New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒08‒10
eleven papers chosen by

  1. Income Inequality, Equality of Opportunity, and Intergenerational Mobility By Corak, Miles
  2. Top incomes and the measurement of inequality in Egypt By Hlasny, Vladimir; Verme, Paolo
  3. Inequality and bi-polarization in socioeconomic status and health: Ordinal approaches By Bénédicte Apouey; Jacques Silber
  4. Well-being effects of a major negative externality: The case of Fukushima By Katrin Rehdanz; Welsch Heinz; Daiju Naritaa; Toshihiro Okubod
  5. Distributional Impact of Commodity Price Shocks: Australia over a Century By Sambit Bhattacharyya; Jeffrey G. Williamson
  6. Transfers to Households with Children and Child Development By Daniela Del Boca; Christopher Flinn; Matthew Wiswall
  7. Interpreting Trends in Intergenerational Income Mobility By Nybom, Martin; Stuhler, Jan
  8. How Redistributive is Fiscal Policy in Latin America?: The Case of Chile and Mexico By Barbara Castelletti
  9. Trends in Poverty and Inequality in Decentralising Indonesia By Riyana Miranti; Yogi Vidyattama; Erick Hansnata; Rebecca Cassells; Alan Duncan
  10. Unemployment and Domestic Violence: Theory and Evidence By Anderberg, Dan; Rainer, Helmut; Wadsworth, Jonathan; Wilson, Tanya
  11. A mapping of labor mobility costs in developing countries By Artuc, Erhan; Lederman, Daniel; Porto, Guido

  1. By: Corak, Miles (University of Ottawa)
    Abstract: Families, labor markets, and public policies all structure a child’s opportunities and determine the extent to which adult earnings are related to family background. Cross-country comparisons and the underlying trends suggest that these drivers will most likely lower the degree of intergenerational earnings mobility for the next generation of Americans coming of age in a more polarized labor market, while the substantial rise in the income shares of the top 1 percent, their access to sources of high-quality human capital investment for their children, and the intergenerational transmission of employers and wealth will imply a much higher rate of transmission of economic advantage at the very top.
    Keywords: human capital, intergenerational mobility, inequality
    JEL: D31 D63 J62
    Date: 2013–07
  2. By: Hlasny, Vladimir; Verme, Paolo
    Abstract: By all accounts, income inequality in Egypt is low and had been declining during the decade that preceded the 2011 revolution. As the Egyptian revolution was partly motivated by claims of social injustice and inequalities, this seems at odds with a low level of income inequality. Moreover, while income inequality shows a decline between 2000 and 2009, the World Values Surveys indicate that the aversion to inequality has significantly increased during the same period and for all social groups. This paper utilizes a range of recently developed statistical techniques to assess the true value of income inequality in the presence of a range of possible measurement issues related to top incomes, including item and unit non-response, outliers and extreme observations, and atypical top income distributions. The analysis finds that correcting for unit non-response significantly increases the estimate of inequality by just over 1 percentage point, that the Egyptian distribution of top incomes follows rather closely the Pareto distribution, and that the inverted Pareto coefficient is located around median values when compared with 418 household surveys worldwide. Hence, income inequality in Egypt is confirmed to be low while the distribution of top incomes is not atypical compared with what Pareto had predicted and compared with other countries in the world. This would suggest that the increased frustration with income inequality voiced by Egyptians and measured by the World Values Surveys is driven by factors other than income inequality.
    Keywords: Inequality,Rural Poverty Reduction,Poverty Impact Evaluation,Income,Economic Theory&Research
    Date: 2013–08–01
  3. By: Bénédicte Apouey (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)); Jacques Silber (Department of Economics - Bar-Ilan University, CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development)
    Abstract: Traditional indices of bi-dimensional inequality and polarization were developed for cardinal variables and cannot be used to quantify dispersion in ordinal measures of socioeconomic status and health. This paper develops two approaches to the measurement of inequality and bi-polarization using only ordinal information. An empirical illustration is given for 24 European Union countries in 2004-2006 and 2011. Results suggest that inequalities and bi-polarization in income and health are especially large in Estonia and Portugal, and that inequalities have significantly increased in recent years in Austria, Belgium, Finland, Germany, and the Netherlands, whereas bi-polarization significantly decreased in France, Portugal, and the UK.
