nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2012‒11‒11
fourteen papers chosen by
Maximo Rossi
University of the Republic

  1. Immigration and the Distribution of Incomes By Francine D. Blau; Lawrence M. Kahn
  2. Poverty and Agriculture in the Philippines: Trends in Income Poverty and Distribution By Tabuga, Aubrey D.; Reyes, Celia M.; Asis, Ronina D.; Datu, Maria Blesila G.
  3. Parents Transmit Happiness along with Associated Values and Behaviors to Their Children: A Lifelong Happiness Dividend? By Headey, Bruce; Muffels, Ruud; Wagner, Gert G.
  4. Polarization, growth and social policy in the case of Israel, 1997 - 2008 By García-Fernándeza, Rosa María; Gottlieb, Daniel; Palacios-González, Federico
  5. Does Mother Know Best? Parental Discrepancies in Assessing Child Functioning By Datta Gupta, Nabanita; Lausten, Mette; Pozzoli, Dario
  6. Trade Policy and Wage Inequality: A Structural Analysis with Occupational and Sectoral Mobility By Erhan Artuç; John McLaren
  7. Ethnic Inequality By Alberto F. Alesina; Stelios Michalopoulos; Elias Papaioannou
  8. Inequality and opportunity: the return of a neglected debate By Stephen Machin; John Van Reenen
  9. Do Women Avoid Salary Negotiations? Evidence from a Large Scale Natural Field Experiment By Andreas Leibbrandt; John A. List
  10. Distributional Justice and Efficiency: Integrating Inequality Within and Between Dimensions in Additive Poverty Indices By Nicole Rippin
  11. Labor Market Effects of Unemployment Insurance Design By Tatsiramos, Konstantinos; van Ours, Jan C.
  12. Subjective Well-Being: Weather Matters; Climate Doesn't By John Feddersen; Robert Metcalfe; Mark Wooden
  13. Welfare Programs and Labor Supply in Developing Countries: Experimental Evidence from Latin America By Alzúa, María Laura; Cruces, Guillermo; Ripani, Laura
  14. The U.S. Employment-Population Reversal in the 2000s: Facts and Explanations By Robert A. Moffitt

  1. By: Francine D. Blau; Lawrence M. Kahn
    Abstract: We review research on the impact of immigration on income distribution. We discuss routes through which immigration can affect income distribution in the host and source countries, including compositional effects and effects on native incomes. Immigration may affect the composition of skills among the residents of a country. Moreover, immigrants can, by changing relative factor supplies, affect native wage and employment rates and the return to capital. We then provide evidence on the level and recent increases in immigration to OECD countries and on the distribution of native and immigrant educational attainment. We next provide a decomposition of 1979-2009 changes in US wage inequality, highlighting the effects of immigration on workforce composition. We then consider the economic theory of the impact of immigration on income distribution, emphasizing labor market substitution and complementarity between natives and immigrants. Further, by changing job opportunities or child care availability, immigrants can affect family, as well as individual, income distribution. We review research methodologies used to estimate the impact of immigration on the native income distribution. These include the structural approach (estimating substitution and complementarity among factors of production, including capital and labor force groups) as well as the natural experiment approach (seeking exogenous sources of variation in immigration) to studying the labor market. We then discuss evidence on these questions for Austria, Britain, France, Germany, Hong Kong, Israel, Portugal, Spain and the United States, as well as the impact of emigration on source country income distribution.
    JEL: D33 J3 J61
    Date: 2012–11
  2. By: Tabuga, Aubrey D.; Reyes, Celia M.; Asis, Ronina D.; Datu, Maria Blesila G.
    Abstract: Poverty incidence in the Philippines is rising based on the national official data released by the National Statistical Coordination Board. Poverty incidence among population rose from 24.9 percent in 2003 to 26.4 percent in 2006 and then inched up further to 26.5 percent in 2009. This is in reverse of the downward trend and is a major deviation from the path toward achieving the Millennium Development Goals. The disparities across the regions remain wide both in terms of poverty and inequality measures. In this paper, we show the salient features of the country`s poverty situation in a hope to contribute to the existing knowledge about the poverty condition and to the formulation of better strategies for reducing poverty. It focuses on agriculture because it plays a central role in the poverty condition that continues to persist despite recent episodes of high economic progress the country has achieved.
