nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒01‒03
nine papers chosen by
Maximo Rossi
University of the Republic

  1. Health and Retirement Effects in a Collective Consumption Model of Elderly Households By Aline Bütikofer; Arthur Lewbel; Shannon Seitz
  2. Economic Preferences and Attitudes of the Unemployed: Are Natives and Second Generation Migrants Alike? By Amelie F. Constant; Annabelle Krause; Ulf Rinne; Klaus F. Zimmermann
  3. Ethnic Minorities in the European Union: An Overview By Martin Kahanec; Anzelika Zaiceva; Klaus F. Zimmermann
  4. Attitudes towards Economic Risk and the Gender Pay Gap By Le, Anh T.; Miller, Paul W.; Slutske, Wendy S.; Martin, Nicholas G.
  5. Why Are Household Incomes More Unequally Distributed in China than in Russia? By Gustafsson, Björn; Li, Shi; Nivorozhkina, Ludmila
  6. Trust, Positive Reciprocity, and Negative Reciprocity: Do These Traits Impact Entrepreneurial Dynamics? By Caliendo, Marco; Fossen, Frank M.; Kritikos, Alexander S.
  7. Emotional Prosperity and the Stiglitz Commission By Oswald, Andrew J.
  8. Some evidence on the importance of sticky wages By Alessandro Barattieri; Susanto Basu; Peter Gottschalk
  9. A New Model for Constructing Poverty Lines By Nanak Kakwani

