nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒01‒26
nine papers chosen by
Maximo Rossi
University of the Republic

  1. Gender differences in German wage mobility By Aretz, Bodo
  2. Winning the War: Poverty from the Great Society to the Great Recession By Bruce D. Meyer; James X. Sullivan
  3. Who Earns Minimum Wages in Europe? New Evidence Based on Household Surveys By François Rycx; Stephan K. S. Kampelmann
  4. Volatile Top Income Shares in Switzerland? Reassessing the Evolution Between 1981 and 2008 By Foellmi, Reto; Martinez, Isabel
  5. The "Task Approach" to Labor Markets: An Overview By David H. Autor
  6. How long will it take to lift one billion people out of poverty ? By Ravallion, Martin
  7. Job spells, employer spells, and wage returns to tenure By Devereux, Paul J; Hart, Robert A; Roberts, J Elizabeth
  8. Mismatch, Sorting and Wage Dynamics By Jeremy Lise; Costas Meghir; Jean-Marc Robin
  9. The Unemployment Subsidy Program in Colombia: An Assessment By Carlos Medina; Jairo Núñez; Jorge Andrés Tamayo

  1. By: Aretz, Bodo
    Abstract: This paper analyzes the evolution of wage inequality and wage mobility separately for men and women in West and East Germany over the last four decades. Using a large administrative data set which covers the years 1975 to 2008, I find that wage inequality increased and wage mobility decreased for male and female workers in East and West Germany. Women faced a higher level of wage inequality and a lower level of wage mobility than men in both parts of the country throughout the entire observation period. The mobility decline was sharper in East Germany so that the level of wage mobility has fallen below that of West Germany over time. Looking at long-term mobility, a slowly closing gap between men and women is observed. --
    Keywords: Wage Mobility,Wage Inequality,Administrative Data
    JEL: J31 D63
    Date: 2013
  2. By: Bruce D. Meyer; James X. Sullivan
    Abstract: This paper considers the long-run patterns of poverty in the United States from the early 1960s to 2010. Our results contradict previous studies that have argued that poverty has shown little improvement over time or that anti-poverty efforts have been ineffective. We find that moving from traditional income-based measures of poverty to a consumption-based measure (which we argue is superior on both theoretical and practical grounds) and, crucially, adjusting for bias in price indices leads to the conclusion that the poverty rate declined by 26.4 percentage points between 1960 and 2010, with 8.5 percentage points of that decline occurring since 1980. Consumption poverty suggests considerably greater improvement than income poverty for single parent families and the aged, but relatively less improvement for married parent families. Our analyses of the proximate causes of these patterns indicate that changes in tax policy explain a substantial part of the decline in poverty and that social security has been important, but that the roles of other transfer programs have been small. Changes in education have contributed to the decline, while other demographic trends have played a small role. Measurement error in income is likely to explain some of the most noticeable differences between changes in income and consumption poverty, but saving and dissaving do not appear to play a large role for most demographic groups.
    JEL: D12 I32
    Date: 2013–01
  3. By: François Rycx; Stephan K. S. Kampelmann
    Abstract: This paper aims to provide a comprehensive, evidence-based, and up-to-date assessment of minimum wages in a range of European countries. A first step towards a better understanding of where Europe stands today on this issue requires to grasp the diversity of European minimum wage systems, a key objective of the paper at hand. The second objective is to document international differences in the so-called "bite" of the minimum wage. This leads to questions such as "how do national minimum wages compare to the overall wage distribution?" and "how many people earn minimum wages in each country?" that are assessed for a set of nine countries from Western, Central and Eastern Europe: Belgium, Bulgaria, Germany, Hungary, Ireland, Poland, Romania, Spain, and the United Kingdom. This sample was designed to include countries for which recent evidence has been missing prior to this paper. What is more, the study also overcomes the narrow focus of extant overviews that have typically focussed only on full-time employment. Crucially, the study improves on existing work by looking beyond aggregate numbers; it provides a detailed panorama of the population of minimum wage earners in each country under investigation, notably by describing their composition in terms of a range of socio-demographic characteristics.
    Keywords: Minimum wage systems; Socio-economic consequences; Europe
    Date: 2013–01–10
  4. By: Foellmi, Reto; Martinez, Isabel
    Abstract: We study the recent evolution of top incomes in Switzerland. We close the data gap between 1993 and 2003 exploiting the fact that cantons changed their tax system at different points in time which allows us to use the non-changing cantons as control group. The results show that the share of top incomes has risen, the top 0.01% share even doubled in the last 20 years. However, top incomes exhibited large variation in the business cycle. We compare the results with social security data on top labor incomes for which the top shares can be measured precisely over the whole time span. The comparison confirms our initial findings and suggests that labor incomes have become more important among top income earners.
