nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒07‒13
eleven papers chosen by
Maximo Rossi
University of the Republic

  1. Earnings Returns to the British Education Expansion By Paul J Devereux; Wen Fan
  2. Inequality, Growth and Public Spending in Central, East and Southeast Europe By Mario Holzner
  3. Assessing wellbeing and deprivation in later life: A multidimensional counting approach By Armando Barrientos; Casilda Lasso de la Vega
  4. Destined for (Un)Happiness: Does Childhood Predict Adult Life Satisfaction? By Frijters, Paul; Johnston, David W.; Shields, Michael A.
  5. The Effect of Public Sector Employment on Women's Labour Market Outcomes By Anghel, Brindusa; de la Rica, Sara; Dolado, Juan José
  6. What Explains the German Labor Market Miracle in the Great Recession? By Burda, Michael C.; Hunt, Jennifer
  7. Declining inequality in Latin America: Some economics, some politics By Nancy Birdsall; Nora Lustig; Darryl McLeod
  8. Antidepressants and Age By Blanchflower, David G; Oswald, Andrew
  9. Does Parental Education Affect Fertility? Evidence from Pre-Demographic Transition Prussia By Becker, Sascha O; Cinnirella, Francesco; Woessmann, Ludger
  10. Interview with Nobel Prize Laureates Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides By Diamond, Peter A.; Mortensen, Dale T.; Pissarides, Christopher A.
  11. Clashing Theories of Unemployment By Robert E. Hall

