nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒07‒24
ten papers chosen by
Maximo Rossi
University of the Republic

  1. An introduction to matching methods for causal inference and their implementation in Stata By Barbara Sianesi
  2. Performance Pay and the Gender Wage Gap: Evidence from Spain By de la Rica, Sara; Dolado, Juan José; Vegas, Raquel
  3. The "Negative" Assimilation of Immigrants: A Special Case By Chiswick, Barry R.; Miller, Paul W.
  4. Collective Action in Diverse Sierra Leone Communities By Rachel Glennerster; Alexander Rothenberg; Edward Miguel
  5. Family Values and the Regulation of Labor By Alberto Alesina; Yann Algan; Pierre Cahuc; Paola Giuliano, UCLA
  6. Social Capital and Political Accountability By Tommaso Nannicini; Andrea Stella; Guido Tabellini; Ugo Troiano
  7. Earnings, consumption and lifecycle choices By Costas Meghir; Luigi Pistaferri
  8. Releasing jobs for the young? Early retirement and youth unemployment in the United Kingdom By James Banks; Richard Blundell; Antoine Bozio; Carl Emmerson
  9. Econometric methods for research in education By Costas Meghir; Steven Rivkin
  10. Investing in Our Young People By Flavio Cunha; James J. Heckman

  1. By: Barbara Sianesi (Institute for Fiscal Studies)
    Abstract: Matching, especially in its propensity-score flavors, has become an extremely popular evaluation method. Matching is, in fact, the best-available method for selecting a matched (or reweighted) comparison group that looks like the treatment group of interest. In this talk, I will introduce matching methods within the general problem of causal inference, highlight their strengths and weaknesses, and offer a brief overview of different matching estimators. Using psmatch2, I will then step through a practical example in Stata that is based on real data. I will then show how to implement some of these estimators, as well as highlight a number of implementational issues.
    Date: 2010–07–13
  2. By: de la Rica, Sara (University of the Basque Country); Dolado, Juan José (Universidad Carlos III de Madrid); Vegas, Raquel (FEDEA, Madrid)
    Abstract: This paper uses detailed information from a large wage survey in 2006 to analyze the gender wage gap in the performance-pay (PP) component of total hourly wages and its contribution to the overall gender gap in Spain. Under the assumption that PP is determined in a more competitive fashion than the other wage components, one would expect, in principle, to find a low gender gap in PP. However, this is not what we find. After controlling for observable differences in individual and job characteristics as well as for non random selection, the adjusted gender gap in PP reaches 26 log points, displaying a "glass ceiling" pattern. After examining several alternative theories that could rationalize these findings, we conjecture that monopsonistic features, possibly related to women's lower labour mobility due to housework, fit better with our results than other theories related to occupational segregation.
    Keywords: performance pay, gender gaps, selection bias, quantile regressions
    JEL: J31 J33 J42 J71
    Date: 2010–06
  3. By: Chiswick, Barry R. (Department of Economics, University of Illinois at Chicago); Miller, Paul W. (Business School, University of Western Australia)
    Abstract: Research on the economic or labor market assimilation of immigrants has to date focused on the degree of improvement in their economic status with duration in the destination. The theoretical underpinning for this finding is the international transferability of skills. This paper addresses whether positive assimilation will be found if skills are very highly transferable internationally. It outlines the conditions for “negative” assimilation in the context of the traditional immigration assimilation model, and examines the empirical relevance of the hypothesis using data on immigrants from the English-speaking developed countries (i.e., the UK, Ireland, Canada and Australia/New Zealand) to the United States. Comparisons with the native born are also presented to test whether the findings are sensitive to immigrant cohort quality effects. Even after controlling for cohort effects, “negative” assimilation (a decline in earnings with duration) is found for immigrants in the US from the English-speaking developed countries. Negative assimilation is also found for immigrants from the English-speaking developed countries in Australia and from Nordic countries in Sweden.
    Keywords: Immigrants; Earnings; Negative Assimilation; English-speaking countries; Sweden
    JEL: F22 J31 J61
    Date: 2010–07–12
  4. By: Rachel Glennerster; Alexander Rothenberg; Edward Miguel
    Abstract: Scholars have pointed to ethnic and other social divisions as a leading cause of economic underdevelopment, due in part to their adverse effects on public good provision and collective action. We investigate this issue in post-war Sierra Leone, one of the world’s poorest countries. To address concerns over endogenous local ethnic composition, and in an advance over most existing work, we use an instrumental variables strategy relying on historical ethnic diversity data from the 1963 Sierra Leone Census. We find that local ethnic diversity is not associated with worse local public goods provision across a variety of outcomes, regression specifications, and diversity measures, and that these “zeros†are precisely estimated. We investigate the role that two leading mechanisms proposed in the literature – enforcement of collective action by strong local government authorities, and the existence of a common national identity and language – in generating these perhaps surprising findings. [Working Paper No. 269]
    Keywords: Etnnic diversity, Collective action, Local public goods, Sierra Leone, Africa
    Date: 2010
  5. By: Alberto Alesina (Harvard and Igier); Yann Algan (Sciences Po, Ofce); Pierre Cahuc (Ecole Polytechnique, Crest); Paola Giuliano, UCLA (UCLA)
