nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒03‒21
fourteen papers chosen by
Maximo Rossi
University of the Republic

  1. The Rise and Fall of Income Inequality in Mexico, 1989â..2010 By Campos, Raymundo; Lustig, Nora
  2. Inequality Trends and their Determinants: Latin America over 1990-2011 By Cornia, Giovanni Andrea
  3. The Politics of Inequality and Redistribution in Latin Americaâ..s Post-Adjustment Era By Roberts, Kenneth M.
  4. Grandparents' Childcare and Female Labor Force Participation By Posadas, Josefina; Vidal-Fernández, Marian
  5. Policy Regimes, Inequality, Poverty and Growth: The Chilean Experience, 1973-2010 By Contreras, Dante
  6. Wealth and inequality in Italy By Giovanni D'Alessio
  7. Decomposing the Composition Effect By Rothe, Christoph
  8. The Distribution of Full Income in Greece By Koutsampelas, Christos; Tsakloglou, Panos
  9. Did Trade Openness Affect Income Distribution in Latin America? Evidence for the years 1980â..2010 By Szekely, Miguel
  10. Gender Differences in Education By Pekkarinen, Tuomas
  11. Is Religiosity of Immigrants a Bridge or a Buffer in the Process of Integration? A Comparative Study of Europe and the United States By García Muñoz, Teresa; Neuman, Shoshana
  12. Hiring, Churn and the Business Cycle By Edward P. Lazear; James R. Spletzer
  13. The Gender Wage Gap by Education in Italy By Mussida, C.; Picchio, M.
  14. Economic Growth, Comparative Advantage, and Gender Differences in Schooling Outcomes: Evidence from the Birthweight Differences of Chinese Twins By Junsen Zhang; Mark Rosenzweig

  1. By: Campos, Raymundo; Lustig, Nora
    Abstract: Inequality in Mexico rose between 1989 and 1994 and declined between 1994 and 2010. We examine the role of market forces (demand and supply of labour by skill), institutional factors (minimum wages and unionization rate), and public policy (cash transfers) in explaining changes in inequality. We apply the â influence functionâ.. method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-94) due to institutional factors and labour demand. Returns declined (1994-2006) due to changes in supply and, to a lesser extent, in demand; institutional factors were not relevant. Government transfers contributed to the decline in inequality, especially after 2000.
    Keywords: inequality, wages, disposable income, labour markets, Mexico
    Date: 2012
  2. By: Cornia, Giovanni Andrea
    Abstract: The paper reviews the steady and widespread decline in income inequality which has taken place in most of Latin America over 2002-10 and whichâ..â..if continued for another 2-3 yearsâ..â..would reduce the average regional income inequality to pre-liberalization levels. The paper then focuses on the factors, which may explain such inequality decline. A review of the literature and an econometric test indicate that a few complementary factors played an important role in this regard, including a drop in the skill premium following a rapid expansion of secondary education, and the adoption of a new development model by a growing number of left-of-centre governments which emphasizes fiscally-prudent but more equitable macroeconomic, tax, social expenditure and labour policies. For the region as a whole, improvements in terms of trade, migrant remittances, FDI and world growth playeda less important role than expected although their impact was perceptible in countries where such transactions were sizeable.
    Keywords: income inequality, human capital inequality, policy regimes, external conditions, Latin America
    Date: 2012
  3. By: Roberts, Kenneth M.
    Abstract: Declining social and economic inequalities since the late 1990s coincided with several basic shifts in Latin Americaâ..s political landscape, including an electoral turn to the left and a revival of social mobilization from below. These shifts helped to â..repoliticizeâ.. inequality and return redistributive policies to a central place on the political agenda in the aftermath to the structural adjustment policies of the 1980s and 1990s.Equity gains, however, have occurred under conservative governments as well as leftist ones, and they are associated with a diverse set of public policy initiatives. The new politics of inequality, therefore, differ significantly from those of Latin Americaâ..s ISI era, as well as those that prevailed during the period of economic liberalization.
    Keywords: inequality, redistribution, structural adjustment, political parties, populism, social policy
    Date: 2012
  4. By: Posadas, Josefina (World Bank); Vidal-Fernández, Marian (University of New South Wales)
    Abstract: In the U.S., grandparents look after one in five preschool children of employed women. Does this source of informal childcare increase female labor force participation and if so, up to what extent? The main challenge to answer this question is that a positive relationship between grandparents’ childcare and female labor force participation might not be causal. We use the maternal grandmother’s death as an instrument of grandparents’ childcare to measure the effect of grandparents’ childcare on maternal labor force participation (MLFP). We compare OLS and IV estimates and find that grandparents’ childcare increases MLFP by 15 percentage points on average. We argue that most of the effect is driven by families from socio-economically disadvantaged backgrounds.
