nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2009‒10‒24
nine papers chosen by
Maximo Rossi
University of the Republic

  1. Worker directors: a German product that didn't export? By Addison, John T.; Schnabel, Claus
  2. The Causal Effect of Teen Motherhood on Worklessness By Ian Walker; Yu Zhu
  3. What explains the cost of remittances ? an examination across 119 country corridors By Beck, Thorsten; Peria, Maria Soledad Martinez
  4. Why are Rich Countries more Politically Cohesive? By Carl-Johan Dalgaard; Ola Olsson
  6. Eliciting Welfare Preferences from Behavioral Datasets By Ariel Rubinstein; Yuval Salant
  7. Work Disability, Work, and Justification Bias in Europe and the U.S. By Arie Kapteyn; James P. Smith; Arthur van Soest
  8. Parametric Estimations of the World Distribution of Income By Maxim Pinkovskiy; Xavier Sala-i-Martin
  9. An Empirical Analysis of the Gender Gap in Mathematics By Roland G. Fryer, Jr; Steven D. Levitt

  1. By: Addison, John T.; Schnabel, Claus
    Abstract: Despite its lack of attractiveness to other countries, the German system of quasi-parity codetermination at company level has held up remarkably well. We recount the theoretical arguments for and against codetermination and survey the empirical evidence on the effects of the institution, tracing the three phases of a still sparse literature. Recent findings hold out the prospect that good corporate governance might include employee representation by virtue of the monitoring function and the reduction in agency costs, while yet cautioning that the optimal level of representation is likely below parity. And although the German system may be better than its reputation among foreigners, it might have to adapt to globalization and the availability of alternative forms of corporate governance in the EU. ; Trotz seiner geringen Attraktivität für andere Länder hat sich das deutsche System der quasi-paritätischen Unternehmensmitbestimmung als bemerkenswert stabil erwiesen. Wir erörtern die theoretischen Argumente für und gegen Mitbestimmung und bieten einen Überblick über die empirische Evidenz zu den Auswirkungen dieser Institution, wobei wir drei Phasen einer eher spärlichen Literatur nachzeichnen. Jüngere Erkenntnisse deuten darauf hin, dass zu einer guten Corporate Governance auch die Beteiligung der Arbeitnehmer (aufgrund ihrer Überwachungsfunktion und der Verringerung von Agency-Kosten) gehören könnte, wobei jedoch das optimale Ausmaß der Mitbestimmung unter 50 Prozent liegen dürfte. Auch wenn das deutsche System besser sein mag als sein Ruf im Ausland, muss es sich wohl an die Globalisierung und die Verfügbarkeit alternativer Unternehmensformen in der EU anpassen.
    Keywords: codetermination,worker directors,board-level employee representation,firm performance, Germany
    JEL: J50
    Date: 2009
  2. By: Ian Walker; Yu Zhu
    Abstract: Teen motherhood continues to be high in the US and the UK relative to most other western European countries. While recent research has clarified how effective policies to reduce teen motherhood might be (Kearney (2009)), there remains little evidence that quantifies the causal effects of teen motherhood on such mothers and their first born children. This paper provides estimates of the causal effect of teen motherhood on worklessness and does so by exploiting the availability of two sources of exogenous variation in maternal age at first birth, which have not previously been used in this literature. Despite the strength of our instruments, we find no significant causal effects.
    Keywords: Teen Motherhood; Worklessness; Causal Effect
    JEL: I3 J13
    Date: 2009–10
  3. By: Beck, Thorsten; Peria, Maria Soledad Martinez
    Abstract: Remittances are a sizeable source of external financing for developing countries. In the L’Aquila 2009 G8 Summit, leaders pledged to reduce the cost of remittances by half in 5 years (from 10 to 5 percent). Yet, empirically, little is known about what drives the cost of remittances. Using newly gathered data across 119 country corridors, this paper explores the factors that determine the cost of remittances. Considering average costs across all types of institutions, the authors find that corridors with larger numbers of migrants and more competition among remittances service providers exhibit lower costs. By contrast, remittance costs are higher in richer corridors and in corridors with greater bank participation in the remittances market. Comparing results across all banks and all money transfer operators separately, the analysis finds few significant differences. However, estimations for Western Union, a leading player in the remittances business, suggest that this firm’s prices are insensitive to competition.
    Keywords: Population Policies,Remittances,Access to Finance,Debt Markets,Economic Theory&Research
    Date: 2009–10–01
  4. By: Carl-Johan Dalgaard (Department of Economics, University of Copenhagen); Ola Olsson (University of Gothenburg)
