nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒06‒24
sixteen papers chosen by
Maximo Rossi
University of the Republic

  1. Social Spending and Income Redistribution in Argentina during the 2000s: The Rising Role of Noncontributory Pensions By Nora Lustig; Carola Pessino
  2. Poverty and Well-Being: Panel Evidence from Germany By Andrew E. Clark; Conchita D’Ambrosio; Simone Ghislandi
  3. Does Part-Time Employment Widen the Gender Wage Gap? Evidence from Twelve European Countries By Eleonora Matteazzi; Ariane Pailhé; Anne Solaz
  4. Inequality in China : an overview By Knight, John
  5. Economic Consequences of Mispredicting Utility By Frey, Bruno S.; Stutzer, Alois
  6. Mobility of top incomes in Germany By Jenderny, Katharina
  7. Child deprivation in Ontario: A (less than perfect) comparison with Europe By Notten, Geranda
  8. Multitasking and Wages By Snower, Dennis J.; Goerlich, Dennis
  9. Stature and Life-Time Labor Market Outcomes: Accounting for Unobserved Differences By Böckerman, Petri; Vainiomäki, Jari
  10. Is there a relationship between income inequality and credit cycles? By Tuomas Malinen
  11. Mobility, Taxation and Welfare By Sami Bibi; Jean-Yves Duclos; Abdelkrim Araar
  12. Are You Unhappy Having Minority Co-Workers? By Haile, Getinet Astatike
  13. Labour Market and Social Policies to Foster More Inclusive Growth in Sweden By Stéphanie Jamet; Thomas Chalaux; Vincent Koen
  14. Can conditional cash transfers compensate for a father's absence ? By Fitzsimons, Emla; Mesnard, Alice
  15. Constrained vs Unconstrained Labor Supply: The Economics of Dual Job Holding By RENNA Francesco; OAXACA Ronald L.; CHOE Chung
  16. Social spending, distribution, and equality of opportunities : opportunity incidence analysis By Cuesta, Jose

  1. By: Nora Lustig (Tulane University); Carola Pessino (Universidad del CEMA)
    Abstract: Between 2003 and 2009, Argentina’s social spending as a share of GDP increased by 7.6 percentage points. Marginal benefit incidence analysis for 2003, 2006, and 2009 suggests that the contribution of cash transfers to the reduction of disposable income inequality and poverty rose markedly between 2006 and 2009 primarily due to the launching of a noncontributory pension program – the pension moratorium – in 2004. Noncontributory pensions as a share of GDP rose by 2.2 percentage points between 2003 and 2009 and entailed a redistribution of income to the poor, and from the formal sector pensioners with above minimum pensions to the beneficiaries of the pension moratorium. The redistributive impact of the expansion of public spending on education and health was also sizeable and equalizing, but to a lesser degree. An assessment of fiscal funding sources puts the sustainability of the redistributive policies into question, unless non-social spending is significantly cut.
    Keywords: social spending, benefit incidence, inequality, poverty, Argentina
    JEL: D31 H22 I38
    Date: 2013–01
  2. By: Andrew E. Clark (Paris School of Economics - CNRS); Conchita D’Ambrosio (Università di Milano-Bicocca, DIW Berlin and Econpubblica); Simone Ghislandi (Università Bocconi and Econpubblica)
    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.
    JEL: I31 D60
    Date: 2013–03
  3. By: Eleonora Matteazzi (University of Verona); Ariane Pailhé (INED); Anne Solaz (INED)
    Abstract: One of five workers work part-time in Europe, mainly women. This article examines the extent to which the overrepresentation of women in part-time employment explains the gender hourly earnings gap in twelve European countries. Using the EU-SILC 2009 data, a double decomposition of the gender wage gap is implemented: between men and women employed full-time and between full-time and part-time working women. The high prevalence of part-time employment plays only a minor role. The nature of part-time employment and labor market segregation are much more important factors. A large share of the gender wage gap still remains unexplained, however.
    Keywords: labor force participation, working hours, wage gap, decomposition, segregation, part-time
    JEL: C31 C49 J21 J22 J24 J31 J71
    Date: 2013–03
  4. By: Knight, John
    Abstract: This paper provides an overview of research on income inequality in China over the period of economic reform. It presents the results of two main sources of evidence on income inequality and, assisted by various decompositions, explains the reasons income inequality has increased rapidly and the Gini coefficient is now almost 0.5. This paper evaluates the degree of income inequality from the perspectives of people's subjective well-being and government concerns. It poses the following question: has income inequality peaked? It also discusses the policy implications of the analysis. The concluding comments of this paper propose a research agenda and suggest possible lessons from China's experience that may be useful for other developing countries.
