nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒10‒16
eight papers chosen by
Maximo Rossi
University of the Republic

  1. Identity, Community and Segregation By Bryony Reich
  2. China's Overt Economic Rise and Latent Human Capital Investment: Achieving Milestones and Competing for the Top By Amelie F. Constant; Bienvenue N. Tien; Klaus F. Zimmermann; Jingzhou Meng
  3. The Easterlin Paradox and Another Anatomy of Income Comparisons: Evidence from Hypothetical Choice Experiments By Katsunori Yamada; Masayuki Sato
  4. How much do Latin American pension programs promise to pay back? By Forteza, Alvaro; Ourens, Guzman
  5. Work histories and pension entitlements in Argentina, Chile and Uruguay By Forteza, Alvaro; Apella, Ignacio; Fajnzylber, Eduardo; Grushka, Carlos; Rossi, Ianina; Sanroman, Graciela
  6. Awards as signals By Bruno S. Frey; Susanne Neckermann
  7. Understanding the Public's Attitudes towards Redistribution through Taxation By Rebbecca Reed-Arthurs; Steven M. Sheffrin
  8. Windows Into Public Attitudes Towards Redistribution By Rebbecca Reed-Arthurs; Steven M. Sheffrin

  1. By: Bryony Reich (Department of Economics, University of Cambridge)
    Abstract: I develop a framework to explain why identity divides some communities and not others. An identity group is defined as a group of individuals with the same `culture'. A community is divided when different identities are socially segregated; a community is integrated when there is no social segregation between different identities. I find three possible outcomes for a community: assimilation, where groups socially integrate and one group conforms to the culture of another; non-assimilative integration, where groups integrate but individuals retain their own identity; and segregation, where groups socially segregate and retain their own culture. I find that certain community environments encourage segregation: (i) communities with similar sized identity groups; (ii) larger communities; (iii) communities with greater cultural distance between identities. Further, when segregation occurs, the cultural divide between the two groups can increase endogenously beyond ex-ante differences.
    Keywords: identity, culture, segregation, immigration, immigrants, networks, network formation, coordination, stochastic stability.
    JEL: J15 D85 D74 A14 C73 H00
    Date: 2010–09
  2. By: Amelie F. Constant; Bienvenue N. Tien; Klaus F. Zimmermann; Jingzhou Meng
    Abstract: We provide an overview of China's economic rise through time. Over the past decade, China has maintained 10% growth in GDP, albeit with a GDP per capita at the low level of a developing country. Its tremendous economic development has overlooked the growing social inequalities and rising resentments of the 'cheap' workers and those laid off. The main contributor to its ascension is international trade and investment in physical capital, often at the expense of the environment. The year 1978 was the landmark for the foundation of the Chinese modern higher education system. Since then the number of students enrolled in Chinese higher education institutions has increased dramatically; China is producing serious scholars and a tremendous amount of scholarly output; more and more Chinese students seek higher education abroad; and international students find a rising interest in receiving education in China.
    Keywords: China, human capital, brain drain, higher education
    JEL: F22 J24 N35 O15 O24 O53
    Date: 2010
  3. By: Katsunori Yamada; Masayuki Sato
    Abstract: This paper provides evidence from Internet-based, large-scale survey data of hypothetical choice experiment on the relative utility hypothesis. The methodology exploited here complements previous empirical results from happiness studies, incentivized choice experiment studies, and neuroscience studies in sucha way that methodological problems among previous studies within these fields are resolved. We show that not only the intensity but also the distribution of relative utility are different across specific comparison benchmarks (internal reference group), and across types of reference groups people are facing in the experiments (external reference group). The relative utility effect among Japanese respondents, while shown to exist in the form of jealousy, is found to be not as strong as can validate the Easterlin paradox. Comparison benchmark with daily contacts is related to stronger jealousy. We also provide empirical evidence, which nuances that the reference group is chosen endogenously.
    Date: 2010–09
  4. By: Forteza, Alvaro; Ourens, Guzman
