nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒06‒04
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Human Development in India: Costs of Inequality By M. H. Suryanarayana; Ankush Agrawal
  2. Testing the Easterlin Hypothesis with Panel Data: The Dynamic Relationship between Life Satisfaction and Economic Growth in Germany and the UK By Tobias Pfaff; Johannes Hirata
  3. Cyclical changes in the wage structure of the United Kingdom: a historical review of the GHS 1972-2002 By Peng, Fei; Kang, Lili
  4. Does High Home-Ownership Impair the Labor Market? By David G. Blanchflower; Andrew J. Oswald
  5. Wage Effects of Unionization and Occupational Licensing Coverage in the United States By Maury Gittleman; Morris M. Kleiner
  6. Organizational Culture and Subjective and Work Well-being. The Case of Employees of Portuguese Universities By Santos, Joana; Gonçalves, Gabriela; Gomes, Alexandra
  7. Income Comparisons, Income Adaptation, and Life Satisfaction: How Robust Are Estimates from Survey Data? By Tobias Pfaff
  8. The Determinants of Rising Inequality in Health Insurance and Wages: An Equilibrium Model of Workers' Compensation and Health Care Policies By Rong Hai
  9. Bolsa Família after Brasil Carinhoso: an Analysis of the Potential for Reducing Extreme Poverty By Rafael Guerreiro Osorio; Pedro H. G. Ferreira de Souza
  10. Intergenerational Long Term Effects of Preschool - Structural Estimates from a Discrete Dynamic Programming Model By James J. Heckman; Lakshmi K. Raut

  1. By: M. H. Suryanarayana (International Poverty Centre); Ankush Agrawal (Indian Institute of Technology Delhi)
    Abstract: Economic growth with income redistribution has been a basic objective of economic development policy in India. Such a strategy seeks to exploit the potential of development programmes for poverty reduction and welfare gains by reducing the costs due to inequality in income distribution. The state of Kerala in India provides empirical evidence to show how it is possible to both achieve growth and improve income distribution through human development. (?)
    Keywords: Human Development in India: Costs of Inequality
    Date: 2013–05
  2. By: Tobias Pfaff; Johannes Hirata
    Abstract: Recent studies focused on testing the Easterlin hypothesis (happiness and national income correlate in the cross-section but not over time) on a global level. We make a case for testing the Easterlin hypothesis at the country level where individual panel data allow exploiting important methodological advantages. Novelties of our test of the Easterlin hypothesis are a) long-term panel data and estimation with individual fixed effects, b) regional GDP per capita with a higher variation than national figures, c) accounting for potentially biased clustered standard errors when the number of clusters is small. Using long-term panel data for Germany and the United Kingdom, we do not find robust evidence for a relationship between GDP per capita and life satisfaction in either country (controlling for a variety of variables). Together with the evidence from previous research, we now count three countries for which Easterlin’s happiness-income hypothesis cannot be rejected: the United States, Germany, and the United Kingdom.
    Keywords: Subjective well-being, economic growth, income, Easterlin hypothesis
    JEL: C23 D0 I31 O40 O52
    Date: 2013
  3. By: Peng, Fei; Kang, Lili
    Abstract: This paper aims to investigate the cyclical changes in the wage structure of the United Kingdom over the period 1972-2002 using the General Household Survey (GHS). Wage structure of the UK shows a cyclical pattern, which may be from the different wage cyclicality of the top, middle and bottom percentile groups. Higher educated male workers have experienced a faster growth of the education premiums so that the wages of males have become more dispersed after the 1970s. However, female workers with only primary education have faster wage growth than higher educated ones. Moreover, the experience premiums of females have grown faster than males and become similar to males in recent years. Changes in the skill endowments and market valuation can account for the cyclical changes in female earnings structure over the entire period. The residual earnings inequality accounts for more than half changes in overall earnings inequality of males, which cannot be explained by changes in skill endowments and market returns. The evolution of the wage structure, including changes in gender gap, overall wage inequality, skill premiums as well as residual wage inequality are affected by business cycle.
    Keywords: wage inequality, skill premiums, business cycle
    JEL: E32 J24 J31
    Date: 2013–05–01
  4. By: David G. Blanchflower; Andrew J. Oswald
    Abstract: We explore the hypothesis that high home-ownership damages the labor market. Our results are relevant to, and may be worrying for, a range of policy-makers and researchers. We find that rises in the home- ownership rate in a U.S. state are a precursor to eventual sharp rises in unemployment in that state. The elasticity exceeds unity: a doubling of the rate of home-ownership in a U.S. state is followed in the long-run by more than a doubling of the later unemployment rate. What mechanism might explain this? We show that rises in home-ownership lead to three problems: (i) lower levels of labor mobility, (ii) greater commuting times, and (iii) fewer new businesses. Our argument is not that owners themselves are disproportionately unemployed. The evidence suggests, instead, that the housing market can produce negative ‘externalities’ upon the labor market. The time lags are long. That gradualness may explain why these important patterns are so little-known.
