nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒01‒16
sixteen papers chosen by
Maximo Rossi
University of the Republic

  1. Income, Aspirations and the Hedonic Treadmill in a Poor Society By John Knight; Ramani Gunatilaka
  2. Ethnicity, Job Search and Labor Market Reintegration of the Unemployed By Amelie Constant; Martin Kahanec; Ulf Rinne; Klaus F. Zimmermann
  3. Estimating Income Poverty in the Presence of Missing Data and Measurment Error By Cheti Nicoletti; Franco Peracchi; Francesca Foliano
  4. Testing for restricted stochastic dominance By Russell Davidson; Jean-Yves Duclos
  5. Reliable inference for the GINI Index By Russell Davidson
  6. The Family Gap in Wages: What Wombmates Reveal By Simonsen, Marianne; Skipper, Lars
  7. On the relation between income inequality and happiness: Do fairness perceptions matter? By Christian Bjornskov; Axel Dreher; Justina A.V. Fischer; Jan Schnellenbach
  8. Economic Inequality and HIV in Malawi By Durevall, Dick; Lindskog, Annika
  9. Income support systems, labour supply incentives and employment – some cross-country evidence By Forslund, Anders; Fredriksson, Peter
  10. Winning Big but Feeling no Better? The Effect of Lottery Prizes on Physical and Mental Health By Benedicte Apouey; Andrew E. Clark
  11. The statistical properties of the mutual information index of multigroup segregation By Ricardo Mora; Javier Ruiz Castillo
  12. Welfare Policy and the Distribution of Hours of Work By L. Rachel Ngai; Christopher A. Pissarides
  13. Altruism and Social Integration. By Pablo Brañas-Garza; Ramón Cobo-Reyes; María Paz Espinosa; Natalia Jiménez; Jaromír Kovárík; Giovanni Ponti
  14. Universal patterns of inequality By Anand Banerjee; Victor M. Yakovenko
  15. On the relation between income inequality and happiness: Do fairness perceptions matter? By Bjornskov, Christian; Dreher, Axel; Fischer, Justina AV; Schnellenbach, Jan
  16. Maternal Literacy and Child Malnutrition in India By Borooah, Vani / K

  1. By: John Knight; Ramani Gunatilaka
    Abstract: A specially designed household survey for rural China is used to analyse the determinants of aspirations for income, proxied by reported minimum income need, and the determinants of subjective well-being, both satisfaction with life and satisfaction with income. It is found that aspiration income is a positive function of actual income and reference income, and that subjective well-being is raised by actual income but lowered by aspiration income. These findings suggests the existence of a partial hedonic treadmill, and can help to explain why subjective well-being in China appears not to have risen despite rapid economic growth.
    Keywords: Adaptation, Aspirations, China, Easterlin Paradox, Happiness, Hedonic treadmill, Subjective well-being
    JEL: D60 O12 O15
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:oxf:wpaper:468&r=ltv
  2. By: Amelie Constant; Martin Kahanec; Ulf Rinne; Klaus F. Zimmermann
    Abstract: This paper is based on recently collected and rich survey data of a representative sample of entrants into unemployment in Germany. Our data include a large number of migration variables, allowing us to adapt a recently developed concept of ethnic identity: the ethnosizer. To shed further light on the native-migrant differences in economic outcomes, we investigate the labor market reintegration, patterns of job search, and reservation wages across unemployed migrants and natives in Germany. Our results indicate that separated migrants have a relatively slow reintegration into the labor market. We explain this finding by arguing that this group exerts a relatively low search effort and that it has reservation wages which are moderate, yet still above the level which would imply similar employment probabilities as other groups of migrants.
    JEL: F22 J15 J61 J64
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:diw:diwwpp:dp963&r=ltv
  3. By: Cheti Nicoletti; Franco Peracchi; Francesca Foliano
    Abstract: Reliable measures of poverty are an essential statistical tool for public policies aimed at reducing poverty. In this paper we consider the reliability of income poverty measures based on survey data which are typically plagued by missing data and measurement error. Neglecting these problems can bias the estimated poverty rates. We show how to derive upper and lower bounds for the population poverty rate using the sample evidence, an upper bound on the probability of misclassifying people into poor and non-poor, and instrumental or monotone instrumental variable assumptions. By using the European Community Household Panel, we compute bounds for the poverty rate in ten European countries and study the sensitivity of poverty comparisons across countries to missing data and measurement error problems. Supplemental materials for this article may be downloaded from the JBES website.
