nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒04‒03
nine papers chosen by
Maximo Rossi
University of the Republic

  1. The Rise and Fall of Income Inequality in Mexico, 1989-2010 By Raymundo Campos; Gerado Esquivel; Nora Lustig
  2. The Gender Wage Gap by Education in Italy By Mussida, Chiara; Picchio, Matteo
  3. What Explains the Gender Earnings Gap in Self-Employment? A Decomposition Analysis with German Data By Lechmann, Daniel S. J.; Schnabel, Claus
  4. Do Middle Classes Bring Institutional Reforms? By Loayza, Norman; Rigolini, Jamele; Llorente, Gonzalo
  5. Back to Baseline in Britain: Adaptation in the BHPS By Clark, Andrew E.; Georgellis, Yannis
  6. Income Inequality and Evaluation of Tax Effect on Redistribution of Income in Japan 1984-2004 By Ximing Yue; Jing Xu
  7. Explaining job polarization: the roles of technology, offshoring and institutions By Maarten GOOS; Alan MANNING; Anna SALOMONS
  8. Income Comparisons and Non-Cognitive Skills By Budría, Santiago; Ferrer-i-Carbonell, Ada
  9. Building social protection and labor systems : concepts and operational implications By Robalino, David A.; Rawlings, Laura; Walker, Ian