    Keywords: Rural Poverty Reduction,Inequality,Poverty Impact Evaluation,Services&Transfers to Poor,Labor Policies
    Date: 2013–06–01
  5. By: Frey, Bruno S. (University of Zurich); Stutzer, Alois (University of Basel)
    Abstract: In a simple conceptual framework, we organize a multitude of phenomena related to the (mis)prediction of utility. Consequences in terms of distorted choices and lower wellbeing emerge if people have to trade-off between alternatives that are characterized by attributes satisfying extrinsic desires and alternatives serving intrinsic needs. Thereby the neglect of asymmetries in adaptation is proposed as an important driver. The theoretical analysis is consistent with econometric evidence on commuting choice using data on subjective well-being. People show substantial adaptation to a higher labor income but not to commuting. This may account for the finding that people are not compensated for the burden of commuting.
    Keywords: adaptation, extrinsic/intrinsic attributes, individual decision-making, misprediction, subjective well-being, time allocation
    JEL: A12 D11 D12 D84 I31 J22
    Date: 2013–05
  6. By: Jenderny, Katharina
    Abstract: Mobility of top incomes matters for both the openness of the income elite and the share of total income that this group receives. It is thus an important complement information to the growing snapshot literature on top income concentration. I use microlevel panel data of German income tax files that is highly representative for top income households. Top income mobility is assessed in four dimensions: (i) its stability over time, (ii) the degree of mobility between top income fractiles, (iii) the degree of mobility between equally sized groups and mobility in ranks, both of which do not depend on fractile sizes, and (iv) mobility's impact on distributional results. Mobility in terms of annual fractile changes is high between the richest top income fractiles, which is primarily due to tiny fractile sizes. When the fractiles' sizes are controlled for, top income recipients' mobility is lower than that of lower income tax units. --
    Keywords: income distribution,inequality,top incomes
    JEL: D31 D63 H24
    Date: 2013
  7. By: Notten, Geranda (Graduate School of Public and International Affairs, University of Ottawa, and UNU-MERIT / MGSoG)
    Abstract: This study assesses how child deprivation in Ontario compares to that of Ontario's population in general and that of children in eight European high-income countries (France, Germany, United Kingdom, Belgium, the Netherlands, Denmark and Sweden). This research has been motivated by the publication of UNICEF's 10th Child Report Card. Due to lacking data the report card only compares child deprivation for Europe. For Ontario, however, deprivation information is available in the 2009 Ontario Material Deprivation Survey. Being a province that is close to Canada's average socio-economic performance, replicating the report card methodology allows exploring how child deprivation in Ontario, and possibly Canada, compares to Europe. This study finds that Children in Ontario have somewhat higher deprivation levels (11.7%) than the Ontario population as a whole (9.9%). In comparison to the eight European countries, Ontario also has higher child deprivation levels, ranking right after France which has the highest deprivation rates and 19th out of 30 countries. Just like their European peers, deprivation of Ontario children is associated with families consisting of lone parents and fewer employed household members as well as caretakers having low education and / or low income. Nevertheless, the relative disadvantage that such children in Ontario face seems smaller than in the European countries. As in Europe, there is considerable lack of overlap between income poor and materially deprived households: this study finds that about 6% of the children are both income poor and deprived; 6% are deprived only and 10% are income poor only (78% are neither income poor or deprived). In sum, rather than resembling the Nordic countries, child deprivation in Ontario resembles more to that in Belgium, Germany, United Kingdom and especially France. As Canada's current focus on 'low income' measures excludes half of the materially deprived households, these findings suggest that using material deprivation measures would also contribute to a better and more nuanced understanding of poverty in Canada.
    Keywords: material deprivation, income poverty, child poverty, Ontario, Europe
    JEL: I32 I38
    Date: 2013
  8. By: Snower, Dennis J. (Kiel Institute for the World Economy); Goerlich, Dennis (Kiel Institute for the World Economy)
    Abstract: This paper sheds light on how changes in the organization of work can help to understand increasing wage inequality. We present a theoretical model in which workers with a wider span of competence (higher level of multitasking) earn a wage premium. Since abilities and opportunities to expand the span of competence are distributed unequally among workers across and within education groups, our theory helps to explain (1) rising wage inequality between groups, and (2) rising wage inequality within groups. Under certain assumptions, it also helps to explain (3) the polarization of the income distribution. Using a rich German data set covering a 20-year period from 1986 to 2006, we provide empirical support for our model.
