nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒02‒05
six papers chosen by
Maximo Rossi
University of the Republic

  1. Welfare State - The Scandinavian Model By Torben M. Andersen
  2. Using Pseudo-Panels to Measure Income Mobility in Latin America By Cuesta, Jose; Nopo, Hugo; Pizzolitto, Georgina
  3. An Essay on Real Wage Index Numbers By Pencavel, John
  4. Ethnic Diversity and Preferences for Redistribution By Matz Dahlberg; Karin Edmark; Heléne Lundqvist
  5. Income poverty and material deprivation in European countries By FUSCO Alessio; GUIO Anne-Catherine; MARLIER Eric
  6. Occupational Learning, Financial Knowledge, and the Accumulation of Retirement Wealth By Brooke Helppie; Kandice A. Kapinos; Robert J. Willis

  1. By: Torben M. Andersen (School of Economics and Management, Aarhus University, Denmark)
    Abstract: The Scandinavian countries have achieved both a high level of living standard (measured by e.g. average income) and an egalitarian outcome (measured by e.g. income inequality) despite a very large public sector and thus a large tax burden (about 50 % of GDP). The Scandinavian cluster thus poses a challenge to the standard view on the tradeoff between efficiency and equity. How come that the Scandinavian countries have been able to achieve high equality without much sacrifice of efficiency in terms of income? This paper addresses this question with the outset in recent work stressing the insurance aspect of the welfare state. A broad interpretation of the Scandinavian welfare model in terms of social insurance or common pool aspects is given. The effects of social insurance are discussed and the potential incentive problems arising in a common pool arrangement are argued to be mitigated by a number of counteracting mechanisms. Issues in policy design and the political economy of the welfare state are also discussed.
    Keywords: Risk-sharing, incentives, common-pool problems, political support
    JEL: H1 E62 F22 P1
    Date: 2011–01–24
  2. By: Cuesta, Jose (Inter-American Development Bank); Nopo, Hugo (Inter-American Development Bank); Pizzolitto, Georgina (World Bank)
    Abstract: This paper presents a comparative overview of mobility patterns in 14 Latin American countries between 1992 and 2003. Using three alternative econometric techniques on constructed pseudo-panels, the paper provides a set of estimators for the traditional notion of income mobility as well as for mobility around extreme and moderate poverty lines. The estimates suggest very high levels of time-dependent unconditional immobility for the Region. However, the introduction of socioeconomic and personal factors reduces the estimate of income immobility by around 30 percent. There are also large variations in country-specific income mobility (estimated to explain some additional 10 percent of inter-temporal income variation). Analyzing the determinants of changes in poverty incidence within cohorts revealed statistically significant roles for age, gender and education of the household head, the latter subject to distinctive effects across levels of attainment and transition in and out of poverty.
    Keywords: income mobility, poverty, pseudo-panels, Latin America
    JEL: D3 I3 O1
    Date: 2011–01
  3. By: Pencavel, John (Stanford University)
    Abstract: Real wage index numbers have been used to measure movements in the standard of living of the typical worker. This paper describes some of these indicators for the United States and England. A new real wage index is proposed that resembles the sliding scale used to adjust wages in certain industries years ago. This new index is applied to U.S. manufacturing industry and it suggests a fall in real wages by about 40 percent since 1960. Workers’ distributional position in U.S. manufacturing has deteriorated considerably.
    Keywords: index numbers, real wages, sliding scale
    JEL: J31
    Date: 2011–01
  4. By: Matz Dahlberg (Uppsala University; IFAU; CESifo; UCFS; UCLS; IEB); Karin Edmark (IFN; IFAU; UCFS; UCLS); Heléne Lundqvist (Uppsala University; UCFS; UCLS)
    Abstract: In recent decades, the immigration of workers and refugees to Europe has increased substantially, and the composition of the population in many countries has consequently become much more heterogeneous in terms of ethnic background. If people exhibit in-group bias in the sense of being more altruistic to one's own kind, such increased heterogeneity will lead to reduced support for redistribution among natives. This paper exploits a nationwide program placing refugees in municipalities throughout Sweden during the period 1985{94 to isolate exogenous variation in immigrant shares. We match data on refugee placement to panel survey data on inhabitants of the receiving municipalities to estimate the causal effects of increased immigrant shares on preferences for redistribution. The results show that a larger immigrant population leads to less support for redistribution in the form of preferred social benet levels. This reduction in support is especially pronounced for respondents with high income and wealth. We also establish that OLS estimators that do not properly deal with endogeneity problems|as in earlier studies|are likely to yield positively biased (i.e., less negative) effects of ethnic heterogeneity on preferences for redistribution.
    Keywords: Income redistribution, ethnic heterogeneity, immigration
    JEL: D31 D64 I3 Z13
    Date: 2011
  5. By: FUSCO Alessio; GUIO Anne-Catherine; MARLIER Eric
    Abstract: Since 2009, the European Union (EU) portfolio of commonly agreed social in-dicators includes measures of material deprivation. The rationale for this inclu-sion is that if purely income-based indicators of poverty and inequality are es-sential, they are nevertheless not sufficient to satisfactorily reflect the diversity of living conditions in the EU, especially since the 2004 and 2007 enlarge-ments. The paper analyses the relationship between income poverty and mate-rial deprivation in 25 European countries (24 EU Member States plus Norway) and aims at identifying the most important factors that determine the risk of being income poor and/or materially deprived. It is based on the 2007 cross-sectional data of the EU Statistics on Income and Living Conditions (EU-SILC) users’ data base.
    Keywords: material deprivation; income poverty; European Union; Eu-SILC; open method of coordination; social inclusion
    JEL: I32
    Date: 2011–01
  6. By: Brooke Helppie (University of Michigan); Kandice A. Kapinos (University of Michigan); Robert J. Willis (University of Michigan)
    Abstract: This study explores the relationship between general human capital investment, financial knowledge, occupational spillovers, and the accumulation of wealth in a primarily descriptive manner. Drawing upon human capital theory and following previous related work by Delavande, Rohwedder and Willis (2008), we hypothesized that individuals with daily exposure to financial knowledge through their occupation would benefit by having greater financial knowledge that would translate into greater wealth accumulation than individuals who do not enjoy such spillovers from their occupation. Using data from the Cognitive Economics Study and the Health and Retirement Study, we find strong evidence that individuals in financial occupations tend to have greater financial knowledge and moderate evidence that they also have greater wealth accumulation.
    Date: 2010–10

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