nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒04‒17
eight papers chosen by
Maximo Rossi
University of the Republic

  1. Income Inequality and Mental Health By Grace Lordan; Prasada Rao; Lucy Bechtel
  2. Well-Being in Germany: GDP and Unemployment Still Matter By Johannes Vatter
  3. The UK Minimum Wage at Age 22: A Regression Discontinuity Approach By Rebecca Riley; David Wilkinson; Richard Dickens
  4. The Evolution of Income, Consumption, and Leisure Inequality in The US, 1980-2010 By Orazio Attanasio; Erik Hurst; Luigi Pistaferri
  5. Lifetime earnings inequality in Germany By Bönke, Timm; Corneo, Giacomo; Lüthen, Holger
  6. Assessing child well-being through a new multidimensional child-based weighting scheme index: an empirical estimation for Portugal By Liliana Fernandes; Américo Mendes; Aurora Teixeira
  7. The Effect of Work First Job Placements on the Distribution of Earnings: An Instrumental Variable Quantile Regression Approach By David H. Autor; Susan N. Houseman; Sari Pekkala Kerr
  8. Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants By David Autor; Nicole Maestas; Kathleen Mullen; Alexander Strand

  1. By: Grace Lordan (School of Economics, The University of Queensland); Prasada Rao (School of Economics, The University of Queensland); Lucy Bechtel
    Abstract: The causal association between absolute income and health is well established, however the relationship between income inequality and health is not. The conclusions from the received studies vary across the region or country studied and/or the methodology employed. Using the Household, Income and Labour Dynamics in Australia panel survey, this paper investigates the relationship between mental health and inequality in Australia. A variety of income inequality indices are calculated to test both the Income Inequality and Relative Deprivation Hypothesis. We find that mental health is only adversely affected by the presence of relative deprivation to a very small degree. In addition we do not find support for the Income Inequality Hypothesis. Importantly our results are robust to a number of sensitivity analyses.
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:qld:uq2004:456&r=ltv
  2. By: Johannes Vatter
    Abstract: This paper examines regional differences in subjective well-being (SWB) in Germany. Inferential statistics indicate a diminishing but still significant gap between East and West Germany, but also differing levels of SWB within both parts. The observed regional pattern of life satisfaction reflects macroeconomic fundamentals, where labor market conditions play a dominant role. Differing levels of GDP and economic growth have contributed rather indirectly to regional well-being such that the years since the German reunification can be considered as a period of joyless growth. Approximately half of the "satisfaction gap" between East and West Germany can be attributed to differing macroeconomic conditions. Moreover, we argue that it is advisable for governments to collect more data on aspects that presumably influence the well-being of society. For example, it is highly probable that reliable data on regional income inequality would lead to severalimportant and influential studies. This, in turn, can help to design indicators for those characteristics which are known for affecting SWB. In total, we do not perceive any fundamental caveat for using data on SWB in order to measure welfare directly, at least within culturally and linguistically homogenous regions. To reduce statistical uncertainty, however, it would be helpful to include subjective information of this kind into larger cross-sectional surveys such as common census data.
    Keywords: social welfare, subjective well-being, unemployment, economic growth
    JEL: R10 I31
    Date: 2012
    URL: http://d.repec.org/n?u=RePEc:rsw:rswwps:rswwps196&r=ltv
  3. By: Rebecca Riley; David Wilkinson; Richard Dickens
    Date: 2011–04
    URL: http://d.repec.org/n?u=RePEc:nsr:niesrd:378&r=ltv
  4. By: Orazio Attanasio; Erik Hurst; Luigi Pistaferri
    Abstract: Recent research has documented that income inequality in the United States has increased dramatically over the prior three decades. There has been less of a consensus, however, on whether the increase in income inequality was matched by an equally large increase in consumption inequality. Most researchers have studied this question using data from the Consumer Expenditure Survey (CE) and some studies have suggested that the increase in consumption inequality has been modest. Unfortunately ,there is now mounting evidence that the CE is plagued by serious non-classical measurement error, which hinders the extent to which definitive conclusions can be made about the extent to which consumption inequality has evolved over the last three decades. In this paper, we use a variety of different techniques to overcome the measurement error problems with the CE. First, we use data from the diary component of the CE, focusing on categories where measurement error has been found to be less of an issue. Second, we explore inequality measures within the CE using the value of vehicles owned, a consumption component that is considered to be measured well. Third, we try to account directly for the non-classical measurement error of the CE by comparing the spending on luxuries (entertainment) relative to necessities (food). This is similar to the recent approach taken by Browning and Crossley (2009) and Aguiar and Bils (2011). Finally, we use expenditure data from the Panel Study of Income Dynamics to explore the dynamics of alternative measures of consumption inequality. All of our different methods yield similar results. We find that consumption inequality within the U.S. between 1980 and 2010 has increased by nearly the same amount as income inequality.
    JEL: D12 E21
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:17982&r=ltv
  5. By: Bönke, Timm; Corneo, Giacomo; Lüthen, Holger
