nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒08‒05
fifteen papers chosen by
Maximo Rossi
University of the Republic

  1. Deconstructing the decline in inequality in Latin America By Lustig, Nora; Lopez-Calva, Luis F.; Ortiz-Juarez, Eduardo
  2. Labour’s Record on Cash Transfers, Poverty, Inequality and the Lifecycle 1997 - 2010 By John Hills
  3. The sources of wage variation: a three-way high-dimensional fixed effects regression model By Sónia Torres; Pedro Portugal; John T. Addison; Paulo Guimarães
  4. The Impact of Within and Between Occupational Inequalities on People's Justice Perceptions towards Their Own Earnings By Carsten Sauer; Peter Valet; Stefan Liebig
  5. Evaluating the Evidence on Income Inequality in Australia in the 2000s By Roger Wilkins
  6. Are Happier People Less Judgmental of Other People's Selfish Behaviors? Laboratory Evidence from Trust and Gift Exchange Games By Michalis Drouvelis; Nattavudh Powdthavee
  7. Unemployment and Business Cycles By Lawrence J. Christiano; Martin S. Eichenbaum; Mathias Trabandt
  8. Racial and Ethnic Differences in Nonwage Compensation By Ritter, Joseph A.
  9. Can Parents' Right to Work Part-Time Hurt Childbearing-Aged Women? A Natural Experiment with Administrative Data By Fernández-Kranz, Daniel; Rodríguez-Planas, Núria
  10. Minimum Wage and the Average Wage in France: A Circular Relationship? By Cette, Gilbert; Chouard, Valérie; Verdugo, Gregory
  11. New Stata code to measure poverty accounting for time By Carlos Gradín
  12. Evidence for Significant Compression of Morbidity In the Elderly U.S. Population By David M. Cutler; Kaushik Ghosh; Mary Beth Landrum
  13. Well-being effects of a major negative externality: The case of Fukushima By Katrin Rehdanz; Heinz Welsch; Daiju Narita; Toshihiro Okubo
  14. Distributional Impact of Commodity Price Shocks: Australia over a Century By Sambit Bhattacharyya; Jeffrey G. Williamson
  15. Endophilia or exophobia: beyond discrimination By Salamanca Acosta N.; Hamermesh D.; Feld J.F.

  1. By: Lustig, Nora; Lopez-Calva, Luis F.; Ortiz-Juarez, Eduardo
    Abstract: Inequality in Latin America unambiguously declined in the 2000s. The Gini coefficient fell in 16 of the 17 countries where there are comparable data, and the change was statistically significant for all of them. Existing studies point to two main explanations for the decline in inequality: a reduction in hourly labor income inequality, and more robust and progressive government transfers. Available evidence suggests that it is the skill premium -- or, more precisely, the returns to primary, secondary, and tertiary education vs. no schooling or incomplete primary schooling -- that drives the decline in hourly labor income inequality. The causes behind the decline in returns to schooling, however, have not been unambiguously established. Some studies find that returns fell because of an increase in the supply of workers with more educational attainment; others, because of a shift in demand away from skilled labor.
    Keywords: Inequality,Poverty Impact Evaluation,Labor Markets,Population Policies,Labor Policies
    Date: 2013–07–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:6552&r=ltv
  2. By: John Hills
    Abstract: Cash transfers (benefits and tax credits) are crucial to the way that inequalities develop over time. This paper looks at how Labour's aims, policies and achievements on poverty and inequality related to its reforms of and spending on cash transfers. - Labour's aims for poverty and inequality were selective. 'Equality of opportunity' was the stated aim, rather than equality of outcome - with a focus on lifting the lowest incomes, not reducing the highest ones. - Labour gave priority to reducing child and pensioner poverty, addressing them through a series of reforms. It increased the share of national income provided through cash transfers to children and pensioners, and increased the value of their cash transfers relative to the poverty line. - By contrast, spending on other transfers to working-age adults fell as a share of national income from the level Labour inherited, while benefits for those without children fell further below the poverty line. - By the end of the period both child poverty and pensioner poverty had fallen considerably, in circumstances where child poverty would have risen without the reforms (and pensioner poverty would have fallen less far). However, poverty for working-age adults without children increased. - The risks of poverty converged between children, their parents, pensioners, and other working age adults. Being a child or a pensioner no longer carried a much greater risk of living in poverty than for other age groups. - Overall income inequality was broadly flat, comparing the start and end of Labour's term in office. But differences in net incomes between age groups were much lower. The smoothing of incomes that occurred across the life cycle could be seen as a striking, if unremarked, achievement.
