nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒05‒14
eleven papers chosen by
Maximo Rossi
University of the Republic

  1. Inequality, Entropy and Goodness of Fit By Frank A. Cowell; Emmanuel Flachaire; Sanghamitra Bandyopadhyay
  2. Youth Unemployment in Europe and the United States By Bell, David N.F.; Blanchflower, David G.
  3. The Crisis, Policy Reactions and Attitudes to Globalization and Jobs By Bell, David N.F.; Blanchflower, David G.
  4. Reconsidering Gender Bias in Intra-Household Allocation in India By Zimmermann, Laura
  5. Young People and the Great Recession By Bell, David N.F.; Blanchflower, David G.
  6. Education and family background: Mechanisms and policies. By Björklund, Anders; Salvanes, Kjell G.
  7. Is income inequality in Latin America falling? By Leonardo Gasparini; Guillero Cruces; Leopoldo Tornarolli
  8. Rising food prices and household welfare : evidence from Brazil in 2008 By Ferreira, Francisco H. G.; Fruttero, Anna; Leite, Phillippe; Lucchetti, Leonardo
  9. Labor market transitions and social security in Colombia By Cuesta, Jose; Bohorquez, Camilo
  10. Competition and Relational Contracts: The Role of Unemployment as a Disciplinary Device By Martin Brown; Armin Falk; Ernst Fehr
  11. Tullock Challenges: happiness, revolutions and democracy By Bruno S. Frey

  1. By: Frank A. Cowell (STICERD - London School of Economics); Emmanuel Flachaire (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Sanghamitra Bandyopadhyay (STICERD - London School of Economics)
    Abstract: Specific functional forms are often used in economic models of distributions; goodness-of-fit measures are used to assess whether a functional form is appropriate in the light of real-world data. Standard approaches use a distance criterion based on the EDF, an aggregation of differences in observed and theoretical cumulative frequencies. However, an economic approach to the problem should involve a measure of the information loss from using a badly-fitting model. This would involve an aggregation of, for example, individual income discrepancies between model and data. We provide an axiomatisation of an approach and applications to illustrate its importance.
    Keywords: goodness of fit; discrepancy; income distribution; inequality measurement
    Date: 2011–05–06
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00591077&r=ltv
  2. By: Bell, David N.F. (University of Stirling); Blanchflower, David G. (Dartmouth College)
    Abstract: This paper focuses particularly on youth unemployment, why we should be concerned about it, why it is increasing again, how the present difficulties of young people entering the labour market differ from those of the past and what useful lessons have been learned that may guide future policy. We focus on Europe and USA, but introduce evidence from other countries where appropriate. Our analysis of the UK NCDS birth cohort data provides evidence supporting the notion that early adulthood unemployment creates long lasting scars which affect labour market outcomes much later in life. Our chosen variables are weekly wages and happiness. Our results show significant effects at age 50 from early adulthood unemployment. These affects are stronger than more recent unemployment experiences.
    Keywords: scarring effects, youth unemployment, happiness
    JEL: J31 J64
    Date: 2011–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp5673&r=ltv
  3. By: Bell, David N.F. (University of Stirling); Blanchflower, David G. (Dartmouth College)
    Abstract: We consider the effects of the financial crisis and subsequent recession on world labour markets. It begins by cataloguing the adverse effects on output of the sudden collapse in demand brought about by the financial crisis in what has come to be called the Great Recession. Next we look at the labour market and how employment and unemployment have been impacted and document the very different responses by country. We then move on to look at attitudinal indicators of the impact of the rising levels of joblessness we observe across most OECD countries. We examine data on well-being and on attitudes to employment. We also examine a number of questions about the impact of globalization that respondents across many European countries were asked in the Spring of 2010. Finally, we examine the policy responses of governments, and consider what lessons might be learned from the marked differences in labour market outcomes following the recession.
