nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒06‒18
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Are Self-Employed Really Happier than Employees?: An Approach Modelling Adaptation and Anticipation Effects to Self-Employment and General Job Changes By Dominik Hanglberger; Joachim Merz
  2. Lectures on Fertility, Savings, Inter-Generational Transfers and Gender By Alessandro Cigno
  3. Employment, Hours of Work and the Optimal Taxation of Low Income Families By Blundell, Richard; Shephard, Andrew
  4. The Intergenerational Transmission of Cognitive and Non-Cognitive Skills During Adolescence and Young Adulthood By Anger, Silke
  5. Knocking on Heaven’s Door? Protestantism and Suicide By Becker, Sascha O.; Woessmann, Ludger
  6. Wage Inequality, Minimum Wage Effects and Spillovers By Stewart, Mark B.
  7. The School Readiness of the Children of Immigrants in the United States: The Role of Families, Childcare and Neighborhoods By Jessica Yiu
  8. Job Loss in the Great Recession: Historial Perspective from the Displaced Workers Survey, 1984-2010 By Henry S. Farber
  9. Bounding quantile demand functions using revealed preference inequalities By Richard Blundell; Dennis Kristensen; Rosa Matzkin
  10. Fairness and Cheating By Daniel Houser; Stefan Vetter; Joachim Winter

  1. By: Dominik Hanglberger; Joachim Merz
    Abstract: Empirical analyses using cross-sectional and panel data found significantly higher levels of job satisfaction for self-employed than for employees. We argue that those estimates in previous studies might be biased by neglecting anticipation and adaptation effects. For testing we specify several models accounting for anticipation and adaptation to self-employment and job changes. Based on data from the German Socio-Economic Panel Survey (SOEP) we find that becoming self-employed is associated with large negative anticipation effects. In contrast to recent literature we find no specific long term effect of self-employment on job satisfaction. Accounting for anticipation and adaptation to job changes in general, which includes changes between employee jobs, reduces the effect of self-employment on job satisfaction by 70%. When controlling for anticipation and adaptation to job changes, we find no further anticipation effect of self-employment and a weak positive but not significant effect of self-employment on job satisfaction for three years. Thus adaptation wipes out higher satisfaction within the first three years being self-employed. According to our results previous studies at least overestimated possible positive effects of self-employment on job satisfaction.
    Keywords: job satisfaction, self-employment, hedonic treadmill model, adaptation, anticipation, fixed-effects panel estimations, German Socio-Economic Panel (SOEP)
    JEL: J23 J28 J8
    Date: 2011
  2. By: Alessandro Cigno (University of Florence)
    Date: 2011
  3. By: Blundell, Richard (University College London); Shephard, Andrew (Princeton University)
    Abstract: The optimal design of low income support is examined using a structural labour supply model. The approach incorporates unobserved heterogeneity, fixed costs of work, childcare costs and the detailed non-convexities of the tax and transfer system. The analysis considers purely Pareto improving reforms and also optimal design under social welfare functions with different degrees of inequality aversion. We explore the gains from tagging and also examine the case for the use of hours-contingent payments. Using the tax schedule for lone parents in the UK as our policy environment, the results point to a reformed non-linear tax schedule with tax credits only optimal for low earners. The results also suggest a welfare improving role for tagging according to child age and for hours-contingent payments, although the case for the latter is mitigated when hours cannot be monitored or recorded accurately by the tax authorities.
    Keywords: low income support, optimal taxation, labour supply
    JEL: J22 I38
    Date: 2011–05
  4. By: Anger, Silke (DIW Berlin)
    Abstract: This study examines cognitive and non-cognitive skills and their transmission from parents to children as one potential candidate to explain the intergenerational link of socio-economic status. Using representative data from the German Socio-Economic Panel Study, we contrast the impact of parental cognitive abilities (fluid intelligence, crystallized intelligence) and personality traits (Big Five, locus of control) on their adolescent and young adult children's traits with the effects of parental background and childhood environment. While for both age groups intelligence and personal traits were found to be transmitted from parents to their children, there are large discrepancies with respect to the age group and the type of skill. The intergenerational transmission effect was found to be relatively small for adolescent children, with correlations between 0.12 and 0.24, whereas the parent-child correlation in the sample of adult children was between 0.19 and 0.27 for non-cognitive skills, and up to 0.56 for cognitive skills. Thus, the skill gradient increases with the age of the child. Furthermore, the skill transmission effects are virtually unchanged by controlling for childhood environment or parental education, suggesting that the socio-economic status of the family does not play a mediating role in the intergenerational transmission of intelligence and personality traits. The finding that non-cognitive skills are not as strongly transmitted as cognitive skills, suggests that there is more room for external (non-parental) influences in the formation of personal traits. Hence, it is more promising for policy makers to focus on shaping children's non-cognitive skills to promote intergenerational mobility. Intergenerational correlations of cognitive skills in Germany are roughly the same or slightly stronger than those found by previous studies for other countries with different institutional settings. Intergenerational correlations of non-cognitive skills revealed for Germany seem to be considerably higher than the ones found for the U.S. Hence, skill transmission does not seem to be able to explain cross-country differences in socio-economic mobility.
