nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒06‒18
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Violent Conflict and Inequality By Cagatay Bircan; Tilman Brück; Marc Vothknecht
  2. Choices Which Change Life Satisfaction: Revising SWB Theory to Account for Change By Bruce Headey; Ruud Muffels; Gert G. Wagner
  3. Work Values, Endogenous Sentiments and Redistribution By Laurence Kranich; Matteo Cervellati; Joan Esteban
  4. Civic Capital as the Missing Link By Luigi Guiso; Paola Sapienza; Luigi Zingales
  5. Under Pressure? The Effect of Peers on Outcomes of Young Adults By Black, Sandra E.; Devereux, Paul; Salvanes, Kjell G.
  6. The Effects of Lottery Prizes on Winners and their Neighbors: Evidence from the Dutch Postcode Lottery By Kuhn, Peter J.; Kooreman, Peter; Soetevent, Adriaan R.; Kapteyn, Arie
  7. Does Racial and Ethnic Discrimination Vary Across Minority Groups? Evidence from a Field Experiment By Booth, Alison L.; Leigh, Andrew; Varganova, Elena
  8. Gender, Competition and the Efficiency of Policy Interventions By Balafoutas, Loukas; Sutter, Matthias
  9. Should I stay or should I go? An institutional approach to brain drain By Lea Cassar; Bruno S. Frey
  10. Are health shocks different ? evidence from a multi-shock survey in Laos By Wagstaff, Adam; Lindelow, Magnus

  1. By: Cagatay Bircan; Tilman Brück; Marc Vothknecht
    Abstract: This paper analyzes the distributive impacts of violent conflicts, which is in contrast to previous literature that has focused on the other direction. We use cross-country panel data for the time period 1960-2005 to estimate war-related changes in income inequality. Our results indicate rising levels of inequality during war and especially in the early period of post-war reconstruction. However, we find that this rise in income inequality is not permanent. While inequality peaks around five years after the end of a conflict, it declines again to pre-war levels within the end of the first post-war period. Lagged effects of conflict and only subsequent adjustments of redistributive policies in the period of post-war reconstruction seem to be valid explanations for these patterns of inequality. A series of alternative specifications confirms the main findings of the analysis.
    Keywords: Conflict, Inequality, Reconstruction, Income Distribution
    JEL: O11 O15
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1013&r=ltv
  2. By: Bruce Headey; Ruud Muffels; Gert G. Wagner
    Abstract: Using data from the long-running German Socio-Economic Panel (SOEP) 1984-2008, this paper analyses the effects of individual preferences and choices on subjective well-being (SWB). It is shown that preferences and choices relating to life goals/values, partner's personality, hours of work, social participation and healthy lifestyle all have substantial effects on life satisfaction. The results have negative implications for the still dominant theory of SWB, set-point theory. This theory holds that adult SWB does not change in the medium or long term, although temporary fluctuations occur due to specific life events. Set-point theory has come under increasing criticism in recent years, primarily due to unmistakable evidence in SOEP that, during the last 25 years, up to a third of the population has recorded substantial and apparently permanent changes in life satisfaction. It is becoming clear that the main challenge now for SWB researchers is to develop a new theory which can account for medium and long term change, and not merely stability in SWB. Set-point theory is limited precisely because it is purely a theory of stability. The paper is based on a specially constructed SOEP file in which data are divided into five 5-year periods in order to facilitate analysis of medium term change.
    Keywords: SWB, set-point theory, life goals, individual choice, panel regression analysis, SOEP
    JEL: I31 J1 Z13
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1010&r=ltv
  3. By: Laurence Kranich; Matteo Cervellati; Joan Esteban
    Abstract: We examine the interactions between individual behavior, sentiments and the social contract in a model of rational voting over redistribution. Agents have moral "work values". Individuals' self-esteem and social consideration of others are endogenously determined comparing behaviors to moral standards. Attitudes toward redistribution depend on self-interest and social preferences. We characterize the politico-economic equilibria in which sentiments, labor supply and redistribution are determined simultaneously. The equilibria feature different degrees of "social cohesion" and redistribution depending on pre-tax income inequality. In clustered equilibria the poor are held partly responsible for their low income since they work less than the moral standard and hence redistribution is low. The paper proposes a novel explanation for the emergence of different sentiments and social contracts across countries. The predictions appear broadly in line with well-documented differences between the United States and Europe.
    Date: 2010
    URL: http://d.repec.org/n?u=RePEc:nya:albaec:10-05&r=ltv
  4. By: Luigi Guiso (European University Institute, EIEF, & CEPR); Paola Sapienza (Northwestern University, NBER, & CEPR); Luigi Zingales (University of Chicago, NBER, & CEPR)
    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:eie:wpaper:1005&r=ltv
  5. By: Black, Sandra E. (University of Texas at Austin); Devereux, Paul (University College Dublin); Salvanes, Kjell G. (Norwegian School of Economics and Business Administration)
    Abstract: A variety of public campaigns, including the "Just Say No" campaign of the 1980s and 1990s that encouraged teenagers to "Just Say No to Drugs", are based on the premise that teenagers are very susceptible to peer influences. Despite this, very little is known about the effect of school peers on the long-run outcomes of teenagers. This is primarily due to two factors: the absence of information on peers merged with long-run outcomes of individuals and, equally important, the difficulty of separately identifying the role of peers. This paper uses data on the population of Norway and idiosyncratic variation in cohort composition within schools to examine the role of peer composition in 9th grade on longer-run outcomes such as IQ scores at age 18, teenage childbearing, post-compulsory schooling educational track, adult labor market status, and earnings. We find that outcomes are influenced by the proportion of females in the grade, and these effects differ for men and women. Other peer variables (average age, average mother's education) have little impact on the outcomes of teenagers.
