nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2009‒10‒31
eleven papers chosen by
Maximo Rossi
University of the Republic

  1. Decomposing Gender and Ethnic Earnings Gaps in Seven West African Cities By Christophe Nordman; Anne-Sophie Robilliard; François Roubaud
  2. Job Satisfaction and Employment Equity in South Africa By Hinks, Timothy
  3. Social Background, Cooperative Behavior, and Norm Enforcement By Kocher, Martin; Martinsson, Peter; Visser, Martine
  4. Does age matter for the value of life? - Evidence from a choice experiment in rural Bangladesh By Johansson-Stenman, Olof; Mahmud, Minhaj; Martinsson, Peter
  5. Income and beyond: Multidimensional poverty in six Latin American countries By Diego Battiston; Guillermo Cruces; Luis Felipe Lopez-Calva; Maria Ana Lugo; Maria Emma Santos
  6. The recent decline of inequality in Latin America: Argentina, Brazil, Mexico and Peru By Luis F. Lopez-Calva; Nora Lustig
  7. On polarization and mobility: A look at polarization in the wage-career profile in Italy By Ambra Poggi; Jacques Silber
  8. Threats in Latin American and Caribbean countries: How do inequality and the asymmetries of rules affect tax morale? By Mariana Gerstenblüth; Natalia Melgar; Juan Pablo Pagano; Máximo Rossi
  9. Recent trends in top income shares in the USA: Reconciling estimates from March CPS and IRS tax return data By Richard V. Burkhauser; Shuaizhang Feng; Stephen P. Jenkins; Jeff Larrimore
  10. Distributional change, reference groups and the measurement of relative deprivation By Jacques Silber; Paolo Verme
  11. Reputation, social identity and social conflict By Smith, John

  1. By: Christophe Nordman (DIAL, IRD, Paris); Anne-Sophie Robilliard (DIAL, IRD, Paris); François Roubaud (DIAL, IRD, Paris)
    Abstract: (english) In this paper, we analyse the size and determinants of gender and ethnic earnings gaps in seven West African capitals (Abidjan, Bamako, Cotonou, Dakar, Lome, Niamey and Ouagadougou) based on a unique and perfectly comparable dataset coming from the 1-2-3 Surveys conducted in the seven cities from 2001 to 2002. Analysing gender and ethnic earnings gaps in an African context raises a number of important issues that our paper attempts to address, notably by taking into account labour allocation between public, private formal and informal sectors which can be expected to contribute to earnings gaps. Our results show that gender earnings gaps are large in all the cities of our sample and that gender differences in the distribution of characteristics usually explain less than half of the raw gender gap. By contrast, majority ethnic groups do not appear to have a systematic favourable position in the urban labour markets of our sample of countries and observed ethnic gaps are small relative to gender gaps. Whatever the “sign” of the gap, the contribution of differences in the distribution of individual characteristics varies markedly between cities. Taking into account differences in sectoral locations in the decomposition of gender earnings gaps provides evidence that within-sector differences in earnings account for the largest share of the gender gap and that the differences in sectoral locations are always more favorable to men than to women. By contrast, concerning ethnic earnings gaps, the full decomposition indicates that sectoral location sometimes plays a “compensating” role against observed earnings gaps. Looking at finer levels of ethnic disaggregation confirms that ethnic earnings differentials are systematically smaller that gender differentials. _________________________________ (français) Dans cette étude nous analysons le poids et les déterminants des différentiels de rémunérations entre genre et groupes ethniques dans sept métropoles d’Afrique de l’Ouest (Abidjan, Bamako, Cotonou, Dakar, Lomé, Niamey and Ouagadougou), en mobilisant une base de données unique et parfaitement comparable, provenant des enquêtes 1-2-3 réalisées dans les sept villes en 2001 et 2002. Cette question soulève un certain nombre de questions méthodologiques que nous tentons de traiter en détail, notamment en tenant compte des différences de composition ethnique et de genre entre les secteurs public, privé formel et informel qui sont susceptibles de jouer sur les écarts de revenus. Les résultats mettent en évidence l’existence d’un déficit systématique de rémunération pour les femmes, les caractéristiques des emplois expliquant moins de la moitié de ces écarts. A contrario, les groupes ethniques majoritaires ne semblent pas bénéficier d’une situation avantageuse et les écarts de revenus suivant le groupe ethnique sont relativement faibles par rapport à ceux que l’on observe suivant le genre. Quel que soit le signe de ce différentiel (positif ou négatif), la contribution expliquée par les caractéristiques observées de l’emploi varie très sensiblement d’une ville à l’autre. Les estimations montrent qu’une grande partie de l’écart de revenu selon le genre provient de l’allocation sectorielle, et que cette dernière est toujours défavorable aux femmes. En revanche, dans le cas des écarts suivant le groupe ethnique, la distribution par secteur institutionnel joue parfois de façon positive dans le sens d’une réduction des écarts. Finalement, une désagrégation plus fine des groupes ethniques, au-delà de la partition majoritaire/minoritaire, confirme que l’entrée ethnique est systématiquement moins significative sur les revenus du travail que le genre.
