nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒02‒26
ten papers chosen by
Maximo Rossi
University of the Republic

  1. The American Family in Black and White: A Post-Racial Strategy for Improving Skills to Promote Equality By Heckman, James J.
  2. Personality Psychology and Economics By Almlund, Mathilde; Duckworth, Angela Lee; Heckman, James J.; Kautz, Tim
  3. The Threat Effect of Participation in Active Labor Market Programs on Job Search Behavior of Migrants in Germany By Bergemann, Annette; Caliendo, Marco; van den Berg, Gerard J.; Zimmermann, Klaus F.
  4. The Shape of the Income Distribution and Economic Growth: Evidence from Swedish Labor Market Regions By Rooth, Dan-Olof; Stenberg, Anders
  5. Trends in Individual Income Growth: Measurement Methods and British Evidence By Jenkins, Stephen P.; Van Kerm, Philippe
  6. Analyzing the Extent and Influence of Occupational Licensing on the Labor Market By Kleiner, Morris M.; Krueger, Alan B.
  7. Putting Different Price Tags on the Same Health Condition: Re-evaluating the Well-Being Valuation Approach By Powdthavee, Nattavudh; van den Berg, Bernard
  8. Happiness and Financial Satisfaction in Israel. Effects of Religiosity , Ethnicity, and War By Bernard M.S. van Praag; Dmitri Romanov; Ada Ferrer-i-Carbonell
  9. Fragile States and Development Policy By Timothy Besley; Torsten Persson
  10. The Tyranny Puzzle in Welfare Economics: An empirical investigation By Marc Fleurbaey; Frank A Cowell; Bertil Tungodden