    Keywords: Income inequality, wealth inequality, labor incomes, distribution and volatility
    JEL: O15 D31 O52
    Date: 2012–12
  5. By: David H. Autor
    Abstract: An emerging literature argues that changes in the allocation of workplace “tasks” between capital and labor, and between domestic and foreign workers, has altered the structure of labor demand in industrialized countries and fostered employment polarization—that is, rising employment in the highest and lowest paid occupations. Analyzing this phenomenon within the canonical production function framework is challenging, however, because the assignment of tasks to labor and capital in the canonical model is essentially static. This essay sketches an alternative model of the assignment of skills to tasks based upon comparative advantage, reviews key conceptual and practical challenges that researchers face in bringing the “task approach” to the data, and cautions against two common pitfalls that pervade the growing task literature. I conclude with a cautiously optimistic forecast for the potential of the task approach to illuminate the interactions among skill supplies, technological capabilities, and trade and offshoring opportunities, in shaping the aggregate demand for skills, the assignment of skills to tasks, and the evolution of wages.
    JEL: J23 J24 J31
    Date: 2013–01
  6. By: Ravallion, Martin
    Abstract: Alternative scenarios are considered for reducing by one billion the number of people living below $1.25 a day. The low-case,"pessimistic,"path to that goal would see the developing world outside China returning to its slower pace of growth and poverty reduction of the 1980s and 1990s, though with China maintaining its progress. This path would take another 50 years or more to lift one billion people out of poverty. The more optimistic path would maintain the (impressive) progress against poverty since 2000, which would instead reach the target by around 2025-30. This scenario is consistent with both linear projections of the time series data and non-linear simulations of inequality-neutral growth for the developing world as a whole.
    Keywords: Achieving Shared Growth,Inequality,Regional Economic Development,Rural Poverty Reduction,Services&Transfers to Poor
    Date: 2013–01–01
  7. By: Devereux, Paul J; Hart, Robert A; Roberts, J Elizabeth
    Abstract: We show that the distinction between job spells and employer spells matters for returns to tenure. Employer spells encompass between-job wage movements linked to promotions or demotions while job spells don't. Using a 1% sample of the British workforce over the period 1975-2010, we find that a significant proportion of the return to employer tenure arises due to job changes within employer spells. Conditional on tenure with employer, the return to job tenure is negative. This suggests that any positive effects of job-specific human capital on wage growth within jobs are outweighed by the effects of job changes within firms.
    Keywords: wage-tenure profiles; employer spells; Job spells
    Date: 2013–01
  8. By: Jeremy Lise; Costas Meghir; Jean-Marc Robin
    Abstract: We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker and job characteristics. We use the model to estimate the potential gain from optimal regulation and we consider the potential gains and redistributive impacts from optimal unemployment insurance policy. Here optimal policy is defined as that which maximizes total output and home production, accounting for the various constraints that arise from search frictions. The model is estimated on the NLSY using the method of moments.
    JEL: C15 C63 D04 J08 J3 J63 J64 J65
    Date: 2013–01
  9. By: Carlos Medina; Jairo Núñez; Jorge Andrés Tamayo
    Abstract: We assess the effects of the Colombian Unemployment Subsidy (US) program on future labor participation, unemployment, formality, school attendance and earnings of its beneficiaries, on household earnings and school attendance of the household members, and on weight and height of their children at birth. In addition to providing benefits, the program also provides training to some recipients. We use regression discontinuity and matching differences-in-differences estimators and find that both approaches indicate that participation in the labor market, the earnings of beneficiaries, and household income, do not increase, and for some populations decrease during the 18 months after leaving from the Unemployment Subsidy program. Enrollment in formal health insurance falls. The effects on male household heads include larger reductions in their earnings, larger decreases in their labor participation, and greater increases in their unemployment rates. We also find a small though statistically significant positive effect of the program on school attendance of the beneficiaries, but none on their children’s weight or height at birth. The results also are sensitive to the type of training that beneficiaries receive in the Unemployment Subsidy program. Overall, the program serves as a mechanism for smoothing consumption and providing social assistance rather than as a mechanism for promoting a more efficient labor market.
    Date: 2013–01–17

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