nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒02‒08
nine papers chosen by
Maximo Rossi
University of the Republic

  1. Do Labor Market Networks Have An Important Spatial Dimension? By Judith K. Hellerstein; Mark J. Kutzbach; David Neumark
  2. Lifetime inequality and redistribution By Mike Brewer; Monica Costa Dias; Jonathan Shaw
  3. Technical Change and the Relative Demand for Skilled Labor: The United States in Historical Perspective By Lawrence F. Katz; Robert A. Margo
  4. Mismatch, Sorting and Wage Dynamics By Jeremy Lise; Costas Meghir; Jean-Marc Robin
  5. The Importance of Being Marginal: Gender Differences in Generosity By Stefano DellaVigna; John A. List; Ulrike Malmendier; Gautam Rao
  6. Cyclical Unemployment, Structural Unemployment By Peter A. Diamond
  7. Do Labor Market Policies have Displacement Effects? Evidence from a Clustered Randomized Experiment By Bruno Crépon; Esther Duflo; Marc Gurgand; Roland Rathelot; Philippe Zamora
  8. Signalling to whom? Conspicuous spending and the local density of the social group income distribution By Andreas Chai; Wolfhard Kaus
  9. Education Policy and Intergenerational Transfers in Equilibrium By Brant Abbott; Giovanni Gallipoli; Costas Meghir; Giovanni L. Violante

