nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2011‒12‒13
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Average and Marginal Returns to Upper Secondary Schooling in Indonesia By Carneiro, Pedro; Lokshin, Michael; Ridao-Cano, Cristobal; Umapathi, Nithin
  2. The measurement of educational inequality: Achievement and opportunity By Francisco H. G. Ferreira; Jérémie Gignoux
  3. Multidimensional Well-Being at the Top: Evidence for Germany By Peichl, Andreas; Pestel, Nico
  4. Should Cash Transfers Be Confined to the Poor? Implications for Poverty and Inequality in Latin America By Acosta, Pablo A.; Leite, Phillippe; Rigolini, Jamele
  5. Inequality and well-being in transition economies: A non-experimental test of inequality aversion By Alexandru Cojocaru
  6. Unemployment Benefits and Immigration: Evidence from the EU By Giulietti, Corrado; Guzi, Martin; Kahanec, Martin; Zimmermann, Klaus F
  7. The Effect of Education Policy on Crime: An Intergenerational Perspective By Meghir, Costas; Palme, Mårten; Schnabel, Marieke
  8. Inequality of opportunity for young people in Italy: Understanding the role of circumstances By Gabriella Berloffa; Francesca Modena; Paola Villa
  9. A vulnerability approach to the definition of the middle class By Lopez-Calva, Luis F.; Ortiz-Juarez, Eduardo
  10. Disparities in Social Assistance Receipt between Immigrants and Natives in Sweden By Gustafsson, Björn

  1. By: Carneiro, Pedro (University College London); Lokshin, Michael (World Bank); Ridao-Cano, Cristobal (World Bank); Umapathi, Nithin (World Bank)
    Abstract: This paper estimates average and marginal returns to schooling in Indonesia using a non-parametric selection model. Identification of the model is given by exogenous geographic variation in access to upper secondary schools. We find that the return to upper secondary schooling varies widely across individuals: it can be as high as 50 percent per year of schooling for those very likely to enroll in upper secondary schooling, or as low as -10 percent for those very unlikely to do so. Average returns for the student at the margin are well below those for the average student attending upper secondary schooling.
    Keywords: returns to schooling, marginal return, average return, marginal treatment effect
    JEL: J31
    Date: 2011–11
  2. By: Francisco H. G. Ferreira (The World Bank and IZA); Jérémie Gignoux (Paris School of Economics)
    Abstract: This paper proposes two related measures of educational inequality: one for educational achievement and another for educational opportunity. The former is the simple variance (or standard deviation) of test scores. Its selection is informed by consideration of two measurement issues that have typically been overlooked in the literature: the implications of the standardization of test scores for inequality indices, and the possible sample selection biases arising from the Program of International Student Assessment (PISA) sampling frame. The measure of inequality of educational opportunity is given by the share of the variance in test scores that is explained by pre-determined circumstances. Both measures are computed for the 57 countries in which PISA surveys were conducted in 2006. Inequality of opportunity accounts for up to 35 percent of all disparities in educational achievement. It is greater in (most of) continental Europe and Latin America than in Asia, Scandinavia, and North America. It is uncorrelated with average educational achievement and only weakly negatively correlated with per capita gross domestic product. It correlates negatively with the share of spending in primary schooling, and positively with tracking in secondary schools.
    Keywords: Educational inequality, educational achievement, inequality of opportunity.
    JEL: D39 D63 I29 O54
    Date: 2011
  3. By: Peichl, Andreas (IZA); Pestel, Nico (IZA)
    Abstract: This paper employs a multidimensional approach for the measurement of well-being at the top of the distribution using German SOEP micro data. Besides income as traditional indicator for material well-being, we include health as a proxy for nonmaterial quality of life as well as self-reported satisfaction with life as dimensions. We find that one third of the German population is well-off in at least one dimension but only one percent in all three dimensions simultaneously. While the distribution of income has become more concentrated at the top, the concentration at the top of the multidimensional well-being distribution has decreased over time. Moreover, health as well as life satisfaction contribute quite substantially to multidimensional wellbeing at the top which has important policy implications.
    Keywords: multidimensional measurement, well-being, Germany
    JEL: D31 D63 I31
    Date: 2011–11
  4. By: Acosta, Pablo A. (World Bank); Leite, Phillippe (World Bank); Rigolini, Jamele (World Bank)
    Abstract: This paper compares for 13 Latin American countries the poverty and inequality impacts of cash transfer programs that are given to all children and the elderly (that is, "categorical" transfers), to programs of equal budget that are confined to the poor within each population group (that is, "poverty targeted" transfers). The analysis finds that both the incidence of poverty and the depth of the poverty gap are important factors affecting the relative effectiveness of categorical versus poverty targeted transfers. The comparison of transfers to children and the elderly also supports the view that choosing carefully categories of beneficiaries is almost as important as targeting the poor for achieving a high poverty and inequality impact. Overall, the findings suggest that although in the Latin American context poverty targeting tends to deliver higher poverty impacts, there are circumstances under which categorical targeting confined to geographical regions (sometimes called "geographic targeting") may be a valid option to consider. This is particularly the case in low-income countries with widespread pockets of poverty.
