nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒05‒02
eleven papers chosen by
Maximo Rossi
University of the Republic

  1. Lifetime Labor Income and the Erosion of Seniority-Based Wages in Japan: Evidence Based on Administrative Data Records By Hori, Masahiro; Iwamoto, Koichiro
  2. Multidimensional Poverty Measurement in Europe: An Application of the Adjusted Headcount Approach By Christopher T. Whelan; Brian Nolan; Bertrand Maître
  3. Income Comparisons and Non-Cognitive Skills By Santi Budria; Ada Ferrer-i-Carbonell
  4. Why women are progressive in education?: Gender disparities in human capital, labor markets, and family arrangement in the Philippines By Yamauchi, Futoshi; Tiongco, Marites
  5. Wage and Employment Determination in Volatile Times: Sweden 1913–1939 By Holmlund, Bertil
  6. Product and Labor Market Imperfections and Scale Economies: Micro-evidence on France, Japan and the Netherlands By Sabien DOBBELAERE; KIYOTA Kozo; Jacques MAIRESSE
  7. Alternative theories for explaining the spatial wage inequality: a multilevel competition among human capital, NEG and amenities By Dusan Paredes
  8. How pro-poor and progressive is social spending in Zambia ? By Cuesta, Jose; Kabaso, Pamela; Suarez-Becerra, Pablo
  9. Income Inequality in the European Union By Kaja Bonesmo Fredriksen
  10. The Impact of Redistributive Policies on Inequality in OECD Countries By Philipp Doerrenberg; Andreas Peichl
  11. Equality of opportunities and fiscal incidence in Cote d'Ivoire By Abras, Ana; Cuesta, Jose; Hoyos, Alejandro; Narayan, Ambar

  1. By: Hori, Masahiro; Iwamoto, Koichiro
    Abstract: This paper examines the impact of the erosion in seniority-based wages on lifetime labor income in Japan. Despite the importance of this issue, studies to date have not been able to address it directly because reliable datasets long enough to cover individuals’ entire careers were not available. Taking advantage of administrative data records on individuals’ careers, which became available with the introduction of Pension Coverage Regular Notices, Takayama et al. (2012) constructed a panel dataset of career records covering a period of more than 30 years. We use the dataset to derive wage profiles throughout individuals’ careers. Moreover, using the estimated wage profiles for individuals with different sets of characteristics, we calculate the lifetime labor income (over a 35-year period) for those individuals to examine the impact of the erosion of Japan’s seniority wages on lifetime income. We confirm that the wage-age profile of lifetime employees over their working life has been gradually flattening in recent years. The flattening is particularly prominent among middle-aged and elderly white-collar workers with a college background, and it appears to have decreased their lifetime labor income by about 10 to 30 percent.
    Keywords: Seniority-based wages, Lifetime labor income, Japan
    JEL: C81 D31 J31
    Date: 2012–04
  2. By: Christopher T. Whelan (School of Sociology and Geary Institute, Univeristy College Dublin); Brian Nolan (College of Human Sciences, University College Dublin University College Dublin); Bertrand Maître (Economic and Social Research Institute, Dublin)
    Abstract: As awareness of the limitations of relying solely on income to measure poverty and social exclusion has become more widespread, attention has been increasingly focused on multi-dimensional approaches. To date efforts to measure multidimensional poverty and social exclusion in rich countries have been predominantly ad hoc and have relied on data that are far from ideal. Here we apply the approach recently developed by Alkire and Foster, characterized by a range of desirable axiomatic properties but mostly discussed so far in a development context, to European countries, exploiting the potential of harmonized microdata on deprivation newly available for the European Union. The analysis seeks to overcome the limitations of the union and intersection approaches that have characterized many earlier studies. Multidimensional poverty is characterized and decomposed in terms of the contribution of different deprivation dimensions, and an account of cross-national and socio-economic variation in risk levels is presented that is in line with theoretical expectations. Multilevel analysis of multi-dimensional poverty provides the basis for assessment of the role of macro and micro characteristics and their interaction in relation to levels and patterns of multidimensional poverty and social exclusion.
    Keywords: poverty, social exclusion, multidimensional
    Date: 2012–04–23
  3. By: Santi Budria; Ada Ferrer-i-Carbonell
    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
  4. By: Yamauchi, Futoshi; Tiongco, Marites
    Abstract: This paper shows mutually consistent evidence to support female advantage in education and disadvantage in labor markets observed in the Philippines. We set up a model that shows multiple Nash equilibria to explain schooling and labor market behaviors for females and males. Our evidence from unique sibling data of schooling and work history and from the Philippine Labor Force Survey support that family arrangement to tighten commitment between daughters and parents keeps a high level of schooling investments in daughters. Because wage penalty to females in labor markets means that education is relatively important as a determinant of their earnings, parental investments in their daughters' education has larger impacts on the income of their daughters than on their sons. Parents expect larger income shared from better-educated adult daughters. In contrast, males stay in an equilibrium, with low levels of schooling investment and income sharing.
