nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒04‒27
eight papers chosen by
Maximo Rossi
University of the Republic

  1. Poverty and Well-Being: Panel Evidence from Germany By Andrew E. Clark; Conchita D'Ambrosio; Simone Ghislandi
  2. Direct Evidence on Income Comparisons and Subjective Well-Being By Laszlo Goerke; Markus Pannenberg
  3. Subjective Well-being Capabilities: Bridging the Gap between the Capability Approach and Subjective Well-Being Research By Martin Binder
  4. Is labor income responsible for poverty reduction ? a decomposition approach By Azevedo, Joao Pedro; Inchauste, Gabriela; Olivieri, Sergio; Saavedra, Jaime; Winkler, Hernan
  5. Job Search Channels, Neighborhood Effects and Wages Inequality in Developing Countries: The Colombian Case By Garcia, Gustavo Adolfo; Nicodemo, Catia
  6. Life chances and class: Estimating inequality of opportunity in South Africa for various life stages By Asmus Zoch
  7. Measurements and Determinants of Multifaceted Poverty: Absolute, Relative, and Subjective Poverty in Indonesia By Dartanto, Teguh; Shigeru, Otsubo
  8. Firm-Level Monopsony and the Gender Pay Gap By Webber, Douglas A.

  1. By: Andrew E. Clark (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA)); Conchita D'Ambrosio (Universita' di Milano-Bicocca - Universita' di Milano-Bicocca, DIW - Deutsches Institut für Wirtschaftsforschung - German Institute for Economic Research, Econpubblica - Università commerciale Luigi Bocconi); Simone Ghislandi (Econpubblica - Università commerciale Luigi Bocconi, Università commerciale Luigi Bocconi - Università commerciale Luigi Bocconi)
    Abstract: We consider the link between poverty and subjective well-being, and focus in particular on the role of time. We use panel data on 42,500 individuals living in Germany from 1992 to 2010 to uncover four empirical relationships. First, life satisfaction falls with both the incidence and intensity of contemporaneous poverty. There is no evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. Third, poverty scars: those who have been poor in the past report lower life satisfaction today, even when out of poverty. Last, the order of poverty spells matters: for a given number of poverty spells, satisfaction is lower when the spells are concatenated: poverty persistence reduces well-being. These effects differ by population subgroups.
    Keywords: Income ; Poverty ; Subjective well-being ; SOEP
    Date: 2013–04
    URL: http://d.repec.org/n?u=RePEc:hal:psewpa:hal-00814659&r=ltv
  2. By: Laszlo Goerke; Markus Pannenberg
    Abstract: Subjective well-being (SWB) is generally argued to rise with relative income. However, direct evidence is scarce on whether and how intensively individuals undertake income comparisons, to whom they relate, and what they perceive their relative income to be. In this paper, novel data with direct information on income comparison intensity and perceived relative income with respect to predetermined reference groups is used to provide evidence on the relationship between income comparisons and SWB. We find negative correlations between comparison intensity and SWB for co-workers, people in the same occupation and friends. For job-related reference groups income comparisons are mostly upwards and perceiving to earn less than the reference group is negatively correlated with SWB.
    Keywords: Income comparisons, endogenous reference groups, German Socio-Economic Panel (SOEP), subjective well-being
    JEL: D31 D62 I31
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp549&r=ltv
  3. By: Martin Binder
    Abstract: As a result of the disenchantment with traditional income-based measures of welfare, alternative welfare measures have gained increasing attention in recent years. Two of the most prominent measures of well-being come from subjective well-being research and the (objective) capability approach. Despite their promising features, both approaches have a number of weaknesses when considered on their own. This paper sets out to examine to what extent a fusion between both approaches can overcome the weaknesses of both individual approaches. It uses features of the capability framework to enrich what is basically a subjective well-being perspective. Key drawbacks of normative subjective well-being views can be overcome by focussing welfare assessments on "Subjective Well-being Capabilities" (SWC), i.e. focussing on the substantive opportunities of individuals to pursue and achieve happiness.
    Keywords: subjective well-being, capability approach, policy-making, normative economics
    Date: 2013–04–12
    URL: http://d.repec.org/n?u=RePEc:esi:evopap:2013-02&r=ltv
  4. By: Azevedo, Joao Pedro; Inchauste, Gabriela; Olivieri, Sergio; Saavedra, Jaime; Winkler, Hernan
    Abstract: Demographics, labor income, public transfers, or remittances: Which factor contributes the most to observed reductions in poverty? Using counterfactual simulations, this paper accounts for the contribution labor income has made to the observed changes in poverty over the past decade for a set of 16 countries that have experienced substantial declines in poverty. In contrast to methods that focus on aggregate summary statistics, the analysis generates entire counterfactual distributions that allow assessing the contributions of different factors to observed distributional changes. Decompositions across all possible paths are calculated so the estimates are not subject to path-dependence. The analysis shows that for most countries in the sample, labor income is the most important contributor to changes in poverty. In ten of the countries, labor income explains more than half of the change in moderate poverty; in another four, it accounts for more than 40 percent of the reduction in poverty. Although public and private transfers were relatively more important in explaining the reduction in extreme poverty, more and better-paying jobs were the key factors behind poverty reduction over the past decade.
    Keywords: Rural Poverty Reduction,Services&Transfers to Poor,Regional Economic Development,Poverty Monitoring&Analysis
