nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒10‒09
five papers chosen by
Maximo Rossi
University of the Republic

  1. Job Polarization and Task-Biased Technological Change: Sweden, 1975–2005 By Adermon, Adrian; Gustavsson, Magnus
  2. Enforcement of labor regulation and informality By Rita Almeida; Pedro Carneiro
  3. Remittances and Income Smoothing By Catalina Amuedo-Dorantes; Susan Pozo
  4. Ethnic Identity and Labor-Market Outcomes of Immigrants in Europe By Alberto Bisin; Eleonora Patacchini; Thierry Verdier; Yves Zenou
  5. Substitution Between Immigrants, Natives, and Skill Groups By George J. Borjas; Jeffrey Grogger; Gordon H. Hanson

  1. By: Adermon, Adrian (Department of Economics); Gustavsson, Magnus (Department of Economics)
    Abstract: This paper investigates the connection between the Swedish wage profile of net job creation and Autor, Levy, and Murnane’s (2003) proposed substitutability between routine tasks and technology. We first show that between 1975 and 2005, Sweden exhibited a pattern of job polarization with expansions of the highest and lowest paid jobs compared to middle-wage jobs. We then use cross-sectional and longitudinal analyses of job-specific employment to map out the importance of routine versus nonroutine tasks for these changes. Results are consistent with substitutability between routine tasks and technology as an important explanation for the observed job polarization during the 1990s and 2000s, but not during the 1970s and 1980s. In particular, the overrepresentation of routine tasks in middle-wage jobs can potentially explain 44 percent of the growth of low-wage jobs relative to middle-wage jobs after 1990 but largely lacks explanatory power in earlier years.
    Keywords: Inequality; Job Mobility; Skill Demand; Skill-Biased Technological Change
    JEL: E24 J21 J23 J62 O33
    Date: 2011–09–21
  2. By: Rita Almeida; Pedro Carneiro (Institute for Fiscal Studies and University College London)
    Abstract: <p>Enforcement of labor regulations in the formal sector may drive workers to informality because they increase the costs of formal labor. But better compliance with mandated benefits makes it attractive to be a formal employee. We show that, in locations with frequent inspections workers pay for mandated benefits by receiving lower wages. Wage rigidity prevents downward adjustment at the bottom of the wage distribution. As a result, lower paid formal sector jobs become attractive to some informal workers, inducing them to want to move to the formal sector.</p>
    Date: 2011–09
  3. By: Catalina Amuedo-Dorantes (San Diego State University); Susan Pozo (Western Michigan University)
    Abstract: Due to inadequate savings and binding borrowing constraints, income volatility can make households in developing countries particularly susceptible to economic hardship. We examine the role of remittances in either alleviating or increasing household income volatility using Mexican household level data over the 2000 through 2008 period. We correct for reverse causality and endogeneity and find that while income smoothing does not appear to be the main motive for sending remittances in a non-negligible share of households, remittances do indeed smooth household income on average. Other variables surrounding income volatility are also considered and evaluated.
    Keywords: remittances, income smoothing
    JEL: F22 O
    Date: 2011–03
  4. By: Alberto Bisin (New York University); Eleonora Patacchini (La Sapienza University of Rome, Einaudi Institute for Economics and Finance (EIEF) and CEPR); Thierry Verdier (Paris School of Economics (PSE) and CEPR); Yves Zenou (Stockholm University, Research Institute of Industrial Economics (IFN), CEPR, IZA and CREAM)
    Abstract: We study the relationship between ethnic identity and labor-market outcomes of non-EU immigrants in Europe. Using the European Social Survey, we find that there is a penalty to be paid for immigrants with a strong identity. Being a first generation immigrant leads to a penalty of about 17 percent while second-generation immigrants have a probability of being employed that is not statistically different from that of natives. However, when they have a strong identity, second-generation immigrants have a lower chance of finding a job than natives. Our analysis also reveals that the relationship between ethnic identity and employment prospects may depend on the type of integration and labor-market policies implemented in the country where the immigrant lives. More flexible labor markets help immigrants to access the labor market but do not protect those who have a strong ethnic identity.
    Date: 2011–01
  5. By: George J. Borjas; Jeffrey Grogger; Gordon H. Hanson
    Abstract: The wage impact of immigration depends crucially on the elasticity of substitution between similarly skilled immigrants and natives and the elasticity of substitution between high school dropouts and graduates. This paper revisits the estimation of these elasticities. The U.S. data indicate that equally skilled immigrants and natives are perfect substitutes. The value of the second elasticity depends on how one controls for changes in demand that have differentially affected high school dropouts and graduates. The groups are imperfect substitutes under standard trend assumptions, but even slight deviations from these assumptions can lead to an outright rejection of the CES framework.
    JEL: J61
    Date: 2011–09

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