    Keywords: Education, Family, Gender, Labor market,
    Date: 2012
  5. By: Holmlund, Bertil (Department of Economics)
    Abstract: The paper studies wage and employment determination in the Swedish business sector from the mid-1910s to the late 1930s. This period includes the boom and bust cycle of the early 1920s as well as the Great Depression of the early 1930s. The events of the early 1920s are particularly intriguing, involving inflation running at an annual rate of 30 percent followed by a period of sharp deflation where nominal wages and prices fell by 30 percent and unemployment increased from 5 to 30 percent. We examine whether relatively standard wage and employment equations can account for the volatile economic development during the interwar years. By and large, the answer is a qualified yes. Industry wages were responsive to industry-specific firm performance, suggesting a significant role for “insider forces” in wage determination. Unemployment had a strong downward impact on wages. There is evidence that reductions in working time added to wage pressure; yet estimates of labor demand equations suggest that cuts in working time may have slightly increased employment as firms substituted workers for hours.
    Keywords: Wage determination; labor demand; interwar labor markets
    JEL: J23 J31 N14 N34
    Date: 2012–04–18
  6. By: Sabien DOBBELAERE; KIYOTA Kozo; Jacques MAIRESSE
    Abstract: Allowing for three labor market settings, this paper relies on an extension of Hall's econometric framework for simultaneously estimating price-cost mark-ups and scale economies. Using an unbalanced panel of 17,653 firms over the period 1986-2001 in France, 8,725 firms over the period 1994-2006 in Japan, and 7,828 firms over the period 1993-2008 in the Netherlands, we first classify 30 comparable manufacturing industries in six distinct regimes that differ in terms of the type of competition prevailing in product and labor markets. For each of the three predominant regimes in each country, we then investigate industry differences in the estimated product and labor market imperfections and scale economies. We not only find important regime differences across the three countries, but also observe cross-country differences in the levels of product and labor market imperfections and scale economies within a particular regime.
    Date: 2012–04
  7. By: Dusan Paredes (IDEAR - Department of Economics, Universidad Católica del Norte - Chile)
    Abstract: This paper presents an empirical framework for analyzing the spatial wage inequality in a Latin American country: Chile. This country is mainly characterized by two stylized facts: the high spatial concentration around metropolitan areas and the key role of natural resources. We consider both elements with a competition between NEG versus amenity framework. Both theories are combined with human capital through a Multilevel Analysis. The results show the low performance of NEG for Chile and how the natural resources are a winner causal mechanism for the case. Additionally, the spatial wage variability is extremely small when it is compared with the wage variation at individual level.
    Keywords: Spatial wage inequality, spatial concentration, natural resources, NEG, amenity framework, wage variation at individual level
    Date: 2012–04
  8. By: Cuesta, Jose; Kabaso, Pamela; Suarez-Becerra, Pablo
    Abstract: This paper analyzes the distributional effect of public spending in Zambia using the most recent data from the 2010 Living Conditions Monitoring Survey. The analysis focuses on both the"traditional"social sectors, such as education and public healthcare, as well as other spending areas less thoroughly studied, such as agricultural support programs. Ultimately, this benefit incidence analysis addresses the extent to which spending is pro-poor and progressive; that is, it primarily benefits the poor and does so at an increasing rate as welfare levels decrease. The results indicate that overall public education spending in Zambia is neither pro-poor nor progressive, but while this is true for the system as a whole it is not true for all of its parts. The net unitary benefits of primary and secondary education are clearly both pro-poor and progressive. However, their progressivity is ultimately outweighed by the extreme concentration of tertiary education benefits among the wealthiest members of Zambian society. Health spending is also regressive and not pro-poor. Although unitary net benefits are slightly progressive, unequal access remains the key constraint. In contrast, the benefits of agricultural-input subsidy programs follow a somewhat progressive pattern (for each beneficiary in the top quintile there are almost two beneficiaries in the poorest quintile) but clearly suffer from targeting problems. Consequently, without better-designed and more conscientiously implemented targeting mechanisms, public spending on health, education, and fertilizers will not be able to further the government's larger objectives for pro-poor and progressive development policy.
