nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒11‒28
eleven papers chosen by
Maximo Rossi
University of the Republic

  1. Work to Live or Live to Work? Unemployment, Happiness, and Culture By Krause, Annabelle
  2. Understandings and Misunderstandings of Multidimensional Poverty Measurement By Sabina Alkire and James Foster
  3. Social Interactions and Subjective Well-Being: Evidence from Latin America. By Victoria Ateca-Amestoy; Alexandra Cortés Aguilar; Ana I. Moro-Egido
  4. The Policies for Reducing Income Inequality and Poverty in South Africa By Murray Leibbrandt; Eva Wegner; Arden Finn
  5. Skill-biased Technological Change, Earnings of Unskilled Workers, and Crime By Naci H. Mocan; Bulent Unel
  6. Do Stronger Age Discrimination Laws Make Social Security Reforms More Effective? By David Neumark; Joanne Song
  7. Anonymous Job Applications of Fresh Ph.D. Economists By Krause, Annabelle; Rinne, Ulf; Zimmermann, Klaus F.
  8. Immigration and the School System By Albornoz-Crespo, Facundo; Cabrales, Antonio; Hauk, Esther
  9. Welfare, Labor Supply and Heterogeneous Preferences: Evidence for Europe and the US By Bargain, Olivier; Decoster, André; Dolls, Mathias; Neumann, Dirk; Peichl, Andreas; Siegloch, Sebastian
  10. The Dilemma of Delegating Search: Budgeting in Public Employment Service By John T. Addison; Martin Altemeyer‐Bartscher; Thomas Kuhn
  11. Estimating the effect of adolescent fertility on educational attainment in Cape Town using a propensity score weighted regression By Vimal Ranchhod; David Lam; Murray Leibbrandt; Leticia Marteleto

  1. By: Krause, Annabelle (IZA)
    Abstract: Happiness drops when individuals become unemployed. The negative impact of the unemployment shock, however, may differ by cultural background. To test the hypothesis of a 'Teutonic work ethic', this paper takes advantage of Switzerland in its cultural diversity. By comparing different cultural groups in the same institutional setting, I empirically test whether such deep psychological traits have an influence on how unemployment is perceived. It is found that unemployment has a significantly negative effect on life satisfaction in Switzerland. I furthermore present evidence which confirms to some extent the hypothesis that Swiss German individuals suffer more from unemployment, although for the most part, these results are without statistical significance. Swiss Germans are additionally found to be happier than their French-speaking compatriots – independent of whether they are unemployed. This difference between Romanic and Germanic cultural backgrounds is in line with previous findings, but deserves further research attention.
    Keywords: life satisfaction, unemployment, cultural differences, Switzerland
    JEL: J28 J60 Z1
    Date: 2011–11
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp6101&r=ltv
  2. By: Sabina Alkire and James Foster
    Abstract: Multidimensional measures provide an alternative lens through which poverty may be viewed and understood. In recent work we have attempted to offer a practical approach to identifying the poor and measuring aggregate poverty (Alkire and Foster 2011). As this is quite a departure from traditional unidimensional and multidimensional poverty measurement – particularly with respect to the identification step – further elaboration may be warranted. In this paper we elucidate the strengths, limitations, and misunderstandings of multidimensional poverty measurement in order to clarify the debate and catalyse further research. We begin with general definitions of unidimensional and multidimensional methodologies for measuring poverty. We provide an intuitive description of our measurement approach, including a ‘dual cutoff’ identification step that views poverty as the state of being multiply deprived, and an aggregation step based on the traditional Foster Greer and Thorbecke (FGT) measures. We briefly discuss five characteristics of our methodology that are easily overlooked or mistaken and conclude with some brief remarks on the way forward.
    Date: 2011–05
    URL: http://d.repec.org/n?u=RePEc:qeh:ophiwp:ophiwp043&r=ltv
  3. By: Victoria Ateca-Amestoy (University of the Basque Country); Alexandra Cortés Aguilar (Universidad Industrial de Santander); Ana I. Moro-Egido (University of Granada)
    Abstract: In this paper, we seek to examine the effect of comparisons and social capital on subjective well-being. Furthermore, we test if, through social influence and exposure, social capital is either an enhancer or appeaser of the comparison effect. Using the Latinobarómetro Survey (2007) we find that in contrast to most previous studies, the comparison effect on well-being is positive; that is, the better others perform, the happier the individual is. We also find that social capital is among the strongest correlates of individuals’ subjective well-being in Latin American countries. Furthermore, our findings suggest that social contacts may enhance the comparison effect on individual’s happiness, which is more intense for those who perform worse in their reference group.
