nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2009‒09‒26
eight papers chosen by
Maximo Rossi
University of the Republic

  1. The Effect of Lone Motherhood on the Smoking Behaviour of Young Adults By Marco Francesconi; Stephen P. Jenkins; Thomas Siedler
  2. Altruism, Other-Regarding Behavior and Identity: The Moral Basis of Prosperity and Oppression By Basu, Kaushik
  3. Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data By Burkhauser R; Feng S; Jenkins S; Larrimore J
  4. Evidence on Unemployment, Market Work and Household Production By Michael C. Burda; Daniel S. Hamermesh
  5. The Right Amount of Trust By Jeffrey Butler; Paola Giuliano; Luigi Guiso
  6. Nerves of Steel? Stress, Work Performance and Elite Athletes By David A. Savage; Benno Torgler
  7. Misperceptions About the Magnitude and Timing of Changes in American Income Inequality By Robert J. Gordon
  8. Women's Rights and Development By Raquel Fernández

  1. By: Marco Francesconi; Stephen P. Jenkins; Thomas Siedler
    Abstract: We provide evidence that living with an unmarried mother during childhood raises smoking propensities for young adults in Germany.
    Keywords: smoking; lone parent; childhood family structure; divorce; unobserved heterogeneity
    JEL: I10 J12 J18
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp217&r=ltv
  2. By: Basu, Kaushik (Cornell University)
    Abstract: Much of economics is built on the assumption that individuals are driven by self-interest and economic development is an outcome of the free play of such individuals. On the few occasions that the existence of altruism is recognized in economics, the tendency is to build this from the axiom of individual selfishness. The aim of this paper is to break from this tradition and to treat as a primitive that individuals are endowed with the 'cooperative spirit', which allows them to work in their collective interest, even when that may not be in their self-interest. The paper tracks the interface between altruism and group identity. By using the basic structure of a Prisoner's Dilemma game among randomly picked individuals and building into it assumptions of general or in-group altruism, the paper demonstrates how our selfish rationality interacts with our innate sense of cooperation. The model is used to outline circumstances under which cooperation will occur and circumstances where it will break down. The paper also studies how sub-groups of a society can form cooperative blocks, whether to simply do better for themselves or exploit others.
    Date: 2009–04
    URL: http://d.repec.org/n?u=RePEc:ecl:corcae:09-06&r=ltv
  3. By: Burkhauser R (Cornell University); Feng S (Shanghai University of Finance and Economics); Jenkins S (Institute for Social and Economic Research); Larrimore J (Cornell University)
    Abstract: Although the majority of research on US income inequality trends is based on public-use March CPS data, a new wave of research using IRS tax return data reports substantially higher levels of inequality and faster growing trends. We show that these apparently inconsistent estimates are largely reconciled if the inequality measure and the income distribution are defined in the same way. Using internal CPS data for 1967–2006, we closely match IRS data-based estimates of top income shares reported by Piketty and Saez (2003). Our results imply that any inequality increases since 1993 are concentrated among the top 1 percent of the distribution.
    Date: 2009–09–14
    URL: http://d.repec.org/n?u=RePEc:ese:iserwp:2009-27&r=ltv
  4. By: Michael C. Burda; Daniel S. Hamermesh
    Abstract: Time-diary data from four countries suggest that differences in market time between the unemployed and employed represent additional leisure and personal maintenance rather than increased household production. U.S. data for 2003-2006 show that almost none of the reduction in market work in areas of long-term high unemployment is offset by additional work at home. In contrast, in those areas where unemployment has risen cyclically, reduced market work is largely substituted by additional time in household production.
    Keywords: unemployment, time use, household production, paid work
    JEL: E24 J22 D13
    Date: 2009–09
    URL: http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2009-043&r=ltv
  5. By: Jeffrey Butler; Paola Giuliano; Luigi Guiso
    Abstract: A vast literature has investigated the relationship between trust and aggregate economic performance. We investigate the relationship between individual trust and individual economic performance. We .nd that individual income is hump-shaped in a measure of intensity of trust beliefs available in the European Social Survey. We show that heterogeneity of trust beliefs in the population, coupled with the tendency of individuals to extrapolate beliefs about others from their own level of trustworthiness, could generate the non-monotonic relationship between trust and income. Highly trustworthy individuals think others are like them and tend to form beliefs that are too optimistic, causing them to assume too much social risk, to be cheated more often and ultimately perform less well than those who happen to have a trustworthiness level close to the mean of the population. On the other hand, the low-trustworthiness types form beliefs that are too conservative and thereby avoid being cheated, but give up prfitable opportunities too often and, consequently, underperform. Our estimates imply that the cost of either excessive or too little trust is comparable to the income lost by foregoing college. Furthermore, we find that people who trust more are cheated more often by banks as well as when purchasing goods second hand, when relying on the services of a plumber or a mechanic and when buying food. We complement the survey evidence with experimental evidence showing that own trustworthiness and expectations of others' trustworthiness in a trust game are strongly correlated and that performance in the game is hump-shaped.
