New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒06‒16
ten papers chosen by

  1. Persistence of high income inequality and banking crises: 1980-2010 By G. Bellettini; F. Delbono
  2. Levels and Trends in United States Income and Its Distribution: A Crosswalk from Market Income Towards a Comprehensive Haig-Simons Income Approach By Philip Armour; Richard V. Burkhauser; Jeff Larrimore
  3. Poverty Measurement with Ordinal Data By Chrysanthi Hatzimasoura; Christopher J. Bennett
  4. Rhythms and Cycles in Happiness By Wolfgang Maennig; Malte Steenbeck; Markus Wilhelm
  5. Inequality and Growth: The Role of Beliefs and Culture By Strieborny, Martin
  6. The Female Labor Force and Long-run Development: The American Experience in Comparative Perspective By Claudia Olivetti
  7. Lost in Translation. Rethinking the Inequality-Equivalence Criteria for Bounded Health Variables By Kjellsson, Gustav; Gerdtham, Ulf-G.
  8. Wealth distribution, accumulation and policy By Francesca Bastagli; Frank A Cowell; Howard Glennerster; John Hills; Eleni Karagiannaki; Abigail McKnight
  9. Measuring Top Incomes Using Tax Record Data: A Cautionary Tale from Australia By Richard V. Burkhauser; Markus H. Hahn; Roger Wilkins
  10. The Supply of Gender Stereotypes and Discriminatory Beliefs By Edward L. Glaeser; Yueran Ma