    Keywords: globalization, jobs
    JEL: J31 J64
    Date: 2011–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp5680&r=ltv
  4. By: Zimmermann, Laura (University of Michigan)
    Abstract: Detecting gender discrimination among children in the intra-household allocation of goods from household surveys has often proven to be difficult. This paper uses some of the commonly used techniques in this field to analyze education expenditures in India. Contrary to most previous research, I find evidence of discrimination against girls. Results at the all-India level are robust to the statistical method and the education expenditure measure, while they are more sensitive to changes in the analysis at the state level. In general, girls experience gender discrimination especially from age 10 onwards, with almost universal disadvantage in the amount of education expenditures in the group of 15-19 year olds.
    Keywords: gender discrimination, India, intra-household allocation, education expenditures
    JEL: J16 O15
    Date: 2011–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp5687&r=ltv
  5. By: Bell, David N.F. (University of Stirling); Blanchflower, David G. (Dartmouth College)
    Abstract: This article reviews the effects of the Great Recession on youth labour markets. We argue that young people aged 16-24 have suffered disproportionately during the recession. Using the USA and UK as case studies, we analyse youth unemployment using microdata. We argue that there is convincing evidence that the effects of unemployment when young impose costs on individuals and society well into the future. Though the effects of current policies on youth unemployment are uncertain, there is still a strong case for policy intervention to address the difficulties that the young are having in accessing employment.
    Keywords: youth unemployment
    JEL: J01 J11 J21 J23 J38 J64
    Date: 2011–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp5674&r=ltv
  6. By: Björklund, Anders (Swedish Institute for Social Research and IZA); Salvanes, Kjell G. (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: In every society for which we have data, people’s educational achievement is positively correlated with their parents’ education or with other indicators of their parents’socioeconomic status. This topic is central in social science, and there is no doubt that research has intensified during recent decades, not least thanks to better data having become accessible to researchers. The purpose of this chapter is to summarize and evaluate recent empirical research on education and family background. Broadly speaking, we focus on two related but distinct motivations for this topic. The first is equality of opportunity. Here, major the research issues are: How important a determinant of educational attainment is family background, and is family background—in the broad sense that incorporates factors not chosen by the individual—a major, or only a minor, determinant of educational attainment? What are the mechanisms that make family background important? Have specific policy reforms been successful in reducing the impact of family background on educational achievement? The second common starting point for recent research has been the child development perspective. Here, the focus is on how human-capital accumulation is affected by early childhood resources. Studies with this focus address the questions: what types of parental resources or inputs are important for children’s development, why are they important and when are they important? In addition, this literature focuses on exploring which types of economic policy, and what timing of the policy in relation to children’s social and cognitive development, are conducive to children’s performance and adult outcomes. The policy interest in this research is whether policies that change parents’ resources and restrictions have causal effects on their children.
    Keywords: Intergenerational mobility; Sibling correlations; Education; Education reform.
    JEL: I21 J13 J24
    Date: 2010–06–04
    URL: http://d.repec.org/n?u=RePEc:hhs:nhheco:2010_014&r=ltv
  7. By: Leonardo Gasparini; Guillero Cruces; Leopoldo Tornarolli
    Abstract: This paper documents patterns and recent developments on income inequality in Latin America (LA). New comparative international evidence confirms that LA is a region of high inequality, although maybe not the highest in the world. Income inequality has fallen in the 2000s, suggesting a turning point from the substantial increases of the 1980s and 1990s. The fall in inequality is significant and widespread, but it does not seem to be based on strong fundamentals.
    Date: 2011–04–30
    URL: http://d.repec.org/n?u=RePEc:col:000425:008446&r=ltv
  8. By: Ferreira, Francisco H. G.; Fruttero, Anna; Leite, Phillippe; Lucchetti, Leonardo
    Abstract: Food price inflation in Brazil in the twelve months to June 2008 was 18 percent, while overall inflation was 5.3 percent. This paper uses spatially disaggregated monthly data on consumer prices and two different household surveys to estimate the welfare consequences of these food price increases, and their distribution across households. Because Brazil is a large food producer, with a predominantly wage-earning agricultural labor force, our estimates include general equilibrium effects on market and transfer incomes, as well as the standard estimates of changes in consumer surplus. While the expenditure (or consumer surplus) effects were large, negative and markedly regressive everywhere, the market income effect was positive and progressive, particularly in rural areas. Because of this effect on the rural poor, and of the partial protection afforded by increases in two large social assistance benefits, the overall impact of higher food prices in Brazil was U-shaped, with the middle-income groups suffering larger proportional losses than the very poor. Nevertheless, since Brazil is 80 percent urban, higher food prices still led to a greater incidence and depth of poverty at the national level.