    Keywords: Health Monitoring&Evaluation,Public Sector Expenditure Policy,Access to Finance,Population Policies,Health Systems Development&Reform
    Date: 2012–04–01
  9. By: Kaja Bonesmo Fredriksen
    Abstract: Poor growth performance over the past decades in Europe has increased concerns for rising income dispersion and social exclusion. European authorities have recently launched the Europe 2020 strategy which aims to improve social inclusion in Europe on top of already existing European regional policies aiming to reduce regional disparities through stimulating growth in areas where incomes are relatively low. While it is most common to confine measures of inequality to national borders, the existence of such union-wide objectives and policies motivates measuring income dispersion among all Europeans in this paper. Towards the end of the 2000s the income distribution in Europe was more unequal than in the average OECD country, albeit notably less so than in the United States. It is the within-country, not the between-country dimension, which appears to be most important. Inequality in Europe has risen quite substantially since the mid 1980s. While the EU enlargement process has contributed to this, it is not the only explanation since inequality has also increased within a “core” of 8 European countries. Large income gains among the 10% top earners appear to be a main driver behind this evolution.<P>L'inégalité des revenus dans l'Union européenne<BR>La faible croissance en Europe au cours des dernières décennies a augmenté les inquiétudes concernant la répartition des revenus et l’exclusion sociale. Les autorités européennes ont récemment lancé la stratégie Europe 2020 qui vise à améliorer l’insertion sociale en Europe en plaçant cet objectif au dessus des politiques régionales européennes déjà existantes afin de réduire les disparités régionales en stimulant la croissance dans les zones où les revenus sont relativement bas. Alors que l’inégalité est, le plus fréquemment, mesurée par pays, le fait de mettre en place des objectifs et des politiques à l’échelle européenne explique pourquoi ce rapport traite de l’inégalité des revenus entre tous les Européens. Vers la fin des années 2000, la distribution des revenus en Europe était plus inégalitaire que la moyenne de la zone de l’OCDE mais beaucoup moins qu’aux États-Unis. Ce sont les inégalités à l’intérieur des pays et non entre pays qui semblent le plus importantes. L’inégalité en Europe a sensiblement augmenté depuis la moitié des années 80. Même si l’élargissement a contribué à cette hausse, ce n’est pas la seule explication puisque l’inégalité a aussi augmenté au sein d’un groupe de 8 pays faisant parti de l’Union sur toute la période considérée. D’importants gains de revenus pour les 10% les mieux rémunérés apparaissent comme étant la raison principale de cette évolution.
    Keywords: redistribution, European Union, convergence, income inequality, Gini coefficient, top incomes, redistribution, Union européenne, convergence, inégalité des revenus, hauts revenus, Gini
    JEL: C81 D31 D63 H23
    Date: 2012–04–16
  10. By: Philipp Doerrenberg (CGS, University of Cologne); Andreas Peichl (IZA, University of Cologne, ISER and CESifo)
    Abstract: Recent discussions about rising inequality in industrialized countries have triggered calls for more government intervention and redistribution. Due to obvious behavioral effects caused by redistribution, it is however not clear whether redistributional policies are indeed able to combat inequality. This paper contributes to this relevant research question by using different contextual country-level data sources to study inequality trends in OECD countries since the 1980s. We first investigate the development of inequality over time before analyzing the question of whether governments can effectively reduce inequality. Different identification strategies, using fixed effects and instrumental variables models, provide some evidence that governments are capable of reducing income inequality despite countervailing behavioral adjustments. The effect is stronger for social expenditure policies than for progressive taxation, which seems to trigger more inequality increasing indirect behavioral effects. Our results also suggest that the use of secondary inequality data should be handled with caution.
    Keywords: Inequality, Redistribution, Social Expenditure, Progressive Taxation
    JEL: D31 D60 H20
    Date: 2012–04–13
  11. By: Abras, Ana; Cuesta, Jose; Hoyos, Alejandro; Narayan, Ambar
    Abstract: This study analyzes opportunities for children in Cote d'Ivoire, where opportunities refer to access to basic services and goods that improve the likelihood of a child maximizing his or her human potential. The principle that guides this analysis is one of equality of opportunity, which is that a child's circumstances at birth should not determine his or her access to opportunities. The analysis computes the Human Opportunity Index, which measures the extent to which access to basic services is universal and evenly distributed among children of different circumstances. Opportunities are limited in Cote d'Ivoire, despite some improvements in access to electricity and timely access to primary education. Otherwise, trends on access remain stagnant. Scale effects (variations across the board) are behind these trends, with little improvement observed from equalizing interventions. Circumstances such as region and household head characteristics affect a child's access to opportunities, while household incomes and a child's gender and ethnicity play a relatively small role in access differentials. Public spending on education opportunities is shown to be regressive and pro-rich, especially when analyzed across the distribution of circumstances rather than acroos income level.The groups of children that are particularly behind in terms of educational opportunities are those whose household heads lack primary education and reside in rural areas. Closing the enrollment gap of these children should be a priority for targeted educational interventions. However, improving opportunities may require more than a single type of intervention: opportunities with low coverage may need to be scaled up, while those with large inequalities of access may require equalizing interventions.
    Keywords: Primary Education,Population Policies,Disability,Gender and Law,Rural Poverty Reduction
    Date: 2012–04–01

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