    Abstract: The authors present a new database of social security indicators for eleven Latin American countries designed to assess pension schemes in terms of the payments they promise in return to contributions. Based on this data, authors analyze inequality, insurance and incentives to work, using the replacement rates and the internal rates of return implicit in the flows of contributions and pensions. Results indicate that most programs analyzed are progressive in the sense that, other things equal, they yield higher returns to low than to high income workers. Poor workers, notwithstanding, often have flat age-earnings profiles and lower life expectancy, both of which reduce the rates of return received from social security. The Argentinean and (the pre-2008) Uruguayan programs severely punish short contribution careers, providing strong incentives for workers in the programs to continue contributing until they reach minimums that vary between 30 and 35 years of contributions. The counterpart is that these programs do not hedge workers against the risk of having short working careers; quite the opposite, they raise the uncertainty workers face. The very low rates of return that the Argentinean and Uruguayan main pension programs pay to workers with short working careers are likely to impact strongly on low income workers, as the probability they experience interruptions is higher. The Brazilian, Chilean and Mexican programs show a better balance between insurance against the risk of short working careers and incentives to work. The defined benefit programs of Argentina, Ecuador and Uruguay strongly discourage early retirement; the Chilean and Mexican programs are more neutral. Argentina, Chile and Uruguay passed reforms to their main pension programs in 2008. Unlike the Argentinean reform, the Chilean and Uruguayan 2008 reforms strengthened the social protection that programs provide, shifting the balance towards more insurance and less incentives to work.
    Keywords: Pensions&Retirement Systems,Emerging Markets,Debt Markets,Gender and Law,Labor Markets
    Date: 2009–12–01
  5. By: Forteza, Alvaro; Apella, Ignacio; Fajnzylber, Eduardo; Grushka, Carlos; Rossi, Ianina; Sanroman, Graciela
    Abstract: The authors propose alternative methods to project pension rights and implement them in Chile and Uruguay and partially in Argentina. The authors use incomplete work histories databases from the social security administrations to project entire lifetime work histories. The authors first fit linear probability and duration models of the contribution status and dynamic linear models of the income level. The authors then run Monte Carlo simulations to project work histories and compute pension rights. According to results, significant swathes of the population would not access to fundamental pension benefits at age 65, if the current eligibility rules were strictly enforced.
    Keywords: Pensions&Retirement Systems,Labor Markets,Emerging Markets,Gender and Law,Debt Markets
    Date: 2009–12–01
  6. By: Bruno S. Frey; Susanne Neckermann
    Abstract: Awards are widespread in all countries and are prevalent both in the public sphere and in the private sector. This paper argues, and empirically supports, that awards serve public functions and economists should take them seriously. Using a unique cross-country data set, we suggest that awards serve as signals. Awards are more prevalent the more difficult the position and status of an individual is to observe due to an anonymous and globalized setting.
    Keywords: Awards, signals, status, anonymity, globalization
    JEL: A13 D63 J33
    Date: 2010–10
  7. By: Rebbecca Reed-Arthurs; Steven M. Sheffrin (Department of Economics, Tulane University)
    Abstract: This paper explores the public's expressed attitudes towards redistribution, then addresses three important gaps in the literature on redistribution. First, studies of support for redistribution have used data focused on desires for transfers from the rich to the poor or to the poor in general, but redistributive polices may also benefit the middle class. Second, experimental research has shown that general views about redistribution may differ from concrete judgments about specific situations-yet much of the existing research uses responses to abstract questions. Finally, there is fundamental uncertainty as to what the public actually means when it suggests preferred distributions of the tax burden-are they expressing pure, ideal preferences, or combining these with their own views of the disincentive effects of higher tax rates? We use data from two nationally representative surveys on taxation and fairness as well as an experiment to address these issues. We find that Americans have some interest in redistribution to both the middle class and the poor. While demand for redistribution to the poor is influenced by many factors (including measures of altruism, political ideology and values) demand for redistribution to the middle class appears to be driven by self-interest and knowledge of the tax system. We find the determinants of demand to be similar under both abstract and concrete question forms. Finally, the experimental results suggest that not only does the public not include incentive effects into their expressions for desired progressivity; but that they do not believe they should be included-in other words, the public separates judgments of progressivity from judgments of economic efficiency.
    Keywords: survey data, incentives, redistribution
    JEL: H24 H20
    Date: 2010–09
  8. By: Rebbecca Reed-Arthurs; Steven M. Sheffrin (Department of Economics, Tulane University)
    Keywords: redistribution, income taxation, public opinion
    JEL: H23 H29
    Date: 2010–09

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