  1. 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 may capture a non-wage amenity.
    JEL: J15 R23
    Date: 2013–02
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:18763&r=ltv
  2. By: Mike Brewer (Institute for Fiscal Studies and ISER, Essex University); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Jonathan Shaw (Institute for Fiscal Studies)
    Abstract: In this paper we look at lifetime inequality to address two main questions: How well does a modern tax system, based on annual information, target lifetime inequality? What aspects of the tranfser system are most progressive from a lifetime perspective? To answer to these questions it is crucial to relate lifetime and annual inequality and determine the main building blocks of lifetime disparities. We look at lifetime inequality and the redistribution properties of taxes and benefits using a dynamic life-cycle model of women's education, labour supply and savings with family dynamics and rich individual heterogeneity in preferences and productivity. The model is coupled with a detailed description of the UK personal tax and benefit system and is estimated on UK longitudinal data covering the 1990s and early 2000s. We show that the tax and benefits system is more redistributive from an annual than from a lifetime perspective, and it most progressive at the bottom of the income distribution in both cases. We then establish that heterogeneity in family experiences throughout adult life is the main vehicle through which the tax and benefits system moderates lifetime inequality. Although transitory, family conditions under which working is especially costly, such as lone-motherhood, are escpecially prevalent among the lifetime poor. By targeting this group, particularly using policies specifically designed to improve the work incentives of those with the lowest earnings capacity, the tax and benefits system does achieve life-cycle redistribution. Other policies like universal benefits towards family with children are less well targeted towards the lifetime poor but are more progressive and improve the work incentives in the middle 60% of the distribution of lifetime income.
    Keywords: female laboursupply, life-cycle, inequality, redistribution, taxes
    JEL: H23 H24 I24 I38 J22 J24
    Date: 2012–10
    URL: http://d.repec.org/n?u=RePEc:ifs:ifsewp:12/23&r=ltv
  3. By: Lawrence F. Katz; Robert A. Margo
    Abstract: This paper examines shifts over time in the relative demand for skilled labor in the United States. Although de-skilling in the conventional sense did occur overall in nineteenth century manufacturing, a more nuanced picture is that occupations “hollowed out”: the share of “middle-skill” jobs – artisans – declined while those of “high-skill” – white collar, non-production workers – and “low-skill” – operatives and laborers increased. De-skilling did not occur in the aggregate economy; rather, the aggregate shares of low skill jobs decreased, middle skill jobs remained steady, and high skill jobs expanded from 1850 to the early twentieth century. The pattern of monotonic skill upgrading continued through much of the twentieth century until the recent “polarization” of labor demand since the late 1980s. New archival evidence on wages suggests that the demand for high skill (white collar) workers grew more rapidly than the supply starting well before the Civil War.
    JEL: J23 N11 N12
    Date: 2013–02
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:18752&r=ltv
  4. By: Jeremy Lise (University College London and IFS); Costas Meghir (Cowles Foundation, Yale University); Jean-Marc Robin (Sciences Po, Paris and University College of London)
    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. The model is estimated on the NLSY using the method of moments.
    Keywords: Matching, Equilibrium wage distributions, Job mobility, Simulated method of moments, MCMC
    JEL: J3 J6 J64 J65 J68 C15
    Date: 2013–01
    URL: http://d.repec.org/n?u=RePEc:cwl:cwldpp:1886&r=ltv
  5. By: Stefano DellaVigna; John A. List; Ulrike Malmendier; Gautam Rao
    Abstract: Do men and women have different social preferences? Previous findings are contradictory. We provide a potential explanation using evidence from a field experiment. In a door-to-door solicitation, men and women are equally generous, but women become less generous when it becomes easy to avoid the solicitor. Our structural estimates of the social preference parameters suggest an explanation: women are more likely to be on the margin of giving, partly because of a less dispersed distribution of altruism. We find similar results for the willingness to complete an unpaid survey: women are more likely to be on the margin of participation.
    JEL: C93 D64 H4
    Date: 2013–02
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:18748&r=ltv
  6. By: Peter A. Diamond
    Abstract: Whenever unemployment stays high for an extended period, it is common to see analyses, statements, and rebuttals about the extent to which the high unemployment is structural, not cyclical. This essay views the Beveridge Curve pattern of unemployment and vacancy rates and the related matching function as proxies for the functioning of the labor market and explores issues in that proxy relationship that complicate such analyses. Also discussed is the concept of mismatch.
    JEL: E24 E32 E6 J23
    Date: 2013–02
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:18761&r=ltv
  7. By: Bruno Crépon (CREST); Esther Duflo (MIT); Marc Gurgand (PSE & CREST); Roland Rathelot (CREST); Philippe Zamora (CREST)
    Abstract: This paper reports the results from a randomized experiment designed to evaluate the direct and indirect (displacement) impacts of job placement assistance on the labor market outcomes of young, educated job seekers in France. We use a two-step design. In the first step, the proportions of job seekers to be assigned to treatment (0%, 25%, 50%, 75% or 100%) were randomly drawn for each of the 235 labor markets (e.g. cities) participating in the experiment. Then, in each labor market, eligible job seekers were randomly assigned to the treatment, following this proportion. After eight months, eligible, unemployed youths who were assigned to the program were significantly more likely to have found a stable job than those who were not. But these gains are transitory, and they appear to have come partly at the expense of eligible workers who did not benefit from the program, particularly in labor markets where they compete mainly with other educated workers, and in weak labor markets. Overall, the program seems to have had very little net benefits.
    Keywords: job placement, counseling, displacement effects, randomized experiment
    JEL: J68 J64 C93
    Date: 2012–11
    URL: http://d.repec.org/n?u=RePEc:crs:wpaper:2012-28&r=ltv
  8. By: Andreas Chai; Wolfhard Kaus
    Abstract: We empirically evaluate two competing explanations about how the dispersion of income within social groups affects household spending on visible goods. Using South African household expenditure data, we find evidence that precisely the reverse of the effect predicted by Charles et al. (2009) takes place in that rich households tend to reduce, rather than increase, spending on visible goods as the dispersion of social group income increases. Our results instead support rank-based models of status competition since the number of within-group peers who possess a similar income level is found to be positively correlated with household spending on visible goods. Moreover, we find that the effect of this 'local' density tends to be stronger in the tail regions of the distribution and performs better than other proxies for the overall income distribution used in recent studies. How the range of visible goods used to signal wealth expands as household income grows is also explored.
    Keywords: Conspicuous consumption, Signaling, Status, South Africa, Income distribution
    JEL: D12 D83 J15 O12
    Date: 2013–01–29
    URL: http://d.repec.org/n?u=RePEc:esi:evopap:2012-18&r=ltv
  9. By: Brant Abbott (University of British Columbia); Giovanni Gallipoli (University of British Columbia); Costas Meghir (Cowles Foundation, Yale University); Giovanni L. Violante (New York University)
    Abstract: This paper compares partial and general equilibrium effects of alternative financial aid policies intended to promote college participation. We build an overlapping generations life-cycle, heterogeneous-agent, incomplete-markets model with education, labor supply, and consumption/saving decisions. Altruistic parents make inter vivos transfers to their children. Labor supply during college, government grants and loans, as well as private loans, complement parental transfers as sources of funding for college education. We find that the current financial aid system in the U.S. improves welfare, and removing it would reduce GDP by two percentage points in the long-run. Any further relaxation of government-sponsored loan limits would have no salient effects. The short-run partial equilibrium effects of expanding tuition grants (especially their need-based component) are sizeable. However, long-run general equilibrium effects are 3-4 times smaller. Every additional dollar of government grants crowds out 20-30 cents of parental transfers.
    Keywords: Education, Education policy, Public finance, Financial aid, Inter vivos transfers, Altruism, Overlapping generations, Credit constraints, Labor supply, Equilibrium
    JEL: E24 I22 J23 J24
    Date: 2013–02
    URL: http://d.repec.org/n?u=RePEc:cwl:cwldpp:1887&r=ltv

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