    Keywords: inequality, Philippines, Philippine poverty profile, agricultural poverty, multidimensional poverty
    Date: 2012
  3. By: Headey, Bruce (Melbourne Institute of Applied Economic and Social Research); Muffels, Ruud (Tilburg University); Wagner, Gert G. (DIW Berlin)
    Abstract: There are strong two-way links between parent and child happiness (life satisfaction), even for 'children' who have grown up, moved to their own home and partnered themselves. German panel evidence shows that transmission of (un)happiness from parents to children is partly due to transmission of values and behaviors known to be associated with happiness (Headey, Wagner and Muffels, 2010, 2012). These values and behaviors include giving priority to pro-social and family values, rather than material values, maintaining a preferred balance between work and leisure, active social and community participation, and regular exercise. Both parents have about equal influence on the values and behaviors which children adopt. However, the life satisfaction of adult 'children' continues to be directly influenced by the life satisfaction of their mothers, with the influence of fathers being only indirect, via transmission of values and behaviors. There appears to be a lifelong happiness dividend (or unhappiness dividend) due to parenting. Structural equation models with two-way causation indicate that the life satisfaction of offspring can significantly affect the satisfaction of their parents, as well as vice-versa, long after the 'children' have left home. Data come from 25 waves of the German Socio-Economic Panel Survey (SOEP, 1984-2008). SOEP is the only panel survey worldwide in which data on life satisfaction have been obtained from parents and an adequate sub-sample of children no longer living in the parental home.
    Keywords: life satisfaction, subjective well-being, child happiness, inter-generational transmission, German Socio-Economic Panel (SOEP), structural equation models
    JEL: D60 I31 J13 J22 C33
    Date: 2012–10
  4. By: García-Fernándeza, Rosa María; Gottlieb, Daniel; Palacios-González, Federico
    Abstract: In this paper we apply two statistical models to the measurement of polarization to Israeli income data over the past decade in order to empirically detect income classes as sub-populations of incomes concentrated around an optimal number of poles. The statistical models compared are a multi-resolution analysis (MRA) and a log-normal approach (LNA). We find the MRA to be superior to the LNA, by providing a more efficient allocation of households into each of the classes, reducing the overlap between the classes around the cut-values for each class. We then study polarization by use of the MRA in a multinomial logit-analysis by including ethnic-cultural, individual, family and other characteristics. We use a multiplicative normalized polarization measure developed by Palacios and Garcia (2010) which consists of presenting the interaction of three components, consistent with the axioms spelled out by Esteban and Ray (1994): alienation and identification, the number of income classes and the size distribution of the groups. The strong cultural heterogeneity of Israeli society, the sharp shifts in social policy during the observation period and the generally high quality of yearly Israeli income data render this dataset particularly useful for analyzing polarization. We find polarization to be significantly affected by cultural classes, by social policy and by standard demographic and individual characteristics. A comparison of our results with those of Esteban and Ray and Zhang and Kanbur reveals some similarity with our normalized version of Zangh and Kanbur (2001). --
    Keywords: polarization,poverty,multi-resolution analysis,income distribution
    JEL: H54 I21 I3 J1 O15 O53
    Date: 2012
  5. By: Datta Gupta, Nabanita (Aarhus University); Lausten, Mette (SFI - Danish National Centre for Social Research); Pozzoli, Dario (Aarhus University)
    Abstract: We investigate the degree of correspondence between parents' reports on child behavioral and educational outcomes using the most recent available wave of a rich Danish longitudinal survey of children (the DALSC). All outcomes are measured at age 11 when the children are expected to be in fifth grade. Once discrepancies are detected, we analyze whether they are driven by noisy evaluations or by systematic bias, focusing on the role of parental characteristics and response heterogeneity. We then explicitly assess the relative importance of the mother's versus the father's assessments in explaining child academic performance and diagnosed mental health to investigate whether one parent is systematically a better informant of their child's outcomes than the other.