    Keywords: social security, cash transfers, child poverty, pensioner poverty, New Labour, public spending, life cycle
    JEL: I38
    Date: 2013–07
    URL: http://d.repec.org/n?u=RePEc:cep:sticas:/175&r=ltv
  3. By: Sónia Torres; Pedro Portugal; John T. Addison; Paulo Guimarães
    Abstract: This paper estimates a wage equation with three high-dimensional fixed effects, using a longitudinal matched employer-employee dataset covering virtually all Portuguese wage earners over a little more than two decades. The variation in log real hourly wages is decomposed into different components related to worker, firm, and job title characteristics (both observed and unobserved) and a residual component. It is found that worker permanent heterogeneity is the most important source of wage variation (36.0 percent) and that the unobserved component plays a more important role (21.0 percent) than the observed component (15.0 percent) in explaining wage differentials. Firm permanent effects are less important overall (28.7 percent) and are due in almost equal parts to the unobserved component and the observed component. Job title effects emerge as the least important dimension but they still explain close to 10 percent of wage variation. Equally important, we found definitive evidence of positive assortative matching.
    JEL: J2 J41
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:ptu:wpaper:w201309&r=ltv
  4. By: Carsten Sauer; Peter Valet; Stefan Liebig
    Abstract: This paper investigates justice perceptions of employees towards their own earnings. Earnings are decomposed into three components: (1) In returns based on human capital endowments, (2) in returns based on individual residual differences and (3) in returns based on differences between occupations. The legitimacy of these earnings components is measured via the justice assessments of employees. Based on theoretical models from justice research and class theory it is hypothesized that earnings inequality resulting from human capital factors is evaluated as just, whereas residual inequality and occupational inequality are perceived as unjust. The hypotheses are tested by using data from a German longitudinal panel study (SOEP) of the years 2005 to 2011. These data allow studying changes of individual earnings and justice evaluations in a household panel over the time span of six years (with four biennial measurement points). The findings support our hypotheses indicating that losses or gains in earnings which are due to changes in human capital endowments do not affect justice perceptions of own earnings. Losses or gains stemming from changes of a person's earnings position within the occupational group or the position of a person's occupational group within the earnings hierarchy of a society, however, affect justice perceptions remarkably. Thus, we can show that justice evaluations of own earnings do not solely depend on compensation for individual investments but also on residual differences in earnings within and between occupational groups.
    Keywords: Earnings inequality, fairness of earnings, decomposition of justice evaluations, group identification, panel regression
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp567&r=ltv
  5. By: Roger Wilkins (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: Published ABS data from the Survey of Income and Housing (SIH) show a substantial increase in income inequality between 2001 and 2010. However, almost all of the increase occurred over a period when changes in survey methodology and income concept were occurring. I document these changes, present results of analysis of the SIH unit record data, and present independent evidence on income inequality trends using the HILDA Survey, tax records and National Accounts. I conclude that the SIH overstates the growth in income inequality, even when the income variable examined is notionally consistently defined across surveys. The extent of overstatement is uncertain, however, reflecting ambiguity about the nature and extent of changes to the distribution of household market income.
    Keywords: Income inequality, household surveys, decomposition
    JEL: D3
    Date: 2013–07
    URL: http://d.repec.org/n?u=RePEc:iae:iaewps:wp2013n26&r=ltv
  6. By: Michalis Drouvelis; Nattavudh Powdthavee
    Abstract: What determines people's moral judgments of selfish behaviors? Here we study whether people's normative views in trust and gift exchange games, which underlie many situations of economic and social significance, are themselves functions of positive emotions. We used experimental survey methods to investigate people's moral judgments empirically, and explored whether we could influence subsequent judgments by deliberately making some individuals happier. We found that moral judgments of selfish behaviors in the economic context depend strongly on other people's behaviors, but their relationships are significantly moderated by an increase in happiness for the person making the judgment.
