nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒05‒22
fourteen papers chosen by
Maximo Rossi
University of the Republic

  1. Explaining Charter School Effectiveness By Angrist, Joshua; Pathak, Parag A.; Walters, Christopher R.
  2. Fiscal Incidence, Fiscal Mobility and the Poor: A New Approach By Nora Lustig; Sean Higgins
  3. Changes in wage structure in Mexico going beyond the mean: An analysis of differences in distribution, 1987-2008 By Claudia Tello; Raul Ramos; Manuel Artís
  4. What explains the gender earnings gap in self-employment? A decomposition analysis with German data By Lechmann, Daniel S. J.; Schnabel, Claus
  5. Wage and Occupational Assimilation by Skill Level By Alcobendas, Miguel Angel; Rodríguez-Planas, Núria; Vegas, Raquel
  6. Does Employer-Provided Health Insurance Constrain Labor Supply Adjustments to Health Shocks? New Evidence on Women Diagnosed with Breast Cancer By Cathy J. Bradley; David Neumark; Scott Barkowski
  7. Care or Cash? The Effect of Child Care Subsidies on Student Performance By Black, Sandra E.; Devereux, Paul J.; Loken, Katrine V.; Salvanes, Kjell G.
  8. Gender and Well-being Around the World: Some Insights from the Economics of Happiness By Carol Graham; Soumya Chattopadhyay
  9. Human Capital, Economic Growth, and Inequality in China By Heckman, James J.; Yi, Junjian
  10. The China Syndrome: Local Labor Market Effects of Import Competition in the United States By David H. Autor; David Dorn; Gordon H. Hanson
  11. Family Planning and Women's and Children's Health: Long Term Consequences of an Outreach Program in Matlab, Bangladesh By Joshi, Shareen; Schultz, T. Paul
  12. Lifetime Labor Supply and Human Capital Investments By Rodolfo Manuelli; Ananth Seshadri; Yongseok Shin
  13. Becker Meets Ricardo: Multisector Matching with Social and Cognitive Skills By McCann, Robert J.; Shi, Xianwen; Siow, Aloysius; Wolthoff, Ronald P.
  14. Inequality of Opportunities and Long Term Earnings Measures: Evidence for Chile By Dante Contreras; Osvaldo Larrañaga; Esteban Puentes; Tomás Rau

  1. By: Angrist, Joshua (MIT); Pathak, Parag A. (MIT); Walters, Christopher R. (MIT)
    Abstract: Estimates using admissions lotteries suggest that urban charter schools boost student achievement, while charter schools in other settings do not. Using the largest available sample of lotteried applicants to charter schools, we explore student-level and school-level explanations for this difference in Massachusetts. In an econometric framework that isolates sources of charter effect heterogeneity, we show that urban charter schools boost achievement well beyond that of urban public school students, while non-urban charters reduce achievement from a higher baseline. Student demographics explain some of these gains since urban charters are most effective for non-whites and low-baseline achievers. At the same time, non-urban charter schools are uniformly ineffective. Our estimates also reveal important school-level heterogeneity within the urban charter sample. A non-lottery analysis suggests that urban charters with binding, well-documented admissions lotteries generate larger score gains than under-subscribed urban charter schools with poor lottery records. Finally, we link charter impacts to school characteristics such as peer composition, length of school day, and school philosophy. The relative effectiveness of urban lottery-sample charters is accounted for by these schools' embrace of the No Excuses approach to urban education.
    Keywords: human capital, charter schools, achievement
    JEL: I21 I24 I28 J45
    Date: 2012–04
  2. By: Nora Lustig (Department of Economics, Tulane University); Sean Higgins (Department of Economics, Tulane University)
    Abstract: Taxes and transfers can have significant impacts on poverty and inequality. All standard measures are by definition anonymous in the sense that we do not know the identity of winners and losers. That a given combination of taxes and transfers makes some of the poor poorer, however, may be important information to incorporate into a fiscal incidence analysis. The directional mobility literature provides a useful framework to identify which individuals are adversely/favorably impacted by a particular policy. This paper introduces a "fiscal mobility matrix" to identify winners and losers. We show that taxes and transfers can lower inequality and poverty (including the severity of poverty) but still make a subgroup of the poor worse off. We use Brazilian data to illustrate how indirect taxes make around 11 percent of the non-poor poor, 15 percent of the moderate poor extremely poor, and 4 percent of the extremely poor "ultra-poor" despite any cash transfers they receive, even when standard poverty and inequality indicators decline and overall taxes are progressive.
    Keywords: fiscal incidence, taxes and transfers, inequality, poverty, redistribution, mobility
    JEL: D31 H22 H53 I32 I38
    Date: 2012–04
  3. By: Claudia Tello (AQR-IREA, Universitat de Barcelona, Spain); Raul Ramos (AQR-IREA, Universitat de Barcelona, Spain); Manuel Artís (AQR-IREA, Universitat de Barcelona, Spain)
    Abstract: This paper conducts an empirical analysis of the relationship between wage inequality, employment structure, and returns to education in urban areas of Mexico during the past two decades (1987-2008). Applying Melly’s (2005) quantile regression based decomposition, we find that changes in wage inequality have been driven mainly by variations in educational wage premia. Additionally, we find that changes in employment structure, including occupation and firm size, have played a vital role. This evidence seems to suggest that the changes in wage inequality in urban Mexico cannot be interpreted in terms of a skill-biased change, but rather they are the result of an increasing demand for skills during that period.
