nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2009‒08‒30
four papers chosen by
Maximo Rossi
University of the Republic

  1. A Microsimulation Approach to an Optimal Swedish Income Tax By Ericson, Peter; Flood, Lennart
  2. Starting Sick Leave on Part-Time as a Treatment Method? By Andrén, Daniela; Thomas, Andrén
  3. Part-time sick leave as a treatment method for individuals with musculoskeletal disorders By Andrén, Daniela; Svensson, Mikael
  4. Five Centuries of Latin American Inequality By Jeffrey G. Williamson

  1. By: Ericson, Peter (Empirica); Flood, Lennart (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper follows the theory of optimal taxation and the goal is to identify a tax/benefit design that maximizes social welfare. A two stage process is proposed where the individuals preferred choice of leisure and consumption is solved in the first stage, and the second stage identifies the tax/benefit system that maximize the social welfare function. Our study deviates from the mainstream literature as the first stage is based on a static micro simulation model with behavioral responses. The behavioralresponses take two different forms and use two different types of models; first binary models that describe mobility in/out from non-work states such as old age pension, disability, unemployment, long term sickness, and second models that describe change in working hours and welfare participation. Compared to the current Swedish income tax, our results suggests that increased basic deduction and in-work tax credit in combination with a reduction of the progressive national taxes would increase welfare. We also find strong support for increased housing allowances. The reforms are financed by a tax based on the same tax base as the proportional municipal income tax.<p>
    Keywords: Micro simulation; tax-benefit system; in-work tax credit reform; optimal taxation
    JEL: C80 D31 H24
    Date: 2009–08–25
  2. By: Andrén, Daniela (Department of Business, Economics, Statistics and Informatics); Thomas, Andrén (Konjunkturinstitutet)
    Abstract: This paper analyzes the effects of starting the sick leave on part-time compared to fulltime on the probability to recover (i.e., return to work with full recovery of lost work capacity). Using a discrete choice one-factor model, we estimate mean treatment parameters and distributional treatment parameters from a common set of structural parameters. Our results indicate that part-time sick leave is not an intensive treatment and should not to be used for all from the very beginning of a case. However, when the output is analyzed for time spans longer than three months, the average probability to recover is higher for those who started on part time sick leave. Besides, the share of individuals who are positive indifferent between the two states is large (above 50%), which suggests that there is potential for increasing the share
    Keywords: part-time sick leave; selection; unobserved heterogeneity; treatment effects
    JEL: I12 J21 J28
    Date: 2009–08–17
  3. By: Andrén, Daniela (Department of Business, Economics, Statistics and Informatics); Svensson, Mikael (Department of Business, Economics, Statistics and Informatics)
    Abstract: There is increasing evidence that staying active is an important part of a recovery process for individuals on sick leave due to musculoskeletal disorders (MSDs). It has been suggested that using part-time sick-leave rather than full-time sick leave will enhance the possibility of full recovery to the workforce, and several countries actively favor this policy. However, to date only few studies have estimated the effect of using part-time sick leave in contrast to full-time sick leave. In this paper the effects of being on part-time sick leave compared to full-time sick leave is estimated for the probability of returning to work with full recovery of lost work capacity and uses a sample of 1,170 employees from the RFV-LS database of the Social Insurance Agency of Sweden. A twostage recursive bivariate probit model is used to deal with the endogeneity problem. The first step estimates the probability of being assigned to part-time sick leave, and the second step estimates the likelihood of recovery with part-time sick-leave as an explanatory variable together with a set of other individual characteristics. The results indicate that employees assigned to part-time sick leave do recover to full work capacity with a higher probability than those assigned to full-time sick leave. The average treatment effect of part-time sick leave is 25 percentage points. Considering that it may also be less expensive than assigning individuals to full-time sick leave, this would clearly imply efficiency improvements from assigning individuals, when possible, to part-time sick leave
    Keywords: Sick-leave; Part-time; Musculoskeletal; Endogenous regressors.
    JEL: I12 J21 J28
    Date: 2009–08–18
  4. By: Jeffrey G. Williamson
    Abstract: Most analysts of the modern Latin American economy hold to a pessimistic belief in historical persistence -- they believe that Latin America has always had very high levels of inequality, suggesting it will be hard for modern social policy to create a more egalitarian society. This paper argues that this conclusion is not supported by what little evidence we have. The persistence view is based on an historical literature which has made little or no effort to be comparative. Modern analysts see a more unequal Latin America compared with Asia and the rich post-industrial nations and then assume that this must always have been true. Indeed, some have argued that high inequality appeared very early in the post-conquest Americas, and that this fact supported rent-seeking and anti-growth institutions which help explain the disappointing growth performance we observe there even today. This paper argues to the contrary. Compared with the rest of the world, inequality was not high in pre-conquest 1491, nor was it high in the post-conquest decades following 1492. Indeed, it was not even high in the mid-19th century just prior Latin America's belle époque. It only became high thereafter. Historical persistence in Latin American inequality is a myth.
    JEL: D31 N16 O54
    Date: 2009–08

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