  1. By: G. Bellettini; F. Delbono
    Abstract: Differently from Atkinson and Morelli (2011) who detect no clear link between increases in income inequality and systemic banking crises, we show that a large majority of crises occurred between 1982 and 2008 have been preceded by persistently high levels of income inequality. Such association is robust when considering Gini values for incomes after-tax as well as before-tax and transfers. Moreover, we investigate the pattern of income inequality levels before and after a group of banking crises and the relative levels of income inequality in a large sample of OECD countries that did not experience banking crises between 1980 and 2010.
    JEL: D31 G21
    Date: 2013–06
  2. By: Philip Armour; Richard V. Burkhauser; Jeff Larrimore
    Abstract: Recent research on United States levels and trends in income inequality vary substantially in how they measure income. Piketty and Saez (2003) examine market income of tax units based on IRS tax return data, DeNavas-Walt, Proctor, and Smith (2012) and most CPS-based research uses pre-tax, post-transfer cash income of households, while the CBO (2012) uses both data sets and focuses on household size-adjusted comprehensive income of persons, including taxable realized capital gains. This paper provides a crosswalk of income growth across these common income measures using a unified data set. It then uses a more consistent Haig-Simons income definition approach to comprehensive income by incorporating yearly-accrued capital gains to measure yearly changes in wealth rather than focusing solely on the realized taxable capital gains that appear in IRS tax return data. Doing so dramatically reduces the observed growth in income inequality across the distribution, but most especially the rise in top-end income since 1989.
    JEL: C81 D31 H24 J3
    Date: 2013–06
  3. By: Chrysanthi Hatzimasoura (Department of Economics, George Washington University); Christopher J. Bennett (Department of Economics, Vanderbilt University.)
    Abstract: The Foster, Greer, Thorbecke (1984) class nests several of the most widely used mea- sures in theoretical and empirical work on economic poverty. Use of this general class of measures, however, presupposes a dimension of well-being that, like income, is cardinally measurable. Responding to recent interest in dimensions of well-being where achievements are recorded on an ordinal scale, this paper develops counterparts to the popular FGT measures that are still meaningful when applied to ordinal data. The resulting ordinal FGT measures retain the simplicity of the classical FGT measures and also many of their desirable features, including additive decomposability. This paper also develops ordinal analogues of the core axioms from the literature on economic poverty, and demonstrates that the ordinal FGT measures indeed satisfy these core axioms. Moreover, new domi- nance conditions, which allow for poverty rankings that are robust with respect to the choice of poverty line, are established. Lastly, the ordinal FGT measures are illustrated using self-reported data on health status in Canada and the United States.
    Keywords: poverty measurement, ordinal data, FGT poverty measures, social welfare, dominance conditions
    JEL: I3 I32 D63 O1
    Date: 2011–07
  4. By: Wolfgang Maennig (Chair for Economic Policy, University of Hamburg); Malte Steenbeck (Chair for Economic Policy, University of Hamburg); Markus Wilhelm (Chair for Economic Policy, University of Hamburg)
    Abstract: This study analyses time-dependent rhythms in happiness in three aspects. We show that the Sunday neurosis exists exclusively for men with a medium level of education and both men and women with high levels of education. Men with high levels of education may even experience a weekend neurosis. This study is the first to test for intra-monthly rhythms and to demonstrate that men with a lower educational background may suffer from negative effects on happiness towards the end of the month, potentially due to liquidity problems. The study is also the first to demonstrate that – even when controlling for health and income effects – happiness exhibits seasonal effects over the annual period, depending on gender and education.
    Keywords: Happiness; life satisfaction; weekend neurosis; rhythms in time
    JEL: I31 N70 Q48
    Date: 2013–06–07
  5. By: Strieborny, Martin (Department of Economics, Lund University)
    Abstract: Governments perpetually align their policies to satisfy shifts in voters' relative demand for economic growth versus social equality. Following such shifts, increases (decreases) in government interventions lower (raise) both inequality and growth. This mechanism generates a positive co-movement between inequality and growth. The pattern is weaker in countries where a culturally determined belief that the rich are deserving renders equality a less important objective in the first place. I develop this analytical result in the theoretical framework of Alesina and Angeletos (2005), and I provide robust empirical support for it in a panel of 38 countries over the period 1964-2004.
    Keywords: culture; inequality; growth
    JEL: O15 O40 P16 Z10
    Date: 2013–04–24
  6. By: Claudia Olivetti
    Abstract: This paper provides additional evidence on the U-shaped relationship between the process of economic development and women's labor force participation. The experience of the United States is studied in a comparative perspective relative to a sample of rich economies observed over the period 1890-2005. The analysis confirms the existence of a U-shaped female labor supply function, coming from both cross-country and within country variation. Further analysis of a large cross section of economies observed over the post-WWII period suggests that the timing of a country's transition to a modern path of economic development affects the shape of women's labor supply.
    JEL: J22 N11 N12
    Date: 2013–06
  7. By: Kjellsson, Gustav (Department of Economics, Lund University); Gerdtham, Ulf-G. (Department of Economics, Lund University)
    Abstract: What distributional change of a population's health preserves the level of inequality? In the income inequality literature, the answer lies somewhere between a uniform and a proportional change of the distribution. The polar positions represent the absolute and relative Inequality Equivalence Criteria (IEC), respectively. For a bounded health variable, health may be defined in terms of both attainments and shortfalls. As a distributional change cannot simultaneously be proportional to attainments and to shortfalls, relative inequality measures may rank populations differently for the two perspectives. In contrast to the literature that stresses the importance of measuring inequality in attainments and shortfalls consistently using an absolute IEC, this paper formalizes a new compromise concept for a bounded variable by explicitly considering the two relative IECs, defined with respect to attainments and shortfalls, to represent the polar cases of defensible positions. We further use a surplus-sharing approach to provide new insights on commonly used inequality indices by evaluating the underpinning IECs in terms of how infinitesimal surpluses of health must be successively distributed to preserve the level of inequality. The IECs underpinning the intensively discussed indices suggested by Adam Wagstaff and Guido Erreygers both satisfy our new compromise concept, but the weights assigned to the polar cases vary with the mean health. In contrast, we derive a one-parameter IEC that assigns constant weights independent of the health distribution. That is, the size of the surplus shares distributed according to the two relative sharing rules is constant and equal to a parameter value.
    Keywords: health inequality; bounded variable; inequality equivalence criteria
    JEL: D63 I14
    Date: 2013–05–29
  8. By: Francesca Bastagli; Frank A Cowell; Howard Glennerster; John Hills; Eleni Karagiannaki; Abigail McKnight
    Date: 2013–05
  9. By: Richard V. Burkhauser; Markus H. Hahn; Roger Wilkins
    Abstract: Atkinson, Piketty, and Saez (2011) survey an important new literature using income tax-based data to measure the share of income held by top income groups. But changes in tax legislation that expand the tax base to include income sources (e.g. capital gains, dividends, etc.) disproportionately held by these groups will conflate such an expansion with an increase in the share of income they hold. We provide a cautionary tale from Australia of how comprehensive tax reform legislation in 1985 substantially altered Australian top income series, especially those that do not separate taxable realized capital gains from other taxable income.
    JEL: H0 I0 J0
    Date: 2013–06
  10. By: Edward L. Glaeser; Yueran Ma
    Abstract: What determines beliefs about the ability and appropriate role of women? An overwhelming majority of men and women born early in the 20th century thought women should not work; a majority now believes that work is appropriate for both genders. Betty Friedan (1963) postulated that beliefs about gender were formed by consumer good producers, but a simple model suggests that such firms would only have the incentive to supply error, when mass persuasion is cheap, when their products complement women’s time in the household, and when individual producers have significant market power. Such conditions seem unlikely to be universal, or even common, but gender stereotypes have a long history. To explain that history, we turn to a second model where parents perpetuate beliefs out of a desire to encourage the production of grandchildren. Undersupply of female education will encourage daughters’ fertility, directly by reducing the opportunity cost of their time and indirectly by leading daughters to believe that they are less capable. Children will be particularly susceptible to persuasion if they overestimate their parents’ altruism toward themselves. The supply of persuasion will diminish if women work before childbearing, which may explain why gender-related beliefs changed radically among generations born in the 1940s.
    JEL: J16
    Date: 2013–06

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