nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒09‒25
six papers chosen by
Maximo Rossi
University of the Republic

  1. Children's Resources in Collective Households: Identification, Estimation and an Application to Child Poverty in Malawi By Geoffrey Dunbar; Arthur Lewbel; Krishna Pendakur
  2. Social Networks, Job Search Methods and Reservation Wages: Evidence for Germany By Marco Caliendo; Ricarda Schmidl; Arne Uhlendorff
  3. Quality of Education and Equality of Opportunity in Spain: Lesson from Pisa By Calo-Blanco Aitor; Villar Notario Antonio
  4. Human Capital Investment and the Gender Division of Labor By Mark M. Pitt; Mark Rosenzweig; Nazmul Hassan
  5. Well-Being Inequality and Reference Groups - An Agenda for New Research By Bernard van Praag
  6. Equality, Equity and Incentives: An Experiment By Loukas Dalafoutas; Martin G. Kocher; Louis Putterman; Matthias Sutter

  1. By: Geoffrey Dunbar (Simon Fraser University); Arthur Lewbel (Boston College); Krishna Pendakur (Simon Fraser University)
    Abstract: The share of household resources devoted to children is hard to identify, because consumption is measured at the household level, and goods can be shared. Using semiparametric restrictions on individual preferences within a collective model, we identify how total household resources are divided up among household members, by observing how each family member’s expenditures on a single private good like clothing varies with income and family size. Using data from Malawi we show how resources devoted to wives and children vary by family size and structure, and we find that standard poverty indices understate the incidence of child poverty.
    Keywords: Collective Model, Cost of Children, Bargaining Power, Iden- tication, Sharing rule, Demand Systems, Engel Curves
    JEL: D13 D11 D12 C31 I32
    Date: 2010–06–01
  2. By: Marco Caliendo; Ricarda Schmidl; Arne Uhlendorff
    Abstract: In this paper we analyze the relationship between social networks and the job search behavior of unemployed individuals. It is believed that networks convey useful information in the job search process such that individuals with larger networks should experience a higher productivity of informal search. Hence, job search theory suggests that individuals with larger networks use informal search channels more often and substitute from formal to informal search. Due to the increase in search productivity, it is also likely that individuals set higher reservation wages. We analyze these relations using a novel data set of unemployed individuals in Germany containing extensive information on job search behavior and direct measures for the social network of individuals. Our findings confirm theoretical expectations. Individuals with larger networks use informal search channels more often and shift from formal to informal search. We find that informal search is mainly considered a substitute for passive, less cost intensive search channels. In addition to that, we find evidence for a positive relationship between the network size and reservation wages.
    Keywords: job search behavior, unemployment, social networks
    JEL: J64
    Date: 2010
  3. By: Calo-Blanco Aitor (Pablo de Olavide University; Ivie); Villar Notario Antonio (Pablo de Olavide University; Ivie)
    Abstract: This working paper analyzes the performance of the Spanish educational system according to the 2006 PISA report, focussing on the equality of opportunity. The basic idea is that a good educational system should produce outcomes that depend basically on the students effort and not on the students external circumstances (parental background here). We present a simple formula to estimate the inequality of opportunity and analyze empirically the behaviour of Spain and its constituent regions, both with respect to quality (mean scores) and with respect to the inequality of opportunity. We find that Spain performs better than the European average in terms of equality of opportunity and worse in terms of quality. We also find large and systematic differences between the Spanish regions
    Keywords: Quality of education, equality of opportunity, PISA report, regional disparities
    Date: 2010–07–01
  4. By: Mark M. Pitt (Brown University); Mark Rosenzweig (Department of Economics, Yale University); Nazmul Hassan (Dhaka University)
    Abstract: We use a model of human capital investment and activity choice to explain facts describing gender differentials in the levels and returns to human capital investments. These include the higher return to and level of schooling, the small effect of healthiness on wages, and the large effect of healthiness on schooling for females relative to males. The model incorporates gender differences in the level and responsiveness of brawn to nutrition in a Roy-economy setting in which activities reward skill and brawn differentially. Empirical evidence from rural Bangladesh provides support for the model and the importance of the distribution of brawn.
    Keywords: brawn, health, schooling, gender
    JEL: O1 J1 J2
    Date: 2010–09
  5. By: Bernard van Praag (University of Amsterdam)
    Abstract: In this paper it is argued that subjective well-being of the individual depends on two types of variables. The first type consists of characteristics of the individual himself, such as age, health, income, etc. The second type of variables consists of the characteristics of the individuals belonging to his reference group. The vast literature about happiness, quality of life, and well-being informs us extensively about the effects of objective variables. How the second type affects well-being is much less investigated. It is argued that the concept of well-being inequality cannot be properly defined without taking the referencing process into account. The reference effect depends on how frequently individuals compare with others and on the degree of social transparency in society. We attempt to give a structural embedding of the idea of reference groups in SWB-models. In this paper we employ the reference-extended model for incorporating in happiness studies the concept of inequality in happiness or SWB. Finally, we plead for an extension of the present happiness paradigm by setting up a new additional agenda for empirical research in order to get quantified knowledge about the referencing process. As a first step we suggest a new question module to be included in new survey questionnaires. <p> Accepted for publication in <A href="">Journal of Economic Inequality</A>.
    Keywords: subjective well-being; happiness; inequality; reference group
    JEL: D31 D62 D63 I31
    Date: 2010–01–28
  6. By: Loukas Dalafoutas; Martin G. Kocher; Louis Putterman; Matthias Sutter
    Abstract: We devise a new experimental game by nesting a voluntary contributions mechanism in a broader spectrum of incentive schemes. With it, we study tensions between egalitarianism, equity concerns, self-interest, and the need for incentives. In a 2x2 design, subjects either vote on or exogenously encounter incentive settings while assigned unequal incomes that are either task-determined or random. We find subjects’ voting to be mainly self-interested but also influenced by egalitarian and equity concerns, which sometimes cut in opposite directions. Contributions, which seem mainly determined by boundedly rational responses to incentives, are influenced by egalitarian, equity and strategic considerations.
    Keywords: equality; efficiency; voluntary contribution mechanism; incentives; experiment
    Date: 2010

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