    Keywords: earnings equations, gender wage gap, ethnic wage gap, West Africa, Equation de gain, écart de salaire, décomposition, genre, Ethnie, Afrique de l'Ouest.
    JEL: J31 J71 O15 O55
    Date: 2009–10
  2. By: Hinks, Timothy
    Abstract: This paper is the first to estimate job satisfaction equations in post-Apartheid South Africa. Earnings and relative earnings are both found to contribute to greater job satisfaction. Racial group is also an important predictor of job satisfaction but when interacted with a proxy for affirmative action legislation it is found that black job satisfaction is positively correlated with this legislation whereas coloured and to a lesser extent white job satisfaction is diminished.
    Keywords: Job satisfaction; Employment Equity; ordered probit; South Africa
    Date: 2009
  3. By: Kocher, Martin (Department of Economics, University of Munich,); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University); Visser, Martine (School of Economics, University of Cape Town)
    Abstract: Studies have shown that there are differences in cooperative behavior across countries. Furthermore, differences in the use and the reaction on the introduction of a norm enforcement mechansism have been documented in cross-cultural studies, recently. We present data which prove that stark differences in both dimensions can exist even within the same town. For this end, a unique data set was created, based on public goods experiments conducted in South Africa. Most of the group differences can, however, be explained by variables accounting for social capital and social environment, such as trust or household violence.<p>
    Keywords: Cooperation; public goods; punishment; experiment; social capital; South Africa
    JEL: C72 C91 H41 Z13
    Date: 2009–10–19
  4. By: Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Mahmud, Minhaj (Queen’s University Belfast); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Using a random sample of individuals in rural Bangladesh, this paper investigates people’s preferences regarding relative values of lives when it comes to different ages of the individuals being saved. By assuming that an individual has preferences concerning different states of the world, and that these preferences can be described by an individual social welfare function, the individuals’ preferences for life-saving programs are elicited using a pair-wise choice experiment between different life-saving programs. In the analyses, we calculate the social marginal rates of substitution between saved lives of people of different ages. We also test whether people have preferences for saving more life-years rather than only saving lives. In particular, we test and compare the two hypotheses that only lives matter and that only life-years matter. The results indicate that the value of a saved life decreases rapidly with age and that people have strong preferences for saving life-years rather than lives per se. Overall, the results clearly show the importance of the number of life-years saved in the valuation of life.<p>
    Keywords: social preferences; life-saving programs; choice experiment; relative value of life
    JEL: D63 I18 J17
    Date: 2009–10–19
  5. By: Diego Battiston (CEDLAS, Universidad de La Plata); Guillermo Cruces (CEDLAS, Universidad de La Plata and CONICET, Argentina); Luis Felipe Lopez-Calva (UNDP, Regional Bureau for Latin America and the Caribbean.); Maria Ana Lugo (Department of Economics, University of Oxford); Maria Emma Santos (OPHI, University of Oxford and CONICET, Argentina)
    Abstract: This paper presents empirical results of a wide range of multidimensional poverty measures for: Argentina, Brazil, Chile, El Salvador, Mexico and Uruguay, for the period 1992–2006. Six dimensions are analysed: income, child attendance at school, education of the household head, sanitation, water and shelter. Over the study period, El Salvador, Brazil, Mexico and Chile experienced significant reductions of multidimensional poverty. In contrast, in urban Uruguay there was a small reduction in multidimensional poverty, while in urban Argentina the estimates did not change significantly. El Salvador, Brazil and Mexico together with rural areas of Chile display significantly higher and more simultaneous deprivations than urban areas of Argentina, Chile and Uruguay. In all countries, access to proper sanitation and education of the household head are the highest contributors to overall multidimensional poverty.
    Keywords: Multidimensional poverty measurement, counting approach, Latin America, Unsatisfied Basic Needs, rural and urban areas.
    JEL: D31 I32
    Date: 2009
  6. By: Luis F. Lopez-Calva (UNDP Regional Bureau for Latin America); Nora Lustig (Tulane University and Center for Global Development)
    Abstract: Between 2000 and 2006, the Gini coefficient declined in 12 of the 17 Latin American countries for which data are available. Why has inequality declined? Have the changes in inequality been driven by market forces such as the demand and supply for labor with different skills? Or have governments become more redistributive than they used to be, and if so, why? This paper attempts to answer these questions by focusing on the determinants of inequality in four countries: Argentina, Brazil, Mexico and Peru. The analysis suggests that the decline in inequality is accounted for by two main factors: (i) a fall in the earnings gap between skilled and low-skilled workers (through both quantity and price effects); and (ii) more progressive government transfers (monetary and in-kind transfers). Demographic factors, such as a change in the proportion of adults (and working adults) per household, have been equalizing but the magnitude of their contribution has been small by comparison. In Brazil, Mexico and Peru, the fall in earnings gap, in turn, is mainly the result of the expansion of basic education over the last couple of decades, which reduced inequality in attainment and made the returns to education curve less steep. It also results from the petering out of the unequalizing effect of skill-biased technical change in the 1990s associated with the opening up of trade and investment. In Argentina, the decline in earnings inequality seems to be associated with government policies that without the windfall of high commodity prices will be hard to sustain.