    Keywords: Inequality ; Bi-polarization ; Ordinal variables ; Self-assessed health
    Date: 2013–08–05
  4. By: Katrin Rehdanz (IFW Kiel); Welsch Heinz (University of Oldenburg, Department of Economics); Daiju Naritaa; Toshihiro Okubod
    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
  5. By: Sambit Bhattacharyya; Jeffrey G. Williamson
    Abstract: This paper studies the distributional impact of commodity price shocks over 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 whereas the same for non-renewable resources (minerals) increases inequality. We expect 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
  6. By: Daniela Del Boca (University of Torino and CCA); Christopher Flinn (New York University and CCA); Matthew Wiswall (Arizona State University)
    Abstract: In this paper we utilize a model of household investments in the cognitive development of children to explore the impact of various transfer policies on the distribution of child cognitive outcomes in target populations. We develop a cost criterion that can be used to compare the cost effectiveness of unrestricted, restricted, and conditional cash transfer systems, and ï¬nd that conditional cash transfers are the most cost efficient way to attain any given gain in average child quality in a target population. Of course, this is only true if one uses efficiently designed cash transfer systems, and we are able to explore their design using our modeling framework.
    Keywords: Time Allocation; Child Development, conditional and unconditional cash transfer
    JEL: J13 D1
    Date: 2013–04
  7. By: Nybom, Martin (SOFI, Stockholm University); Stuhler, Jan (University College London)
    Abstract: We examine how intergenerational income mobility responds to structural changes in a simple theoretical model of intergenerational transmission, deviating from the existing literature by explicitly analyzing the transition path between steady states. We find that mobility depends not only on current but also on past transmission mechanisms, such that changing policies, institutions or economic conditions may generate long-lasting trends. Variation in mobility levels across countries may thus be partly explained by differences in former institutions; current mobility trends may be caused by institutional changes in the past. We further find that transitions between steady states tend to be non-monotonic. Changes in the relative returns to different skills or a shift towards a less plutocratic and more meritocratic economy raise mobility initially, but also generate a negative trend over subsequent generations. Times of change thus tend to be times of high mobility, and declining mobility today may not reflect a recent deterioration of equality of opportunity but rather major improvements made in the past.
    Keywords: intergenerational mobility, intergenerational income elasticity, mobility trends, steady state, transition path
    JEL: J62 D31
    Date: 2013–07
  8. By: Barbara Castelletti
    Abstract: This paper looks at the incidence of fiscal policy on the income distribution for Chile and Mexico. Notably by broadening the income concept to account for in-kind benefits and taxes, this paper provides a full picture of the effect of fiscal policy on reducing income inequality. The contrast between the estimates for Chile and Mexico and the rest of OECD countries provides an overall snapshot of income distribution of high inequality countries vis-à-vis advanced economies. The breakdown of the Gini coefficient at a detailed level of policy instruments also enables us to identify the main channels of income inequality reduction and shows how these results differ across countries. Our results for Chile and Mexico suggest that fiscal policy significantly benefits the poorest income groups, mainly through in-kind services such as education and health care. Nevertheless, when compared with outcomes in high-income countries, the effectiveness of fiscal policy in reducing inequality is still limited. Cash transfers (especially those for old-age programmes), direct taxation and, to some extent, a higher market inequality are the main factors behind this difference.<BR>Cet article étudie l’impact des politiques fiscales sur la répartition des revenus au Chili et au Mexique. En outre, en intégrant dans la définition des prestations les transferts en nature et les taxes, cet article dresse un portrait complet de l’effet des politiques fiscales dans la réduction des inégalités salariales. Les différences dans les estimations du Chili et du Mexique avec le reste des pays de l’OCDE permettent un aperçu général de la répartition des revenus dans les pays les plus inégalitaires par rapport aux économies avancées. L’analyse du coefficient de Gini à un niveau détaillé des instruments politiques nous permet également d’identifier les principaux canaux de réduction des inégalités et de comprendre l’origine des divergences entre pays. Nos résultats pour le Chili et le Mexique suggèrent que la politique fiscale bénéficie significativement aux pays à faible revenu, principalement à travers des services en nature tels que l’éducation et les services de santé. Toutefois, en comparaison avec les résultats des pays à haut revenu, l’efficacité de la politique fiscale sur la réduction des inégalités reste limitée. Les transferts en espèces (particulièrement ceux liés au système des retraites), l’imposition directe et, dans une certaine mesure, de fortes inégalités de marché sont les principaux facteurs de cette différence.