    Keywords: Comparison effect, social capital, subjective well-being, social interactions
    JEL: D31 I31 O54 Z10
    Date: 2011–11–18
    URL: http://d.repec.org/n?u=RePEc:ehu:dfaeii:201105&r=ltv
  4. By: Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town); Eva Wegner (SALDRU, School of Economics, University of Cape Town); Arden Finn (NIDS-SALDRU, School of Economics, University of Cape Town)
    Abstract: Trends in inequality, poverty, and redistribution in post-apartheid South Africa have received intense attention especially in terms of measuring inequality and poverty levels and the proximate causes of these levels. We review this literature and find a set of established trends. Inequality levels have increased but the face of inequality has changed with present-day inequality displaying a lessened racial make-up than under apartheid. In contrast, poverty has decreased but is still bears the strong racial makers of apartheid. The labour market continues to drive inequality. A related literature has concentrated on fiscal redistribution in South Africa after the transition, arguing that social policies are well targeted towards the poor with social grants being central in lifting people out of poverty. At the same time, these policies have not succeeded in reversing inequality trends and in providing equal opportunities for all South Africans. To bulk of paper probes this further. We use fiscal incidence analysis to show that redistribution increased slightly since 1993, that this redistribution is higher than in Latin America but far below European levels. Second, looking at spending for all social services we find a mixed picture. There has been an increase in spending since the end of apartheid on social policy and for a number of social policy items in the progressivity of this spending. At the same time, spending has not increased as a percentage of GDP and has become less progressive for social grants. Finally, we examine education policy in more detail. We find that the importance of tertiary education, as a predictor of income has increased considerably whereas individuals with low or incomplete secondary education were worse off in 2008, compared to 1993. Second, we find that state spending on education has increased since the early 1990s. The spending gap between rich and poor provinces has become much narrower but spending equality has not been reached. The academic achievements of students display high inequality, compared to international standards and there is also evidence that the capabilities of students have decreased, rather than increased, suggesting that increased spending has not translated into an increase in the quality of education provision.
    Date: 2011–09
    URL: http://d.repec.org/n?u=RePEc:ldr:wpaper:64&r=ltv
  5. By: Naci H. Mocan; Bulent Unel
    Abstract: This paper investigates the impact of unskilled workers' earnings on crime. Following the literature on wage inequality and skill-biased technological change, we employ CPS data to create state-year as well as state-year-and (broad) industry specific measures of skill-biased technological change, which are then used as instruments for unskilled workers' earnings in crime regressions. Regressions that employ state panels reveal that technology-induced variations in unskilled workers' earnings impact property crime with an elasticity of -1, but that wages have no impact on violent crime. The paper also estimates, for the first time in this literature, structural crime equations using micro panel data from NLSY97 and instrumenting real wages of young workers. Using state-year-industry specific technology shocks as instruments yields elasticities that are in the neighborhood of -2 for most types of crime, which is markedly larger than previous estimates. In both data sets there is evidence for asymmetric impact of unskilled workers' earnings on crime. A decline in earnings has a larger effect on crime in comparison to an increase in earnings by the same absolute value.
    JEL: J23 J24 J31 K42 O3
    Date: 2011–11
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:17605&r=ltv
  6. By: David Neumark (University of California, Irvine National Bureau of Economic Research); Joanne Song (University of California, Irvine)
    Abstract: Supply-side Social Security reforms to increase employment and delay benefit claiming among older individuals may be frustrated by age discrimination. We test for policy complementarities between supply-side Social Security reforms and demand-side efforts to deter age discrimination, specifically studying whether stronger state-level age discrimination protections enhanced the impact of the increases in the Social Security Full Retirement Age (FRA) that occurred in the past decade. The evidence indicates that, for older individuals who were “caught” by the increase in the FRA, benefit claiming reductions and employment increases were sharper in states with stronger age discrimination protections.
    Date: 2011–09
    URL: http://d.repec.org/n?u=RePEc:mrr:papers:wp249&r=ltv
  7. By: Krause, Annabelle (IZA); Rinne, Ulf (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: Discrimination in recruitment decisions is well documented. Anonymous job applications may reduce discriminatory behavior in hiring. This paper analyzes the potential of this approach in a randomized experiment with fresh Ph.D. economists on the academic job market using data from a European-based economic research institution. If included in the treatment group, characteristics such as name, gender, age, contact details and nationality were removed. Results show that anonymous job applications are in general not associated with a higher or lower probability to receive an invitation for a job interview. However, we find that while female applicants have a higher probability to receive an interview invitation than male applicants with standard applications, this difference disappears with anonymous job applications. We furthermore present evidence that certain professional signals are weighted differently with and without anonymization.
