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on Unemployment, Inequality and Poverty |
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Issue of 2013‒04‒06
fifteen papers chosen by |
| By: | Stevenson, Betsey (University of Michigan); Wolfers, Justin (University of Michigan) |
| Abstract: | Progress in closing differences in many objective outcomes for blacks relative to whites has slowed, and even worsened, over the past three decades. However, over this period the racial gap in wellbeing has shrunk. In the early 1970s data revealed much lower levels of subjective well‐being among blacks relative to whites. Investigating various measures of well‐being, we find that the well‐being of blacks has increased both absolutely and relative to that of whites. While a racial gap in well‐being remains, two‐fifths of the gap has closed and these gains have occurred despite little progress in closing other racial gaps such as those in income, employment, and education. Much of the current racial gap in well‐being can be explained by differences in the objective conditions of the lives of black and white Americans. Thus making further progress will likely require progress in closing racial gaps in objective circumstances. |
| Keywords: | life satisfaction, subjective well‐being, happiness, race |
| JEL: | D6 I32 J1 J7 K1 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7309&r=ltv |
| By: | Olivier Bargain (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM), IZA - Institute for the Study of Labor); Mathias Dolls (IZA - Institute for the Study of Labor, University of Cologne - University of Cologne); Dirk Neumann (IZA - Institute for the Study of Labor, University of Cologne - University of Cologne); Andreas Peichl (IZA - Institute for the Study of Labor, University of Cologne - University of Cologne, CESifo - CESifo, ISER - University of Essex); Sebastian Siegloch (IZA - Institute for the Study of Labor, University of Cologne - University of Cologne) |
| Abstract: | We analyze to which extent social inequality aversion differs across nations when control ling for actual country differences in labor supply responses. Towards this aim, we estimate labor supply elasticities at both extensive and intensive margins for 17 EU countries and the US. Using the same data, inequality aversion is measured as the degree of redistribution implicit in current tax-benefit systems, when these systems are deemed optimal. We find relatively small differences in labor supply elasticities across countries. However, this changes the cross-country ranking in inequality aversion compared to scenarios following the standard approach of using uniform elasticities. Differences in redistributive views are significant between three groups of nations. Labor supply responses are systematically larger at the extensive margin and often larger for the lowest earnings groups, exacerbating the implicit Rawlsian views for countries with traditional social assistance programs. Given the possibility that labor supply responsiveness was underestimated at the time these programs were implemented, we show that such wrong perceptions would lead to less pronounced and much more similar levels of inequality aversion. |
| Keywords: | Social preferences; redistribution; optimal income taxation; labor supply |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00805751&r=ltv |
| By: | Costas Meghir (Institute for Fiscal Studies and Yale University); Renata Narita; Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po) |
| Abstract: | It is often argued that informal labour markets in developing countries are the engine of growth because their existence allows firms to operate in an environment where wage and regulatory costs are lower. On the other hand informality means that the amount of social protection offered to workers is lower. In this paper we extend the wage-posting framework of Burdett and Mortensen (1998) to allow for two sectors of employment. Firms are heterogeneous and decide endogenously in which sector to locate. Workers engage in both off the job and on the job search and decide which offers to accept. Direct transitions across sectors are permitted, which matches the evidence in the data about job mobility. Our empirical analysis uses Brazilian labour force surveys. We use the model to discuss the relative merits of alternative policies towards informality. In particular, we evaluate the impact of a tighter regulatory framework on employment in the formal and the informal sector on the distribution of wages. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:08/13&r=ltv |
| By: | Cecilia García-Peñalosa (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Elsa Orgiazzi (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie) |
| Abstract: | This paper uses data from the Luxembourg Income Study to examine some of the forces that have driven changes in household income inequality over the last three decades of the 20th century. We decompose inequality for 6 countries (Canada, Germany, Norway, Sweden, the UK, and the US) into the three sources of market income (earnings, property income and income from self-employment) and taxes and transfers. Our findings indicate that although changes in the distribution of earnings are an important aspect of recent increases in inequality, they are not the only one. Greater earnings dispersion has in some cases been accompanied by a reduction in the share of earnings that dampened its impact on overall household income inequality. In some countries the contribution of self-employment income to inequality has been on the rise, while in others, increases in inequality in capital income account for a substantial fraction of the observed distributional changes. |
| Keywords: | income inequality; factor decomposition; decomposition by population subgroups |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00802825&r=ltv |
| By: | Nguyen Viet, Cuong |
| Abstract: | This paper examines the poverty and inequality pattern, income and characteristics of households in the Program 135-II communes – the poorest areas in Vietnam. The poverty incidence decreased from 57.5 percent to 49.2 percent during the period 2007-2012. Although the poverty incidence decreased, the poverty gap and severity indexes of households in the Program 135-II areas did not decrease during 2007-2012. The decomposition analysis shows that the reduction of the poverty incidence in the poorest communes was achieved by the income growth. The inequality increased, thereby slightly raising the poverty incidence. Poverty is sensitive to economic growth. However, the elasticity of poverty with respect to income growth tends to decrease overtime. It means that income redistribution plays a very important role in decreasing the poverty gap and poverty severity. |
