nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒10‒13
eight papers chosen by
Maximo Rossi
University of the Republic

  1. Relative status and well-being: evidence from U.S. suicide deaths By Mary C. Daly; Daniel J. Wilson; Norman J. Johnson
  2. The United States Labor Market: Status Quo or A New Normal? By Edward P. Lazear; James R. Spletzer
  3. Youth Unemployment and Vocational Training By Biavaschi, Costanza; Eichhorst, Werner; Giulietti, Corrado; Kendzia, Michael J.; Muravyev, Alexander; Pieters, Janneke; Rodríguez-Planas, Núria; Schmidl, Ricarda; Zimmermann, Klaus F.
  4. Do Labor Market Networks Have An Important Spatial Dimension? By Judith K. Hellerstein; Mark J. Kutzbach; David Neumark
  5. Do Literacy and Numeracy Pay Off? On the Relationship between Basic Skills and Earnings By Antoni, Manfred; Heineck, Guido
  6. Consumption Inequality and Family Labor Supply By Richard Blundell; Luigi Pistaferri; Itay Saporta-Eksten
  7. Why Do Women Leave Science and Engineering? By Hunt, Jennifer
  8. Active Labor Market Programs: Employment Gain or Fiscal Drain? By Brown, Alessio J. G.; Koettl, Johannes