    Keywords: maternal labor force participation, grandparents, childcare, NLSY
    JEL: J2 I3
    Date: 2012–02
  5. By: Contreras, Dante
    Abstract: Since the 1970s, Chile has exhibited a highly skewed income distribution accompanied with strong fluctuations over time. Although income distribution worsened notably in the 1970s-80s, a significant improvement was recorded in the first half of the 1990s, resulting from better economic and social policies in the return to democracy. Nonetheless, Chile still faces significant challenges to improve development. There must be an active macroeconomic policy focused on the real economy. Chile also needs profound microeconomic reforms, including (i) capital markets, developing long-term financing channels for small businesses; (ii) radical progress in quality of education and labour training; and (iii) vigorous public support for innovation.
    Keywords: income distribution, macroeconomic policy, microeconomic policies
    Date: 2012
  6. By: Giovanni D'Alessio (Banca d'Italia)
    Abstract: The paper describes first the evolution in total household wealth in Italy over the period 1965-2010 before addressing the analysis of wealth inequality. On the basis of reconstructed data, we show that household wealth inequality declined until the beginning of the 1990s. It then grew significantly during that decade, remaining at approximately the same level afterwards. By international standards, Italy does not have a high level of wealth inequality (contrary to the evidence available for income). Wealth distribution has changed significantly over time, favouring elderly rather than young households. The origins of wealth (savings, gifts, inheritance, capital gains) are also examined and the statistical evidence is discussed together with the opinions on inequality collected by means of statistical surveys.
    Keywords: wealth, inequality
    JEL: D31 D63
    Date: 2012–02
  7. By: Rothe, Christoph (Toulouse School of Economics)
    Abstract: This paper proposes a decomposition of the composition effect, i.e. the part of the observed between-group difference in the distribution of some economic outcome that can be explained by differences in the distribution of covariates. Our decomposition contains three types of components: (i) the "direct contributions" of each covariate due to between-group differences in the respective marginal distributions, (ii) several “two way” and "higher order" interaction effects due to the interplay between two or more covariates' marginal distributions, and (iii) a "dependence effect" accounting for between-group differences in dependence patterns among the covariates. Our methods can be used to decompose differences in arbitrary distributional features, like quantiles or inequality measures, and allows for general nonlinear relationships between the outcome and the covariates. It can easily be implemented in practice using standard econometric techniques. An application to wage data from the US illustrates the empirical relevance of the decomposition’s components.
    Keywords: counterfactual distribution, decomposition methods
    JEL: C13 C18 C21 J31
    Date: 2012–02
  8. By: Koutsampelas, Christos (University of Cyprus); Tsakloglou, Panos (Athens University of Economics and Business)
    Abstract: Non-cash incomes from either private or public sources can have substantial effects on the distribution of economic welfare. However, standard approaches to inequality measurement either neglect them or take into account only selected non-monetary items. Using data for Greece in the mid 2000s we show that it is possible to incorporate a comprehensive list of non-monetary components into the analysis of income inequality. The results indicate that inequality declines sharply when we move from the distribution of disposable monetary income to the distribution of full income, that includes both cash and non-cash incomes. Both private and public non-cash incomes are far more equally distributed than monetary income, but the inequality-reducing effect of publicly provided in-kind services is stronger. The structure of inequality changes when non-cash incomes are included in the concept of resources, but the effects are not dramatic. Non-cash incomes appear to accrue more heavily to younger and older individuals, thus reducing differences across age groups.
    Keywords: income distribution, imputed rent, in-kind public transfers
    JEL: D31 I38
    Date: 2012–02
  9. By: Szekely, Miguel
    Abstract: This paper offers a medium-term perspective for analysing the trade opennessâ..inequality relationship in Latin America. We present three contributions. The first is that we assemble a database on income distribution indicators systematically estimated from household surveys with emphasis on within-country consistency of methodology, definitions, and coverage for the years 1980-2010. This 30-year database allows observing clearly that the increases in inequality throughout the 1980s and 1990s decades have been almost totally counteracted by the improvements during the first 10 years of the twenty-first century: 75 per cent of the deterioration in income distribution was reversed in the first decade of 2000. The second is an estimation of the association between trade openness and income distribution over the 30-year period. Our central conclusion in this regard is that greater trade openness is associated with contemporaneous increases in inequality in the region. The third is that trade openness contributedâ..â..together with other factorsâ..â the increase in inequality during the 1980s and 1990s, but once fully implemented, it did not lead to further rises in inequality, and did not represent a permanent obstacle to improvements in income distribution triggered by other factors such as greater education levels across the population.