    Keywords: fiscal policy, Latin America, income distribution, tax-benefit analysis, politique fiscale, Amérique latine, répartition des revenus, analyse socio-fiscal
    JEL: D31 H20 H31 H40 I30 I32 I38
    Date: 2013–07–24
  9. By: Riyana Miranti; Yogi Vidyattama; Erick Hansnata; Rebecca Cassells; Alan Duncan
    Abstract: As one of the world’s largest emerging economies, Indonesia has experienced rapid economic growth and substantial reduction of poverty over the past three decades, particularly prior to the 1997-98 Asian Financial Crisis. After the crisis, Indonesia entered a new development phase that saw the fall of the Suharto government and new governance which moved highly centralised policies and powers towards a decentralised process. This research report analyses economic and social patterns and trends of poverty and inequality in Indonesia with a particular focus on the decentralisation period from 2001 to 2010.The Indonesian political and economic environment has changed significantly during this period and this had implications for individual wellbeing, regional economic prosperity and national economic growth. The report finds that in general, absolute poverty rates have continued to decline during the decentralisation period although the reduction has not been as strong as it was prior to the Asian economic crisis. In contrast, consumption inequality has increased during the same period. New estimates of growth and inequality elasticity of poverty suggest that this rising inequality has been offsetting the positive benefits of consumption growth on poverty.<BR>En tant que l'une des plus grandes économies émergentes du monde, l'Indonésie a connu une croissance économique rapide et une réduction substantielle de la pauvreté au cours des trois dernières décennies, en particulier avant la crise financière asiatique de 1997-1998. Après cette crise, l'Indonésie est entrée dans une nouvelle phase de développement qui a vu la chute du gouvernement Suharto, et qui a connu une nouvelle gouvernance délaçant des politiques et des pouvoirs fortement centralisés vers un processus décentralisé. Ce rapport analyse les caractéristiques et tendances économiques et sociales de la pauvreté et de l'inégalité en Indonésie, avec un accent particulier sur la période de décentralisation de 2001 à 2010. L’environnement politique et économique indonésien a considérablement changé au cours de cette période. Cela a eu des répercussions sur le bien-être individuel, la prospérité économique régionale et à la croissance économique nationale. Le rapport constate qu'en général, les taux de pauvreté absolue ont continué à baisser au cours de la période de décentralisation, mais la baisse n'a pas été aussi forte qu'elle l'avait été avant la crise économique asiatique. En revanche, les inégalités (mesurées par la consommation) ont augmenté durant la même période. Des nouvelles estimations de la croissance et de l'élasticité de l'inégalité de la pauvreté suggèrent que cette inégalité croissante a compensé les effets positifs de la croissance de la consommation sur la pauvreté.
    Keywords: poverty, inequality, regional disparities, poverty alleviation strategy
    JEL: I32 I38 R12
    Date: 2013–07–23
  10. By: Anderberg, Dan (Royal Holloway, University of London); Rainer, Helmut (Ifo Institute for Economic Research); Wadsworth, Jonathan (Royal Holloway, University of London); Wilson, Tanya (Royal Holloway, University of London)
    Abstract: Is unemployment the overwhelming determinant of domestic violence that many commentators expect it to be? The contribution of this paper is to examine, theoretically and empirically, how changes in unemployment affect the incidence of domestic abuse. The key theoretical prediction is that male and female unemployment have opposite-signed effects on domestic abuse: an increase in male unemployment decreases the incidence of intimate partner violence, while an increase in female unemployment increases domestic abuse. Combining data on intimate partner violence from the British Crime Survey with locally disaggregated labor market data from the UK's Annual Population Survey, we find strong evidence in support of the theoretical prediction.
    Keywords: domestic violence, unemployment
    JEL: J12 D19
    Date: 2013–07
  11. By: Artuc, Erhan; Lederman, Daniel; Porto, Guido
    Abstract: Estimates of labor mobility costs are needed to assess the responses of employment and wages to trade shocks when factor adjustment is costly. Available methods to estimate those costs rely on panel data, which are seldom available in developing countries. The authors propose a method to estimate mobility costs using readily obtainable data worldwide. The estimator matches the changes in observed sectoral employment allocations with the predicted allocations from a model of costly labor adjustment. This paper estimates a world map of labor mobility costs and uses those estimates to explore the response of labor markets to trade policy.
    Keywords: Labor Markets,Labor Policies,Economic Theory&Research,Work&Working Conditions,Labor Management and Relations
    Date: 2013–08–01

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