    Abstract: We document empirically that rich countries are more politically cohesive than poorer countries. In order to explain this regularity, we provide a model where political cohesion is linked to the emergence of a fully functioning market economy. Without market exchange, the welfare of inherently selfish individuals will be mutually independent. As a result, political negotiations, echoing the preferences of the citizens of society, will be dog-eat-dog in nature. Whoever has greater bargaining power will be willing to make decisions that enhance the productivity of his supporters at the expense of other groups in society. If the gains from specialization become sufficiently large, however, a market economy will emerge. From being essentially non-cohesive under self-sufficiency, the political decision making process becomes cohesive in the market economy, as the welfare of individuals will be mutually interdependent due to the exchange of goods. We refer to this latter state as “capitalist cohesion”.
    Keywords: political cohesion; economic growth
    JEL: P16 O41
    Date: 2009–10
  5. By: Hamermesh, Daniel S.
    Abstract: Using the 2006-07 American Time Use Survey and its Eating and Health Module, I show that over half of adult Americans report grazing (secondary eating/drinking) on a typical day, with grazing time almost equaling primary eating/drinking time. An economic model predicts that higher wage rates (price of time) will lead to substitution of grazing for primary eating/drinking, especially by raising the number of grazing incidents relative to meals. This prediction is confirmed in these data. Eating meals more frequently is associated with lower BMI and better self-reported health, as is grazing more frequently. Food purchases are positively related to time spent eatingâsubstitution of goods for time is difficultâbut are lower when eating time is spread over more meals.
    Keywords: time use, food, obesity, Consumer/Household Economics, Health Economics and Policy,
    Date: 2009–09
  6. By: Ariel Rubinstein; Yuval Salant
    Date: 2009–10–16
  7. By: Arie Kapteyn (RAND); James P. Smith (RAND); Arthur van Soest (Tilburg University, Netspar & RAND)
    Abstract: To analyze the effect of health on work, many studies use a simple self-assessed health measure based upon a question such as “do you have an impairment or health problem limiting the kind or amount of work you can do?” A possible drawback of such a measure is the possibility that different groups of respondents may use different response scales. This is commonly referred to as “differential item functioning” (DIF). A specific form of DIF is justification bias: to justify the fact that they don’t work, non-working respondents may classify a given health problem as a more serious work limitation than working respondents. In this paper we use anchoring vignettes to identify justification bias and other forms of DIF across countries and socio-economic groups among older workers in the U.S. and Europe. Generally, we find differences in response scales across countries, partly related to social insurance generosity and employment protection. Furthermore, we find significant evidence of justification bias in the U.S. but not in Europe, suggesting differences in social norms concerning work.
    Date: 2009–08
  8. By: Maxim Pinkovskiy; Xavier Sala-i-Martin
    Abstract: We use a parametric method to estimate the income distribution for 191 countries between 1970 and 2006. We estimate the World Distribution of Income and estimate poverty rates, poverty counts and various measures of income inequality and welfare. Using the official $1/day line, we estimate that world poverty rates have fallen by 80% from 0.268 in 1970 to 0.054 in 2006. The corresponding total number of poor has fallen from 403 million in 1970 to 152 million in 2006. Our estimates of the global poverty count in 2006 are much smaller than found by other researchers. We also find similar reductions in poverty if we use other poverty lines. We find that various measures of global inequality have declined substantially and measures of global welfare increased by somewhere between 128% and 145%. We analyze poverty in various regions. Finally, we show that our results are robust to a battery of sensitivity tests involving functional forms, data sources for the largest countries, methods of interpolating and extrapolating missing data, and dealing with survey misreporting.
    JEL: F01 O1
    Date: 2009–10
  9. By: Roland G. Fryer, Jr; Steven D. Levitt
    Abstract: We document and analyze the emergence of a substantial gender gap in mathematics in the early years of schooling using a large, recent, and nationally representative panel of children in the United States. There are no mean differences between boys and girls upon entry to school, but girls lose more than two-tenths of a standard deviation relative to boys over the first six years of school. The ground lost by girls relative to boys is roughly half as large as the black-white test score gap that appears over these same ages. We document the presence of this gender math gap across every strata of society. We explore a wide range of possible explanations in the U.S. data, including less investment by girls in math, low parental expectations, and biased tests, but find little support for any of these theories. Moving to cross-country comparisons, we find that earlier results linking the gender gap in math to measures of gender equality are sensitive to the inclusion of Muslim countries, where in spite of women’s low status, there is little or no gender gap in math.
    JEL: I20
    Date: 2009–10

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