    Keywords: inequality, education, trade
    Date: 2012
  10. By: Pekkarinen, Tuomas (Aalto University)
    Abstract: This paper surveys the trends in gender gaps in education, their causes and potential policy implications. I show that female educational attainment has surpassed, or is about to surpass, male educational attainment in most industrialized countries. These gaps reflect male overrepresentation among secondary school drop-outs and female overrepresentation among tertiary education students and graduates. Existing evidence suggests that this pattern is a result of a combination of increasing returns to education and lower female effort costs of education. Widening gender gap in education combined with recent wage and employment polarization will likely lead to widening inequalities and is linked to declining male labor force participation. The paper discusses evidence on educational policies that both widen and reduce gender gaps in educational outcomes.
    Keywords: gender differences, test scores, education
    JEL: I20 J16 J24
    Date: 2012–02
  11. By: García Muñoz, Teresa (Universidad de Granada); Neuman, Shoshana (Bar-Ilan University)
    Abstract: This study reviews and evaluates the intertwined relationship between immigration and religiosity, focusing on the two sides of the Atlantic – Europe and the United States. Based on the existing literature and on a statistical analysis of several data sets (the International Social Survey Program – ISSP: Module Religion, 2008; the European Social Survey – ESS, waves 2002-2010; and the General Social Survey – GSS, waves 2002-2010) the following aspects are explored: (i) the current religious landscape of Europe and of the United States and projections for the future; (ii) religiosity of immigrants (in Europe and the United States): are they more religious than the native populations (in terms of church attendance and of prayer habits)?; (iii) how does religiosity of immigrants affect integration: is it serving as a bridge that smoothens integration into the local population, or as a buffer against the harsh integration process?; and (iv) are the intersections between religiosity and integration different in Europe and in the United States, due to historical differences in the state-religion relationship, immigration policies and concepts? The main findings are the following: (a) immigrants are indeed more religious than the populations in the receiving countries. This fact, combined with higher fertility rates and also a continued inflow of immigrants, will lead to major changes in the religious landscape, both in Europe and in the United States; and (b) while in the united States religiosity of immigrants serves as a bridge between the immigrants and the local population, in Europe it has mainly the function of a buffer and of "balm to the soul".
    Keywords: immigration, religion, integration, Europe, United States
    JEL: J11 J15 Z12 Z13
    Date: 2012–02
  12. By: Edward P. Lazear; James R. Spletzer
    Abstract: Churn, defined as replacing departing workers with new ones as workers move to more productive uses, is an important feature of labor dynamics. The majority of hiring and separation reflects churn rather than hiring for expansion or separation for contraction. Using the JOLTS data, we show that churn decreased significantly during the most recent recession with almost four-fifths of the decline in hiring reflecting decreases in churn. Reductions in churn have costs because they reflect a reduction in labor movement to higher valued uses. We estimate the cost of reduced churn to be $208 billion. On an annual basis, this amounts to about .4% of GDP for a period of 3 1/2 years.
    JEL: J21 J63
    Date: 2012–03
  13. By: Mussida, C.; Picchio, M. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper studies the gender wage gap by educational attainment in Italy using the 1994–2001 ECHP data. We estimate wage distributions in the presence of covariates and sample selection separately for highly and low educated men and women. Then, we decompose the gender wage gap across all the wage distribution and isolate the part due to gender differences in the remunerations of the similar characteristics. We find that women are penalized especially if low educated. When we control for sample selection induced by unobservables, the penalties for low educated women become even larger, above all at the bottom of the wage distribution.
    Keywords: gender wage gap;education;counterfactual distributions;decompositions;hazard function.
    JEL: C21 C41 J16 J31 J71
    Date: 2012
  14. By: Junsen Zhang (Chinese University of Hong Kong); Mark Rosenzweig (Economic Growth Center, Yale University)
    Abstract: Data from two surveys of twins in China are used to contribute to an improved understanding of the role of economic development in affecting gender differences in the trends in, levels of, and returns to schooling observed in China and in many developing countries in recent decades. In particular, we explore the hypothesis that these phenomena reflect differences in comparative advantage with respect to skill and brawn between men and women in the context of changes in incomes, returns to skill, and/or nutritional improvements that are the result of economic development and growth.
    Keywords: schooling, gender, twins, China
    JEL: J24 J16 I15 I25 O15
    Date: 2012–02

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