New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒03‒28
eleven papers chosen by

  1. Start-Up Subsidies for the Unemployed: Long-Term Evidence and Effect Heterogeneity By Marco Caliendo; Steffen Künn
  2. Higher education and youth transition from school to labour market: The Spanish case By Marta Rohana Lopez
  3. Happiness and childbearing across Europe By Arnstein Aassve; Maria Sironi; Alice Goisis
  4. Microeconomic Approaches to Development: Schooling, Learning, and Growth By Mark R. Rosenzweig
  5. The Gender and Poverty Impacts of Trade Liberalization in Senegal By John Cockburn; Erwin Corong; Bernard Decaluwé; Ismaël Fofana; Véronique Robichaud
  6. On Measuring Vulnerability to Poverty By Dutta, I.; Foster, J.; Mishra, Ajit
  7. Public-Private Wage Gap In Latin America (1999-2007): A Matching Approach By Alejandra Mizala; Pilar Romaguera; Sebastian Gallegos
  8. The Evolution of the Returns to Human Capital in Canada, 1980-2005 By Boudarbat, Brahim; Lemieux, Thomas; Riddell, Craig
  9. A Shred of Credible Evidence on the Long Run Elasticity of Labor Supply By Ashenfelter, Orley; Doran, Kirk; Schaller, Bruce
  10. Higher Education Attainment: The Case of Intergenerational Transmission of Education in Portugal By Pereira, Pedro T.
  11. What good is happiness? By FLEURBAEY, Marc; SCHOKKAERT, Erik; DECANCQ, Koen

  1. By: Marco Caliendo; Steffen Künn
    Abstract: Turning unemployment into self-employment has become an increasingly important part of active labor market policies (ALMP) in many OECD countries. Germany is a good example where the spending on start-up subsidies for the unemployed accounted for nearly 17% of the total spending on ALMP in 2004. In contrast to other programs-like vocational training, job creation schemes, or wage subsidies-the empirical evidence on the effectiveness of such schemes is still scarce; especially regarding long-term effects and effect heterogeneity. This paper aims to close this gap. We use administrative and survey data from a large sample of participants in two distinct start-up programs and a control group of unemployed individuals. We find that over 80% of participants are integrated in the labor market and have relatively high labor income five years after start-up. Additionally, participants are much more satisfied with their current occupational situation compared to previous jobs. Based on conditional propensity score matching methods we estimate the long-term effects of the programs against non-participation. Our results show that both programs are effective with respect to income and employment outcomes in the long-run. Moreover, we consider effect heterogeneity with respect to several dimensions and show that start-up subsidies for the unemployed tend to be most effective for disadvantaged groups in the labor market.
    Keywords: Start-up subsidies, self-employment, evaluation, long-term effects, effect heterogeneity
    JEL: J68 C14 H43
    Date: 2010
  2. By: Marta Rohana Lopez
    Abstract: Using a specific data set drawn from the Spanish Module Education to Labour Market Transitions (2000), this paper analyses the labour market entrance of Spanish school leavers and the match between education and work at the early stages of working life. Moreover, special attention is paid to graduates, because Spain experienced a strong growth in the demand for higher education during the last decades of 20th century. The empirical evidence shows that, besides other personal and family individual's characteristics, human capital exerts a strong influence on the finding of an employment. With regard to the match between education and work, the results indicate that over-education is a common phenomenon in the Spanish youth labour market. However, unlike what one could expect, being a graduate seems to be associated to a lower likelihood of over-education in the first employment.
    Keywords: university education, school to work transition, mismatch in the labour market, Spain
    Date: 2009–07
  3. By: Arnstein Aassve; Maria Sironi; Alice Goisis
    Abstract: In this paper we analyse the relationship between happiness and childbearing taking a comparative perspective. We argue that fertility and happiness are somewhat linked and we investigate whether there are important differences across European countries. Using happiness as a welfare measure offers important benefits over income especially when interest lies in understanding how individuals' wellbeing is associated with childbearing outcomes. We use the European Social Survey (ESS) and apply simple regression techniques, controlling for country differences, and find indeed a positive and significant association between happiness and childbearing. However, parents do not appear to be consistently happier in some countries than in others. The final set of analyses reveals a very strong interconnection between, childbearing, partnership and happiness.
