nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒04‒24
seven papers chosen by
Maximo Rossi
University of the Republic

  1. A Socio-economic Analysis of Youth Disconnectedness By Friedhelm Pfeiffer; Ruben R. Seiberlich
  2. Real Wages and the Business Cycle: Accounting for Worker and Firm Heterogeneity By Anabela Carneiro; Paulo Guimaraes; Pedro Portugal
  3. Does Marriage Matter for Children? Assessing the Impact of Legal Marriage in Sweden By Björklund, Anders; Ginther, Donna K.; Sundström, Marianne
  4. Civic Capital as the Missing Link By Luigi Guiso; Paola Sapienza; Luigi Zingales
  5. The Consequences of Corruption: Evidence from China By Bin Dong; Benno Torgler
  6. The Causes of Corruption: Evidence from China By Bin Dong; Benno Torgler
  7. A New Data Set of Educational Attainment in the World, 1950–2010 By Robert J. Barro; Jong-Wha Lee

  1. By: Friedhelm Pfeiffer; Ruben R. Seiberlich
    Abstract: Disconnectedness among youth can have several dimensions. From a socio-economic viewpoint, failure in school, unemployment and the lack of an intimate relationship are among the most important ones. In our samples from SOEP youth questionnaires, approximately 13% of young people in Germany between the ages of 17 and 19 are disconnected. The percentage of disconnected youths has been on the rise since 2001. There is evidence that an adverse family background is the most important variable for being disconnected in young adulthood. Macroeconomic factors also contribute to disconnectedness. Recessions are followed by increases in the number of disconnected youth.
    Keywords: Disconnected youth, unemployment, school failure, life adversity
    JEL: D87 I12 I21 J13
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp291&r=ltv
  2. By: Anabela Carneiro (cef.up, Faculdade de Economia, Universidade do Porto); Paulo Guimaraes (University of South Carolina, cef.up, and IZA Bonn); Pedro Portugal (Banco de Portugal, Universidade NOVA de Lisboa, and IZA Bonn)
    Abstract: Using a longitudinal matched employer-employee data set for Portugal over the 1986-2005 period, this study analyzes the heterogeneity in wages responses to aggregate labor market conditions for newly hired workers and existing workers. Accounting for both worker and firm heterogeneity, the data support the hypothesis that entry wages are much more procyclical than current wages. A one-point increase in the unemployment rate decreases wages of newly hired male workers by around 2.8% and by just 1.4% for workers in continuing jobs. Since we estimate the fixed effects, we were able to show that unobserved heterogeneity plays a non-trivial role in the cyclicality of wages. In particular, worker fixed effects of new hires and separating workers behave countercyclically, whereas firm fixed effects exhibit a procyclical pattern. Finally, the results reveal, for all workers, a wage-productivity elasticity of 1.2, slightly above the one-for-one response predicted by the Mortensen-Pissarides model.
    Keywords: wage cyclicality; hires; firm-specific effects; compositional effects; labor productivity
    JEL: J31 E24 E32
    Date: 2009–11
    URL: http://d.repec.org/n?u=RePEc:por:cetedp:0903&r=ltv
  3. By: Björklund, Anders (Swedish Institute for Social Research, Stockholm University); Ginther, Donna K. (Dept. of Economics); Sundström, Marianne (Swedish Institute for Social Research, Stockholm University)
    Abstract: This paper examines whether parental marriage confers educational advantages to children relative to cohabitation. We exploit a dramatic marriage boom in Sweden in late 1989 created by a reform of the Widow’s Pension System that raised the attractiveness of marriage compared to cohabitation to identify the effect of marriage and the effect of selection bias on marriage estimates. Sweden’s rich administrative data sources enable us to identify the children who were affected by parental marriage due to this marriage boom. Our analysis addresses the question of whether marginal marriages created by a policy initiative have an impact on children. Using grade point average at age 16 as the outcome variable, we first show the expected pattern that children with married parents do better than children with cohabiting parents. However, once we control for observable family background and compare the outcomes for children whose parents married due to the reform with those for children whose parents remained unmarried, the differences largely disappear. The results from a sibling difference analysis are consistent with the conclusion that the differentials among children of married and cohabiting parents reflect selection rather than causation.
    Keywords: family structure; marriage; child well-being; educational attainment
    JEL: J10 J12 J13 J18
    Date: 2010–03–31
    URL: http://d.repec.org/n?u=RePEc:hhs:sofiwp:2010_003&r=ltv