    Keywords: Trust, trustworthiness, economic performance, culture, false consensus
    JEL: A1 A12 D1 O15 Z1
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:eui:euiwps:eco2009/33&r=ltv
  6. By: David A. Savage; Benno Torgler
    Abstract: There is a notable shortage of empirical research directed at measuring the magnitude and direction of stress effects on performance in a controlled environment. One reason for this is the inherent difficulties in identifying and isolating direct performance measures for individuals. Additionally most traditional work environments contain a multitude of exogenous factors impacting individual performance, but controlling for all such factors is generally unfeasible (omitted variable bias). Moreover, instead of asking individuals about their self-reported stress levels we observe workers’ behavior in situations that can be classified as stressful. For this reason we have stepped outside the traditional workplace in an attempt to gain greater controllability of these factors using the sports environment as our experimental space. We empirically investigate the relationship between stress and performance, in an extreme pressure situation (football penalty kicks) in a winner take all sporting environment (FIFA World Cup and UEFA European Cup competitions). Specifically, we examine all the penalty shootouts between 1976 and 2008 covering in total 16 events. The results indicate that extreme stressors can have a positive or negative impact on individuals’ performance. On the other hand, more commonly experienced stressors do not affect professionals’ performances.
    Keywords: Performance, Stressors, Sport, Behavioural Economics, Work-related stress
    JEL: D80 D81 J81 Z13
    Date: 2009–09–24
    URL: http://d.repec.org/n?u=RePEc:qut:dpaper:251&r=ltv
  7. By: Robert J. Gordon
    Abstract: The rise in American inequality has been exaggerated both in magnitude and timing. Commentators lament the large gap between the growth rates of real median household income and of private sector productivity. This paper shows that a conceptually consistent measure of this growth gap over 1979 to 2007 is only one-tenth of the conventional measure. Further, the timing of the rise of inequality is often misunderstood. By some measures inequality stopped growing after 2000 and by others inequality has not grown since 1993. This cessation of inequality’s secular rise in 2000 is evident from the growth of Census mean vs. median income, and in the income share of the top one percent of the income distribution. The income share of the 91st to 95th percentile has not increased since 1983, and the income ratio of the 90th to 10th percentile has barely increased since 1986. Further, despite a transient decline in labor’s income share in 2000-06, by mid-2009 labor’s share had returned virtually to the same value as in 1983, 1991, and 2001. Recent contributions in the inequality literature have raised questions about previous research on skill-biased technical change and the managerial power of CEOs. Directly supporting our theme of prior exaggeration of the rise of inequality is new research showing that price indexes for the poor rise more slowly than for the rich, causing most empirical measures of inequality to overstate the growth of real income of the rich vs. the poor. Further, as much as two-thirds of the post-1980 increase in the college wage premium disappears when allowance is made for the faster rise in the cost of living in cities where the college educated congregate and for the lower quality of housing in those cities. A continuing tendency for life expectancy to increase faster among the rich than among the poor reflects the joint impact of education on both economic and health outcomes, some of which are driven by the behavioral choices of the less educated.
    JEL: D12 D3 D31 D63 I3 J24 J31 J62 R10
    Date: 2009–09
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:15351&r=ltv
  8. By: Raquel Fernández
    Abstract: Why has the expansion of women's economic and political rights coincided with economic development? This paper investigates this question, focusing on a key economic right for women: property rights. The basic hypothesis is that the process of development (i.e., capital accumulation and declining fertility) exacerbated the tension in men's conflicting interests as husbands versus fathers, ultimately resolving them in favor of the latter. As husbands, men stood to gain from their privileged position in a patriarchal world whereas, as fathers, they were hurt by a system that afforded few rights to their daughters. The model predicts that declining fertility would hasten reform of women's property rights whereas legal systems that were initially more favorable to women would delay them. The theoretical relationship between capital and the relative attractiveness of reform is non-monotonic but growth inevitably leads to reform. I explore the empirical validity of the theoretical predictions by using cross-state variation in the US in the timing of married women obtaining property and earning rights between 1850 and 1920.
    JEL: J12 J16 N31 O15 O16
    Date: 2009–09
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:15355&r=ltv

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