    Keywords: Misclassification error, survey non-response, partial identification
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp252&r=ltv
  4. By: Russell Davidson (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579, CIREG - Centre interuniversitaire de recherche en économie quantitative - Université de Montréal, Department of Economics, McGill University - McGill University); Jean-Yves Duclos (CIRPEE - Université de Laval, Department of Economics - Université de Laval)
    Abstract: Asymptotic and bootstrap tests are studied for testing whether there is a relation of stochastic dominance between two distributions. These tests have a null hypothesis of nondominance, with the advantage that, if this null is rejected, then all that is left is dominance. This also leads us to define and focus on restricted stochastic dominance, the only empirically useful form of dominance relation that we can seek to infer in many settings. One testing procedure that we consider is based on an empirical likelihood ratio. The computations necessary for obtaining a test statistic also provide estimates of the distributions under study that satisfy the null hypothesis, on the frontier between dominance and nondominance. These estimates can be used to perform dominance tests that can turn out to provide much improved reliability of inference compared with the asymptotic tests so far proposed in the literature.
    Keywords: Stochastic dominance, empirical likelihood, bootstrap test
    Date: 2009–12–30
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00443560_v1&r=ltv
  5. By: Russell Davidson (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579, CIREG - Centre interuniversitaire de recherche en économie quantitative - Université de Montréal, Department of Economics, McGill University - McGill University)
    Abstract: Although attention has been given to obtaining reliable standard errors for the plugin estimator of the Gini index, all standard errors suggested until now are either complicated or quite unreliable. An approximation is derived for the estimator by which it is expressed as a sum of IID random variables. This approximation allows us to develop a reliable standard error that is simple to compute. A simple but effective bias correction is also derived. The quality of inference based on the approximation is checked in a number of simulation experiments, and is found to be very good unless the tail of the underlying distribution is heavy. Bootstrap methods are presented which alleviate this problem except in cases in which the variance is very large or fails to exist. Similar methods can be used to find reliable standard errors of other indices which are not simply linear functionals of the distribution function, such as Sen's poverty index and its modification known as the Sen-Shorrocks-Thon index.
    Keywords: Gini index, delta method, asymptotic inference, jackknife, bootstrap
    Date: 2009–12–30
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00443553_v1&r=ltv
  6. By: Simonsen, Marianne (University of Aarhus); Skipper, Lars (AKF, Danish Institute of Governmental Research)
    Abstract: We shed new light on the effects of having children on hourly wages by exploiting access to data on the entire population of employed same-sex twins in Denmark. Our second contribution is the use of administrative data on absenteeism; the amount of hours off due to holidays and sickness. Our results suggest that childbearing reduces female hourly wages but the principal explanation is in fact mothers' higher levels of absence. We find a positive wage premium for fathers.
    Keywords: fertility, wages, twins
    JEL: J13 J24 J31 J71
    Date: 2009–12
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4650&r=ltv
  7. By: Christian Bjornskov (Nationalökonomisk Institut (Department of Economics), Aarhus School of Business, Aarhus Universitet); Axel Dreher (University of Goettingen, Center for European, Governance and Economic Development Research); Justina A.V. Fischer (University of Hamburg, Institute for Public Finance); Jan Schnellenbach (Alfred Weber Institute for Social Policy and Political Economy, Ruprecht-Karls-Universität Heidelberg)
    Abstract: In this paper, we revisit the association between happiness and inequality. We argue that the perceived fairness of the income generation process affects this association. Building on a two-period model of individual life-time utility maximization, we predict that persons with higher perceived fairness will experience higher levels of life-time utility and are less in favor of income redistribution. In societies with a high level of actual social mobility, income inequality is perceived more positively with increased expected fairness. The opposite is expected for countries with low actual social mobility, due to an increasing relevance of a disappointment effect resulting from unsuccessful individual investments. Using the World Values Survey data and a broad set of fairness measures, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective well-being). We also find strong empirical support for the disappointment effect in low social mobility countries. In contrast, the results for high-mobility countries turn out to be ambiguous.