  4. By: Luigi Guiso; Paola Sapienza; Luigi Zingales
    Abstract: This chapter reviews the recent debate about the role of social capital in economics. We argue that all the difficulties this concept has encountered in economics are due to a vague and excessively broad definition. For this reason, we restrict social capital to the set of values and beliefs that help cooperation—which for clarity we label civic capital. We argue that this definition differentiates social capital from human capital and satisfies the properties of the standard notion of capital. We then argue that civic capital can explain why differences in economic performance persist over centuries and discuss how the effect of civic capital can be distinguished empirically from other variables that affect economic performance and its persistence, including institutions and geography.
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:eui:euiwps:eco2010/08&r=ltv
  5. By: Bin Dong (QUT); Benno Torgler (QUT)
    Abstract: With complementary Chinese data sets and alternative corruption measures, we explore the consequences of corruption. Adopting a novel approach we provide evidence that corruption can have both, positive and negative effects, on economic development. The overall impact of corruption might be the balance of the two simultaneous effects within a specific institutional environment (“grease the wheels†and “sand the wheelsâ€). Corruption is observed to considerably increase income inequality in China. We also find that corruption strongly reduces tax revenue. Looking at things from an expenditure point of view we observe that corruption significantly decreases government spending on education, R&D and public health in China. We also observe that regional corruption significantly reduces inbound foreign direct investment in Chinese regions, which indicates that the pollution haven hypothesis may not hold in China. This finding sheds a new light on the “China puzzle†that China is the largest developing host of FDI while it is appears to be very corrupt. Finally we observe that corruption substantially aggravates pollution probably through loosening environment regulation, and that it modifies the effects of trade openness and FDI on the stringency of environmental policy in a manner opposite to that observed in literature to date.
    Keywords: Corruption; China; Government; Economic Development; Inequality;
    JEL: D72 H11 K42
    Date: 2010–03–25
    URL: http://d.repec.org/n?u=RePEc:qut:dpaper:256&r=ltv
  6. By: Bin Dong (QUT); Benno Torgler (QUT)
    Abstract: In this study we explore in detail the causes of corruption in China using two different sets of data at the regional level (provinces and cities). We observe that regions with more anti-corruption efforts, histories of British rule, higher openness, more access to media and relatively higher wages of government employees are markedly less corrupt; while social heterogeneity, regulation, abundance of resource and state-owned enterprises substantially breed regional corruption. Moreover, fiscal decentralization is discovered to depress corruption significantly, while administrative decentralization fosters local corruption. We also find that there is currently a positive relationship between corruption and economic development in China that is mainly driven by the transition to a market economy.
    Keywords: Corruption; China; Government; Decentralization; Deterrence; Social Heterogenity
    JEL: D73 H11 K42
    Date: 2010–03–25
    URL: http://d.repec.org/n?u=RePEc:qut:dpaper:257&r=ltv
  7. By: Robert J. Barro; Jong-Wha Lee
    Abstract: Our panel data set on educational attainment has been updated for 146 countries from 1950 to 2010. The data are disaggregated by sex and by 5-year age intervals. We have improved the accuracy of estimation by using information from consistent census data, disaggregated by age group, along with new estimates of mortality rates and completion rates by age and education level. We use these new data to investigate how output relates to the stock of human capital, measured by overall years of schooling as well as by the composition of educational attainment of workers at various levels of education. We find schooling has a significantly positive effect on output. After controlling for the simultaneous determination of human capital and output, by using the 10-year lag of parents‘ education as an instrument variable (IV) for the current level of education, the estimated rate-of-return to an additional year of schooling ranges from 5% to 12%, close to typical Mincerian return estimates found in the labor literature.
    JEL: F43 I21 O11 O4
    Date: 2010–04
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:15902&r=ltv

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