    Keywords: wage inequality, quantile regressions, decomposition.
    JEL: J31
    Date: 2012–05
  4. By: Lechmann, Daniel S. J.; Schnabel, Claus
    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. -- Mit einem großen Datensatz für Deutschland zeigen wir, dass sowohl der gesamte geschlechtsspezifische Verdienstunterschied als auch dessen unerklärter Teil bei Selbständigen größer ausfallen als bei abhängig Beschäftigten. Gemäß einer Oaxaca-Blinder-Zerlegung ist über ein Viertel des Unterschieds im Monatsverdienst von Selbständigen darauf zurückzuführen, dass Frauen kürzere Arbeitszeiten haben als Männer. Dagegen scheinen Variablen wie Familienhintergrund, Arbeitszeitflexibilität und Karriereaspiration nicht substanziell zum Geschlechter-Verdienstdifferenzial beizutragen. Dies legt nahe, dass selbständige Frauen nicht deshalb weniger verdienen, weil sie eher an der Vereinbarkeit von Arbeit und Familie und weniger an Gewinnerzielung interessiert sind. Unterschiede in der Humankapitalausstattung erklären weitere 13 Prozent des Differenzials, doch Segregation spielt keine eindeutige Rolle.
    Keywords: earnings differential,entrepreneurship,gender pay gap,Germany,self-employed,self-employment
    JEL: J31 J71
    Date: 2012
  5. By: Alcobendas, Miguel Angel (Universitat Autònoma de Barcelona); Rodríguez-Planas, Núria (IZA); Vegas, Raquel (FEDEA, Madrid)
    Abstract: While much of the literature on immigrants' assimilation has focused on countries with a large tradition of receiving immigrants and with flexible labor markets, very little is known on how immigrants adjust to other types of host economies. With its severe dual labor market, and an unprecedented immigration boom, Spain presents a quite unique experience to analyze immigrations' assimilation process. Using alternative datasets and methodologies, this paper provides evidence of a differential assimilation pattern for low- versus high-skilled immigrants in Spain: our key finding is that having a high-school degree does not give immigrants an advantage in terms occupational or wage assimilation (relative to their native counterparts).
    Keywords: wage assimilation, occupational assimilation, education
    JEL: J15 J24 J61 J62
    Date: 2012–05
  6. By: Cathy J. Bradley; David Neumark; Scott Barkowski
    Abstract: Employment-contingent health insurance creates incentives for ill workers to remain employed at a sufficient level (usually full-time) to maintain access to health insurance coverage. We study employed married women, newly diagnosed with breast cancer, comparing labor supply responses to breast cancer diagnoses between women dependent on their own employment for health insurance and women with access to health insurance through their spouse’s employer. We find evidence that women more dependent on their own job for health insurance reduce their labor supply by less after a diagnosis of breast cancer – the estimate difference is about 5.5 to 7 percent. Women’s subjective responses to questions about working more to maintain health insurance are consistent with the conclusions from observed behavior.
    JEL: J2
    Date: 2012–05
  7. By: Black, Sandra E. (University of Texas at Austin); Devereux, Paul J. (University College Dublin); Loken, Katrine V. (University of Bergen); Salvanes, Kjell G. (Norwegian School of Economics (NHH))
    Abstract: Given the wide use of childcare subsidies across countries, it is surprising how little we know about the effect of these subsidies on children's longer run outcomes. Using a sharp discontinuity in the price of childcare in Norway, we are able to isolate the effects of childcare subsidies on both parental and student outcomes. We find very small and statistically insignificant effects of childcare subsidies on childcare utilization and parental labor force participation. Despite this, we find significant positive effect of the subsidies on children's academic performance in junior high school, suggesting the positive shock to disposable income provided by the subsidies may be helping to improve children's scholastic aptitude.
    Keywords: education, income subsidy, child care
    JEL: I1 J1
    Date: 2012–05
  8. By: Carol Graham (The Brookings Institution); Soumya Chattopadhyay (The Brookings Institution)
    Abstract: A wide body of research explores gender differences in welfare outcomes, and their implications for economic development. We aim to contribute to this work by looking at differences in reported well-being (happiness) across genders around the world. We examine differences across genders within countries, comparing age, income, education, and urban versus rural cohorts, and explore how those same within country differences vary in countries of different development levels. Our findings, based also on previous research on well-being more generally, highlight some consistent patterns across genders, with women typically happier than men in the world as a whole, with the exception of the poorest sample of countries. We also find substantial differences in the standard relationships between key variables - such as marriage - and happiness when we take differences in gender rights into account. Our research also suggests that cross-gender differences in well-being are affected by the same empirical and methodological factors that drive the paradoxes underlying the income and happiness debates more generally, with norms and expectations playing an important mediating role. Women's happiness seems to fall - at least in the short-term - when there are changes/improvements in gender rights, in keeping with our more general findings on the drops in reported well-being that are often associated with the process of acquiring agency.