  1. By: Paul J Devereux (University College Dublin); Wen Fan (University College Dublin)
    Abstract: We study the effects of the large expansion in British educational attainment that took place for cohorts born between 1970 and 1975. Using the Quarterly Labour Force Survey, we find that the expansion caused men to increase education by about a year on average and gain about 8% higher wages; women obtained a slightly greater increase in education and a similar increase in wages. Clearly, there was a sizeable gain from being born late enough to take advantage of the greater educational opportunities offered by the expansion. Treating the expansion as an exogenous increase in educational attainment, we obtain instrumental variables estimates of returns to schooling of about 6% for both men and women.
    Keywords: return to education; higher education expansion
    Date: 2011–06–28
  2. By: Mario Holzner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The article analyses the joint determinants of inequality and growth with a special emphasis on public spending structures in transition. The mutual benefit of low real interest rates, to both equity and economic development is a major result of this paper. In terms of public spending items we find a positive correlation with equity and a negative with growth as several of the government expenditure items seem to act counter-cyclically. In the late 1990’s and early 2000’s the European integration process allowed most of the transition economies to aim for the best of both worlds: equity and economic development.
    Keywords: Inequality, Government Expenditures, Economic Growth, Transition
    JEL: D63 H5 O4 P2
    Date: 2010–10
  3. By: Armando Barrientos; Casilda Lasso de la Vega
    Abstract: The paper applies a multidimensional and comparative approach to the assessment of wellbeing and deprivation among a panel of older people in Brazil and South Africa. It develops and justifies a counting approach to rank order wellbeing and deprivation distributions. An application of this approach generates substantive findings on the dynamics of the distribution of wellbeing and deprivation in later life, on stratification, and on the importance of social policy addressing ageing.
    Date: 2011
  4. By: Frijters, Paul (University of Queensland); Johnston, David W. (Monash University); Shields, Michael A. (University of Melbourne)
    Abstract: In this paper we address the question of how much of adult life satisfaction is predicted by childhood traits, parental characteristics and family socioeconomic status. Given the current focus of many national governments on measuring population well-being, and renewed focus on effective policy interventions to aid disadvantaged children, we study a cohort of children born in a particular week in 1958 in Britain who have been repeatedly surveyed for 50 years. Importantly, at four points in their adult lives this cohort has been asked about their life satisfaction (at ages 33, 42, 46, and 50). A substantive finding is that characteristics of the child and family at birth predict no more than 1.2% of the variance in average adult life satisfaction. A comprehensive set of child and family characteristics at ages 7, 11 and 16 increases the predictive power to only 2.8%, 4.3% and 6.8%, respectively. We find that the conventional measures of family socioeconomic status, in the form of parental education, occupational class and family income, are not strong predictors of adult life satisfaction. However, we find robust evidence that non-cognitive skills as measured by childhood behavioural-emotional problems, and social maladjustment, are powerful predictors of whether a child grows up to be a satisfied adult. We also find that some aspects of personality are important predictors. Adding contemporaneous adulthood variables for health and socio-economic status increases the predictability of average life satisfaction to 15.6%, while adding long-lags of life satisfaction increases the predictive power to a maximum of 35.5%. Repeating our analyses using data from the 1970 British Cohort Study confirms our main findings. Overall, the results presented in the paper point to average adult life satisfaction not being strongly predictable from a wide-range of childhood and family characteristics by age 16, which implies that there is high equality of opportunity to live a satisfied life, at least for individuals born in Britain in 1958 and 1970.
    Keywords: childhood, socioeconomic status, life satisfaction, non-cognitive, cognitive
    JEL: I1 J1
    Date: 2011–06
  5. By: Anghel, Brindusa (FEDEA, Madrid); de la Rica, Sara (University of the Basque Country); Dolado, Juan José (Universidad Carlos III de Madrid)
    Abstract: This paper addresses the role played by Public Sector (PS) employment across different OECD labour markets in explaining: (i) gender differences regarding choices to work in either PS or private sector, and (ii) subsequent changes in female labour market outcomes. To do so, we provide some empirical evidence about cross-country gender differences in choice of employment in the PS vs. the private sector, using the European Community Household Panel (ECHP), in the light of different theories on gender behaviour in the labour market. We also analyze the main determinants of the hourly wage gaps across these two sectors for males and females separately. Finally, we document the main stylized facts about labour market transitions by male and female workers among inactivity, unemployment, working in the PS and working in the private sector.
    Keywords: labour market transitions, gender gaps, public sector employment
    JEL: J45 J16 J31
    Date: 2011–06
  6. By: Burda, Michael C. (Humboldt University, Berlin); Hunt, Jennifer (McGill University)
    Abstract: Germany experienced an even deeper fall in GDP in the Great Recession than the United States, with little employment loss. Employers' reticence to hire in the preceding expansion, associated in part with a lack of confidence it would last, contributed to an employment shortfall equivalent to 40 percent of the missing employment decline in the recession. Another 20 percent may be explained by wage moderation. A third important element was the widespread adoption of working time accounts, which permit employers to avoid overtime pay if hours per worker average to standard hours over a window of time. We find that this provided disincentives for employers to lay off workers in the downturn. Although the overall cuts in hours per worker were consistent with the severity of the Great Recession, reduction of working time account balances substituted for traditional government-sponsored short-time work.
    Keywords: unemployment, Germany, Great Recession, short time work, working time accounts, Hartz reforms, extensive vs. intensive employment margin
    JEL: E24 E32 J6
    Date: 2011–06
  7. By: Nancy Birdsall (Center for Global Development); Nora Lustig (Tulane University and Center for Global Development); Darryl McLeod (Fordham University)
    Keywords: inequality, poverty, social policy, new left, Latin America
    JEL: O15 P16 I32
    Date: 2011
  8. By: Blanchflower, David G; Oswald, Andrew (Dartmouth; University of Warwick)
    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
  9. By: Becker, Sascha O; Cinnirella, Francesco; Woessmann, Ludger (University of Warwick, University of Munich)
    Abstract: While  women’s  employment  opportunities,  relative  wages,  and  the  child quantity quality trade-off have been studied as factors underlying  historical fertility limitation, the role of parental education has received  little  attention.  We  combine  Prussian  county  data  from  three  censuses—1816,  1849,  and  1867—to  estimate  the  relationship  between women’s education and their fertility before the demographic  transition.  Despite  controlling  for  several  demand  and  supply  factors,  we  find  a  negative  residual  effect  of  women’s  education  on  fertility.  Instrumental variable estimates, using exogenous variation in women's education driven by differences in landownership inequality, suggest that the effect of women's education on fertility is casual.
    Keywords: Demographic transition; female education; fertitility; Nineteenth Century Prussia
  10. By: Diamond, Peter A. (Massachusetts Institute of Technology); Mortensen, Dale T. (Northwestern University); Pissarides, Christopher A. (London School of Economics)
    Abstract: Interview with the 2010 Laureates in Economic Sciences Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides, 6 December 2010. The interviewer is Adam Smith, Editorial Director of Nobel Media.
    Keywords: Search frictions;
    JEL: E24 J64
    Date: 2010–12–06
  11. By: Robert E. Hall
    Abstract: General-equilibrium models for studying monetary influences in general and the zero lower bound on the nominal interest rate in particular contain implicit theories of unemployment. In some cases, the theory is explicit. When the nominal rate is above the level that clears the current market for output, the excess supply shows up as diminished output, lower employment, and higher unemployment. Quite separately, the Diamond-Mortensen-Pissarides model is a widely accepted and well-developed account of turnover, wage determination, and unemployment. The DMP model is a clashing theory of unemployment, in the sense that its determinants of unemployment do not include any variables that signal an excess supply of current output. In consequence, a general-equilibrium monetary model with a DMP labor market generally has no equilibrium. After demonstrating the clash in a minimal but adequate setting, I consider modifications of the DMP model that permit the complete model to have an equilibrium. No fully satisfactory modification has yet appeared.
    JEL: E12 E22 E32
    Date: 2011–06

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