  1. By: Aline Bütikofer (University of Bern); Arthur Lewbel (Boston College); Shannon Seitz (Boston College)
    Abstract: Using data on elderly individuals and couples, we estimate a collective model of household consumption of a variety of goods, showing how resources are shared between husband and wife, and how this allocation is affected by retirement and health status. We identify the extent to which shared consumption of some goods by elderly married couples reduces their costs of living relative to living alone. We also identify the fraction of household resources consumed by wives versus husbands, taking this jointness of some consumption into account. The results are relevant for household bargaining models and for a variety of welfare calculations.
    Keywords: Collective household models, Bargaining models, Retirement, Aging, Health, Equivalence scales, Indifference scales, Cost of Living, Consumption, Welfare
    JEL: D13 D12 I1 D6 C30
    Date: 2010–12–15
  2. By: Amelie F. Constant; Annabelle Krause; Ulf Rinne; Klaus F. Zimmermann
    Abstract: In this paper we study the economic effects of risk attitudes, time preferences, trust and reciprocity while we compare natives and second generation migrants. We analyze an inflow sample into unemployment in Germany, and find differences between the two groups mainly in terms of risk attitudes and positive reciprocity. Second generation migrants have a significantly higher willingness to take risks and they are less likely to have a low amount of positive reciprocity when compared to natives. We also find that these differences matter in terms of economic outcomes, and more specifically in terms of the employment probability about two months after unemployment entry. We observe a significantly lower employment probability for individuals with a high willingness to take risks. Some evidence suggests that this result is channeled through reservation wages and search intensity.
    Keywords: Unemployment; Migration; Personality Traits; Risk Attitudes; Time Preferences; Trust; Reciprocity
    JEL: F22 J15 J61 J64
    Date: 2010
  3. By: Martin Kahanec; Anzelika Zaiceva; Klaus F. Zimmermann
    Abstract: This paper sheds light on the labor market situation of ethnic minorities in the European Union. Facing a serious measurement challenge and lacking adequate data, we apply several measures of ethnicity and examine various data sources as well as secondary evidence. We find significant gaps between ethnic minority and majority populations in terms of labor market outcomes. In particular, ethnic minorities appear to face disproportional difficulties in finding a job. Although experience in the host country improves the status of immigrant minorities, we do not find any clear assimilation of further immigrant generations. Roma people seem to face particularly grave integration barriers in European labor markets.
    Keywords: ethnicity, ethnic minority, migration, unemployment, labor force participation, labor market
    JEL: F22 J15 J61 J71
    Date: 2010
  4. By: Le, Anh T. (Curtin University of Technology); Miller, Paul W. (Curtin University of Technology); Slutske, Wendy S. (University of Missouri-Columbia); Martin, Nicholas G. (Queensland Institute of Medical Research)
    Abstract: This paper examines the links between gender differences in attitudes towards economic risk and the gender pay gap. Consistent with the literature on the socio-economic determinants of attitudes towards economic risk, it shows that females are much more risk averse than males. It then extends this research to show that workers with more favorable attitudes towards risk are associated with higher earnings, and that gender differences in attitudes towards economic risk can account for a small, though important, part of the standardized gender pay gap.
    Keywords: wages, gender, risk, wage gap
    JEL: J31 J71
    Date: 2010–12
  5. By: Gustafsson, Björn (Göteborg University); Li, Shi (Beijing Normal University); Nivorozhkina, Ludmila (Rostov State Economic University)
    Abstract: Harmonised microdata show a Gini coefficient for per capita total income of 45.3 percent in China 2002 and 33.6 percent in Russia 2003. A much larger urban to rural income gap in combination with a much smaller proportion of people living in urban areas in China are important reasons for this cross-country difference in inequality. Wage is a more non-equalising income source in China than in Russia. While Russian public transfers reduce income inequality, Chinese public transfers increase income inequality. Cross-country differences in the process of transition are also found to be significant. A relatively large non-agriculture self-employment sector is non-equalising in rural China, but is also narrowing the urban to rural income gap. In contrast to the many cross-country differences revealed, we report income inequality among urban residents in China and in urban Russia to be very similar.
    Keywords: income distribution, inequality, China, Russia, public transfers
    JEL: D31 P25 P52
    Date: 2010–12
  6. By: Caliendo, Marco (IZA); Fossen, Frank M. (DIW Berlin); Kritikos, Alexander S. (DIW Berlin)
    Abstract: Experimental evidence reveals that there is a strong willingness to trust and to act in both positively and negatively reciprocal ways. So far it is rarely analyzed whether these variables of social cognition influence everyday decision making behavior. We focus on entrepreneurs who are permanently facing exchange processes in the interplay with investors, sellers, and buyers, as well as needing to trust others and reciprocate with their network. We base our analysis on the German Socio-Economic Panel and recently introduced questions about trust, positive reciprocity, and negative reciprocity to examine the extent that these variables influence the entrepreneurial decision processes. More specifically, we analyze whether i) the willingness to trust other people influences the probability of starting a business; ii) trust, positive reciprocity, and negative reciprocity influence the exit probability of entrepreneurs; and iii) willingness to trust and to act reciprocally influences the probability of being an entrepreneur versus an employee or a manager. Our findings reveal that, in particular, trust impacts entrepreneurial development. Interestingly, entrepreneurs are more trustful than employees, but much less trustful than managers.
    Keywords: entrepreneurship, trust, reciprocity
    JEL: D81 J23 M13 L26
    Date: 2010–12
  7. By: Oswald, Andrew J. (University of Warwick)
    Abstract: This paper argues – in line with the proposals of the recent Stiglitz Commission on the Measurement of Economic Performance and Social Progress – that we should now be measuring a nation's emotional prosperity rather than its economic prosperity (that is, we ought to focus on the level of mental well-being not the number of pounds in people's bank accounts). The paper reviews recent ideas in this field. It also describes seven recent studies that, worryingly, suggest that emotional prosperity may be declining through time. For labour-market specialists, a key question for future research is how much this downward trend can be traced back to increased pressures in working life. That question currently remains open.
    Keywords: well-being, biomarkers, GHQ, happiness, Easterlin paradox
    JEL: I1 I3
    Date: 2010–12
  8. By: Alessandro Barattieri; Susanto Basu; Peter Gottschalk
    Abstract: Nominal wage stickiness is an important component of recent medium-scale macroeconomic models, but to date there has been little microeconomic evidence supporting the assumption of sluggish nominal wage adjustment. We present evidence on the frequency of nominal wage adjustment using data from the Survey of Income and Program Participation (SIPP) for the period 1996–1999. The SIPP provides high-frequency information on wages, employment, and demographic characteristics for a large and representative sample of the U.S. population. The main results of the analysis are as follows: (1) After correcting for measurement error, wages appear to be very sticky. In the average quarter, the probability that an individual will experience a nominal wage change is between 5 and 18 percent, depending on the samples and assumptions used. (2) The frequency of wage adjustment does not display significant seasonal patterns. (3) There is little heterogeneity in the frequency of wage adjustment across industries and occupations. (4) The hazard of a nominal wage change first increases and then decreases, with a peak at 12 months. (5) The probability of a wage change is positively correlated with the unemployment rate and with the consumer price inflation rate.
    Keywords: Wages
    Date: 2010
  9. By: Nanak Kakwani (Philippine Institute for Development Studies)
    Abstract: In this paper, we present a new model for constructing poverty lines. The model uses consumer theory to construct both food and non-food poverty thresholds. Although one cannot completely eliminate the value judgments inherent in the construction of poverty thresholds, this model helps to make the ad hoc assumptions that are generally made more justifiable. The model ensures that poverty line is consistent across regions. The methodology developed in the paper is used to illustrate the construction of poverty thresholds in Pakistan.
    Keywords: Poverty line, Consumer theory, Consistent poverty Line, Calorie cost, economies of scale and poverty measures
    JEL: O10 D11
    Date: 2010

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