    Keywords: wage inequality, multitasking, tasks, organizational change
    JEL: J31 J24 L23
    Date: 2013–05
  9. By: Böckerman, Petri (Labour Institute for Economic Research); Vainiomäki, Jari (University of Tampere)
    Abstract: We use twin data matched to register-based individual information on earnings and employment to examine the effect of height on life-time labor market outcomes. The use of twin data allows us to remove otherwise unobserved ability and other differences. The twin pair difference estimates from instrumental variables estimation for genetically identical twins reveal a significant height-wage premium for women but not for men. This result implies that cognitive ability explains the effect of height on life-time earnings for men. Additional findings using capital income as the outcome variable suggest that discrimination against short persons may play a role for women.
    Keywords: height, weight, BMI, height premium, earnings, employment
    JEL: I10 J23 J31
    Date: 2013–05
  10. By: Tuomas Malinen (University of Helsinki and HECER)
    Abstract: Recent studies by Atkinson (2011); Rajan (2010); Kumhof and Ranciére (2010); Bordo and Meissner (2013) have assessed the relationship between income inequality and financial stability. Bordo and Meissner found that changes in income inequality do not have an effect on the growth of credit. We extend their study by assessing the relationship between levels of income inequality and leverage. We find that the relationship between inequality and credit is long-run, i.e. trending, in nature and that removing this relation with first differencing will lead to biased inference. In conclusion we find that income inequality is associated with increased leverage in the economy.
    Keywords: top 1% income share, bank loans, unit root, cointegration Classification-JEL: C23, D31, G21
    Date: 2013–03
  11. By: Sami Bibi; Jean-Yves Duclos; Abdelkrim Araar
    Abstract: Income mobility is often thought to equalize permanent incomes and thereby to improve social welfare. The welfare analysis of mobility often fails, however, to account for the cost of the variability of periodic incomes around permanent incomes. This paper assesses the net welfare benefit of mobility by assuming both an aversion to inequality in permanent incomes and an aversion to variability in periodic incomes. The paper further investigates the combined (and comparative) impact of mobility and the tax system (another presumed income equalizer) on the dynamics of income across time and on the inequality of income across individuals. Using panel data, we find that Canada’s tax system limits significantly the redistributive impact of mobility while also lowering considerably the cost of income variability. The permanent income equalizing effect of taxes can reach up to 23 percent of mean income at the higher values of inequality aversion that we use. Globally, the net social welfare effect of both mobility and taxation is (almost always) positive and substantial, often amounting to around 30 percent of mean income. For all choices of parameter values, the tax effect exceeds substantially the net effect of mobility on inequality and social welfare.
    Keywords: Mobility, social welfare, risk, income variability, inequality, permanent income
    JEL: D31 D63 H24
    Date: 2013
  12. By: Haile, Getinet Astatike (University of Nottingham)
    Abstract: This paper attempts to establish empirically whether natives' job satisfaction is adversely affected by having minority co-worker(s). The paper uses nationally representative linked employer-employee data and eight different facets of job satisfaction. Measuring minority co-worker status at the workplace- and occupation-level and employing alternative econometric estimators; the paper finds that on average natives' experience a reduction in job satisfaction due to having minority co-worker(s). The effect found is larger if the co-worker-ship is at the occupation-level.
