nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒06‒25
eight papers chosen by
Maximo Rossi
University of the Republic

  1. A Behaviouristic Approach for Measuring Poverty: The Decomposition Approach - Empirical Illustrations for Germany 1995-2009 By Jürgen Faik
  2. Dynamics of Poverty, Labor Market and Public Policies in Latin America By Luis Beccaria; Roxana Maurizio; Ana Laura Fernandez; Paula Monsalvo; Mariana Alvarez
  3. The Future of Retirement and the Pension System: How the Public's Expectations Vary over Time and across Socio-Economic Groups By Bissonnette, Luc; van Soest, Arthur
  4. Mobility, Taxation and Welfare By Bibi, Sami; Duclos, Jean-Yves; Araar, Abdelkrim
  5. Antidepressants and Age By Blanchflower, David G.; Oswald, Andrew J.
  6. Time Costs of Children as Parents' Foregone Leisure By Ekert-Jaffe, Olivia; Grossbard, Shoshana
  7. Short-Time Work: The German Answer to the Great Recession By Brenke, Karl; Rinne, Ulf; Zimmermann, Klaus F.
  8. Dimensions of Health in the Elderly Population By David M. Cutler; Mary Beth Landrum

  1. By: Jürgen Faik
    Abstract: In this paper an alternative approach with regard to poverty measurement is discussed: the so-called decomposition approach. This method differentiates between various social groups in the sense that for each group a separate poverty line is determined. E. g., household size might be a criterion for such a social differentiation. By doing this, the problem of traditional poverty measurement to refer to income-independent equivalence scales is principally avoided. Moreover, the further problem of the traditional method, namely to determine a (general) poverty line as a more or less arbitrary fraction of society¿s mean welfare level, does not exist, on principle, in the decomposition approach. Present author's own calculations reveal higher poverty levels indicated by this approach compared with the conventional method of measuring (income) poverty. Since it appears to be realistic that some people perform their poverty assessments through a "mixture" of their own group's and overall welfare levels, at a plausible degree of economies of scale (i. e., Buhmann et al.'s · > 0.65) the poverty levels of the decomposition approach can be interpreted as upper limits for the "true" level of poverty, and, conversely, the degree of poverty ascertained by the conventional approach can be seen as a lower limit for "true" poverty.
    Keywords: Welfare, poverty measurement, decomposition approach, equivalence scales
    JEL: I31 I32 P46
    Date: 2011
  2. By: Luis Beccaria; Roxana Maurizio; Ana Laura Fernandez; Paula Monsalvo; Mariana Alvarez
    Abstract: Latin America experienced six years of sustained growth from 2003-2008. The high rate of economic growth over these years – before the 2008-2009 crisis – positively impacted social and labour market indicators. Evidence of these positive impacts can be seen in the form of job creation (particularly formal occupations), reduced unemployment and a slight recovery of average wages. During the period of interest, the rates of poverty and extreme poverty in the region respectively fell by 11 and 6 percentage points (p.p.). It is highly pertinent, in this context, to study the dynamics of poverty in the region and to analyze the flows into and out of poverty that accompanied this significant reduction in poverty. The main objective of this paper is to carry out a comparative study of poverty dynamics in five Latin American countries. The study specifically aims to analyze the extent to which countries with various levels of poverty incidence differ in terms of the intensity of poverty exits and entries, identify the relative importance of events associated with poverty transitions (such as factors in the labour market, demographic change and public policy), and finally, this study aims to examine the ways in which these events affect households with different characteristics.In order to achieve these objectives, we perform a dynamic analysis of panel data from regular household surveys. Of the five countries included in the study, Argentina and Costa Rica are found to have a relatively low incidence of poverty, Brazil is in an intermediary situation in this regard, while relatively high rates of poverty are found in Ecuador and Peru. This heterogeneous selection gives us a varied picture of social deprivation in the region.This dynamic analysis is useful for policy recommendations to overcome high poverty levels in the region, both by reducing the probability of falling into poverty and increasing the chances of moving out of poverty.
    Keywords: Poverty dynamics, Latin America, Labour market, Social policy
    JEL: I32 I38 J68 O54
    Date: 2011
  3. By: Bissonnette, Luc (Tilburg University); van Soest, Arthur (Tilburg University)
    Abstract: We analyze expectations of the Dutch population of ages 25 and older concerning the future generosity state and occupational pensions, the two main pillars of the Dutch pension system. Since the summer of 2006, monthly survey data were collected on the expectations of Dutch households concerning purchasing power of occupational pensions, eligibility and purchasing power of old age social security benefits, and the average retirement age ten or twenty years from now. We investigate how these expectations have changed over time and how they vary with socio-economic characteristics. Exploiting the fact that we have data until September 2010, we also analyze the effect of the recent financial and economic crisis. We find significant differences in expectations of different socio-economic groups, mainly suggesting that groups who are probably better informed were also more pessimistic.