    Keywords: child development, informant discrepancies, reporting bias
    JEL: I12 J13
    Date: 2012–10
  6. By: Erhan Artuç; John McLaren
    Abstract: A number of authors have argued that a worker's occupation of employment is at least as important as the worker's industry of employment in determining whether the worker will be hurt or helped by international trade. We investigate the role of occupational mobility on the effects of trade shocks on wage inequality in a dynamic, structural econometric model of worker adjustment. Each worker in our specification can switch either industry, occupation, or both, paying a time-varying cost to do so in a rational-expectations optimizing environment. We find that the costs of switching industry and occupation are both high, and of similar magnitude, but in simulations we find that a worker's industry of employment is much more important than either the worker's occupation or skill class in determining whether or not she is harmed by a trade shock.
    JEL: E24 F13 F16
    Date: 2012–11
  7. By: Alberto F. Alesina; Stelios Michalopoulos; Elias Papaioannou
    Abstract: This study explores the consequences and origins of contemporary differences in well-being across ethnic groups within countries. We construct measures of ethnic inequality combining ethno-linguistic maps on the spatial distribution of groups with satellite images of light density at night. Ethnic inequality is strongly inversely related to per capita income; this pattern holds when we condition on the overall degree of spatial inequality – that is also associated with underdevelopment. We further show that differences in geographic endowments across ethnic homelands explain a sizable portion of contemporary ethnic inequality. This deeply-rooted inequality in geographic attributes across ethnic regions is also negatively related to comparative development. We also show that ethnic inequality goes in tandem with lower levels development within countries. Using micro-level data from the Afrobarometer surveys we show that individuals from the same ethnic group are worse off when they reside in districts with a high degree of ethnic inequality.
    JEL: D63 O10 O40 O43 R12
    Date: 2012–11
  8. By: Stephen Machin; John Van Reenen
    Abstract: During this election period many Americans are feeling angry towards the very rich, especially those working in the financial sector, who helped cause the Great Recession and yet were bailed out by the government. Increases in inequality might be tolerable at a time of growing consumption for all, but they become less acceptable when the unemployment rate has hit 10% and real wages continue to stagnate. The chances that those who are born poor will escape from poverty are lower now in the US than in almost any other OECD country. However, neither of the presidential candidates is clear about how they would tackle the fundamental causes of the enormous shift in the US income distribution.
    Keywords: inequality, social mobility, fiscal crisis, US Election, USA, unemployment
    Date: 2012–10
  9. By: Andreas Leibbrandt; John A. List
    Abstract: One explanation advanced for the persistent gender pay differences in labor markets is that women avoid salary negotiations. By using a natural field experiment that randomizes nearly 2,500 job-seekers into jobs that vary important details of the labor contract, we are able to observe both the nature of sorting and the extent of salary negotiations. We observe interesting data patterns. For example, we find that when there is no explicit statement that wages are negotiable, men are more likely to negotiate than women. However, when we explicitly mention the possibility that wages are negotiable, this difference disappears, and even tends to reverse. In terms of sorting, we find that men in contrast to women prefer job environments where the ‘rules of wage determination’ are ambiguous. This leads to the gender gap being much more pronounced in jobs that leave negotiation of wage ambiguous.