| Keywords: | Ethnic minority; household income; poverty; decomposition, Vietnam |
| JEL: | I3 I31 I32 |
| Date: | 2012–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45737&r=ltv |
| By: | Christopher Candelaria; Mary Daly; Galina Hale |
| Abstract: | Regional inequality in China appears to be persistent and even growing in the last two decades. We study potential explanations for this phenomenon. After making adjustments for the difference in the cost of living across provinces, we find that some of the inequality in real wages could be attributed to differences in quality of labor, industry composition, labor supply elasticities, and geographical location of provinces. These factors, taken together, explain about half of the cross-province real wage difference. Interestingly, we find that inter-province redistribution did not help offset regional inequality during our sample period. We also demonstrate that inter-province migration, while driven in part by levels and changes in wage differences across provinces, does not offset these differences. These results imply that cross-province labor market mobility in China is still limited, which contributes to the persistence of cross-province wage differences. |
| Keywords: | China ; Wages ; Labor market ; Labor supply |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2013-06&r=ltv |
| By: | Lundberg, Shelly (University of California, Santa Barbara) |
| Abstract: | I examine the effects of cognitive ability and personality traits on college graduation in a recent cohort of young Americans, and how the returns to these traits vary by family background, and find very substantial differences across family background groups in the personality traits that predict successful completion of college, particularly for men. The implications are two-fold. First, the returns to noncognitive traits may be highly context-dependent. Second, policy discussion concerning educational inequality should include, not just the possibilities for remediating the skill levels of poor children, but also approaches to changing the environments that limit their opportunities. |
| Keywords: | education, personality, inequality |
| JEL: | I24 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7305&r=ltv |
| By: | Olivier Bargain (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM), IZA - Institute for the Study of Labor); Kristian Orsini (CES - Center for Economic Studies - Université Catholique de Louvain (UCL) - Belgique); Andreas Peichl (IZA - Institute for the Study of Labor, University of Cologne - University of Cologne, CESifo - CESifo, ISER - University of Essex) |
| Abstract: | We suggest the first large-scale international comparison of labor supply elasticities for 17 European countries and the US, separately by gender and marital status, with measurement differences netted out by using a harmonized empirical approach and comparable data sources. We find that own-wage elasticities are relatively small and much more uniform across countries than previously considered. Nonetheless, such differences do exist, and are found not to arise from different tax-benefit systems, wage/hour level or demographic compositions across countries, suggesting genuine differences in work preferences across countries. Furthermore, three other important results for welfare analysis are consistent across countries: the extensive (participation) margin dominates the intensive (hours) margin; for singles, this leads to larger labor supply responses in low-income groups; and income elasticities are extremely small everywhere. Finally, the results for cross-wage elasticities in couples are opposed between regions, consistent with complementarity in spouses' leisure in the US versus substitution in their household production in Europe. |
| Keywords: | household labor supply; elasticity; taxation; Europe; US |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00805736&r=ltv |
| By: | Weiss, Yoram (Tel Aviv University); Yi, Junjian (University of Chicago); Zhang, Junsen (Chinese University of Hong Kong) |
| Abstract: | We study the rise in marriages between residents of HK and China following the handover of HK to China in 1997. Cross-boundary marriages accounted for almost half the marriages registered in HK in 2006. Because of large differences in male income between China and HK, marriages of HK men with Mainland women outnumbered those of HK women with mainland men sevenfold. Following the handover, HK women had lower marriage, higher divorce and higher emigration rates. These outcomes are predicted by our matching model and contradict the hypothesis that cross-boundary marriages were driven by rising education of HK women. |
| Keywords: | one-way permit, hypergamy, cross-boundary marriage, family behavior |
| JEL: | F22 J11 J12 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7293&r=ltv |
| By: | Clavet, Nicholas-James (Université Laval); Duclos, Jean-Yves (Université Laval); Lacroix, Guy (Université Laval) |
| Abstract: | This paper analyzes the impact of a recent recommendation made by Quebec's Comité consultatif de lutte contre la pauvreté et l'exclusion sociale to guarantee every individual an income equal to 80% of Statistics Canada's Market Basket Measure (MBM). Workers with earnings at least equivalent to 16 weekly hours at the minimum wage would be entitled to 100% of the MBM. We also investigate the impact of three alternative proposals: 1) a change in the above the hours cut-off from 16 to 30 hours; 2) a guaranteed income equal to 100% of the MBM, irrespective of earnings; 3) a 3$/hour conditional wage subsidy. To do this, we first estimate a structural labor supply model using the existing tax code and predict the labor supply of a representative sample of individuals based upon the parameter estimates of the model. Simulations show that the original recommendation would have strong negative impacts on participation rates of low-earners and that its cost would exceed $ 2 billion. Increasing the hours cut-off is predicted to have little impact beyond those of the original recommendation. Providing a guaranteed income equivalent to 100% of the MBM, on the other hand, would have a large impact. We find that contrary to what is usually assumed, guaranteed income schemes may increase the incidence of low-income rather than decrease it. |
