nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒09‒30
fourteen papers chosen by
Maximo Rossi
University of the Republic

  1. The Great Happiness Moderation By Clark, Andrew E.; Flèche, Sarah; Senik, Claudia
  2. Do Higher Childcare Subsidies Improve Parental Well-being? Evidence from Québec's Family Policies By Brodeur, Abel; Connolly, Marie
  3. An Anatomy of Racial and Ethnic Trends in Male Earnings By Winters, John V.; Hirsch, Barry T.
  4. Working Time Preferences, Hours Mismatch and Well-Being of Couples: Are There Spillovers? By Wunder, Christoph; Heineck, Guido
  5. Evolution of Teachers' Salaries in Latin America at the Turn of the 20th Century: How Much Are They (Under or Over) Paid? By Mizala, Alejandra; Nopo, Hugo
  6. The Intergenerational Transmission of Human Capital. The Role of Skills and Health By Lundborg, Petter; Nordin, Martin; Rooth, Dan Olof
  7. How Different Are the Wage Curves for Formal and Informal Workers? Evidence from Turkey By Baltagi, Badi H.; Baskaya, Yusuf Soner; Hulagu, Timur
  8. Welfare-poverty measurement By Antonio Villar
  9. Gender Gaps in Spain: Policies and Outcomes over the Last Three Decades By Guner, Nezih; Kaya, Ezgi; Sánchez-Marcos, Virginia
  10. What is behind the decline in poverty since 2000 ? evidence from Bangladesh, Peru and Thailand By Inchauste, Gabriela; Olivieri, Sergio; Saavedra, Jaime; Winkler, Hernan
  11. The Most Egalitarian of All Professions: Pharmacy and the Evolution of a Family-Friendly Occupation By Claudia Goldin; Lawrence F. Katz
  12. Self investments of adolescents and their cognitive development By Daniela Del Boca; Chiara Monfardini; Cheti Nicoletti
  13. Occupational tasks and changes in the wage structure By Firpo, Sergio; Fortin, Nicole M; Lemieux, Thomas
  14. Anti-Lemons: School Reputation, Relative Diversity, and Educational Quality By MacLeod, W. Bentley; Urquiola, Miguel

  1. By: Clark, Andrew E. (Paris School of Economics); Flèche, Sarah (Paris School of Economics); Senik, Claudia (Paris School of Economics)
    Abstract: This paper shows that within-country happiness inequality has fallen in the majority of countries that have experienced positive income growth over the last forty years, in particular in developed countries. This new stylized fact comes as an addition to the Easterlin paradox, which states that the time trend in average happiness is flat during episodes of long-run income growth. This mean-preserving declining spread in happiness comes about via falls in both the share of individuals who declare low and high levels of happiness. Rising income inequality moderates the fall in happiness inequality, and may even reverse it after some point, for example in the US starting in the 1990s. Hence, if raising the income of all does not raise the happiness of all, it will at least harmonize the happiness of all, providing that income inequality does not grow too much. Behind the veil of ignorance, lower happiness inequality would certainly be considered as attractive by risk-averse individuals.
    Keywords: happiness, inequality, economic growth, development, Easterlin paradox
    JEL: D31 D6 I3 O15
    Date: 2012–07
  2. By: Brodeur, Abel (Paris School of Economics); Connolly, Marie (University of Québec at Montréal)
    Abstract: In this paper, we investigate the effect of a change in childcare subsidies on parental subjective well-being. Starting in 1997, the Canadian province of Québec implemented a generous program providing $5-a-day childcare to children under the age of 5. By 2007, the percentage of children attending subsidized day care had tripled and mothers' labor force participation had increased substantially. Objectively, more labor force participation is seen as a positive improvement, bringing with it higher income, independence and bargaining power. Yet a decrease in women's subjective well-being over previous decades has been documented, perhaps due to a Second Shift effect where women work more but still bear the brunt of housework and childrearing (Hochschild and Machung, 1989). Using data from the Canadian General Social Survey, we estimate a triple-differences model using differences pre- and post- reforms between Québec and the rest of Canada and between parents with young children and those with older children. Our estimates suggest that Québec's family policies led to a small decrease in parents' subjective well-being. Of note, though, we find large and positive effects for poor household families and high school graduates and negative effects for middle household income families. We find similar negative effects on life satisfaction for both men and women, but different effects on satisfaction with work-life balance. This suggests that fathers' life satisfaction could be influenced by their wives' labor supply while their work-life balance is not.