    Keywords: Ph.D. economists, annual job market, discrimination, anonymous job applications, randomized experiment
    JEL: J44 J79 J20
    Date: 2011–11
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp6100&r=ltv
  8. By: Albornoz-Crespo, Facundo; Cabrales, Antonio; Hauk, Esther
    Abstract: Immigration is an important problem in many societies, and it has wide-ranging eects on the educational systems of host countries. There is a now a large empirical literature, but very little theoretical work on this topic. We introduce a model of family immigration in a framework where school quality and student outcomes are determined endogenously. This allows us to explain the selection of immigrants in terms of parental motivation and the policies which favor a positive selection. Also, we can study the eect of immigration on the school system and how school quality may self-reinforce immigrants' and natives' choices.
    Keywords: education; immigrant sorting; immigration; parental involvement; school resources
    JEL: I20 I21 I28 J24 J61
    Date: 2011–11
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:8653&r=ltv
  9. By: Bargain, Olivier (University of Aix-Marseille II); Decoster, André (K.U.Leuven); Dolls, Mathias (IZA); Neumann, Dirk (IZA); Peichl, Andreas (IZA); Siegloch, Sebastian (IZA)
    Abstract: Following the report of the Stiglitz Commission, measuring and comparing well-being across countries has gained renewed interest. Yet, analyses that go beyond income and incorporate non-market dimensions of welfare most often rely on the assumption of identical preferences to avoid the difficulties related to interpersonal comparisons. In this paper, we suggest an international comparison based on individual welfare rankings that fully retain preference heterogeneity. Focusing on the consumption-leisure trade-off, we estimate discrete choice labor supply models using harmonized microdata for 11 European countries and the US. We retrieve preference heterogeneity within and across countries and analyze several welfare criteria which take into account that differences in income are partly due to differences in tastes. The resulting welfare rankings clearly depend on the normative treatment of preference heterogeneity with alternative metrics. We show that these differences can indeed be explained by estimated preference heterogeneity across countries – rather than demographic composition.
    Keywords: welfare measures, preference heterogeneity, labor supply, Beyond GDP
    JEL: C35 D63 H24 H31 J22
    Date: 2011–11
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp6102&r=ltv
  10. By: John T. Addison (Department of Economics, University of South Carolina, Moore School of Business, Columbia, SC, USA; Chemnitz Institute of Technology, Chemnitz, Germany); Martin Altemeyer‐Bartscher (Department of Economics, Chemnitz University of Technology, Chemnitz, Germany); Thomas Kuhn (Department of Economics, Chemnitz University of Technology, Chemnitz, Germany)
    Abstract: The Recent German research has suggested that extending the number of caseworkers may have a very positive effect on PES performance. The present paper accepts this key insight but argues that there are other factors that may independently drive outcomes and in particular local agents’ discretion. That is, it focuses on the delegation problem between the central office and the local job center ‘matchmakers.’ Because their (search) effort in contacting employers and collecting data is not verifiable by the central authority, a typical moral hazard problem can arise. To overcome the delegation problem and provide high‐powered incentives for increased levels of search effort on the part of job centers, we propose output‐related schemes that assign greater staff capacity to agencies achieving high strike rates.
    Keywords: matching unemployment, public employment service, active labor market policy, moral hazard, search theory
    JEL: J64 D82
    Date: 2011–11
    URL: http://d.repec.org/n?u=RePEc:rim:rimpre:02_11&r=ltv
  11. By: Vimal Ranchhod (School of Economics, University of Cape Town); David Lam (University of Michigan); Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town); Leticia Marteleto (University of Texas at Austin.)
    Abstract: We estimate the effect of a teenage birth on the educational attainment of young mothers in Cape Town, South Africa. Longitudinal and retrospective data on youth from the CAPS dataset are used. We control for a number of early life and pre-fertility characteristics. We also reweight our data using a propensity score matching process to generate a more appropriate counterfactual group. Accounting for respondent characteristics reduces estimates of the effect of a teen birth on dropping out of school, successfully completing secondary school, and years of schooling attained. Our best estimates of the effect of a teen birth on high school graduation by ages 20 and 22 are -5.9 and -2.7 percentage points respectively. The former is significant at the 5% level,while the latter is not statistically significant. Thus, there appears to be some `catching up' in educational attainment by teen mothers. We find only limited support for the hypothesis that there is heterogeneity in the effect of a teen birth, depending on the actual age of the first birth. By age 22, none of the estimates for high school graduation or years of schooling are statistically significant, regardless of the specific age at which the teen birth occurred. Despite this, we do find evidence that a teen birth does correlate with reduced educational expectations. The proportion of teen mothers who report an expected final educational attainment of high school graduation or greater is about 15 percentage points lower than the matched set of non-teen mothers, but this is not manifest amongst the girls whom we know will subsequently become teen mothers at some point after these expectations are measured.
    Date: 2011–03
    URL: http://d.repec.org/n?u=RePEc:ldr:wpaper:59&r=ltv

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