New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒03‒12
seven papers chosen by

  1. Occupational Tasks and Changes in the Wage Structure By Firpo, Sergio; Fortin, Nicole M.; Lemieux, Thomas
  2. Horizontal inequity under a dual income tax system: principles and measurement By Erlend E. Bø, Peter J. Lambert, and Thor O. Thoresen
  3. On the meaning and measurement of redistribution in cross-country comparisons By Peter J. Lambert, Runa Nesbakken and Thor O. Thoresen
  4. Part-Time Unemployment and Optimal Unemployment Insurance By Ek, Susanne; Holmlund, Bertil
  5. A Flying Start? Long Term Consequences of Maternal Time Investments in Children During Their First Year of Life By Carneiro, Pedro; Løken, Katrine Vellesen; Salvanes, Kjell Gunnar
  6. Job Search and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data By Alan B. Krueger; Andreas Mueller
  7. Democracy, Property Rights, Income Equalilty, and Corruption By Bin Dong; Benno Torgler

  1. By: Firpo, Sergio (São Paulo School of Economics); Fortin, Nicole M. (University of British Columbia, Vancouver); Lemieux, Thomas (University of British Columbia, Vancouver)
    Abstract: This paper argues that changes in the returns to occupational tasks have contributed to changes in the wage distribution over the last three decades. Using Current Population Survey (CPS) data, we first show that the 1990s polarization of wages is explained by changes in wage setting between and within occupations, which are well captured by tasks measures linked to technological change and offshorability. Using a decomposition based on Firpo, Fortin, and Lemieux (2009), we find that technological change and deunionization played a central role in the 1980s and 1990s, while offshorability became an important factor from the 1990s onwards.
    Keywords: wage inequality, polarization, occupational tasks, offshoring, RIF-regressions
    JEL: J3 J5
    Date: 2011–02
  2. By: Erlend E. Bø, Peter J. Lambert, and Thor O. Thoresen (Statistics Norway)
    Abstract: Tax systems with separate taxation of wage and capital income, also called dual income tax systems, have gained relevance through the Mirrlees Review. Obviously, such tax systems are exposed to horizontal equity (HE) failures, or horizontal inequity (HI). HE and HI have a firm grip on assessment of fair tax policies, both from an academic point of view and in general public debate. The dual income tax system of Norway was modified by the tax reform of 2006 precisely because the previous schedule failed to deliver equal tax treatment of equals. This paper discusses the meaning and measurement of HI effects of dual income tax systems, and evaluates the development of HI for Norway over the time period 2000–2008 using micro data. A copula-based identification strategy efficiently establishes a framework for evaluations of HI over time. The dual income tax system and the early announcement of its impending revision during the period under examination created measurement problems which we had to account for by defining a new income concept for the empirical strategy. As expected, we find less HI in Norway after the reform of 2006.
    Keywords: Dual income tax; Horizontal inequity; Reranking; Copula estimation
    JEL: D31 D63 H31
    Date: 2011–02
  3. By: Peter J. Lambert, Runa Nesbakken and Thor O. Thoresen (Statistics Norway)
    Abstract: Empirical findings on the relationship between income inequality and redistribution from a cross-country perspective are not conclusive. One reason may be that observers have in mind different concepts of redistribution. A major factor is that comparator countries’ pre-fisc distributions typically differ markedly, and account is taken of this differently (if at all) by different measures of redistribution. The ambiguities can be resolved by applying the “transplant-and-compare” approach, rendering fiscal regimes into a common base by adjusting for differences in pre-fisc income inequality, and then measuring the “pure” effect of tax-and-transfer policies using this benchmark. We illustrate both what is possible, and what remains problematic, using this technique, by conducting an exploratory international comparison, based on microdata from the Luxembourg Income Study database in combination with more aggregated information from the OECD, for 15 countries.
    Keywords: Redistributive effect; Personal income tax; Cross-country comparison
    JEL: H11 H23 H53
    Date: 2011–02
  4. By: Ek, Susanne (Department of Economics); Holmlund, Bertil (Department of Economics)
    Abstract: A significant fraction of the labor force consists of employed workers who are part-time unemployed (underemployed) in the sense that they are unable to work as much as they prefer. This paper develops a search and matching model to study the design of optimal unemployment insurance in an economy with unemployment as well as part-time unemployment. Part-time unemployment provides income insurance and serves as a stepping stone to full-time jobs. Unemployment benefits for part-timers increase the outflow from unemployment to part-time work but reduce the outflow from part-time work to fulltime employment. We examine the optimal structure of benefits for unemployed and underemployed workers. The results indicate nonnegligible welfare gains associated with time limits for unemployment benefits as well as for part-time benefits. The welfare gains from optimal UI are larger when wages are fixed than when they are flexible.
    Keywords: Job search; part-time unemployment; unemployment insurance
    JEL: J64 J65
    Date: 2011–02–28
  5. By: Carneiro, Pedro (University College London); Løken, Katrine Vellesen (University of Bergen); Salvanes, Kjell Gunnar (Norwegian School of Economics and Business Administration)
    Abstract: We study the impact on children of increasing the time that the mother spends with her child in the first year by exploiting a reform that increased paid and unpaid maternity leave in Norway. The reform increased maternal leave on average by 4 months and family income was unaffected. The increased time with the child led to a 2.7 percentage points decline in high school dropout. For mothers with low education we find a 5.2 percentage points decline. The effect is especially large for children of mothers who prior to the reform, would take very low levels of unpaid leave.
    Keywords: employment; income; family; education
    JEL: J21 J22
    Date: 2010–10–01
  6. By: Alan B. Krueger (Princeton University); Andreas Mueller (Stockholm University)
    Abstract: This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and spring of 2010. Our main findings are: (1) the amount of time devoted to job search declines sharply over the spell of unemployment; (2) the self-reported reservation wage predicts whether a job offer is accepted or rejected; (3) the reservation wage is remarkably stable over the course of unemployment for most workers, with the notable exception of workers who are over age 50 and those who had nontrivial savings at the start of the study; (4) many workers who seek full-time work will accept a part-time job that offers a wage below their reservation wage; and (5) the amount of time devoted to job search and the reservation wage help predict early exits from Unemployment Insurance (UI).
    Keywords: unemployment, job search, reservation wage
    JEL: D19 D60 H31 J21 J29
    Date: 2011–01
  7. By: Bin Dong (QUT); Benno Torgler (QUT)
    Abstract: This paper presents theoretical and empirical evidence on the nexus between corruption and democracy. We establish a political economy model where the effect of democracy on corruption is conditional on income distribution and property rights protection. Our empirical analysis with cross-national panel data provides evidence that is consistent with the theoretical prediction. Moreover, the effect of democratization on corruption depends on the protection of property rights and income equality which shows that corruption is a nonlinear function of these variables. The results indicate that democracy will work better as a control of corruption if the property right system works and there is a low level of income inequality. On the other hand if property rights are not secured and there is strong income inequality, democracy may even lead to an increase of corruption. In addition, property rights protection and the mitigation of income inequality contribute in a strong manner to the reduction of corruption.
    Keywords: Corruption; Democracy; Income inequality; Property rights
    JEL: D73 H11 P16
    Date: 2010–11–26

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