    JEL: J01 J6
    Date: 2013–05
  5. By: Maury Gittleman (U.S. Bureau of Labor Statistics); Morris M. Kleiner (Humphrey School of Public Affairs, Universityof Minnesota)
    Abstract: Recent estimates in standard models of wage determination for both unionization and occupational licensing have shown wage effects that are similar across the two institutions. These cross-sectional estimates use specialized data sets, with small sample sizes, for the period 2006 through 2008. Our analysis examines the impact of unions and licensing coverage on wage determination using new data collected on licensing statutes that are then linked to longitudinal data from the National Longitudinal Survey of Youth (NLSY79) from 1979 to 2010. We develop several approaches, using both cross-sectional and longitudinal analyses, to measure the impact of these two labor market institutions on wage determination. Our estimates of the economic returns to union coverage are greater than those for licensing requirements.
    Keywords: Occupational Licensing, Unionization, Wage Effects
    JEL: J31 J44 J51
    Date: 2013–05
  6. By: Santos, Joana (University of Algarve); Gonçalves, Gabriela (University of Algarve); Gomes, Alexandra (University of Algarve)
    Abstract: This study investigated the determination of Organizational Culture on the Well-Being at Work and determination on the Subjective Well-being of employees of Public Institutions of Higher Education in Portugal. The final total sample had 635 participants, employees of Portuguese Public Higher Education Institutions. The hierarchical regression shows a significant effect of Organizational Culture on the criterion variable, Subjective Well-Being. By adding Well-Being at Work, it increased the explanatory power of the model. It was still possible to establish a structural equation model, which considers the determination of Support Organizational Culture on Well-being at Work and this on Well-being Professional. These results reveal the importance of organizations implementing a culture of support, particularly in ensuring the Well-being of its employees.
    Keywords: Organizational Culture; Subjective Well-Being; Well-Being at Work
    JEL: L32 M14
    Date: 2013–05–22
  7. By: Tobias Pfaff
    Abstract: Theory suggests that subjective well-being is affected by income comparisons and adaptation to income. Empirical tests of the effects often rely on self-constructed measures from survey data. This paper shows that results can be highly sensitive to simple parameter changes. Using large-scale panel data from Germany and the UK, I report cases where plausible variations in the underlying income type substantially affect tests of the relationship between life satisfaction, income rank, reference income, and income adaptation. Models simultaneously controlling for income and income rank as well as models with a number of income lags are prone to imperfect multicollinearity with consequences for the precision and robustness of estimates. When testing relative-income effects, researchers should be aware that reference income constructed as average of a rather arbitrarily defined reference group and reference income predicted from Mincer-type earnings equations are two approaches that can produce inconsistent results, and that are probably not as reliable and valid as previously assumed. The analysis underlines the importance of robustness checks and regression diagnostics, two routines that are often not carried out diligently in empirical research.
    Keywords: Subjective well-being, life satisfaction, relative income, income rank, adaptation
    JEL: C23 D0 I31
    Date: 2013
  8. By: Rong Hai (Department of Economics, University of Pennsylvania)
    Abstract: I develop and structurally estimate a non-stationary overlapping generations equilibrium model of employment and workers' health insurance and wage compensation, to investigate the determinants of rising inequality in health insurance and wages in the U.S. over the last 30 years. I find that skill-biased technological change and the rising cost of medical care services are the two most important determinants, while the impact of Medicaid eligibility expansion is quantitatively small. I conduct counterfactual policy experiments to analyze key features of the 2010 Patient Protection and Affordable Care Act, including employer mandates and further Medicaid eligibility expansion. I find that (i) an employer mandate reduces both wage and health insurance coverage inequality, but also lowers the employment rate of less educated individuals; and (ii) further Medicaid eligibility expansion increases employment rate of less educated individuals, reduces health insurance coverage disparity, but also causes larger wage inequality.
    Keywords: Labor Market, Health Insurance, Health Care Policies, Inequality
    JEL: J2 J3 I1 I24
    Date: 2013–01–16
  9. By: Rafael Guerreiro Osorio (International Poverty Centre); Pedro H. G. Ferreira de Souza (Institute for Applied Economic Research (IPEA))
    Abstract: The Bolsa Família Programme (Programa Bolsa Família ? PBF) is a monthly cash transfer from the Brazilian federal government to poor and extremely poor families enrolled in the Single Registry of Social Programmes. Since 2009, transfers last for a minimum period of two years, regardless of changes in household income. However, a family may no longer receive transfers if it fails to abide by certain conditions, such as ensuring that children and adolescents in the family go to school and achieve attendance rates of least 85 per cent during the school year for beneficiary children aged 6-15 and 75 per cent for teenagers aged 16-17. These characteristics classify the PBF as a targeted and conditional cash transfer programme. (?)
    Keywords: Bolsa Família after Brasil Carinhoso: an Analysis of the Potential for Reducing Extreme Poverty
    Date: 2013–03
  10. By: James J. Heckman; Lakshmi K. Raut
    Abstract: This paper formulates a structural dynamic programming model of preschool investment choices of altruistic parents and then empirically estimates the structural parameters of the model using the NLSY79 data. The paper finds that preschool investment significantly boosts cognitive and non-cognitive skills, which enhance earnings and school outcomes. It also finds that a standard Mincer earnings function, by omitting measures of non-cognitive skills on the right hand side, overestimates the rate of return to schooling. From the estimated equilibrium Markov process, the paper studies the nature of within generation earnings distribution and intergenerational earnings and schooling mobility. The paper finds that a tax financed free preschool program for the children of poor socioeconomic status generates positive net gains to the society in terms of average earnings and higher intergenerational earnings and schooling mobility.
    JEL: I21 J24 J62 O15
    Date: 2013–05

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