    Keywords: discrimination, job-related well-being, linked employer-employee data, Britain
    JEL: J7 J15 J82 I31
    Date: 2013–05
  13. By: Stéphanie Jamet; Thomas Chalaux; Vincent Koen
    Abstract: Sweden is a very egalitarian country but inequalities have risen and some groups are poorly integrated into the labour market. For growth to become more inclusive, the gap between the cost of labour and productivity for some groups needs to be reduced, transitions from education to work should be facilitated, incentives to take a job ought to be strengthened and the non-employed need to be protected against the risk of falling into unemployment or inactivity traps. This calls for lowering minimum wages relative to the average wage for groups at risk of becoming unemployed, improving vocational education and training, and extending the coverage of the unemployment insurance while strengthening obligations for the unemployed. To address labour market duality risks, the gap in job protection between temporary and permanent contracts needs to be reduced. Women’s employment is high but the gender wage gap could be narrowed further by enhancing their employment opportunities.<P>Des politiques sociales et du marché du travail au service d'une croissance plus solidaire en Suède<BR>Bien qu’elle soit un pays très égalitaire, la Suède accuse aujourd’hui un creusement des inégalités, et certaines catégories de sa population restent en marge du marché du travail. Pour favoriser une croissance plus solidaire, il est nécessaire de réduire l’écart entre le coût du travail et la productivité de certaines catégories de main-d’oeuvre, de faciliter le passage de l’école à la vie professionnelle, de renforcer les incitations au travail et de protéger les sans-emploi contre le piège du chômage ou de l’inactivité. Pour y parvenir, il faudra abaisser les minima salariaux par rapport au salaire moyen pour les groupes risquant de se retrouver au chômage, améliorer l’enseignement et la formation professionnelle et élargir la couverture de l’assurance-chômage, tout en renforçant les obligations des chômeurs. Pour faire face au risque de dualisme du marché du travail, les disparités dans la protection de l’emploi entre contrats temporaires et contrats permanents devront être réduites. Le taux d’emploi des femmes est certes élevé, mais l’écart salarial par rapport aux hommes pourrait être encore réduit en améliorant les perspectives d’emploi des femmes.
    Keywords: Sweden, employment protection legislation, labour costs, unemployment insurance, public employment services, minimum wage, vocational training, labour market dualism, vocational education, inclusive growth, inequality, gender equality, Suède, assurance chômage, salaire minimum, coût du travail, service public de l'emploi, dualisme du marché du travail, croissance inclusive, inégalités, législation pour la protection de l’emploi, apprentissage et formation professionnelle, égalité des genres
    JEL: I14 I28 I3 J08 J16 J3 J51 J65
    Date: 2013–02–18
  14. By: Fitzsimons, Emla; Mesnard, Alice
    Abstract: This paper investigates how the permanent departure of the father from a household affects children's school enrollment and work participation in rural Colombia. The results indicate that the permanent departure of the father decreases children's school enrollment by approximately 5 percentage points and increases child labor by 3 percentage points. This paper explores the rollout of a conditional-cash-transfer program during the period of study and shows that this program counteracts these adverse effects. When coupled with other evidence, this finding strongly suggests that the channel through which the father's departure most affects children is by reducing the income of very poor households, which tightens their liquidity constraints. This finding also highlights the important safety-net role played by welfare programs with respect to disadvantaged households, particularly because these households are unlikely to have formal or informal mechanisms with which to insure themselves against such vagaries.
    Keywords: Labor Policies,Street Children,Primary Education,Youth and Governance,Population Policies
    Date: 2013–06–01
  15. By: RENNA Francesco; OAXACA Ronald L.; CHOE Chung
    Abstract: This paper develops a uni?ed model of dual and unitary job holding based on a Stone-Geary utility function. The model incorporates both constrained and unconstrained labor supply. Panel data methods are adapted to accommodate multinomial selection into 6 mutually exclusive labor supply regimes. We derive and estimate the associated Slutsky equation wage and income elasticities using data from the British Household Panel Survey 1991- 2008. Our study ?nds that the income and wage elasticities are much larger for labor supply to job 2 compared with job 1.
    Keywords: dual job; labor supply; Stone-Geary
    JEL: J22
    Date: 2013–03
  16. By: Cuesta, Jose
    Abstract: Existing evidence forms a body of"conventional wisdom"on the redistributive impact of fiscal policies that has been recently questioned by more disaggregated analyses. This paper proposes an additional extension to the traditional benefit incidence analysis to explore further the extent to which the conventional wisdom holds, as well as to provide effective guidance in fiscal decision making. The benefit incidence analysis extension includes linking fiscal policies with the concept of equality of opportunities. The paper describes this approach and showcases the application of the proposed"opportunity incidence analysis"to six pilot countries: Liberia, Cote d’Ivoire, Zambia, Tajikistan, Thailand, and Paraguay. Three main contributions stand out: first, opportunity incidence analysis complements traditional benefit incidence analysis by applying its mechanics to a more forward looking concept of equal opportunity. Second, opportunities can be used to target public spending with higher precision. Third, micro-simulations can be used to understand the cost-effectiveness of alternative spending interventions that seek to improve equality of opportunities. All of these results complement the diagnosis produced by traditional incidence analysis and provide useful information to guide specific policy decisions.
    Keywords: Access to Finance,Subnational Economic Development,Public Sector Expenditure Policy,Health Monitoring&Evaluation,Health Systems Development&Reform
    Date: 2013–06–01

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