    Keywords: happiness, childbearing, European social survey, ESS
    Date: 2009–07
  4. By: Mark R. Rosenzweig (Economic Growth Center, Yale University)
    Abstract: I illustrate the variety of approaches to development issues microeconomists employ, focusing on studies that illuminate and quantify the major mechanisms posited by growth theorists who highlight the role of education in fostering growth. I begin with a basic issue: what are the returns to schooling? I discuss microeconomic studies that estimate schooling returns using alternative approaches to estimating wage equations, which require assumptions that are unlikely to be met in low-income countries, looking at inferences based on how education interacts with policy and technological changes in the labor and marriage markets. I then review research addressing whether schooling facilitates learning, or merely imparts knowledge, and whether there is social learning that gives rise to educational externalities. I next examine studies quantifying the responsiveness of educational investments to changes in schooling returns and assess whether and where there exist important barriers to such investments when returns justify their increase.
    Keywords: schooling, development, growth
    JEL: O11 O15 O33 J24
    Date: 2010–03
  5. By: John Cockburn; Erwin Corong; Bernard Decaluwé; Ismaël Fofana; Véronique Robichaud
    Abstract: Developing countries are deeply engaged in trade negotiations at the bilateral, regional and international (WTO) levels. As imports, exports and tariff duties all occupy an important part of their economies, far-reaching impacts on production, labor and capital markets, household incomes and, perhaps most importantly, economic growth will indubitably ensue. As men and women occupy very different roles in these economies, particularly in terms of the import and export orientation of the sectors in which they work, they will be affected very differently by these reforms. To anticipate these changes, a dynamic economy-wide model is developed with an application to Senegal. Whereas most similar existing studies consider the comparative static resource reallocation effects of trade reforms, ours is the first to focus on the growth effects (“dynamic gains from trade”), which are thought to be possibly much larger. The trade-productivity link is revealed to be the strongest growth channel, raising GDP by over three percentage points by the end of our 15 year simulation period. Trade liberalization is found to increase the gender wage gap in favor of men, especially among unskilled workers, as men are more active in export-oriented sectors such as cash crops and mining whereas women contribute more to import-competing sectors such as food crops. Furthermore, the ensuing growth effects further widen the over-all gender wage gap, as the productivity gains from increased openness are greatest in female-intensive sectors in which imports rise markedly. Thus, this suggests the need to implement policies aimed at increasing both unskilled and skilled women’s exposure in labor-intensive export industries, which is currently male dominated. A linked microsimulation analysis, based on a survey of Senegalese households, show that trade liberalization reduces poverty in Senegal, particularly in rural areas. While the fall in the relative wages of rural workers would initially lead us to believe that rural households would lose the most from trade liberalization, they are in fact compensated by greater consumer price savings, given that they consume more goods from the initially protected agricultural and agro-industrial sectors.
    Keywords: Senegal, Trade, Gender, Poverty, Growth
    JEL: C68 F17 F43 I32 J16 O24 O33 O55
    Date: 2010
  6. By: Dutta, I.; Foster, J.; Mishra, Ajit
    Abstract: There is a growing interest on dynamic and broader concepts of deprivation such as vulnerability, which takes in to account the destitution of individuals from future shocks. We use the framework of decision making under uncertainty to arrive at a new measure of vulnerability to poverty. We highlight the importance of current standard of living to better capture the notion of vulnerability. In conceptualizing the new class of measures of vulnerability we thus move beyond the standard expected poverty measures that is commonly found in the literature. We also axiomatically characterize the new class of measure and discuss some of it's properties.
