nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒01‒30
six papers chosen by
Maximo Rossi
University of the Republic

  1. Openness, Inequality, and Poverty: Endowments Matter By Julien Gourdon; Nicolas Maystre; Jaime Melo De
  2. Lost in Transition? The Returns to Education Acquired under Communism 15 Years after the Fall of the Berlin Wall By Brunello, Giorgio; Crivellaro, Elena; Rocco, Lorenzo
  3. Is Short-Time Work a Good Method to Keep Unemployment Down? By Cahuc, Pierre; Carcillo, Stéphane
  4. Efficient and Inefficient Welfare States By Algan, Yann; Cahuc, Pierre; Sangnier, Marc
  5. How Much Do Educational Outcomes Matter in OECD Countries? By Hanushek, Eric A.; Woessmann, Ludger
  6. Partially Identified Poverty Status: A New Approach to Measuring Poverty and the Progress of the Poor. By Gordon Anderson; Maria Grazia Pittau; Roberto Zelli

  1. By: Julien Gourdon (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Nicolas Maystre (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Jaime Melo De (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Using tariffs as a measure of openness, this paper finds consistent evidence that the conditional effects of trade liberalization on inequality are correlated with relative factor endowments. Trade liberalization, measured by changes in tariff revenues, is associated with increases in inequality in countries well-endowed in highly skilled workers and capital or with workers that have very low education levels. Similar, though less robust, results are also obtained when decile data are used instead of the usual Gini coefficients. Taken together, the results are strongly supportive of the factor-proportions theory of trade and suggest that trade liberalization in poor countries where the share of the labor force with little education is high raises inequality. Simulation results also suggest that relatively small changes in inequality as measured by aggregate measures of inequality like the Gini coefficient are magnified when estimates are carried out using decile data.
    Keywords: international trade;Income distribution;Poverty
    Date: 2011–01–18
  2. By: Brunello, Giorgio (University of Padova); Crivellaro, Elena (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: Using data for 22 economies in Eastern and Western Europe, we find evidence that having studied under communism is relatively penalized in the economies of the late 2000s. This evidence, however, is limited to males and to primary and secondary education, and holds for eight CEE economies but not for the East Germans who have studied in the former German Democratic Republic. We also find that post-secondary education acquired under communism yields higher, not lower, payoffs than similar education in Western Europe.
    Keywords: returns to education, Eastern Europe
    JEL: J24
    Date: 2010–12
  3. By: Cahuc, Pierre (Ecole Polytechnique, Paris); Carcillo, Stéphane (University of Paris 1 Panthéon-Sorbonne)
    Abstract: Short-time work compensation aims at reducing lay-offs by allowing employers to temporarily reduce hours worked while compensating workers for the induced loss of income. These programs are now widespread in the OECD countries, notably following the 2008-2009 crisis. This paper discusses the efficiency of this type of policy and investigates its impact on unemployment and employment. There is some evidence that short-time compensation programs stabilize permanent employment and reduce unemployment during downturns. All in all, it seems that short-time work programs used in the recent downturn had significant beneficial effects. This suggests that countries which do not have short-time compensation programs could benefit from their introduction. But short-time compensation programs can also induce inefficient reductions in working hours and reduce the prospects of outsiders if used too intensively. Thus, the design of short-time compensation programs should include an experience-rating component.
    Keywords: short-time work, unemployment, employment
    JEL: E24 J22 J65
    Date: 2011–01
  4. By: Algan, Yann (Sciences Po, Paris); Cahuc, Pierre (Ecole Polytechnique, Paris); Sangnier, Marc (Paris School of Economics)
    Abstract: This paper shows that cross country differences in the generosity and the quality of the welfare state are associated with differences in the trustworthiness of their citizens. We show that generous, transparent and efficient welfare states in Scandinavian countries are based on the civicness of their citizens. In contrast, the generosity but low transparency of the Continental European welfare states survive thanks to the support of a large share of uncivic individuals who consider that it can be justifiable to misbehave with taxes and social benefits. We also explain why countries with an intermediate degree of trustworthiness of their citizens and of transparency of the government, like Anglo-Saxon countries, have small welfare states. Overall, this paper provides a rationale for the observed persistence of both efficient and inefficient welfare states, as a function of the civicness of the citizens.
    Keywords: welfare state, trust, civism, corruption
    JEL: H1 Z1
    Date: 2011–01
  5. By: Hanushek, Eric A. (Stanford University); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: Existing growth research provides little explanation for the very large differences in long-run growth performance across OECD countries. We show that cognitive skills can account for growth differences within the OECD, whereas a range of economic institutions and quantitative measures of tertiary education cannot. Under the growth model estimates and plausible projection parameters, school improvements falling within currently observed performance levels yield very large gains. The present value of OECD aggregate gains through 2090 could be as much as $275 trillion, or 13.8 percent of the discounted value of future GDP. Extensive sensitivity analyses indicate that, while differences between model frameworks and alternative parameter choices make a difference, the economic impact of improved educational outcomes remains enormous. Interestingly, the quantitative difference between an endogenous and neoclassical model framework – with improved skills affecting the long-run growth rate versus just the steady-state income level – matters less than academic discussions suggest. We close by discussing evidence on which education policy reforms may be able to bring about the simulated improvements in educational outcomes.
    Keywords: education, growth, OECD, cognitive skills, projection
    JEL: I2 O4
    Date: 2010–12
  6. By: Gordon Anderson; Maria Grazia Pittau; Roberto Zelli
    Abstract: Poverty measurement and the analysis of the progress (or otherwise) of the poor is beset with difficulties and controversies surrounding the definition of a poverty line or frontier. Here, using ideas from the partial identification literature and mixture models, a new approach to poverty measurement is proposed which avoids specifying a frontier, the price is that an agent\'s poverty status is only partially identified. Invoking variants of Gibrat\'s law to give structure to the distribution of outcomes for homogeneous subgroups of a population within the context of a finite mixture model of societal outcomes facilitates calculation of the probability of an agent\'s poverty status. From this it is straightforward to calculate all the usual poverty measures as well as other characteristics of the poor and non poor subgroups in a society. These ideas are exemplified in a study of 47 countries in Africa over the recent quarter century which reveals among other things a growing poverty rate and a growing disparity between poor and non poor groups not identified by conventional methods.
    Keywords: Poverty Frontiers, Mixture Models, Gibrat\'s law, Partial Identification
    JEL: C14 I32 O1
    Date: 2011–01–20

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