nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒05‒29
six papers chosen by
Maximo Rossi
University of the Republic

  1. Time Packages and Their Effect on Life Satisfaction By Marina Della Giusta; Zella King
  2. Anything to Keep You Happy? By Marina Della Giusta; Sarah Jewell; Uma Kambhampati
  3. Inequality amongst the wealthiest and its link with economic growth By Franses, Ph.H.B.F.; Vermeer, S.
  4. The Distribution of Top Incomes in Five Anglo-Saxon Countries over the Twentieth Century By A B Atkinson; Andrew Leigh
  5. Do Rising Top Incomes Lift All Boats? By Dan Andrews; Christopher Jencks; Andrew Leigh
  6. Immigration, wages, and compositional amenities. By Card, D.; Dustmann, C.; Preston, I.

  1. By: Marina Della Giusta (School of Economics, University of Reading); Zella King (School of Management, University of Reading)
    Abstract: The expected response of individuals to policy changes usually requires that they use their resources in a different way, according to the changed relative opportunity cost of undertaking each that the policy effects. However, it has often been noted that the allocation of time to different activities does not respond smoothly, and rather appears to be influenced by a range of non economic factors that lead to opportunity costs and trade-offs being different for different individuals, depending not just on the constraints they face, but also on the activities they are already ‘specialised’ at. In this paper we use the British Household Panel Survey to examine how time packages - the allocation of weekly hours to a combination of paid and unpaid work and leisure - affect life satisfaction, and the marginal returns from additional hours spent in paid work, overtime, caring and housework. We observe that for men in general, the marginal benefits of an additional hour of paid work, or extra work (in the form of overtime or a second job) are positive, while an additional hour of caring has a negative effect on life satisfaction. For men who are leisure rich, however, the marginal benefits of an additional hour of housework are positive. Leisure rich men appear to gain satisfaction from doing housework, in a way that other men do not. The same applies to women. Women are in general less satisfied by taking on overtime or second jobs, presumably preferring to use that discretionary time at home in leisure pursuits or with children. For women doing full-time paid work, the marginal effect of an additional hour of extra work (overtime or a second job) is negative; for women already stretched by full-time paid work, extra hours are an unwelcome burden. We discuss the role that different kinds of constraints, including gender attitudes, play in determining our results and the implications for policy design.
    Keywords: happiness, time use
    JEL: D13 I31
    Date: 2010–05–08
  2. By: Marina Della Giusta (School of Economics, University of Reading); Sarah Jewell (School of Economics, University of Reading); Uma Kambhampati (School of Economics, University of Reading)
    Abstract: Whilst there is an abundant supply of theoretical and empirical contributions in cooperative bargaining models on the transfer of material resources within couples and the labour supply patterns of individuals in couples, this literature has so far not been interested in measuring empirically the utilities of partners. Conversely the literature on hedonic wellbeing has recently moved on to assess couple’s happiness and the extent to which individuals in couples influence each other’s happiness without making reference to the problem of allocation of resources. The latter is however important to both the individual and couple happiness, and in the limit determine whether couples stay together. Here we address the role of the allocation of resources, particularly in the form of time use time and the effect it has on the joint and individual utilities in the couple.
    Keywords: happiness, utility transfers, time use, care
    JEL: D13 I31
    Date: 2010–05–06
  3. By: Franses, Ph.H.B.F.; Vermeer, S.
    Abstract: In this paper we correlate the key features of the distribution of wealth of the 500 wealthiest individuals in the Netherlands with economic growth and stock market returns for 1998 to 2009. We show that each year the distribution obeys a power law and that the key parameter measures the degree of inequality. Our main finding is that more inequality amongst the wealthiest is associated with higher economic growth.
    Keywords: wealth distribution;power law;economic growth
    Date: 2010–04–29
  4. By: A B Atkinson; Andrew Leigh
    Abstract: Taxation data have been used to create long-run series for the distribution of top incomes in quite a number of countries. Most of these studies have focused on the national experience of individual countries, but we can also learn from cross-country comparisons. Comparative analysis is therefore the next stage in the research program. At the same time, we know from other fields that there are dangers in simply pooling all available time series, without regard to the specific nature of data and reality. In this paper, we therefore adopt an intermediate approach, taking five Anglo- Saxon countries that have relatively similar backgrounds and tax systems: Australia, Canada, New Zealand, the UK, and the US. The first part of the paper tackles the challenge of comparability of income-tax based estimates across countries and across time. The second part summarizes the evidence about top income shares. Across these five countries, the shares of the very richest exhibit a strikingly similar pattern, falling in the three decades after World War II, before rising sharply from the mid-1970s onwards. The share of the top 1 percent is highly correlated across Anglo-Saxon countries, more so than the share of the next 4 percent. The third part of the paper looks at the relationship between taxes and top income shares. Controlling for country and year fixed effects, we find that a reduction in the marginal tax rate on wage income is associated with an increase in the share of the top percentile group. Likewise, a fall in the marginal tax rate on investment income (based on a lagged moving average) is associated with a rise in the share of the top percentile group.
    Keywords: inequality, taxation, Australia, Canada, New Zealand, United Kingdom, United States
    JEL: D31 H23 N30
    Date: 2010–04
  5. By: Dan Andrews; Christopher Jencks; Andrew Leigh
    Abstract: Pooling data for 1905 to 2000, we find no systematic relationship between top income shares and economic growth in a panel of 12 developed nations observed for between 22 and 85 years. After 1960, however, a one percentage point rise in the top decile’s income share is associated with a statistically significant 0.12 point rise in GDP growth during the following year. This relationship is not driven by changes in either educational attainment or top tax rates. If the increase in inequality is permanent, the increase in growth appears to be permanent. However, our estimates imply that it would take 13 years for the cumulative positive effect of faster growth on the mean income of the bottom nine deciles to offset the negative effect of reducing their share of total income.
    Keywords: inequality, growth, income distribution, national income
    JEL: D31 N10 O57
    Date: 2010–04
  6. By: Card, D.; Dustmann, C.; Preston, I.
    Abstract: Economists are often puzzled by the stronger public opposition to immigration than trade, since the two policies have symmetric effects on wages. Unlike trade, however, immigration changes the composition of the local population, imposing potential externalities on natives. While previous studies have focused on fiscal spillovers, a broader class of externalities arise because people value the ‘compositional amenities’ associated with the characteristics of their neighbors and co-workers. In this paper we present a new method for quantifying the relative importance of these amenities in shaping attitudes toward immigration. We use data for 21 countries in the 2002 European Social Survey, which included a series of questions on the economic and social impacts of immigration, as well as on the desirability of increasing or reducing immigrant inflows. We find that individual attitudes toward immigration policy reflect a combination of concerns over conventional economic impacts (i.e., on wages and taxes) and compositional amenities, with substantially more weight on composition effects. Most of the difference in attitudes to immigration between more and less educated natives is attributable to heightened concerns over compositional amenities among the less-educated.
    Date: 2009–11

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