  1. By: Mary C. Daly; Daniel J. Wilson; Norman J. Johnson
    Abstract: We assess the importance of interpersonal income comparisons using data on suicide deaths. We examine whether suicide risk is related to others’ income, holding own income and other individual and environmental factors fixed. We estimate models of the suicide hazard using two independent data sets: (1) the National Longitudinal Mortality Study and (2) the National Center for Health Statistics’ Multiple Cause of Death Files combined with the 5 percent Public Use Micro Sample of the 1990 decennial census. Results from both data sources show that, controlling for own income and individual characteristics, individual suicide risk rises with others’ income.
    Keywords: Income distribution ; Suicide ; Happiness
    Date: 2012
  2. By: Edward P. Lazear; James R. Spletzer
    Abstract: The recession of 2007-09 witnessed high rates of unemployment that have been slow to recede. This has led many to conclude that structural changes have occurred in the labor market and that the economy will not return to the low rates of unemployment that prevailed in the recent past. Is this true? The question is important because central banks may be able to reduce unemployment that is cyclic in nature, but not that which is structural. An analysis of labor market data suggests that there are no structural changes that can explain movements in unemployment rates over recent years. Neither industrial nor demographic shifts nor a mismatch of skills with job vacancies is behind the increased rates of unemployment. Although mismatch increased during the recession, it retreated at the same rate. The patterns observed are consistent with unemployment being caused by cyclic phenomena that are more pronounced during the current recession than in prior recessions.
    Date: 2012–09
  3. By: Biavaschi, Costanza (IZA); Eichhorst, Werner (IZA); Giulietti, Corrado (IZA); Kendzia, Michael J. (IZA); Muravyev, Alexander (St. Petersburg University GSOM and IZA); Pieters, Janneke (IZA); Rodríguez-Planas, Núria (IZA, IAE-CSIC and UPF); Schmidl, Ricarda (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: This paper focuses on the determinants of the labor market situation of young people in developed countries and the developing world, with a special emphasis on the role of vocational training and education policies. We highlight the role of demographic factors, economic growth and labor market institutions in explaining young people's transition into work. We then assess differences in the setup and functioning of the vocational education and training policies in major world regions, as an important driver of differential labor market situation of youth. Based on our analysis we argue in favor of vocational education and training systems combining work experience and general education and give some policy recommendations regarding the implementation of education and training systems adapted to a country's economic and institutional context.
    Keywords: vocational education and training, dual vocational training, youth employment, youth unemployment
    JEL: J24 I25 O17
    Date: 2012–10
  4. By: Judith K. Hellerstein; Mark J. Kutzbach; David Neumark
    Abstract: We test for evidence of spatial, residence-based labor market networks. Turnover is lower for workers more connected to their neighbors generally and more connected to neighbors of the same race or ethnic group. Both results are consistent with networks producing better job matches, while the latter could also reflect preferences for working with neighbors of the same race or ethnicity. For earnings, we find a robust positive effect of the overall residence-based network measure, whereas we usually find a negative effect of the same-group measure, suggesting that the overall network measure reflects productivity enhancing positive network effects, while the same-group measure captures a non-wage amenity.
    Date: 2012–09
  5. By: Antoni, Manfred (Institute for Employment Research (IAB), Nuremberg); Heineck, Guido (University of Bamberg)
    Abstract: Is there a reward for basic skills in the German labor market? To answer this question, we examine the relationship between literacy, numeracy and monthly gross earnings of full-time employed workers. We use data from the ALWA survey, augmented by test scores on basic cognitive skills as well as administrative earnings data. Our results indicate that earnings are positively related to both types of skills. There furthermore is no evidence for non-linearity in this relationship and only little heterogeneity when differentiating by sub-groups.
    Keywords: literacy, numeracy, earnings, administrative data, Germany, ALWA
    JEL: I21 J31
    Date: 2012–09
  6. By: Richard Blundell; Luigi Pistaferri; Itay Saporta-Eksten
    Abstract: In this paper we examine the link between wage inequality and consumption inequality using a life cycle model that incorporates household consumption and family labor supply decisions. We derive analytical expressions based on approximations for the dynamics of consumption, hours, and earnings of two earners in the presence of correlated wage shocks, non-separability and asset accumulation decisions. We show how the model can be estimated and identified using panel data for hours, earnings, assets and consumption. We focus on the importance of family labour supply as an insurance mechanism to wage shocks and find strong evidence of smoothing of males and females permanent shocks to wages. Once family labor supply, assets and taxes are properly accounted for their is little evidence of additional insurance.
    JEL: E21 J22
    Date: 2012–10
  7. By: Hunt, Jennifer (Rutgers University)
    Abstract: I use the 1993 and 2003 National Surveys of College Graduates to examine the higher exit rate of women compared to men from science and engineering relative to other fields. I find that the higher relative exit rate is driven by engineering rather than science, and show that 60% of the gap can be explained by the relatively greater exit rate from engineering of women dissatisfied with pay and promotion opportunities. I find that family-related constraints and dissatisfaction with working conditions are only secondary factors. The relative exit rate by gender from engineering does not differ from that of other fields once women's relatively high exit rates from male fields generally are taken into account.
    Keywords: science and engineering workforce, gender
    JEL: J16 J44
    Date: 2012–09
  8. By: Brown, Alessio J. G. (Kiel Institute for the World Economy); Koettl, Johannes (World Bank)
    Abstract: This paper provides a new perspective by classifying active labor market programs (ALMPs) depending on their main objectives and their relevance and cost-effectiveness during normal times, during a crisis, and during recovery. We distinguish ALMPs that provide: (i) incentives for retaining employment, (ii) incentives for creating employment, (iii) incentives for seeking and keeping a job, (iv) incentives for human capital enhancement, and (v) improved labor market matching. Reviewing evidence from the literature, we discuss direct and indirect effects of various interventions, their cost-effectiveness, and draw lessons for transition and developing countries. The paper concludes by providing a systematic overview of how, why, when and to what extent specific ALMPs are effective. In particular, the paper shows that ALMPs retaining employment, like work sharing schemes, should be applied in severe recessions for a limited time period of time only. ALMPs creating employment, like hiring subsidies, perform much better on cost-effectiveness and strengthen the outsiders' position in the labor market, especially during recoveries. In-work benefits and public works are not very cost-efficient in terms of raising employment, but might be cost-efficient in reducing poverty and inequity. Policies readjusting distorted employment incentives, such as activation and sanction measures, have proven to provide cost-effective results during normal times.
    Keywords: active labor market programs, short work, subsidies, training, workfare, activation, sanctions, job search assistance, intermediation, counseling, cost-effectiveness
    JEL: J08 J22 J23 J38 E24
    Date: 2012–09

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