  1. By: Raymundo Campos (Center for Economic Studies, El Colegio de Mexico); Gerado Esquivel (Center for Economic Studies, El Colegio de Mexico); Nora Lustig (Department of Economics, Tulane University)
    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 "re-centered influence function" method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-1994) 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
    JEL: D31 J20 J31 O54
    Date: 2012–03
  2. By: Mussida, Chiara (Università Cattolica del Sacro Cuore); Picchio, Matteo (Ghent University)
    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: 2012–03
  3. By: Lechmann, Daniel S. J. (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg)
    Abstract: Using a large data set for Germany, we show that both the raw and the unexplained gender earnings gap are higher in self-employment than in paid employment. Applying an Oaxaca-Blinder decomposition, more than a quarter of the difference in monthly self-employment earnings can be traced back to women working fewer hours than men. In contrast variables like family background, working time flexibility and career aspirations do not seem to contribute much to the gender earnings gap, suggesting that self-employed women do not earn less because they are seeking work-family balance rather than profits. Differences in human capital endowments account for another 13 percent of the gap but segregation does not contribute to the gender earnings gap in a robust way.
    Keywords: earnings differential, entrepreneurship, gender pay gap, Germany, self-employed, self-employment
    JEL: J31 J71
    Date: 2012–03
  4. By: Loayza, Norman (World Bank); Rigolini, Jamele (World Bank); Llorente, Gonzalo (World Bank)
    Abstract: We revisit the link between poverty, the middle class and institutional outcomes using a newly developed cross-country panel dataset containing detailed information on the distribution of income and expenditures. When the size of the middle class increases (measured as the proportion of people with income above 10 US Dollars a day in PPP terms), social policy on health and education becomes more active and the quality of governance regarding democratic participation and official corruption improves. This does not occur at the expense of economic freedom, as an expansion of the middle class also implies more market-oriented economic policy on trade and finance. The impact of a larger middle class appears to be more robust than those of lower poverty, lower inequality, or higher GDP per capita.
    Keywords: poverty, middle class, income, institutions, development
    JEL: D3 H5 O1 O4
    Date: 2012–03
  5. By: Clark, Andrew E. (Paris School of Economics); Georgellis, Yannis (Kingston University London)
    Abstract: We look for evidence of adaptation in well-being to major life events using eighteen waves of British panel data. Adaptation to marriage, divorce, birth of a child and widowhood appears to be rapid and complete, whereas this is not the case for unemployment. These findings are remarkably similar to those in previous work on German panel data. Equally, the time profiles with life satisfaction as the well-being measure are very close to those using a twelve-item scale of psychological functioning. As such, the phenomenon of adaptation may be a general one, rather than being only found in German data or using single-item well-being measures.
    Keywords: life satisfaction, anticipation, adaptation, baseline satisfaction, labour market and life events
    JEL: I31 J12 J13 J63 J64
    Date: 2012–03
  6. By: Ximing Yue; Jing Xu
    Abstract: This paper investigates the statistical measurement of income distribution and evaluates the income redistribution effect of income tax system in Japan, using National Survey of Family Income and Expenditure 1984-2004. This paper finds first that income inequality has been widening over time, especially in the young (age 39 or less) and middle (age 40-59) groups, second that tax role of income redistribution has been weaken since 1984, and third that the income redistribution effect by taxation is strong in the old (age 60 or above) group because distribution of before tax income is already very unequal among them.
    JEL: D3 H2 H24
    Date: 2012–03
  7. By: Maarten GOOS; Alan MANNING; Anna SALOMONS
    Abstract: This paper develops a simple and empirically tractable model of labor demand to explain recent changes in the occupational structure of employment as a result of technology, offshoring and institutions. This framework takes account not just of direct effects but indirect effects through induced shifts in demand for different products. Using data from 16 European countries, we find that the routinization hypothesis of Autor, Levy and Murnane (2003) is the most important factor behind the observed shifts in employment but that offshoring does play a role. We also find that shifts in product demand are acting to attenuate the impacts of recent technological progress and offshoring and that changes in wage-setting institutions play little role in explaining job polarization in Europe.
    Date: 2011–12
  8. By: Budría, Santiago (University of Madeira); Ferrer-i-Carbonell, Ada (IAE Barcelona (CSIC))
    Abstract: People gain utility from occupying a higher ranked position in the income distribution of the reference group. This paper investigates whether these gains depend on an individual's set of non-cognitive skills. Using the 2000-2008 waves of the German Socioeconomic Panel dataset (SOEP), a subjective question on Life Satisfaction, and three different sets of non-cognitive skills indicators, we find significant and robust differences across skills groups. People who are more neurotic, extravert and have low external locus of control and low negative reciprocity are more sensitive to their individual position in the economic ladder. By contrast, the Life Satisfaction reaction to changes in economic status is significantly lower among individuals who score high (low) in negative (positive) reciprocity, and are at the bottom of the distribution of neuroticism, extraversion. The heterogeneity on the importance of income comparisons needs to be taken into account when, for example, introducing them into economic models, predicting individuals' behaviour, or making welfare judgments.
    Keywords: life satisfaction, income comparisons, personality traits
    JEL: D62 I31
    Date: 2012–03
  9. By: Robalino, David A.; Rawlings, Laura; Walker, Ian
    Abstract: This paper presents a framework for designing and implementing social protection and labor (SP&L) systems in middle and low income countries. Although the term'system'is used to describe a country's set of social protection programs, these tend to operate independently with little or no coordination even when they have the same policy objective and target similar population groups. The paper argues that enhancing coordination across SP&L policies, programs, and administrative tools has the potential to enhance both individual program performance as well as the overall provision of social protection across programs. The first part of the paper discusses the characteristics of well?designed social protection systems. It also points to the gains and some of the risks - of moving toward systems, including: (i) more effective risk management in crisis and non?crisis periods; (ii) improved financial sustainability; (iii) more equitable redistribution; (iv) economies of scale in administration; and (v) better incentives. The second part discusses issues related to design and implementation based on country studies for Brazil, Chile, India, Niger, Romania, and Vietnam. It suggests three levels of engagement to support the design of SP&L systems: (a) at the policy level, defining how different instruments (e.g., savings, risk pooling, redistribution) interact, and coordinating financing mechanisms and institutional arrangements; (b) at the program level, improving the design of individual programs and creating synergies with other programs within and across social protection functions; and (c) at the administrative level, setting up basic'nuts and bolts'tools that can work across programs, such as beneficiary identification and registry, payment mechanisms, and management information systems. The last part of the paper outlines some of the implications of a systems vision for the World Bank's social protection and labor practice.
    Keywords: Labor Markets,Insurance Law,Insurance&Risk Mitigation,Labor Policies,Poverty Impact Evaluation
    Date: 2012–03–01

This nep-ltv issue is ©2012 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.