    Keywords: happiness, gender, agency, expectations
    JEL: I3 J1 J7
    Date: 2012–03
  9. By: Heckman, James J. (University of Chicago); Yi, Junjian (University of Chicago)
    Abstract: China's rapid growth was fueled by substantial physical capital investments applied to a large stock of medium skilled labor acquired before economic reforms began. As development proceeded, the demand for high skilled labor has grown, and, in the past decade, China has made substantial investments in producing it. The egalitarian access to medium skilled education characteristic of the pre-reform era has given rise to substantial inequality in access to higher levels of education. China's growth will be fostered by expanding access to all levels of education, reducing impediments to labor mobility, and expanding the private sector.
    Keywords: education, human capital, economic growth, inequality
    JEL: I25 J24 O15
    Date: 2012–05
  10. By: David H. Autor; David Dorn; Gordon H. Hanson
    Abstract: We analyze the effect of rising Chinese import competition between 1990 and 2007 on local U.S. labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization while instrumenting for imports using changes in Chinese imports by industry to other high-income countries. Rising exposure increases unemployment, lowers labor force participation, and reduces wages in local labor markets. Conservatively, it explains one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in exposed labor markets.
    JEL: F16 H53 J23 J31
    Date: 2012–05
  11. By: Joshi, Shareen (Georgetown University); Schultz, T. Paul (Yale University)
    Abstract: The paper analyzes the impact of an experimental maternal and child health and family-planning program that was implemented in Matlab, Bangladesh in 1977. Village data from 1974, 1982 and 1996 suggest that program villages experienced extra declines in fertility of about 17%. Household data from 1996 confirm that this decline in "surviving fertility" persisted for nearly two decades. Women in program villages also experienced other benefits: lower child mortality, improved health status, and greater use of preventive health inputs. Some benefits also diffused beyond the boundaries of the program villages into neighboring comparison villages. These program effects are robust to the inclusion of individual, household, and community characteristics. This paper concludes that the benefits of this reproductive and child health program in rural Bangladesh have many dimensions extending well beyond fertility reduction, which do not appear to dissipate after two decades.
    Keywords: program evaluation, health and women's work, health and development, family planning, fertility, Bangladesh
    JEL: O12 J13 I12 J16
    Date: 2012–05
  12. By: Rodolfo Manuelli (Washington University in St. Louis and Federal Reserve Bank of St. Louis); Ananth Seshadri (University of Wisconsin--Madison); Yongseok Shin (Washington University in St. Louis and Federal Reserve Bank of St. Louis)
    Abstract: We develop a model of retirement and human capital investment to study the effects of tax and retirement policies. Workers choose the supply of raw labor (career length) and also the human capital embodied in their labor. Our model explains a significant fraction of the US-Europe difference in schooling and retirement. The model predicts that reforms of the European retirement policies modeled after the US can deliver 15-35 percent gains in per-worker output in the long run. Increased human capital investment in and out of school accounts for most of the gains, with relatively small changes in career length. JEL classification: E24; J24
    Keywords: Lifetime labor supply human capital
    JEL: E24 J24
  13. By: McCann, Robert J. (University of Toronto); Shi, Xianwen (University of Toronto); Siow, Aloysius (University of Toronto); Wolthoff, Ronald P. (University of Toronto)
    Abstract: This paper presents a tractable framework for studying frictionless matching in school, work, and marriage when individuals have heterogeneous social and cognitive skills. In the model, there are gains to specialization and team production, but specialization requires communication and coordination between team members, and individuals with more social skills communicate and coordinate at lower resource cost. The theory delivers full task specialization in the labor and education markets, but incomplete specialization in marriage. It also captures well-known matching patterns in each of these sectors, including the commonly observed many-to-one matches in firms and schools. Equilibrium is equivalent to the solution of a utilitarian social planner solving a linear programming problem.
    Keywords: social skill, cognitive skill, matching, sorting, education, labor, marriage, social welfare, linear programming
    JEL: E24 J12 J24 J31
    Date: 2012–04
  14. By: Dante Contreras; Osvaldo Larrañaga; Esteban Puentes; Tomás Rau
    Abstract: In this paper we assess the sensitivity of measures of inequality of opportunity to long-term earnings data. We compare indicators using four and seven year earnings with indicators that use the most commonly available yearly and monthly earnings. We argue that four and seven year earnings are preferable since they are a more precise measure of permanent income and are less affected by short-term variability. We use data available for Chile and found that the use of seven and four year earnings produces a 25% higher share of inequality of opportunity compared to yearly and monthly earnings measures. We find that parental education contributes most to income inequality in Chile. Finally, we perform Monte Carlo simulations, finding that our results are robust to several income processes.
    Date: 2012–04

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