    Keywords: cash transfers, targeting, social assistance, poverty
    JEL: D6 H5 O1
    Date: 2011–11
  5. By: Alexandru Cojocaru (University of Maryland)
    Abstract: This paper examines the link between inequality and individual well-being using household survey data from 27 Transition Economies, where income inequality increased considerably since 1989. A test of inequality aversion in individual preferences that draws on the Fehr and Schmidt (QJE, 1999) specification of inequality aversion is proposed, and the difficulties of implementing it in a non-experimental setting are discussed. Estimates based on this model confirm aversion to inequality both in the overall sample and in the regional sub-samples. The Gini index, on the other hand, is unable to capture this negative effect of inequality on well-being. Notably, inequality aversion is not intrinsic. Rather, it appears to be tied to a concern with the fairness of the institutions underlying the distribution of fortunes in society. The evidence is suggestive of inequality of opportunity driving attitudes toward overall inequality. Perceiving inequality to be unfair is also associated with calls for strong government involvement in redistributive policies.
    Keywords: inequality aversion, relative deprivation, subjective well-being, transition economies.
    JEL: D63 I32 P20
    Date: 2011
  6. By: Giulietti, Corrado; Guzi, Martin; Kahanec, Martin; Zimmermann, Klaus F
    Abstract: The paper studies the impact of unemployment benefits on immigration. A sample of 19 European countries observed over the period 1993 to 2008 is used to test the hypothesis that unemployment benefit spending (UBS) is correlated with immigration flows from EU and non-EU origins. While OLS estimates reveal the existence of a moderate correlation for non-EU immigrants only, IV and GMM techniques used to address endogeneity issues yield, respectively, a much smaller and an essentially zero causal impact of UBS on immigration. All estimates for immigrants from EU origins indicate that flows within the EU are not related to unemployment benefit generosity. This suggests that the so-called 'welfare migration' debate is misguided and not based on empirical evidence.
    Keywords: European Union; immigration; unemployment benefit spending; welfare magnets
    JEL: H53 J61
    Date: 2011–11
  7. By: Meghir, Costas (Yale University); Palme, Mårten (Stockholm University); Schnabel, Marieke (University College London)
    Abstract: A number of studies have shown that education reforms extending compulsory schooling reduce criminal behavior of those affected by the reform. We consider the effects of a major Swedish educational reform on crime by exploiting its staggered implementation across Sweden. We first show that the reform reduced crime rates for the generation directly affected by the reform. We then show that the benefits extended to the next generation with large reductions in the crime rates of the children of those affected. The effect operates only through the father and points in the direction of improved parenting rather than resources.
    Keywords: comprehensive school, economics of crime, returns to education, returns to human capital
    JEL: I20 I21 I28 K42 N34
    Date: 2011–11
  8. By: Gabriella Berloffa (Department of Economics, University of Trento); Francesca Modena (Department of Economics, University of Trento and Euricse); Paola Villa (Department of Economics, University of Trento)
    Abstract: In this paper we analyze the way in which changes in macro-economic circumstances and labour market institutions, that occurred in Italy over the ‘90s, affected the set of opportunities for young generations, amplify or shrinking existing inequalities. In particular we investigate whether they have modified the importance of the family background to reach certain labour outcomes (in terms of more or less secure employment). Results suggest that the effect of the social network of the father on early occupational outcomes is more related to changes in the macroeconomic circumstances than to institutional changes, and that the one on transitions is larger, in relative terms, in the late ‘90s than in the early ‘80s.
    Keywords: equality of opportunity, labour outcomes, precarious employment, Italy.
    JEL: D6 J2
    Date: 2011
  9. By: Lopez-Calva, Luis F.; Ortiz-Juarez, Eduardo
    Abstract: Measurement of the middle class has recently come to the center of policy debate in middle-income countries as they search for the potential engines of growth and good governance. This debate assumes, first, that there is a meaningful definition of class, and second, that thresholds that define relatively homogeneous groups in terms of pre-determined sociological characteristics can be found empirically. This paper aims at proposing a view of the middle class based on vulnerability to poverty. Following this approach the paper exploits panel data to determine the amount of comparable income -- associated with a low probability of falling into poverty -- which could define the lower bound of the middle class. The paper looks at absolute thresholds, challenging the view that people above the poverty line are actually part of the middle class. The estimated lower threshold is used in cross-section surveys to quantify the size and the evolution of middle classes in Chile, Mexico, and Peru over the past two decades. The first relevant feature relates to the fact that the proposed thresholds lie around the 60th percentile of the distribution. The evidence also shows that the middle class has increased significantly in all three countries, suggesting that a higher number of households face lower probabilities of falling into poverty than they did in the 1990s. There is an important group of people, however, which cannot be defined as middle class from this perspective, but are not eligible for poverty programs according to traditional definitions of poverty.
    Keywords: Rural Poverty Reduction,Inequality,Regional Economic Development,Urban Partnerships&Poverty,Services&Transfers to Poor
    Date: 2011–12–01
  10. By: Gustafsson, Björn (University of Gothenburg)
    Abstract: Social assistance receipt among immigrants in relation to receipt among natives in Sweden is investigated. A background of how the system is constructed is provided, statistical information reported, the literature surveyed and key results interpreted. Most out-payment for social assistance in Sweden refers to foreign born persons although the category makes up 14 percent of the population. While some part of the high costs can be attributed to needs to maintaining recent refugees, this is not the entire story. Immigrants tend to assimilate out of social assistance receipt. However, receipt continues to be higher than among in several characteristics identical natives many years after immigration among immigrants from not rich countries. The elevated probabilities of social assistance receipt among immigrants from not rich countries are mainly due to failures of integrating into the labor market at the destination.
    Keywords: social assistance, immigrants, Sweden
    JEL: F22 I38 J15
    Date: 2011–11

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