    Keywords: subjective probabilities, old age social security, occupational pensions
    JEL: D84 H55 J26
    Date: 2011–06
  4. By: Bibi, Sami (Université Laval); Duclos, Jean-Yves (Université Laval); Araar, Abdelkrim (Université Laval)
    Abstract: Income mobility is often thought to equalize permanent incomes and thereby to improve social welfare. The welfare analysis of mobility often fails, however, to account for the cost of the variability of periodic incomes around permanent incomes. This paper assesses the net welfare benefit of mobility by assuming both a social aversion to inequality in permanent incomes and an individual aversion to variability in periodic incomes. The paper further investigates the combined (and comparative) impact of mobility and of the tax system (another presumed income equalizer) on the dynamics of income across time and on the inequality of income across individuals. Using panel data, we find that Canada's tax system limits significantly the redistributive impact of mobility while also lowering considerably the cost of income variability. The permanent income equalizing effect of taxes can reach up to 23 percent of mean income at the higher values of inequality aversion that we use. Globally, the net social welfare effect of both mobility and taxation is (almost always) positive and substantial, often amounting to around 30 percent of mean income. For all choices of parameter values, the tax effect exceeds by far the net effect of mobility on inequality and social welfare.
    Keywords: mobility, social welfare, risk, income variability, inequality, permanent income
    JEL: D31 D63 H24
    Date: 2011–06
  5. By: Blanchflower, David G. (Dartmouth College); Oswald, Andrew J. (IZA)
    Abstract: Antidepressants as a commodity have been remarkably little-studied by economists. This study shows in new data for 27 European countries that 8% of people (and 10% of those middle-aged) take antidepressants each year. The probability of antidepressant use is greatest among those who are middle-aged, female, unemployed, poorly educated, and divorced or separated. A hill-shaped age pattern is found. The adjusted probability of using antidepressants reaches a peak – approximately doubling – in people’s late 40s. This finding is consistent with, and provides a new and independent form of corroboration of, recent claims in the research literature that human well-being follows a U-shape through life.
    Keywords: well-being, aging, mental health, depression, happiness, Easterlin paradox
    Date: 2011–06
  6. By: Ekert-Jaffe, Olivia (Institut National d’Etudes Demographiques); Grossbard, Shoshana (San Diego State University, California)
    Abstract: This article uses data from the 1998-1999 French INSEE time use survey to estimate the time costs of children. The focus is on couples with two spouses working Full-Time in the labor force in order to avoid issues of substitution between home production and labor supply. Time costs are computed in terms of hours of foregone leisure. The model accounts for selection into full-time employment and controls for use of hired childcare workers. We find that the foregone leisure cost of one child under age 3 is 1.9 hour for mothers and 2.2 hours for fathers. We find economies of scale for mothers but not for fathers. The presence of a childcare worker per child reduces the time cost of children to a couple of parents by 5%.
    Keywords: children, time costs, leisure
    JEL: J13 J22
    Date: 2011–06
  7. By: Brenke, Karl (DIW Berlin); Rinne, Ulf (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: Short-time work was the "German answer" to the economic crisis. The number of short-time workers strongly increased in the recession and peaked at more than 1.5 million. Without the extensive use of short-time work, unemployment would have risen by approximately twice as much as it actually did. Short-time work has certainly contributed to the mild response of the German labor market to the crisis, but this is likely due to the country-specific context. Although the crisis has been overcome and employment is strongly expanding, modified regulations governing short-time work are still in place. This leads to undesired side effects.
    Keywords: labor market policy, partially unemployed workers, short-time work compensation, economic crisis
    JEL: J65 J68
    Date: 2011–06
  8. By: David M. Cutler; Mary Beth Landrum
    Abstract: In this paper, we characterize the multi-faceted health of the elderly and understand how health along multiple dimensions has changed over time. Our data are from the Medicare Current Beneficiary Survey, 1991-2007. We show that 19 measures of health can be combined into three broad categories: a first dimension representing severe physical and social incapacity such as difficulty dressing or bathing; a second dimension representing less severe difficulty such as walking long distances or lifting heavy objects; and a third dimension representing vision and hearing impairment. These dimensions have changed at different rates over time. The first and third have declined rapidly over time, while the second has not. The improvement in health is not due to differential mortality of the sick or a new generation of more healthy people entering old age. Rather, the aging process itself is associated with less rapid deterioration in health. We speculate about the factors that may lead to this.
    JEL: I1 I12
    Date: 2011–06

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