    Keywords: childcare, labor supply, subjective well-being, life satisfaction, happiness, work-life balance
    JEL: I31 J20 J28
    Date: 2012–08
  3. By: Winters, John V. (University of Cincinnati); Hirsch, Barry T. (Georgia State University)
    Abstract: Progress in narrowing black-white earnings differences has been far from continuous, with some of the apparent progress resulting from labor force withdrawal among lower-skilled African Americans. This paper builds on prior research and documents racial and ethnic differences in male earnings from 1950 through 2010 using data from the decennial census and American Community Surveys. Emphasis is given to annual rather than weekly or hourly earnings. Treatment of imputed earnings greatly affects measured outcomes. We take a quantile approach, providing evidence on medians and other percentiles of the distribution. Black male joblessness rose to over 40% in 2010, the median black-white earnings gap being the largest in at least sixty years. The experience of black men contrasts with that of Hispanic men during the last decade, who exhibited earnings growth similar to white men. Black men are being left behind economically, a process exacerbated by weak labor market conditions.
    Keywords: inequality, race, earnings, wages, median regression, imputed earnings
    JEL: J15 J31
    Date: 2012–07
  4. By: Wunder, Christoph (University of Erlangen-Nuremberg); Heineck, Guido (University of Bamberg)
    Abstract: We analyze how well-being is related to working time preferences and hours mismatch. Self-reported measures of life satisfaction are used as an empirical approximation of true wellbeing. Our results indicate that well-being is generally lower among workers with working time mismatch. Particularly underemployment is detrimental for well-being. We further provide first evidence on spillovers from the partner's working time mismatch. However, the spillover becomes insignificant once we control for the partner's well-being. This suggests that well-being is contagious, and the spillover is due to interdependent utilities. Females experience the highest well-being when their partner is working full-time hours. Male wellbeing is unaffected over a wide interval of the partner's working hours.
    Keywords: subjective well-being, life satisfaction, working time preferences, working time mismatch, spillovers, utility interdependence
    JEL: I31 J21 J22
    Date: 2012–08
  5. By: Mizala, Alejandra (University of Chile); Nopo, Hugo (Inter-American Development Bank)
    Abstract: How much are teachers paid in comparison to those in other professions in Latin America? How have these differences evolved at the turn of the 20th century? This paper reports the evolution, between circa 1997 and circa 2007, of teachers´ salaries vis-à-vis workers in other professional and technical occupations for thirteen Latin-American countries. After controlling the earnings differentials by observable characteristics linked to productivity it is found that the hourly earnings gap, although substantial, decreased throughout the decade. This has been the case for earnings gaps at the main and secondary jobs, and also for those measured in terms of monthly and yearly earnings. Nonetheless, behind the region averages there is an important cross-country heterogeneity.
    Keywords: wage differentials, professional labor markets, national and international labor standards, Latin America, Caribbean
    JEL: J31 J44 J8 O54
    Date: 2012–08
  6. By: Lundborg, Petter (Department of Economics, Lund University); Nordin, Martin (Department of Economics, Lund University); Rooth, Dan Olof (Linnaeus University)
    Abstract: We provide new evidence on the causal mechanisms reflected in the intergenerational transmission of human capital. Applying both an adoption and a twin design to rich data from the Swedish military enlistment, we show that greater parental education increases son's cognitive and non-cognitive skills, as well as their health. The estimates are in many cases similar across research designs and suggest that a substantial part of the effect of parental education on the children's education works through improving children's skills and health.