    Keywords: Keywords: Happiness, life satisfaction, subjective well-being, inequality, income distribution, redistribution, political ideology, justice, fairness, World Values Survey
    JEL: I31 H40 D31 J62 Z13
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:hce:wpaper:027&r=ltv
  8. By: Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University); Lindskog, Annika (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This study analyzes the relationship between economic inequality and the spread of HIV among young Malawian women. We estimate multi-level logistic models of the individual probability of being HIV infected. Two different community levels are considered; the immediate neighbourhood, and Malawi’s districts. The main finding is a strong positive association between communal inequality and the risk of HIV infection. The relationship between HIV status and income, at the communal and the individual levels, is less clear-cut, but individual absolute poverty does not increase the risk of HIV infection. Further analysis shows that the HIV-inequality relationship is related to riskier sexual behavior, gender violence, and close links to urban areas, measured by return migration. It does not seem to be related to worse health in more unequal communities, or gender gaps in education or women’s market work.<p>
    Keywords: Africa; AIDS; communal; health; multilevel models; poverty; wealth
    JEL: I12
    Date: 2009–12–28
    URL: http://d.repec.org/n?u=RePEc:hhs:gunwpe:0425&r=ltv
  9. By: Forslund, Anders (IFAU - Institute for Labour Market Policy Evaluation); Fredriksson, Peter (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: This paper summarizes a set of expert reports commissioned by the IFAU. The expert reports cover Estonia, Germany, Italy, the Netherlands, Sweden, and the United Kingdom. These countries represent range of welfare states, both in terms of scope and design. And in each country there are interesting experiences from which other countries may learn. The overall objective is to identify policy tools that help generate sustained increases in employment in the long run. Therefore, we focus on policies that improve the incentives for labour force participation and reduce the barriers to participation.
    Keywords: Labour force participation; employment; income support; long-run sustainability
    JEL: J08 J21
    Date: 2009–12–17
    URL: http://d.repec.org/n?u=RePEc:hhs:ifauwp:2009_032&r=ltv
  10. By: Benedicte Apouey (Paris School of Economics); Andrew E. Clark (Paris School of Economics and IZA Bonn)
    Abstract: We use British panel data to explore the exogenous impact of income on a number of individual health outcomes: general health status, mental health, physical health problems, and health behaviours (drinking and smoking). Lottery winnings allow us to make causal statements regarding the effect of income on health, as the amount won is largely exogenous. These positive income shocks have no significant effect on general health, but a large positive effect on mental health. This result seems paradoxical on two levels. First, there is a well-known status gradient in health in cross-section data, and, second, general health should partly reflect mental health, so that we may expect both variables to move in the same direction. We propose a solution to the first apparent paradox by underlining the endogeneity of income. For the second, we show that exogenous income is associated with greater risky health behaviours: lottery winners smoke more and engage in more social drinking. General health will pick up both mental health and the effect of these behaviours, and so may not improve following a positive income shock. This paper presents the first microeconomic analogue of previous work which has highlighted the negative health consequences of good macroeconomic conditions.
    Keywords: Income, Self-assessed health, Mental health, Smoking, Drinking
    JEL: D1 I1 I3
    Date: 2009–11
    URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2009.96&r=ltv
  11. By: Ricardo Mora; Javier Ruiz Castillo
    Abstract: In this paper the Kullback-Leibler notion of discrepancy (Kullback and Leibler, 1951) is used to propose a measure of segregation within a general statistical framework. Under general conditions, this measure coincides with the Mutual Information index of segregation, M, first proposed by Theil and Finizza (1971), and fully characterized in terms of eight ordinal axioms by Frankel and Volij (2009). In this paper, two specific issues are addressed in relation to this index: the evaluation of statistical significance for observed differences in M measurements, and the control for the statistical association between demographic groups and schools and other socioeconomic variables. Among the main results of the paper it is established that M can be decomposed to isolate segregation conditional on any vector of socioeconomic characteristics. Furthermore, consistent estimators for M and the terms in its decomposition are proposed, and their asymptotic properties are obtained. As a result, the M index now stands as the only index of segregation which has been fully characterized in terms of axiomatic properties, is well embedded into a general statistical framework, and can be used when samples are finite and a multivariate framework is required. The usefulness of the approach is illustrated by looking at patterns of multigroup school segregation in the U.S. for the school years 1989-90 and 2005-06.
    Keywords: Multigroup segregation measurement, Axiomatic properties, Econometric models
    Date: 2009–12
    URL: http://d.repec.org/n?u=RePEc:cte:werepe:we09448&r=ltv
  12. By: L. Rachel Ngai; Christopher A. Pissarides
    Abstract: We examine the distribution of hours of work across industrial sectors in OECD countries.We find large disparities when sectors are divided into three groups: one that produces goodswithout home substitutes and two others that have home substitutes — health and socialwork, and all others. We attribute the disparities to the countries' tax and subsidy policies.High taxation substantially reduces hours in sectors that have close home substitutes but lessso in other sectors. Health and social care subsidies increase hours in that sector. We computethese effects for nineteen OECD countries.