    Keywords: Income inequality, Latin America, wage gap, government transfers.
    JEL: O15 H53 J48
    Date: 2009
  7. By: Ambra Poggi (University of Milan Bicocca and Collegio Carlo Alberto); Jacques Silber (Bar-Ilan University)
    Abstract: This paper attempts to combine the analysis of wage (income) polarization with that of wage (income) mobility. Using the polarization index PG recently proposed by Deutsch et al. (2007) it shows that, when taking the identity of the individuals into account (working with panel data), a distinction can be made between a change over time in polarization that is the consequence of "structural mobility" (change over time in the overall, between and within groups inequality) and a change in polarization that is the sole consequence of "exchange mobility" (changes over time in the ranks of the individuals). This approach is then applied to the 1985-2003 Work Histories Italian Panel (WHIP), an employer-employee linked panel database developed by the Italian Social Security administrative sources. The empirical investigation attempts to improve our understanding of labor market segmentation in Italy, whether the groups are defined on the basis of the individual wages or derived from other criteria such as white versus blue collar workers.
    Keywords: exchange mobility, Italy, labor market segmentation, polarization, structural mobility, wage inequality.
    JEL: D31 J31
    Date: 2009
  8. By: Mariana Gerstenblüth (Department of Economics, State University, Uruguay); Natalia Melgar (Department of Economics, State University, Uruguay); Juan Pablo Pagano (Department of Economics, State University, Uruguay); Máximo Rossi (Department of Economics, State University, Uruguay)
    Abstract: Latin America is well known as the most inequitable region. As it is recognized, inequality and corruption perception weaken the way that political institutions works and the democratic system. Focusing on Latin American and Caribbean countries, we analyze what are the elements that shape tax morale. In particular, we analyze how the context influences on ethic decisions such as the predisposition to pay taxes. Our data source is the survey carried out in 2005 by Latinobarometro. In particular, our objective is to analyze how country performance is determining tax morale. To do so, we estimated four probit models including Gini index, Transparency International Corruption Perception Index and Gross Domestic Product per capita (GDPpc). As expected we found that some socio-demographic variables play a relevant role. Interestingly, we also found that, in this attitude, LAC countries do not register a gender bias. However, those are not our main contributions to the literature on the field. The most important results are linked with: 1) the level matters, GDPpc increases the probability that people have tax morale, 2) moreover, income distribution also influence on tax morale but in opposite direction and 3) corruption perception also reduces tax morale. Those results show that the quality of institutions matters and therefore, the way that democracy works play a relevant role.
    Keywords: Tax morale, corruption, inequality, democracy, microeconomic behaviour.
    JEL: H26 H73
    Date: 2009
  9. By: Richard V. Burkhauser (Cornell University); Shuaizhang Feng (Princeton University and Shanghai University of Finance and Economics); Stephen P. Jenkins (University of Essex); Jeff Larrimore (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.
    Keywords: US Income Inequality, Top income shares, March CPS, IRS tax return data.
    JEL: D31 C81
    Date: 2009
  10. By: Jacques Silber (Bar-Ilan University); Paolo Verme (University of Torino and School of Management SDA Bocconi)
    Abstract: This paper attempts to explicitly integrate the idea of reference group when measuring relative deprivation. It assumes that in assessing her situation in society an individual compares herself with individuals whose environment can be considered as being similar to hers. By environment we mean the set of people with a similar set of observable characteristics such as human capital, household attributes and location. We therefore propose to measure relative deprivation by comparing the actual income of an individual with the one he could have expected on the basis of the level of these characteristics. We then aggregate these individual comparisons by computing an index of "distributional change" that compares, on a non anonymous basis, the distributions of the actual and "expected" incomes. At the difference of other approaches to relative deprivation our measure takes into account not only the difference between the actual and "expected" individual incomes but also that between the actual and "expected" individual ranks. We applied our approach to Moldova, the poorest country in Europe, using a survey which covered a period of six years (from 2000 to 2005). We then observed that our measure of deprivation, when compared to other possible measures of deprivation, had a higher correlation with the answers given by individuals in the survey we used to a question on their assessment of their housing living conditions (a higher number corresponding to a worse subjective situation).
    Keywords: deprivation, reference groups, and inequality.
    JEL: D31 D63 I32 O15
    Date: 2009
  11. By: Smith, John
    Abstract: We interpret the social identity literature and examine its economic implications. We model a population of agents from two exogenous and well defined social groups. Agents are randomly matched to play a reduced form bargaining game. We show that this struggle for resources drives a conflict through the rational destruction of surplus. We assume that the population contains both unbiased and biased players. Biased players aggressively discriminate against members of the other social group. The existence and specification of the biased player is motivated by the social identity literature. For unbiased players, group membership has no payoff relevant consequences. We show that the unbiased players can contribute to the conflict by aggressively discriminating and that this behavior is consistent with existing empirical evidence.
    Keywords: reputation; identity; conflict
    JEL: L14 D74 C72
    Date: 2009–10–22

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