    Keywords: Intergenerational Transmission; Human Capital; Education; Health
    JEL: C41 I11 I12 J12 J14
    Date: 2012–09–12
  7. By: Baltagi, Badi H. (Syracuse University); Baskaya, Yusuf Soner (Central Bank of Turkey); Hulagu, Timur (Central Bank of Turkey)
    Abstract: This paper presents wage curves for formal and informal workers using a rich individual level data for Turkey over the period 2005-2009. The wage curve is an empirical regularity describing a negative relationship between regional unemployment rates and individuals' real wages. While this relationship has been well documented for a number of countries including Turkey, less attention has focused on how this relationship differs for informal versus formal employment. This is of utmost importance for less developed countries where informal employment plays a significant role in the economy. Using the Turkish Household Labor Force Survey observed over 26 NUTS-2 regions, we find that real hourly wages of informal workers in Turkey are more sensitive to variations in regional unemployment rates than wages of formal workers. This is true for all workers as well as for different gender and age groups.
    Keywords: formal/informal employment, wage curve, regional labor markets
    JEL: C26 J30 J60 O17
    Date: 2012–09
  8. By: Antonio Villar (Department of Economics, Universidad Pablo de Olavide; IVIE)
    Abstract: This paper provides an approach to poverty measurement that relies on the interpretation of poverty as a welfare loss. Our contribution is twofold. On the one hand, we analyse the relationship between individual and aggregate indicators, by introducing the notion of “distributive impact of poverty” (a measure of the poverty loss due to the inequality among the poor). We show that a welfare inequality measure can be expressed as the sum of the average individual welfare poverty plus the distributive impact of poverty. On the other hand, we extend the analysis to the case of a society made of several population subgroups, by using a decomposability principle consistent with this approach. An empirical application, regarding educational poverty in the OECD, out of the data in PISA 2009, illustrates the extent of our method.
    Keywords: poverty, welfare loss, individual poverty measure, distributive impact of poverty
    JEL: I32 D63
    Date: 2012–09
  9. By: Guner, Nezih (MOVE, Barcelona); Kaya, Ezgi (Universitat Autònoma de Barcelona); Sánchez-Marcos, Virginia (Universidad de Cantabria)
    Abstract: We document recent trends in gender equality in employment and wages in Spain. Despite an impressive decline in gender gap in employment, females are still less likely to work, and if they work they are more likely to be employed part time and with temporary contracts. The gender gap (after controlling for worker and job characteristics) is about 20% and did not change between 1995 and 2006. Furthermore, the gender gap in wages is driven mainly by differences in returns to individual characteristic. While women are more qualified than men in observable labor market characteristics, they end up earning less. Public policy seems to affect female employment. In particular, there was a significant acceleration of female employment in 2000s. This was a period in which many policies that were implemented after early 1990s started to have their longer term effects. It was also a period during which Spain received a large number of immigrants, which had a positive impact on female labor force participation.
    Keywords: gender employment gap, gender wage gap, occupational segregation, quantile regressions, public policy
    JEL: J16 J21 J22 J24
    Date: 2012–08
  10. By: Inchauste, Gabriela; Olivieri, Sergio; Saavedra, Jaime; Winkler, Hernan
    Abstract: This paper quantifies the contributions of different factors to poverty reduction observed in Bangladesh, Peru and Thailand over the last decade. In contrast to methods that focus on aggregate summary statistics, the method adopted here generates entire counterfactual distributions to account for the contributions of demographics and income from labor and non-labor sources in explaining poverty reduction. The authors find that the most important contributor was the growth in labor income, mostly in the form of farm income in Bangladesh and Thailand and non-farm income in the case of Peru. This growth in labor incomes was driven by higher returns to individual and household endowments, pointing to increases in productivity and real wages as the driving force behind poverty declines. Lower dependency ratios also helped to reduce poverty, particularly in Bangladesh. Non-labor income contributed as well, albeit to a smaller extent, in the form of international remittances in the case of Bangladesh and through public and private transfers in Peru and Thailand. Transfers are more important in explaining the reduction in extreme compared with moderate poverty.