    Keywords: hours of work, employment shares, home production, childcare, tax wedge,welfare state, social subsidies
    JEL: H53 I18 I38 J22
    Date: 2009–12
    URL: http://d.repec.org/n?u=RePEc:cep:cepdps:dp0962&r=ltv
  13. By: Pablo Brañas-Garza (Universidad de Granada); Ramón Cobo-Reyes (Universidad de Granada); María Paz Espinosa (Universidad del País Vasco); Natalia Jiménez (Universidad de Granada); Jaromír Kovárík (Universidad del País Vasco); Giovanni Ponti (Universidad de Alicante; Università di Ferrara)
    Abstract: We report on a two-stage experiment in which i) we first elicit the social network within a section of undergraduate students and ii) we then measure their altruistic attitudes by means of a standard Dictator game. We observe that more socially integrated subjects are also more altruistic, as betweenness centrality and reciprocal degree are positively correlated with the level of giving, even after controlling for framing and social distance, which have been shown to signicantly affect giving in previous studies. Our findings suggest that social distance and social integration are complementary determinants of altruistic behavior.
    Keywords: Altruism, centrality, social network experiments
    JEL: C93 D85
    Date: 2009–12–21
    URL: http://d.repec.org/n?u=RePEc:ehu:ikerla:200935&r=ltv
  14. By: Anand Banerjee; Victor M. Yakovenko
    Abstract: We study probability distributions of money, income, and energy consumption per capita for ensembles of economic agents. Following the principle of entropy maximization for partitioning of a limited resource, we find exponential distributions for the investigated variables. We also discuss fluxes of money and population between two systems with different money temperatures. For income distribution, we study a stochastic process with additive and multiplicative components. The resultant income distribution interpolates between exponential at the low end and power-law at the high end, in agreement with the empirical data for USA. We discuss how the increase of income inequality in USA in 1983-2007 results from dramatic increase of the income fraction going to the upper tail and exceeding 20% of the total income. Analyzing the data from the World Resources Institute, we find that the distribution of energy consumption per capita around the world is reasonably well described by the exponential function. Comparing the data for 1990, 2000, and 2005, we discuss the effects of globalization on the inequality of energy consumption.
    Date: 2009–12
    URL: http://d.repec.org/n?u=RePEc:arx:papers:0912.4898&r=ltv
  15. By: Bjornskov, Christian; Dreher, Axel; Fischer, Justina AV; Schnellenbach, Jan
    Abstract: In this paper, we revisit the association between happiness and inequality. We argue that the perceived fairness of the income generation process affects this association. Building on a two-period model of individual life-time utility maximization, we predict that persons with higher perceived fairness will experience higher levels of life-time utility and are less in favor of income redistribution. In societies with a high level of actual social mobility, income inequality is perceived more positively with increased expected fairness. The opposite is expected for countries with low actual social mobility, due to an increasing relevance of a disappointment effect resulting from unsuccessful individual investments. Using the World Values Survey data and a broad set of fairness measures, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective well-being). We also find strong empirical support for the disappointment effect in low social mobility countries. In contrast, the results for high-mobility countries turn out to be ambiguous.
    Keywords: Happiness; life satisfaction; subjective well-being; inequality; income distribution; redistribution; political ideology; justice; fairness; World Values Survey
    JEL: D31 H40 J62 I31 Z13
    Date: 2009–12–21
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:19502&r=ltv
  16. By: Borooah, Vani / K
    Abstract: This study uses unit-record data on over 50,000 rural children, from the sixteen major states of India, to analyse the determinants of the risks of severe stunting and of being severely underweight. The importance of this study derives from the fact that the prevalence of under-nourishment in India is, even relative to other poor countries, shockingly high. The study focuses on the role of maternal literacy in reducing the risk of child malnourishment. It concludes that when the mother is literate, real benefits flow to children in terms of reduced risk; the same benefits, however, do not flow when the father, but not the mother, is literate. Literate mothers make more effective use of health-care institutions, like anganwadis and hospitals. Consequently, the benefits to children from expanding the supply of such institutions are greater when these institutions interact with mothers who are literate.
    Keywords: Malnutrition; Maternal Literacy; Bivariate Probit Model
    JEL: J16
    Date: 2009
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:19833&r=ltv

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