  1. By: Heckman, James J. (University of Chicago)
    Abstract: In contemporary America, racial gaps in achievement are primarily due to gaps in skills. Skill gaps emerge early before children enter school. Families are major producers of those skills. Inequality in performance in school is strongly linked to inequality in family environments. Schools do little to reduce or enlarge the gaps in skills that are present when children enter school. Parenting matters, and the true measure of child advantage and disadvantage is the quality of parenting received. A growing fraction of American children across all race and ethnic groups is being raised in dysfunctional families. Investment in the early lives of children in disadvantaged families will help close achievement gaps. America currently relies too much on schools and adolescent remediation strategies to solve problems that start in the preschool years. Policy should prevent rather than remediate. Voluntary, culturally sensitive support for parenting is a politically and economically palatable strategy that addresses problems common to all racial and ethnic groups.
    Keywords: skill gap, racial inequality, early childhood intervention
    JEL: J15 J24
    Date: 2011–02
  2. By: Almlund, Mathilde (University of Chicago); Duckworth, Angela Lee (University of Pennsylvania); Heckman, James J. (University of Chicago); Kautz, Tim (University of Chicago)
    Abstract: This paper explores the power of personality traits both as predictors and as causes of academic and economic success, health, and criminal activity. Measured personality is interpreted as a construct derived from an economic model of preferences, constraints, and information. Evidence is reviewed about the "situational specificity" of personality traits and preferences. An extreme version of the situationist view claims that there are no stable personality traits or preference parameters that persons carry across different situations. Those who hold this view claim that personality psychology has little relevance for economics. The biological and evolutionary origins of personality traits are explored. Personality measurement systems and relationships among the measures used by psychologists are examined. The predictive power of personality measures is compared with the predictive power of measures of cognition captured by IQ and achievement tests. For many outcomes, personality measures are just as predictive as cognitive measures, even after controlling for family background and cognition. Moreover, standard measures of cognition are heavily influenced by personality traits and incentives. Measured personality traits are positively correlated over the life cycle. However, they are not fixed and can be altered by experience and investment. Intervention studies, along with studies in biology and neuroscience, establish a causal basis for the observed effect of personality traits on economic and social outcomes. Personality traits are more malleable over the life cycle compared to cognition, which becomes highly rank stable around age 10. Interventions that change personality are promising avenues for addressing poverty and disadvantage.
    Keywords: personality, behavioral economics, cognitive traits, wages, economic success, human development, person-situation debate
    JEL: I2 J24
    Date: 2011–02
  3. By: Bergemann, Annette (University of Mannheim); Caliendo, Marco (IZA); van den Berg, Gerard J. (University of Mannheim); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: Labor market programs may affect unemployed individuals' behavior before they enroll. Such ex ante effects may differ according to ethnic origin. We apply a novel method that relates self-reported perceived treatment rates and job search behavioral outcomes, such as the reservation wage or search intensity, to each other. We compare German native workers with migrants with a Turkish origin or Central and Eastern European (including Russian) background. Job search theory is used to derive theoretical predictions. We examine the omnibus ex ante effect of the German ALMP system, using the novel IZA Evaluation Data Set, which includes self-reported assessments of the variables of interest as well as an unusually detailed amount of information on behavior, attitudes and past outcomes. We find that the ex ante threat effect on the reservation wage and search effort varies considerably among the groups considered.
    Keywords: immigrants, policy evaluation, reservation wage, search effort, expectations, unemployment duration, program evaluation, active labor market policy
    JEL: J64 J61 C21 D83 D84
    Date: 2011–02
  4. By: Rooth, Dan-Olof (Linneaus University); Stenberg, Anders (SOFI, Stockholm University)
    Abstract: We analyze the association between inequality and growth across 72 labor market regions in Sweden 1990-2006. Highly accurate measures of growth and inequality (gini, Q3, p9075, p5010) are derived from population register data. The regional set-up also reduces problems with omitted variable bias and endogeneity found in cross country comparisons since the regions within a country share the same redistributive policies and institutions. The findings suggest that inequality between the 90th and 75th percentiles enhances regional growth. This result no longer holds when we take into account changes in commuting patterns. Although only suggestive, the finding is interesting in that it is consistent with the hypothesis that inequality enhances growth by stimulating commuting incentives.
    Keywords: growth, income distribution, inequality, gini
    JEL: O4 D3 J6
    Date: 2011–02
  5. By: Jenkins, Stephen P. (London School of Economics); Van Kerm, Philippe (CEPS/INSTEAD)
    Abstract: Assessments of whose income growth is the greatest and whose is the smallest are typically based on comparisons of income changes for income groups (e.g. rich versus poor) or income values (e.g. quantiles). However, income group and quantile composition changes over time because of income mobility. To summarize patterns of income growth while also tracking the fortunes of the same individuals, a longitudinal perspective is required. For this case, we develop dominance conditions and summary indices for comparisons of distributions of individual income growth, together with associated methods of estimation and inference. Using these methods and data from the British Household Panel Survey, we study individual income growth for periods between 1991 and 2005. We show that income growth was significantly more pro-poor in the early years of the Labour government than in earlier Conservative years.
    Keywords: individual income growth, pro-poor growth, progressive income growth, income mobility, mobility profile, British Household Panel Survey
    JEL: D31 D63 I32
    Date: 2011–02
  6. By: Kleiner, Morris M. (University of Minnesota); Krueger, Alan B. (Princeton University)
    Abstract: This study examines the extent and influence of occupational licensing in the U.S. using a specially designed national labor force survey. Specifically, we provide new ways of measuring occupational licensing and consider what types of regulatory requirements and what level of government oversight contribute to wage gains and variability. Estimates from the survey indicated that 35 percent of employees were either licensed or certified by the government, and that 29 percent were fully licensed. Another 3 percent stated that all who worked in their job would eventually be required to be certified or licensed, bringing the total that are or eventually must be licensed or certified by government to 38 percent. We find that licensing is associated with about 18 percent higher wages, but the effect of governmental certification on pay is much smaller. Licensing by larger political jurisdictions is associated with higher wage gains relative to only local licensing. We find little association between licensing and the variance of wages, in contrast to unions. Overall, our results show that occupational licensing is an important labor market phenomenon that can be measured in labor force surveys.
    Keywords: occupational licensing, labor market institutions, labor market data, wages and labor market institutions, wage inequality and labor market institutions
    JEL: J08 J44 J58 J80 K23 K31 L38 L5 L51
    Date: 2011–02
  7. By: Powdthavee, Nattavudh (University of York); van den Berg, Bernard (University of York)
    Abstract: Many recent writings in health policy have proposed that health be valued directly and in monetary terms using the new well-being valuation method. Yet there is currently no clear consensus on what the best measure of individual’s experience may be for the evaluation process. To shed light on this issue, monetary values for a number of health problems are compared across different well-being measures within the same UK data set. We find that, while there is strong internal consistency of health impacts within each well-being measure, hugely different monetary valuations are obtained for the same health problem across different well-being measures. Our results, although should only viewed as illustrative, call for economists to rethink about which measure of well-being or experienced utility to be used in the well-being valuation method, should the approach ever be implemented in real policy contexts.
    Keywords: well-being, compensation variations, monetary valuations, happiness, health, GHQ
    JEL: H8 I18 I31
    Date: 2011–02
  8. By: Bernard M.S. van Praag (University of Amsterdam, IZA, CESifo, DIW); Dmitri Romanov (Central Bureau of Statistics, Jerusalem, Israel); Ada Ferrer-i-Carbonell (Institut d'Analisi Economica (IAE-CSIC), Barcelona, Spain and IZA)
    Abstract: We analyze individual satisfaction with life as a whole and satisfaction with the personal financial situation for Israeli citizens of Jewish and Arab descent. Our data set is the Israeli Social Survey (2006). We are especially interested in the impact of the religions Judaism, Islam and Christianity, where we are able to differentiate between individuals who vary in religiosity between secular and ultra-orthodox. We find a significant effect of religiosity on happiness. With respect to Jewish families it is most striking that the impact of family size on both life and financial satisfaction seems to vary with religiosity. This might be a reason for differentiation in family equivalence scales. For Arab families we did not find this effect. First-generation immigrants are less happy than second-generation immigrants, while there is no significant difference between second-generation families and native families. The effect of the Lebanon War is much less than expected.
    Keywords: Happiness; subjective well-being; financial satisfaction; Israel; religion; immigration; terrorism
    JEL: H56 I31 N35 N45 R23 Z12
    Date: 2010–09–16
  9. By: Timothy Besley; Torsten Persson
    Abstract: It is widely recognized that fragile states are key symptoms of under-development inmany parts of the world. Such states are incapable of delivering basic services totheir citizens and political violence is commonplace. As of yet, mainstreamdevelopment economics has not dealt in any systematic way with such concerns andthe implications for development assistance. This paper puts forward a frame-workfor analyzing fragile states and applies it to a variety of development policies indifferent types of states.9076:
    Keywords: state fragility, development
    JEL: P45
    Date: 2011–01
  10. By: Marc Fleurbaey; Frank A Cowell; Bertil Tungodden
    Abstract: We address a puzzle in welfare economics - the possibility that rational people may be simultaneously against two apparently con‡icting forms of "tyranny." In fact the two types of tyranny can be reconciled but at the possible cost of con‡ict with other standard welfare principles. We examine whether such con‡icts do arise using a questionnaire-experimental study. Our study shows that both tyrannies are rejected by a majority of the parti- cipants, and in many cases also pose a practical problem in moral reasoning
    Keywords: Keywords: social welfare, aggregation, questionnaire, income distribution
    JEL: H20 H21
    Date: 2010–05

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