    Keywords: education, peer effects
    JEL: I2
    Date: 2010–05
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4946&r=ltv
  6. By: Kuhn, Peter J. (University of California, Santa Barbara); Kooreman, Peter (Tilburg University); Soetevent, Adriaan R. (University of Amsterdam); Kapteyn, Arie (RAND)
    Abstract: Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors. Consistent with the life-cycle hypothesis, the effects on winners’ consumption are largely confined to cars and other durables. Consistent with the theory of in-kind transfers, the vast majority of BMW winners liquidate their BMWs. We do, however, detect substantial social effects of lottery winnings: PCL nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants.
    Keywords: social interactions, natural experiments
    JEL: D12 C21
    Date: 2010–05
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4950&r=ltv
  7. By: Booth, Alison L. (University of Essex); Leigh, Andrew (Australian National University); Varganova, Elena (Australian National University)
    Abstract: We conduct a large-scale audit discrimination study to measure labor market discrimination across different minority groups in Australia – a country where one quarter of the population was born overseas. To denote ethnicity, we use distinctively Anglo-Saxon, Indigenous, Italian, Chinese, and Middle Eastern names, and our goal is a comparison across multiple ethnic groups rather than focusing on a single minority as in most other studies. In all cases, we applied for entry-level jobs and submitted a CV showing that the candidate had attended high school in Australia. We find economically and statistically significant differences in callback rates, suggesting that ethnic minority candidates would need to apply for more jobs in order to receive the same number of interviews. These differences vary systematically across groups, with Italians (a more established migrant group) suffering less discrimination than Chinese and Middle Easterners (who have typically arrived more recently). We also explore various explanations for our empirical findings.
    Keywords: discrimination, field experiments, employment
    JEL: J71 C93
    Date: 2010–05
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4947&r=ltv
  8. By: Balafoutas, Loukas (University of Innsbruck); Sutter, Matthias (University of Innsbruck)
    Abstract: Recent research has shown that women shy away from competition more often than men. We evaluate experimentally three alternative policy interventions to promote women in competitions: Quotas, Preferential Treatment, and Repetition of the Competition unless a critical number of female winners is reached. We find that Quotas and Preferential Treatment encourage women to compete significantly more often than in a control treatment, while efficiency in selecting the best candidates as winners is not worse. The level of cooperation in a post-competition teamwork task is even higher with successful policy interventions. Hence, policy measures promoting women can have a double dividend.
    Keywords: competition, gender gap, experiment, affirmative action, teamwork, coordination
    JEL: C91
    Date: 2010–05
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4955&r=ltv
  9. By: Lea Cassar; Bruno S. Frey
    Abstract: This paper suggests that institutional factors which reward social net- works at the expenses of productivity can play an important role in ex- plaining brain drain. The e¤ects of social networks on brain drain are analyzed in a decision theory framework with asymmetric information. We distinguish between the role of insidership and personal connections. The larger the cost of being an outsider, the smaller is the number and the average ability of researchers working in the domestic job market. Per- sonal connections partly compensate for this e¤ect by attracting highly connected researchers back. However, starting from a world with no dis- tortions, personal connections also increase brain drain.
    Keywords: Brain Drain; Social Networks; Institutions; Asymmetric In- formation; Italian Academia
    JEL: D82 F22 I20 J24 J44
    Date: 2010–06
    URL: http://d.repec.org/n?u=RePEc:cra:wpaper:2010-12&r=ltv
  10. By: Wagstaff, Adam; Lindelow, Magnus
    Abstract: In Laos health shocks are more common than most other shocks and more concentrated among the poor. They tend to be more idiosyncratic than non-health shocks, and are more costly, partly because they lead to high medical expenses, but also because they lead to income losses that are sizeable compared with the income losses associated with non-health shocks. Health shocks also stand out from other shocks in the number of coping strategies they trigger: they are more likely than non-health shocks to trigger assistance from a nongovernmental organization and other households, dis-saving, borrowing, asset sales, an early harvest, the pawning of possessions, and the delaying of plans; by contrast, they are less likely to trigger assistance from government. Consumption regressions point to only limited evidence of households not being able to smooth consumption in the face of any shock. However, these results contrast with households'own assessments of the welfare impacts of shocks. The majority said they had to cut back consumption following a shock and that shocks considerably affected their welfare. Only health shocks are worse than a drought in terms of the likelihood of a family being forced to cut back consumption and in terms of the shock affecting a family's well-being"a lot."The poor are especially disadvantaged in terms of the greater damage that health shocks inflict on household well-being. Health shocks stand out too in leading to a loss of human capital: household members experiencing a health shock did not recover their former subjective health following the health shock, losing, on average, 0.6 points on a 5-point scale. The wealthier and better educated are better able to limit the health impacts of a health shock; the data are consistent with this being due to their greater proximity to a health facility.
    Keywords: Health Monitoring&Evaluation,Health Systems Development&Reform,Housing&Human Habitats,Rural Poverty Reduction,Economic Theory&Research
    Date: 2010–06–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:5335&r=ltv

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