    Keywords: Happiness, moral judgments, trust games, gift exchange games
    JEL: C91
    Date: 2013–07
    URL: http://d.repec.org/n?u=RePEc:cep:cepdps:dp1231&r=ltv
  7. By: Lawrence J. Christiano; Martin S. Eichenbaum; Mathias Trabandt
    Abstract: We develop and estimate a general equilibrium model that accounts for key business cycle properties of macroeconomic aggregates, including labor market variables. In sharp contrast to leading New Keynesian models, wages are not subject to exogenous nominal rigidities. Instead we derive wage inertia from our specification of how firms and workers interact when negotiating wages. Our model outperforms the standard Diamond-Mortensen-Pissarides model both statistically and in terms of the plausibility of the estimated structural parameter values. Our model also outperforms an estimated sticky wage model.
    JEL: E2 E24 E32
    Date: 2013–07
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:19265&r=ltv
  8. By: Ritter, Joseph A.
    Abstract: Previous research has found that, after controlling for test scores, measured black-white wage gaps are small but unemployment gaps remain large. This paper complements this previous research by examining the incidence of employer-provided benefits from the same premarket perspective. However, marriage rates differ substantially by race, and the possibility of health-insurance coverage through a spouse’s employer therefore distorts how the distribution of benefits available in the market to an individual is expressed in the distribution of benefits received. Two imputation strategies are used to address this complication. The evidence suggests that benefit availability gaps are small.
    Keywords: Labor and Human Capital, Public Economics,
    Date: 2013–06
    URL: http://d.repec.org/n?u=RePEc:ags:umaemp:152497&r=ltv
  9. By: Fernández-Kranz, Daniel (IE Business School, Madrid); Rodríguez-Planas, Núria (IZA and IAE-CSIC)
    Abstract: Using a differences-in-differences approach and controlling for individual unobserved heterogeneity, we evaluate the impact of a 1999 law that granted all workers with children younger than 7 years old protection against a layoff if the worker had previously asked for a work-week reduction due to family responsibilities. As only mothers took advantage of these arrangements, we find that after the law, employers were: (i) more likely to let childbearing-aged working women "go" relative to their male counterparts; (ii) less likely to promote childbearing-aged women into good jobs; and (iii) less likely to hire childbearing-aged women. In addition, employers were able to pass at least part of the cost to childbearing-aged women through lower wages, and the amount passed to workers increased with the precariousness of the job. Heterogeneity analysis reveals that the effect on employment transitions is mainly driven by low-skilled workers and those in blue-collar jobs, while the effect on wages holds across all groups. Evidence that the substitution away from (good) jobs widens over time suggests employer learning. These results are robust to the use of different specifications and placebo tests.
    Keywords: female employment transitions and wages, fixed-term and permanent contract
    JEL: C23 C25 C33 J16 J22 J62
    Date: 2013–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7509&r=ltv
  10. By: Cette, Gilbert (Bank of France); Chouard, Valérie (Bank of France); Verdugo, Gregory (Bank of France)
    Abstract: This paper investigates whether increases in the minimum wage in France have the same impact on the average wage when intended to preserve the purchasing power of the minimum wage as when intended to raise it. We find that the impact of the minimum wage on the average wage is strong, but differs depending on the indexation factor. We also find some empirical evidence of circularity between the average wage and the minimum wage.
    Keywords: minimum wage, average wage, France
    JEL: E24 J31 J58
    Date: 2013–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7502&r=ltv
  11. By: Carlos Gradín (Universidade de Vigo and EQUALITAS)
    Abstract: The purpose of this presentation is to introduce a new user-written code that allows for measuring poverty in a panel of individuals. It complements existing poverty codes for a cross-section of individuals (e.g. povdeco, poverty) by producing a new family of indices proposed by Gradín, Cantó and Del Río (Review of Income and Wealth, 2012). This family of indices is a natural extension of the popular Foster-Greer-Thorbecke (FGT) poverty indices to the longitudinal case in which individuals are observed for more than one period. It takes into account that longer poverty spell durations and more unequal poverty profiles aggravate poverty. These measures have attractive decomposability properties. One particular advantage of this family of indices is that it embraces other indices recently proposed in the literature as particular cases.