    Date: 2012–09–01
  11. By: Claudia Goldin; Lawrence F. Katz
    Abstract: Pharmacy has become a female-majority profession that is highly remunerated with a small gender earnings gap and low earnings dispersion relative to other occupations. We sketch a labor market framework based on the theory of equalizing differences to integrate and interpret our empirical findings on earnings, hours of work, and the part-time work wage penalty for pharmacists. Using extensive surveys of pharmacists for 2000, 2004, and 2009 as well as samples from the American Community Surveys and the Current Population Surveys, we explore the gender earnings gap, the penalty to part-time work, labor force persistence, and the demographics of pharmacists relative to other college graduates. We address why the substantial entrance of women into the profession was associated with an increase in their earnings relative to male pharmacists. We conclude that the changing nature of pharmacy employment with the growth of large national pharmacy chains and hospitals and the related decline of independent pharmacies played key roles in the creation of a more family-friendly, female-friendly pharmacy profession. The position of pharmacist is probably the most egalitarian of all U.S. professions today.
    JEL: J24 J31 J44
    Date: 2012–09
  12. By: Daniela Del Boca; Chiara Monfardini; Cheti Nicoletti
    Abstract: While a large literature has focused on the impact of parental investments on child cognitive development, very little is known about the role of child?s own in- vestments. Information on how children invest their time separately from parents is probably little informative for babies and toddlers, but it becomes more and more important in later stages of life, such as adolescence, when children start to take decisions independently. By using the Child Development Supplement of the PSID (Panel Study of Income Dynamics), we model the production of cognitive ability of adolescents and extend the set of inputs to include the child?s own time investments. Looking at investments during adolescence, we ?nd that child?s investments matter more than mother?s investments. On the contrary, looking at investments during childhood, it is the mother?s investments that are more important. Our results are obtained accounting for potential unobserved child?s and family?s endowments and are robust across several speci?cations and samples, e.g. considering and not considering father?s investments and non-intact families.
    Keywords: time-use, cognitive ability, child development, adolescence.
    JEL: J13 D1
    Date: 2012
  13. By: Firpo, Sergio; Fortin, Nicole M; Lemieux, Thomas
    Abstract: This paper argues that changes in the returns to occupational tasks have contributed to changes in the wage distribution over the last three decades. Using Current Population Survey (CPS) data, we first show that the 1990s polarization of wages is explained by changes in wage setting between and within occupations, which are well captured by tasks measures linked to technological change and offshorability. Using a decomposition based on Firpo, Fortin, and Lemieux (2009), we find that technological change and deunionization played a central role in the 1980s and 1990s, while offshorability became an important factor from the 1990s onwards.
    Date: 2012–09–12
  14. By: MacLeod, W. Bentley (Columbia University); Urquiola, Miguel (Columbia University)
    Abstract: Friedman (1962) observed that the ability of firms to acquire and maintain reputations for quality is a key ingredient for the efficient provision of goods and services in a market economy. This paper explores the implications of school reputation for skill acquisition and labor market outcomes in an otherwise competitive market. We find that reputation effects can explain several puzzling findings in the economics of education, including the fact that competition can, but does not always, improve skill acquisition. This result follows from an anti-lemons effect (in contrast to Akerlof's lemons effect) that arises when schools can enhance their reputation by positively selecting their students. This leads to excess demand for "high quality" selective schools that drive out non-selective schools. This in turn reduces "relative diversity", a measure of ability dispersion in a school, leading to lower skill acquisition.
    Keywords: education, reputation, competition, labor markets
    JEL: H2 H4 I21 J31
    Date: 2012–08

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