nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒06‒13
seven papers chosen by
Maximo Rossi
University of the Republic

  1. Canadian Inequality: Recent Development and Policy Options By Fortin, Nicole M.; Green, David A.; Lemieux, Thomas; Milligan, Kevin; Riddell, W. Craig
  2. Care or Cash? The Effect of Child Care Subsidies on Student Performance. By Black, Sandra; Devereux, Paul J.; Løken, Katrine V.; Salvanes, Kjell G.
  3. A Comparison of Inequality and Living Standards in Canada and the United States Using an Expanded Measure of Economic Well-Being By Edward N. Wolff; Ajit Zacharias; Thomas Masterson; Selçuk Eren; Andrew Sharpe; Elspeth Hazell
  4. Job Market Polarization and Employment Protection in Europe By Barbara Pertold-Gebicka
  5. Factor shares and income inequality - Empirical evidence from Germany 2002 - 2008 By Adler, Martin; Schmid, Kai Daniel
  6. Imputing Rent in Consumption Measures, with an Application to Consumption Poverty in Canada 1997-2009 By Krishna Pendakur; Sam Norris
  7. Tall or Taller, Pretty or Prettier: Is Discrimination Absolute or Relative? By Daniel S. Hamermesh

  1. By: Fortin, Nicole M.; Green, David A.; Lemieux, Thomas; Milligan, Kevin; Riddell, W. Craig
    Abstract: Considerable concern has recently been expressed about growing income inequality. Much of the discussion, though, has been in general terms and focused on the U.S. experience. To understand whether and how Canada ought to respond to this development, we need to be clear on the facts. This paper documents Canadian patterns in income inequality and investigates the top 1% of earners – the group receiving much attention. We summarize what is known about the causes of growing income inequality, including the role of gender wage differences. Finally we outline policy options for reducing -- or slowing the growth of -- inequality.
    Keywords: income inequality, polarization, technical change, tax and transfer system, minimum wages, gender wage gap, unions, globalization
    JEL: I24 I30 J24 J31 J51
    Date: 2012–05–30
  2. By: Black, Sandra (University of Texas, Austin); Devereux, Paul J. (University College Dublin); Løken, Katrine V. (University of Bergen); Salvanes, Kjell G. (Dept. of Economics, Norwegian School of Economics and Business Administration)
    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: Childcare; subsidies; academic performance
    JEL: H52 J13
    Date: 2012–05–16
  3. By: Edward N. Wolff; Ajit Zacharias; Thomas Masterson; Selçuk Eren; Andrew Sharpe; Elspeth Hazell
    Abstract: We use the Levy Institute Measure of Economic Well-being (LIMEW), the most comprehensive income measure available to date, to compare economic well-being in Canada and the United States in the first decade of the 21st century. This study represents the first international comparison based on LIMEW, which differs from the standard measure of gross money income (MI) in that it includes noncash government transfers, public consumption, income from wealth, and household production, and nets out all personal taxes. We find that, relative to the United States, median equivalent LIMEW was 11 percent lower in Canada in 2000. By 2005, this gap had narrowed to 7 percent, while the difference in median equivalent MI was only 3 percent. Inequality was notably lower in Canada, with a Gini coefficient of 0.285 for equivalent LIMEW in 2005, compared to a US coefficient of 0.376—a gap that primarily reflects the greater importance of income from wealth in the States. However, the difference in Gini coefficients declined between 2000 and 2005. We also find that the elderly were better off relative to the nonelderly in the United States, but that high school graduates did better relative to college graduates in Canada.
    Keywords: Well-Being; Living Standards; Inequality; Income; International Comparisons
    JEL: D31 D63 P17
    Date: 2012
  4. By: Barbara Pertold-Gebicka (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: Although much attention has been paid to the polarization of national labor markets, with employment and wage growth occurring in both low- and high- but not middle-skill occupations, there is little consistent evidence on cross-country differences in this process. I analyze job polarization in 12 European countries using an occupational skill-intensity measure, which is independent of country-specific labor supply conditions. Extensive cross-country differences in the extent of polarization correspond to variation in economic conditions and to dissimilarities in the employment protection legislation.
    Keywords: polarization, employment protection, skill requirements, occupational structure
    JEL: J21 J24 K31
    Date: 2012–06–06
  5. By: Adler, Martin; Schmid, Kai Daniel
    Abstract: We examine the interplay between changes in the functional distribution of income and the distribution of market income among households. We use micro data from the German Socio-Economic Panel as well as macro data from the German Federal Statistical Office from 2002 to 2008. We categorize and evaluate the implications of changes in the functional distribution of income upon the distribution of income among individuals on the basis of a simple theoretic framework that links the degree of the concentration of income from asset flows among individuals to the (structural) relationship between individuals' levels of market income and their respective income shares from asset flows. Our empirical analysis offers two insights: First, the relative rise of income from asset flows reported by German National Accounting Statistics is also evident in the micro data taken from the German Socio-Economic Panel. Second, rising capital income shares are associated with an increasing concentration of market income. --
    Keywords: Factor Shares,Income Distribution,Inequality,Market Income
    JEL: D31 D33 E6 E25
    Date: 2012
  6. By: Krishna Pendakur (Simon Fraser University); Sam Norris (University of Toronto)
    Abstract: Measures of household consumption-­which may be used to investigate average consumption growth, mor consumption poverty and inequality-­must account for the rental flow from owned accommodation. We consider two econometric problems relating to the imputation of rental flows for owned accommodation that have been thus far ignored in the literature on consumption poverty and inequality. First, using a Heckman-type correction, we account for quality differences correlated with selection into owner-occupied versus rental tenure. Using this correction increases the estimate of average household consumption by about 4 per cent in comparison with uncorrected estimates. Second, we propose a new way to measure poverty (or inequality) that accounts for the measurement error induced by the rent imputation. In particular, we argue that the researcher should impute a consumption distribution, rather than a single consumption level, for each household. We apply our methods to the measurement of consumption poverty in Canada. We estimate the rate of consumption poverty for all people, and for children and the elderly, over the period 1997-2009, allowing for interprovincial and intertemporal variation in commodity prices. Using a better rent imputation strategy matters a lot: the over-time pattern in poverty rates is quite different with the selection- and measurement-­error corrected approach. We find that poverty declined dramatically over the study period, and that, although substantial progress was been made on overall poverty and child poverty, poverty among the elderly did not decrease very much.
    Date: 2012–05
  7. By: Daniel S. Hamermesh
    Abstract: Using several microeconomic data sets from the United States and the Netherlands, and the examples of height and beauty, this study examines whether: 1) Absolute or relative differences in a characteristic are what affect labor-market and other outcomes; and 2) The effects of a characteristic change when all agents acquire more of it—become taller or better-looking. Confronted with a choice among individuals, decision-makers respond more to absolute than to relative differences among them. Also, an increase in the mean of a characteristic’s distribution does not alter market responses to differences in it.
    JEL: J71 J78
    Date: 2012–06

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