    Keywords: cognitive abilities, personality, intergenerational transmission, skill formation
    JEL: J10 J24 I20
    Date: 2011–05
  5. By: Becker, Sascha O. (University of Warwick, Ifo, CEPR, CESifo, and IZA); Woessmann, Ludger (University of Munich, Ifo, CESifo, and IZA)
    Abstract: We model the effect of Protestant vs. Catholic denomination in an economic theory of suicide, accounting for differences in religious-community integration, views about man’s impact on God’s grace, and the possibility of confessing sins. We test the theory using a unique micro-regional dataset of 452 counties in 19th century Prussia, when religiousness was still pervasive. Our instrumental-variable model exploits the concentric dispersion of Protestantism around Wittenberg to circumvent selectivity bias. Protestantism had a substantial positive effect on suicide in 1816-21 and 1869-71. We address issues of bias from mental illness, misreporting, weather conditions, within-county heterogeneity, religious concentration, and gender composition. Key words: Religion ; suicide ; Prussian economic history JEL classification: Z12 ; N33
    Date: 2011
  6. By: Stewart, Mark B. (University of warwick)
    Abstract: This paper investigates possible spillover effects of the UK minimum wage. The halt in the growth in inequality in the lower half of the wage distribution (as measured by the 50:10 percentile ratio) since the mid 1990s, in contrast to the continued inequality growth in the upper half of the distribution, suggests the possibility of a minimum wage effect and spillover effects on wages above the minimum. This paper analyses individual wage changes, using both a difference-in-differences estimator and a specification involving cross-uprating comparisons, and concludes that there have not been minimum wage spillovers. Since the UK minimum wage has always been below the 10th percentile, this lack of spillovers implies that minimum wage changes have not had an effect on the 50:10 percentile ratio measure of inequality in the lower half of the wage distribution. JEL classification: J31 ; J38 ; J08.
    Date: 2011
  7. By: Jessica Yiu (Princeton University)
    Abstract: At present, little is known about the welfare of very young immigrant children, since the emphasis thus far has been on the integration of school-aged children and youths into host societies (e.g. Leventhal et al. 2006; Portes and Hao 2004; Zhou and Bankston 1994). However invaluable these studies are in understanding how well the children of immigrants fare, particularly at school, and in predicting their socioeconomic mobility as adults, they cannot ascertain how early the onset of these nativity differences is. Researchers across the disciplines are thus increasingly turning their attention to the early childhood period to better understand how learning gaps between the children of immigrant versus native-born parentage – that is, second- and third-plus generations, respectively – are formed and persist prior to school entry (Fuller et al. 2009; Johnson de Feyter and Winsler 2009; Takanishi, 2004). The recent availability of longitudinal and large-scale birth cohort studies, such as the Fragile Families Study of Child Well-being, facilitates analyses which address early childhood research with a focus on nativity.
    Keywords: young immigrant children, integration, school-aged children and youths, host societies, Fragile Families Study of Child Well-being
    JEL: D19 D63 I21 I31 J15
    Date: 2011–05
  8. By: Henry S. Farber (Princeton University, NBER, IZA)
    Abstract: The Great Recession from December 2007 to June 2009 is associated with a dramatic weakening of the labor market from which the labor market is now only slowly recovering. The unemployment rate remains stubbornly high and durations of unemployment are unprecedentedly long. I use data from the Dis- placed Workers Survey (DWS) from 1984-2010 to investigate the incidence and consequences of job loss from 1981-2009. In particular, the January 2010 DWS, which captures job loss during the 2007-2009 period, provides a window through which to examine the experience of job losers in the Great Recession and to compare their experience to that of earlier job losers. These data show a record high rate of job loss, with almost one in six workers reporting having lost a job in the 2007-2009 period. The consequences of job loss are also very serious dur- ing this period with very low rates of reemployment, diculty nding full-time employment, and substantial earnings losses.
    Keywords: Labor market, unemployment rate, Displaced Workers Survey, reemployment, employment, substantial earnings losses
    JEL: E24 J00 J20 J21
    Date: 2011–05
  9. By: Richard Blundell (Institute for Fiscal Studies and University College London); Dennis Kristensen; Rosa Matzkin (Institute for Fiscal Studies and UCLA)
    Abstract: <p>This paper develops a new technique for the estimation of consumer demand models with unobserved heterogeneity subject to revealed preference inequality restrictions. Particular attention is given to nonseparable heterogeneity. The inequality restrictions are used to identify bounds on quantile demand functions. A nonparametric estimator for these bounds is developed and asymptotic properties are derived. An empirical application using data from the U.K. Family Expenditure Survey illustrates the usefulness of the methods by deriving bounds and confidence sets for estimated quantile demand functions.</p>
    Date: 2011–06
  10. By: Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Stefan Vetter (University of Munich); Joachim Winter (University of Munich)
    Abstract: We present evidence from a laboratory experiment showing that individuals who believe they were treated unfairly in an interaction with another person are more likely to cheat in a subsequent unrelated game. Specifically, subjects first participated in a dictator game. They then flipped a coin in private and reported the outcome. Subjects could increase their total payoff by cheating, i.e., lying about the outcome of the coin toss. We found that subjects were more likely to cheat in reporting the outcome of the coin flip when: 1) they received either nothing or a very small transfer from the dictator; and 2) they claimed to have been treated unfairly.
    Keywords: cheating, fairness, experimental design
    JEL: C91 D63
    Date: 2011–01

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