women. We analyse labour-market inequality and unemployment hysteresis in the light of our results.
    Keywords: job insecurity, externalities, unemployment, well-being
    JEL: I31 D84 J60
    Date: 2009–06
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4210&r=ltv
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