    Abstract: Flexible labor markets requires geographically mobile workers to be efficient. Otherwise, firms can take advantage of the immobility of workers and extract monopsony rents. In cultures with strong family ties, moving away from home is costly. Thus, individuals with strong family ties rationally choose regulated labor markets to avoid moving and limiting the monopsony power of firms, even though regulation generates lower employment and income. Empirically, we do find that individuals who inherit stronger family ties are less mobile, have lower wages, are less often employed and support more stringent labor market regulations. There are also positive cross-country correlations between the strength of family ties and labor market rigidities. Finally, we find positive correlations between labor market rigidities at the beginning of the twenty first century and family values prevailing before World War II, which suggests that labor market regulations have deep cultural roots.
    Keywords: Family Values, Regulation of Labor, Labor Markets
    JEL: J J2 J4
    Date: 2010–05
  6. By: Tommaso Nannicini (Bocconi University, IGIER & IZA); Andrea Stella (Harvard University); Guido Tabellini (Bocconi University, IGIER, CEPR & CIFAR); Ugo Troiano (Harvard University)
    Abstract: In this paper, we empirically investigate a channel through which social capital may improve economic wellbeing and the functioning of institutions: political accountability. The main idea is that voters who share norms of generalized morality demand higher standards of behavior on their elected representavtives, are more willing to bear the cost of acquiring information, and are more likely to base their vote on criteria of social welfare rather than (narrow) personal interest. We take this conjecture to the data using information on the Italian members of Parliament in the postwar period (1948–2001). The empirical evidence shows that the electoral punishment of political misbehavior is considerably larger in electoral districts with high social capital, where social capital is measured by blood donation, and political misbehavior refers to receiving a request of criminal prosecution or shirking in parliamentary activity. Accordingly, episodes of political misbehavior are less frequent in electoral districts with high social capital.
    Keywords: Social Capital, Culture, Political Agency
    JEL: D72 D73 Z10
    Date: 2010–05
  7. By: Costas Meghir (Institute for Fiscal Studies and University College London); Luigi Pistaferri (Institute for Fiscal Studies and Stanford University)
    Abstract: <p><p>We discuss recent developments in the literature that studies how the dynamics of earnings and wages affect consumption choices over the life cycle. We start by analyzing the theoretical impact of income changes on consumption - highlighting the role of persistence, information, size and insurability of changes in economic resources. We next examine the empirical contributions, distinguishing between papers that use only income data and those that use both income and consumption data. The latter do this for two purposes. First, one can make explicit assumptions about the structure of credit and insurance markets and identify the income process or the information set of the individuals. Second, one can assume that the income process or the amount of information that consumers have are known and tests the implications of the theory. In general there is an identification issue that is only recently being addressed, with better data or better "experiments". We conclude with a discussion of the literature that endogenize people's earnings and therefore change the nature of risk faced by households.</p></p>
    Date: 2010–04
  8. By: James Banks (Institute for Fiscal Studies and University College London); Richard Blundell (Institute for Fiscal Studies and University College London); Antoine Bozio (Institute for Fiscal Studies and UCL); Carl Emmerson (Institute for Fiscal Studies)
    Abstract: <p>This paper tries to assess whether or not we have any empirical evidence of links between early retirement and youth unemployment. Most economists would today dismiss the idea immediately as another version of the naïve 'lump-of-labor fallacy'. In its most basic form, this proposition holds that there is a fixed supply of jobs and that any reduction in labor supply will reduce unemployment by offering jobs to those who are looking for ones. Taken to the extreme, this view would support that the idea that a high level of employment of one group of individuals can only be at the expense of another group: if for instance were the population of a country to increase, younger individuals would be unemployed as older individuals would not 'release' enough jobs for the new entrants. The absurdity of this view in the long term is simply seen by considering the fact that the size of a country does not bear any relation to the share of population unemployed. </p>
    Date: 2010–03
  9. By: Costas Meghir (Institute for Fiscal Studies and University College London); Steven Rivkin
    Abstract: <p>This paper reviews some of the econometric methods that have been used in the economics of education. The focus is on understanding how the assumptions made to justify and implement such methods relate to the underlying economic model and the interpretation of the results. We start by considering the estimation of the returns to education both within the context of a dynamic discrete choice model inspired byWillis and Rosen (1979) and in the context of the Mincer model. We discuss the relationship between the econometric assumptions and economic behaviour. We then discuss methods that have been used in the context of assessing the impact of education quality, the teacher contribution to pupils' achievement and the effect of school quality on housing prices. In the process we also provide a summary of some of the main results in this literature.</p>
    Date: 2010–05
  10. By: Flavio Cunha; James J. Heckman
    Abstract: This paper reviews the recent literature on the production of skills of young persons. The literature features the multiplicity of skills that explain success in a variety of life outcomes. Noncognitive skills play a fundamental role in successful lives. The dynamics of skill formation reveal the interplay of cognitive and noncognitive skills, and the presence of critical and sensitive periods in the life-cycle. We discuss the optimal timing of investment over the life-cycle.
    JEL: D91 J13 J24
    Date: 2010–07

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