    Date: 2013–08–01
    URL: http://d.repec.org/n?u=RePEc:boc:norl13:19&r=ltv
  12. By: David M. Cutler; Kaushik Ghosh; Mary Beth Landrum
    Abstract: The question of whether morbidity is being compressed into the period just before death has been at the center of health debates in the United States for some time. Compression of morbidity would lead to longer life but less rapid medical spending increases than if life extension were accompanied by expanding morbidity. Using nearly 20 years of data from the Medicare Current Beneficiary Survey, we examine how health is changing by time period until death. We show that functional measures of health are improving, and more so the farther away from death the person is surveyed. Disease rates are relatively constant at all times until death. On net, there is strong evidence for compression of morbidity based on measured disability, but less clear evidence based on disease-free survival.
    JEL: I1 J11
    Date: 2013–07
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:19268&r=ltv
  13. By: Katrin Rehdanz; Heinz Welsch; Daiju Narita; Toshihiro Okubo
    Abstract: Following a major earthquake off the Pacific coast of Japan, a tsunami disabled the power supply and cooling of three reactors in Fukushima, causing a major nuclear accident on 11 March 2011. Based on a quasi-experimental difference-in-differences approach we use panel data for 5,979 individuals interviewed in Japan before and after the accident to analyze the effect of the accident on people’s subjective well-being. Our main hypotheses are that this effect declines with distance to the place of the event but also with distance to other nuclear power plants. To test these hypotheses, we use Geographical Information Systems to merge the well-being data with information on respondents’ distance to the Fukushima nuclear plant and on their proximity to nuclear power stations in general. Our empirical results suggest the existence of significant well-being effects of the combined event of the earthquake, tsunami and nuclear accident that are proportional to proximity to the Fukushima site being equivalent to up to 72 percent of annual household income. We find no evidence for increased nation-wide worry about the presence of nuclear power plants near people’s place of residence
    Keywords: Fukushima, subjective well-being, nuclear disaster, difference-in-differences, willingness to pay
    JEL: D62 Q51 Q54 I31
    Date: 2013–07
    URL: http://d.repec.org/n?u=RePEc:kie:kieliw:1855&r=ltv
  14. By: Sambit Bhattacharyya; Jeffrey G. Williamson
    Abstract: This paper studies the distributional impact of commodity price shocks over the both the short and very long run. Using a GARCH model, we find that Australia experienced more volatility than many commodity exporting developing countries over the periods 1865-1940 and 1960-2007. A single equation error correction model suggests that commodity price shocks increase the income share of the top 1, 0.05, and 0.01 percents in the short run. The very top end of the income distribution benefits from commodity booms disproportionately more than the rest of the society. The short run effect is mainly driven by wool and mining and not agricultural commodities. A sustained increase in the price of renewables (wool) reduces inequality whreas the same for non-renewable resources (minerals) increases inequality. We expect that the initial distribution of land and mineral resources explains the asymmetric result.
    Keywords: commodity price shocks; commodity exporters; top incomes; inequality
    JEL: F14 F43 N17 O13
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:csa:wpaper:2013-11&r=ltv
  15. By: Salamanca Acosta N.; Hamermesh D.; Feld J.F. (ROA)
    Abstract: The immense literature on discrimination treats outcomes as relative One group suffers compared to another. But does a difference arise because agents discriminate against othersare exophobicor because they favor their own kindare endophilic This difference matters, as the relative importance of the types of discrimination and their inter-relation affect market outcomes. Using a field experiment in which graders at one university were randomly assigned students exams that did or did not contain the students names, on average we find favoritism but no discrimination by nationality, and neither favoritism nor discrimination by gender, findings that are robust to a wide variety of potential concerns. We observe heterogeneity in both discrimination and favoritism by nationality and by gender in the distributions of graders preferences. We show that a changing correlation between endophilia and exophobia can generate perverse predictions for observed market discrimination.
    Keywords: Economic Methodology: General; Education and Inequality; Labor Discrimination;
    JEL: J71 I24 B40
    Date: 2013
    URL: http://d.repec.org/n?u=RePEc:dgr:umaror:2013008&r=ltv

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