nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒07‒08
six papers chosen by
Maximo Rossi
University of the Republic

  1. Empirical Approaches to Inequality of Opportunity: Principles, Measures, and Evidence By Ramos, Xavi; Van de gaer, Dirk
  2. The Cycle of Earnings Inequality: Evidence from Spanish Social Security Data By Bonhomme, Stephane; Hospido, Laura
  3. Is the Erosion Thesis Overblown? Evidence from the Orientation of Uncovered Employers By John Addison; Paulino Teixeira; Katalin Evers; Lutz Bellmann
  4. Lifetime versus Annual Tax Progressivity: Sweden, 1968–2009 By Bengtsson, Niklas; Holmlund, Bertil; Waldenström, Daniel
  5. Immigrants and Earnings Inequality: Evidence from Hong Kong By Ou, Dongshu; Kondo, Ayako
  6. Measuring Segregation When Hierarchy Matters By Hutchens, Robert M.

  1. By: Ramos, Xavi (Universitat Autònoma de Barcelona); Van de gaer, Dirk (Ghent University)
    Abstract: We put together the different conceptual issues involved in measuring inequality of opportunity, discuss how these concepts have been translated into computable measures, and point out the problems and choices researchers face when implementing these measures. Our analysis identifies and suggests several new possibilities to measure inequality of opportunity. The approaches are illustrated with a selective survey of the empirical literature on income inequality of opportunity.
    Keywords: equality of opportunity, measurement, compensation, responsibility, effort, circumstances
    JEL: D3 D63
    Date: 2012–06
  2. By: Bonhomme, Stephane (CEMFI, Madrid); Hospido, Laura (Bank of Spain)
    Abstract: We use detailed information on labor earnings and employment from social security records to document the evolution of earnings inequality in Spain from 1988 to 2010. Male earnings inequality was strongly countercyclical: it increased around the 1993 recession, showed a substantial decrease during the 1997-2007 expansion, and then a sharp increase during the recent recession. This evolution was partly driven by the cyclicality of employment and earnings in the lower-middle part of the distribution. We emphasize the importance of the housing boom and subsequent housing bust, and show that demand shocks in the construction sector had large effects on aggregate labor market outcomes.
    Keywords: earnings inequality, social security data, unemployment, business cycle
    JEL: D31 J21 J31
    Date: 2012–06
  3. By: John Addison (University of South Carolina and GEMF); Paulino Teixeira (University of Coimbra, Portugal and GEMF); Katalin Evers (Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit); Lutz Bellmann (Friedrich-Alexander-Universität Erlangen-Nürnberg and Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit)
    Abstract: It is sometimes claimed that the coverage of collective bargaining in Germany is considerably understated because of orientation, a process whereby uncovered firms profess to shadow the wages set under sectoral bargaining. Yet importantly, at a time when collective bargaining proper has been in retreat, little is known of corresponding trends in the frequency of indirect coverage, still less of the degree to which wages are aligned in practice. Using nationally representative data for 2000–2010, this paper charts the extent of orientation in the uncovered sector, and tracks average wages across bargaining regimes as well as changes in wages from switches in regime. It is reported that orientation is growing with the decline in sectoral bargaining and that orienting firms do pay higher wages than their counterparts in the collective bargaining free zone. Yet in neither case – frequency nor remuneration – is the degree of ‘compensation’ recorded other than partial.
    Keywords: Orientation, Erosion of Collective Bargaining, Uncovered Sector, Sectoral Bargaining, Wages, Regime Shifts.
    JEL: J31 J5
    Date: 2012–06
  4. By: Bengtsson, Niklas (Department of Economics); Holmlund, Bertil (Department of Economics); Waldenström, Daniel (Department of Economics)
    Abstract: This paper analyzes the evolution of tax progressivity in Sweden from both annual and lifetime perspectives. Using a rich micro panel with administrative records of incomes, taxes and benefits over the period 1968–2009, we calculate tax rates across the income distribution accounting for different tax bases as well as the role of transfers. The uniquely long time span also allows us to compute tax progressivity as realized over a cohort’s entire life cycle. Our main finding is that taxes are considerably less progressive over the lifetime than in any single year. In fact, life cycle taxes are close to proportional, bearing a redistributive effect of only a few percent. Intragenerational income mobility seems to be driving this result, but the Swedish economic crisis of the 1990s and the tax reforms of 1971 and 1991 are also important events. Labor income taxes contribute less to progressivity in recent years, whereas transfers to unemployed and old-age pensioners have become increasingly important. Our findings are robust to using different tax rates, tax bases, sample populations, discount rates and reranking controls.
    Keywords: Tax progressivity; Income distribution; Lifetime income; Redistributive effect; Kakwani index; Transfers
    JEL: D31 H20
    Date: 2012–06–13
  5. By: Ou, Dongshu; Kondo, Ayako
    Abstract: Using data from 1991 to 2006 in Hong Kong, this paper documents how the distribution of workers’ earnings and the inequality of immigrants’ and natives’ earnings changed over time. We decompose earnings inequality to explore how the changes in immigrants’ share of the labor force have affected earnings inequality. We find that the increase in overall inequality can be explained by the increase in the within-group variance of natives. A nonnegligible part of the increase in inequality for women is due to the expansion of between-group variance caused by the large inflow of low-income immigrants from developing countries.
    Keywords: Earnings inequality; immigrants; Hong Kong
    JEL: D31 O15 J61
    Date: 2012–06–26
  6. By: Hutchens, Robert M. (Cornell University)
    Abstract: This paper considers the problem of measuring segregation when groups form a hierarchy whereby some groups have greater economic status than others. While existing measures of segregation address the case where people are unequally distributed across groups with the same economic status, concern often focuses on groups with different status, e.g., occupational segregation where women have limited access to high wage occupations. This paper first defines a class of segregation indexes that encompasses both the "same economic status" and "different economic status" case. It then proposes two methods for incorporating economic status into empirical work. One is to rank groups from highest to lowest economic status and apply the dominance criteria in Theorem 2. The other is to invoke a cardinal measure of group economic status and then compute a numerical index. Finally, a numerical index of segregation is introduced, and both methods are used to analyze U.S. occupational segregation by gender and ethnicity.
    Keywords: inequality, segregation, occupational segregation, inequality index, Lorenz dominance
    JEL: C43 C81 D63 J15
    Date: 2012–06

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