    Keywords: Poverty; Vulnerability; Uncertainty
    Date: 2010–03
  7. By: Alejandra Mizala; Pilar Romaguera; Sebastian Gallegos
    Abstract: Using matching methods, we estimate the public-private wage gap in seven Latin American countries—Argentina, Bolivia, Brazil, Chile, Costa Rica, Paraguay and Uruguay—for the years 1999 and 2007. These methods do not require any estimation of earnings equations and hence no validity-out-of-the-support assumptions; furthermore, this approach allows us to estimate not only the average wage gap but also its distribution. Our main findings indicate that the average public sector worker earns more than his/her private counterpart. This differential has increased over the 1999-2007 period. Our results also show that there are important differences along the wage distribution. In particular, we find that the public sector wage premium declines as it moves up the conditional wage distribution, becoming a public sector wage penalty for the higher percentiles. Over the 1999-2007 period, the public-private wage gap changes from positive to negative at higher percentiles of the distribution, but still the most qualified public sector workers do face a wage penalty. Therefore, the profitability of public sector employment seems to be at its greatest at the lower end of the wage distribution. JEL Classification: J31, D31. Key words: Public-private Wage Gap, Matching, Public Sector, Latin America.
    Date: 2010
  8. By: Boudarbat, Brahim (University of Montreal); Lemieux, Thomas (University of British Columbia, Vancouver); Riddell, Craig (University of British Columbia, Vancouver)
    Abstract: We examine the evolution of the returns to human capital in Canada over the period 1980-2005. Our main finding is that returns to education increased substantially for Canadian men, contrary to conclusions reached previously. Most of this rise took place in the early 1980s and since 1995. Returns to education also rose, albeit more modestly, for Canadian women. Another important development is that after years of expansion, the wage gap between younger and older workers stabilized after 1995. Controlling for work experience and using Canadian Census data appear to account for the main differences between our results and earlier findings.
    Keywords: human capital, wage differentials, Canada
    JEL: J24 J31
    Date: 2010–03
  9. By: Ashenfelter, Orley (Princeton University); Doran, Kirk (University of Notre Dame); Schaller, Bruce (New York City Department of Transportation)
    Abstract: Virtually all public policies regarding taxation and the redistribution of income rely on explicit or implicit assumptions about the long run effect of wage rates on labor supply. The available estimates of the wage elasticity of male labor supply in the literature have varied between -0.2 and 0.2, implying that permanent wage increases have relatively small, poorly determined effects on labor supplied. The variation in existing estimates calls for a simple, natural experiment in which men can change their hours of work, and in which wages have been exogenously and permanently changed. We introduce a panel data set of taxi drivers who choose their own hours, and who experienced two exogenous permanent fare increases instituted by the New York City Taxi and Limousine Commission, and we use these data to fit a simple structural labor supply function. Our estimates suggest that the elasticity of labor supply is about -0.2, implying that income effects dominate substitution effects in the long run labor supply of males.
    Keywords: labor supply
    JEL: J22
    Date: 2010–03
  10. By: Pereira, Pedro T. (University of Madeira)
    Abstract: The lack of formal education and competences of the Portuguese workers is one of the biggest problems of the country. This lack is disappearing as quickly as desired and the young generations still lag far behind those in other OECD countries. This paper studies the intergenerational transmission of education achievement, in particular higher education completion, seeking to determine the influence on future attainment of parents’ education and labor market conditions while the child was growing up. We conclude that the education of the parents is very important, even if it is only one of them that has it. This influence seems not to be independent of the gender of the parent who has it. The fact that the parents face unemployment has a negative effect on the educational achievement of the child. Females generally perform better than males, but there are exceptions. For instance, it is significantly lower if the father has low education and the mother has secondary or higher education.
    Keywords: demand for schooling, human capital, parent’s education
    JEL: I21 I28 J11
    Date: 2010–03
    Keywords: happiness, satisfaction, preferences, welfare economics, psychology
    JEL: D60 D71
    Date: 2009–03–01

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