    Abstract: This paper documents the magnitude, pattern, and evolution of lifetime earnings inequality in Germany. Based on a large sample of earnings biographies from social security records, we show that the intra-generational distribution of lifetime earnings of male workers has a Gini coefficient around .2 for cohorts born in the late 1930s and early 1940s; this amounts to about 2/3 of the value of the Gini coefficient of annual earnings. Within cohorts, mobility in the distribution of yearly earnings is substantial at the beginning of the lifecycle, decreases afterwards and virtually vanishes after age forty. Earnings data for thirty-one cohorts reveals striking evidence of a secular rise of intra-generational inequality in lifetime earnings: West-German men born in the early 1960s are likely to experience about 80 % more lifetime inequality than their fathers. In contrast, both short-term and long-term intra-generational mobility have been rather stable. Longer unemployment spells of workers at the bottom of the distribution of younger cohorts contribute to explain 30 to 40 % of the overall increase in lifetime earnings inequality.
    Keywords: Earnings distribution; Lifetime inequality
    JEL: D31 H24
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:8929&r=ltv
  6. By: Liliana Fernandes (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto); Américo Mendes (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto); Aurora Teixeira (Faculdade de Economia - Universidade do Porto)
    Abstract: Assessing child well-being through composite summary indexes is one of the most recent developments regarding child well-being measurement. Using a new index that takes into account the children’s own perspectives, this paper presents empirical evidence on the main determinants of overall child well-being. Econometric estimations, based on a sample of 1246 children enrolled in the 3rd to 6th grades of schools located in the Northern region of Portugal, convey two main results: 1) the parents’ educational background and professional status, in particular, an unemployed father, are the most important factors affecting child well-being; 2) children from households with double or foreign nationality are worse off than those with Portuguese nationality. These results support the positive role of policies targeting the qualifications and employment opportunities for parents, as well as the need for inclusive policies for immigrant households as a way to improve their children’s well-being.
    Keywords: child well-being, measurement, child indicators, empirical testing
    JEL: I31 I32
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:cap:wpaper:022012&r=ltv
  7. By: David H. Autor; Susan N. Houseman; Sari Pekkala Kerr
    Abstract: Federal and state employment programs for low-skilled workers typically emphasize rapid placement of participants into jobs and often place a large fraction of participants into temporary-help agency jobs. Using unique administrative data from Detroit's welfare-to-work program, we apply the Chernozhukov-Hansen instrumental variables quantile regression (IVQR) method to estimate the causal effects of welfare-to-work job placements on the distribution of participants' earnings. We find that neither direct-hire nor temporary-help job placements significantly affect the lower tail of the earnings distribution. Direct-hire placements, however, substantially raise the upper tail, yielding sizable earnings increases for more than fifty percent of participants over the medium-term (one to two years following placement). Conversely, temporary-help placements have zero or negative earnings impacts at all quantiles, and these effects are economically large and significant at higher quantiles. In net, we find that the widespread practice of placing disadvantaged workers into temporary-help jobs is an ineffective tool for improving earnings and, moreover, that programs focused solely on job placement fail to improve earnings among those who are hardest to serve. Methodologically, one surprising result is that a reduced-form quantile IV approach, akin to two-step instrumental variables, produces near-identical point estimates to the structural IVQR approach, which is based on much stronger assumptions.
    JEL: J24 J48 J62
    Date: 2012–04
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:17972&r=ltv
  8. By: David Autor (MIT and NBER); Nicole Maestas (RAND); Kathleen Mullen (RAND); Alexander Strand (Social Security Administration)
    Abstract: An influential body of research studies the labor supply and earnings of denied Social Security Disability Insurance (SSDI) applicants to estimate the potential employment and earnings of those awarded benefits. This research design implicitly treats employability as a stable applicant attribute that is not directly impacted by the process of applying for SSDI benefits. If, plausibly, applicants’ employment potential deteriorates while they are out of the labor force, then the labor force participation of denied applicants -- who spend an average of 10 months seeking benefits -- may understate their employment potential at the time of application. This paper tests whether the duration of SSDI applications causally affects applicants’ subsequent employment. We use a unique Social Security Administration workload database to identify exogenous variation in applicants’ initial decision times induced by differences in processing speed among the disability examiners to which they are randomly assigned. This variation significantly affects applicants’ total processing time but, importantly, is uncorrelated with their initial award and denial outcomes. We find that longer processing times reduce the employment and earnings of SSDI applicants in the years after their initial decision. A one standard deviation (2.4 month) increase in initial processing time reduces annual employment rates by 1 percentage point (3.2%) in years two, three and four post-decision. Extrapolating these effects to total applicant processing times, we estimate that the SSDI determination process directly reduces the post-application employment of denied applicants by approximately 3.6 percentage points (7%) and allowed applicants by approximately 5.2 percentage points (33%).
    Date: 2011–09
    URL: http://d.repec.org/n?u=RePEc:mrr:papers:wp258&r=ltv

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