    Keywords: Rural Poverty Reduction,Markets and Market Access,Regional Economic Development,Food&Beverage Industry
    Date: 2011–05–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:5652&r=ltv
  9. By: Cuesta, Jose; Bohorquez, Camilo
    Abstract: This paper quantifies the magnitude of transitions across occupational categories in Colombia, a country with high unemployment and informality but quickly increasing its social security coverage for health. The analysis makes use of a panel of households between 2008 and 2009, representative of the main metropolitan areas in the country. Results confirm previous evidence found in Colombia and elsewhere in the region that transitions between occupations are large and asymmetric: they are disproportionally more likely to happen from formal to informal occupations than vice versa. The paper finds for the first time that such transitions are also different for salaried workers compared with the self-employed, as well as by poverty status of the worker. Salaried workers are more likely to transition first into other salaried jobs, while self-employed are more likely to transition into unemployment or out of the labor force. There are marked differences in the profiles of transitioning and non-transitioning workers, both in terms of socioeconomic characteristics and social security coverage. Causal analysis shows that affiliation to social security on health deters occupational transitions, while pension insurance does not. Hence, high-volume transitions may not be crisis-specific phenomena, but rather associated with contributive and non-contributive social security mechanisms that incentivize informality, and workers'preferences for informal jobs. The debate on labor market and social security reforms needs to take these features of transitions into account.
    Keywords: Labor Markets,Labor Policies,Population Policies,Labor Standards,Work&Working Conditions
    Date: 2011–05–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:5650&r=ltv
  10. By: Martin Brown (Swiss National Bank and CenTER Tilburg University); Armin Falk (University of Bonn); Ernst Fehr (Institute for Empirical Research in Economics, University of Zurich)
    Abstract: When workers are faced with the threat of unemployment, their relationship with a particular firm becomes valuable. As a result, a worker may comply with the terms of a relational contract that demands high effort even when performance is not enforceable by a third party. But can relational contracts motivate high effort when workers can easily find alternative jobs? We examine how competition for labor affects the emergence of relational contracts and their effectiveness in overcoming moral hazard in the labor market. We show that effective relational contracts do emerge in a market with excess demand for labor. Long-term relationships turn out to be less frequent when there is excess demand for labor than they are in a market characterized by exogenous unemployment. However, stronger competition for labor does not impair labor market efficiency: higher wages induced by competition lead to higher effort out of concerns for reciprocity.
    Keywords: Relational Contracts, Involuntary Unemployment
    JEL: D82 J3 J41 E24 C9
    Date: 2011–05
    URL: http://d.repec.org/n?u=RePEc:trf:wpaper:359&r=ltv
  11. By: Bruno S. Frey
    Abstract: Gordon Tullock has been one of the most important founders and contributors to Public Choice. Two innovations are typical “Tullock Challenges”. The first relates to method: the measurement of subjective well-being, or happiness. The second relates to digital social networks such as Facebook, Twitter, or to some extent Google. Both innovations lead to strong incentives by the governments to manipulate the policy consequences. In general “What is important, will be manipulated by the government”. To restrain government manipulation one has to turn to Constitutional Economics and increase the possibilities for direct popular participation and federalism, or introduce random mechanisms.
    Keywords: Happiness, social networks, constitutional economics, random mechanisms, public choice
    JEL: D72 H10 I31 P16 D02
    Date: 2011–04
    URL: http://d.repec.org/n?u=RePEc:zur:econwp:015&r=ltv

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