    Date: 2013–04–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:6414&r=ltv
  5. By: Garcia, Gustavo Adolfo (Autonomous University of Barcelona); Nicodemo, Catia (University of Oxford)
    Abstract: This paper analyses the relationship between social networks and the job search behaviour of individuals. Networking is not only based on friends and relatives but also on neighbourhood. The geographic closeness is associated to social interactions. Individuals who are in physical and social proximity share the same sources of information, because they divide individual characteristics or because they learn from one another's behaviour. Using data from Colombia in 2009 we explore how neighbourhoods have an effect on the channel used to search for a job (formal vs informal). People tend to opt for a formal or informal channel depending on the channel selected by employed people in their neighbourhood. In addition, we study the wage premium in using a formal or informal channel, exploring the inequality that can arise using a different job search method. Our results show that the neighbourhood affects the individual's job search method and referral workers earn less wage at the bottom of the wage distribution with respect to non-referred workers. At the top of the wage distribution the difference observed is due to different characteristics between the two groups. Colombia presents persistent high levels of informality and inequality. These features impose important social and economic costs such as low tax collection, low employee protection and deficiencies in the labour intermediation process with strong informational asymmetries in the job search. New policies to regulate the labour market are need.
    Keywords: neighborhood effects, formal and informal networks, job search, quantile regression
    JEL: J64 J31 J24 P23 J6 J7 J0
    Date: 2013–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7336&r=ltv
  6. By: Asmus Zoch (Department of Economics, University of Stellenbosch)
    Abstract: This paper aims to determine the degree to which class and socio-economic background influence a child’s life chances and their future perspectives. We build on the growing number of papers that deal with the concept of inequality of opportunity. Comparing children from poor and middle class households we find significant differences in terms of access to basic education, sanitation, clean water and mobility. Our multivariate analysis highlights the importance of class membership for schooling outcomes and labour market prospects of a child. The single most important variable to explain schooling outcomes are mother’s education. While income seems to be less important for younger ages it becomes increasingly important for the chances of reaching matric and obtaining tertiary education. The results are robust for various models and panel data.
    Keywords: Inequality of opportunity, Intergenerational mobility, South Africa, Middle class
    JEL: D63 I24 J62
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers184&r=ltv
  7. By: Dartanto, Teguh; Shigeru, Otsubo
    Abstract: The notion of ‘poverty’ is diversified and dynamic. It varies across countries with different socio-economic norms. It may also change over time even in the same society, with different stages of social and economic development. A country may be struggling with absolute poverty at the early stages of development, while it may well be more concerned with relative and/or subjective poverty as its average per-capita income increases. This article intends to conduct an exploration of multiple poverty measures by looking into the absolute, relative and subjective poverty incidence in Indonesia. Using the 2005 National Socio-Economic Survey (Susenas), we observed that there was a roughly 28 percentage-point difference in the poverty headcount ratios computed by applying absolute (14.47%) and subjective (42.03%) poverty. There were virtually no correlations among the poverty rankings in the provinces of Indonesia obtained by five poverty metrics. Results of logit model and ordered logit model estimations of the possible determinants of poverty indicate that the main determinants of poverty are educational attainment, number of household members, physical assets (land and house ownership), existence of migrant workers (possible remittances), negative shocks of layoffs and/or health problems, development of public services, and the availability of road infrastructure. A higher educational attainment increases the probability of never being poor in any of the five poverty metrics by almost 11 percentage points. This study also confirmed that households having less than society’s averages in terms of the physical asset of land and consumption of durable goods and fashion tended to subjectively asses themselves as poor. The study suggests that any poverty alleviation programs should consider relative impacts among beneficiaries and non-beneficiaries within each locality and across provinces.
    Keywords: Absolute Poverty , Relative Poverty , Subjective Poverty , Subjective Well-Being , Multidimensional Poverty Analysis , Indonesia
    Date: 2013–02–18
    URL: http://d.repec.org/n?u=RePEc:jic:wpaper:54&r=ltv
  8. By: Webber, Douglas A. (Temple University)
    Abstract: Using a dynamic labor supply model and linked employer-employee data, I find evidence of substantial search frictions, with females facing a higher level of frictions than males. However, the majority of the gender gap in labor supply elasticities is driven by across firm sorting rather than within firm differences, a feature predicted in the search theory literature, but which has not been previously documented. The gender differential in supply elasticities leads to 3.3% lower earnings for women. Roughly 60% of the elasticity differential can be explained by marriage and children penalties faced by women but not men.
    Keywords: monopsony, discrimination
    JEL: J42 J71
    Date: 2013–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7343&r=ltv

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