| Keywords: | labor market effects, ex ante evaluation, Guaranteed Minimum Income, financial cost, poverty alleviation, public finance |
| JEL: | C25 D31 D63 H31 I30 J22 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7283&r=ltv |
| By: | Niklas, Jakobsson (Dept. of Economics); Persson, Mattias (Örebro University); Svensson, Mikael (Dept. of Economics) |
| Abstract: | This paper analyzes whether class size has an effect on the prevalence of mental health problems and well-being among adolescents in Swedish schools. We use cross-sectional data collected in year 2008 covering 2,755 Swedish adolescents in 9th grade from 40 schools and 159 classes. We utilize different econometric approaches to address potential between- and within-school endogeneity including school-fixed effects and regression discontinuity approaches. Our results indicate no robust effects of class size on the prevalence of mental health problems and well-being, and we cannot reject the hypothesis that class size has no effect on mental health and well-being at all. |
| Keywords: | mental health; well-being; class size; adolescents; Sweden. |
| JEL: | H75 I12 I21 |
| Date: | 2013–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:kaunek:0009&r=ltv |
| By: | Jerome Adda (Institute for Fiscal Studies and European University Institute); Christian Dustmann (Institute for Fiscal Studies and University College London); Costas Meghir (Institute for Fiscal Studies and Yale University); Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po) |
| Abstract: | This paper analyses the career progression of skilled and unskilled workers, with a focus on how careers are affected by economic downturns and whether formal skills, acquired early on, can shield workers from the effect of recessions. Using detailed administrative data for Germany for numerous birth cohorts across different regions, we follow workers from labour market entry onwards and estimate a dynamic life-cycle model of vocational training choice, labour supply and wage pogression. Most particularly, our model allows for labour market frictions that vary by skill group and over the business cycle. We find that sources of wage growth differ: learning-by-doing is an important component for unskilled workers early on in their careers, while job mobility is important for workers who acquire skills in an apprenticeship scheme before labour market entry. Likewise, economic downturns affect skill groups through very different channels: unskilled workers lose out from a decline in productivity and human capital, whereas skilled individuals suffer mainly from lack of mobility. |
| Keywords: | Wage determination, skills, business cycles, apprenticeship training, job mobility |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:06/13&r=ltv |
| By: | Fredriksson, Peter (Dept. of Economics, Stockholm University); Öckert, Björn (Institute for Evaluation of Labour Market and Education Policy (IFAU)) |
| Abstract: | In Sweden, children typically start compulsory school the year they turn 7. Individuals born around the new year have about the same date of birth but enter school at different ages. We exploit this source of exogenous variation to identify effects of age at school entry on educational attainment and long-run labor market outcomes. Using data for the entire native population born 1935-55, we find that school entry age raises educational attainment. We show that the comprehensive school reform (which postponed tracking until age 16) reduced the effect of school starting age on educational attainment. We also trace the effects of school starting age on prime-age earnings, employment, and wages. On average, school starting age only affects the allocation of labor supply over the lifecycle; prime-age earnings is unaffected, and there is a negative effect on discounted life-time earnings. But for individuals with low-educated parents, and to some extent women, we find that prime-age earnings increase in response to age at school start. |
| Keywords: | School starting age; educational attainment; life-time earnings; regression discontinuity |
| JEL: | C31 I21 I28 J24 |
| Date: | 2013–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sunrpe:2013_0007&r=ltv |
| By: | Adsera, Alicia (Princeton University); Ferrer, Ana (University of Calgary) |
| Abstract: | In this paper we examine the fertility experience of immigrants during their first years in Canada. Fertility decisions at the time of arrival may be crucial in determining immigrants' economic assimilation into the new country, as households with infants usually face large expenses and are constrained in the amount of time they can supply to the labour market. Using the confidential files of the Canadian Census of Population for the years 1991 through 2006 we look at native born-immigrant differentials in new births up to five years after migration. We find evidence of a relatively rapid growth in births during this initial period compared to both similar natives and migrants themselves during the two years before the move. To what extent the presence of infants in immigrant households converges to the levels of the native-born during the early migration years differs greatly by broad area of origin. |
| Keywords: | immigrant fertility, fertility disruption, recent immigrants, Canada |
| JEL: | J11 J13 J15 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7289&r=ltv |
| By: | David Neumark; Diego Grijalva |
| Abstract: | State and federal policymakers grappling with the aftermath of the Great Recession have sought ways to spur job creation, in many cases adopting hiring credits to encourage employers to create new jobs. However, there is virtually no evidence on the effects of these kinds of counter-recessionary hiring credits – the only evidence coming from much earlier studies of the New Jobs Tax Credit from the 1970s. This paper provides evidence on the effect on job growth of hiring credits adopted during the Great Recession. For many of the types of hiring credits we examine we do not find positive effects on job growth. However, some specific types of hiring credits – including those targeting the unemployed and those that allow states to recapture credits when job creation goals are not met – appear to have succeeded in boosting job growth. At the same time, some credits appear to generate hiring without increasing employment or to generate much more hiring than net employment growth, consistent with these credits leading to churning of employees that raises the costs of producing jobs via hiring credits. |
| JEL: | J23 J38 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18928&r=ltv |