    JEL: C93 J0
    Date: 2012–11
  10. By: Nicole Rippin (German Development Institute (DIE))
    Abstract: According to Sen (1976), any reasonable poverty index ought to be sensitive to inequality. In a multidimensional framework, inequality between poverty dimensions is traditionally treated as association sensitivity. Such an approach, however, is based exclusively on efficiency considerations, thereby neglecting all aspects of distributive justice. This paper introduces a new property for dealing with inequality that accounts for both efficiency as well as distributive justice. Based on the new property, it then proceeds to derive a new class of inequality-sensitive poverty measures whose advantages are demonstrated by an empirical application to 28 developing countries.
    Keywords: Multidimensional poverty measurement; counting indices; inequality; correlation sensitivity; identification
    JEL: I32
    Date: 2012–10–30
  11. By: Tatsiramos, Konstantinos (University of Leicester); van Ours, Jan C. (Tilburg University)
    Abstract: With the emergence of the Great Recession unemployment insurance (UI) is once again at the heart of the policy debate. In this paper, we review the recent theoretical and empirical evidence on the labor market effects of UI design. We also discuss policy issues related to UI design, including the structure of benefits, the role of liquidity constraints and the pros and cons of a UI system in which the generosity of UI benefits is varying over the business cycle. Finally, we identify potential areas of future research.
    Keywords: labor market institutions, labor market policy, job search, unemployment dynamics, unemployment insurance
    JEL: J64 J65 J68
    Date: 2012–10
  12. By: John Feddersen; Robert Metcalfe; Mark Wooden
    Abstract: We investigate the impact of short-term weather and long-term climate on self-reported life satisfaction using panel data. We find robust evidence that day-to-day weather variation impacts life satisfaction by a similar magnitude to acquiring a mild disability. Utilizing two sources of variation in the cognitive complexity of satisfaction questions, we present evidence that weather bias arises because of the cognitive challenge of reporting life satisfaction. Consistent with past studies, we detect a relationship between long-term climate and life satisfaction without individual fixed effects. This relationship is not robust to individual fixed effects, suggesting climate does not directly influence life satisfaction.
    Keywords: Life satisfaction, Subjective well-being, Climate change, Weather
    JEL: Q51 C23 C81 C83
    Date: 2012
  13. By: Alzúa, María Laura (CEDLAS-UNLP); Cruces, Guillermo (CEDLAS-UNLP); Ripani, Laura (Inter-American Development Bank)
    Abstract: This study looks at the effect of welfare programs on work incentives and the adult labor supply in developing countries. The analysis builds on the experimental evaluations of three programs implemented in rural areas: Mexico's PROGRESA, Nicaragua's RPS and Honduras' PRAF. Comparable results for the three countries indicate that the effects that the programs have had on the labor supply of participating adults have been mostly negative but are nonetheless small and not statistically significant. However, the evidence does point to the presence of other effects on labor markets. In the case of PROGRESA, there is a small positive effect on the number of hours worked by female beneficiaries and a sizeable increase in wages among male beneficiaries and a resulting increase in household labor income. Moreover, PROGRESA seems to have reduced female labor-force participation in ineligible households. These results imply that large-scale interventions may have broader equilibrium effects.
    Keywords: welfare programs, income support, labor supply, work incentives, conditional cash transfers, randomized control trials, developing countries
    JEL: J08 J22 I38
    Date: 2012–10
  14. By: Robert A. Moffitt
    Abstract: The decline in the employment-population ratios for men and women over the period 2000-2007 prior to the Great Recession represents an historic turnaround in the evolution of U.S. employment. The decline is disproportionately concentrated among the less educated and younger groups within the male and female populations and, for women, disproportionately concentrated among the unmarried and those without children. About half of men’s decline can be explained by declines in wage rates and by changes in nonlabor income and family structure influences, but the decline among women is more difficult to explain and requires distinguishing between married and unmarried women and those with and without children, who have each experienced quite different wage and employment trends. Neither taxes nor transfers appear likely to explain the employment declines, with the possible exception of the Supplemental Nutrition Assistance Program. Other influences such as the minimum wage or health factors do not appear to play a role, but increases in incarceration could have contributed to the decline among men.
    Date: 2012–10

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