nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒09‒13
eleven papers chosen by
Maximo Rossi
University of the Republic

  1. Inequality and poverty in the United States: the aftermath of the Great Recession By Jeffrey P. Thompson; Timothy M. Smeeding
  2. Explaining Rising Income Inequality in Germany, 1991-2010 By Kai Daniel Schmid; Ulrike Stein
  3. Inequality-Adjusted Gender Wage Differentials in Germany By Ekaterina Selezneva; Philippe Van Kerm
  4. Doing Well in Reforming the Labour Market? Recent Trends in Job Stability and Wages in Germany By Giannelli, Gianna Claudia; Jaenichen, Ursula; Rothe, Thomas
  5. Career progression, economic downturns, and skills By Jerome Adda; Christian Dustmann; Costas Meghir; Jean-Marc Robin
  6. Regression Analysis of Country Effects Using Multilevel Data: A Cautionary Tale By Bryan, Mark L.; Jenkins, Stephen P.
  7. People Skills and the Labor-Market Outcomes of Underrepresented Groups By Bas ter Weel; Lex Borghans; Bruce A. Weinberg
  8. Changes in education, employment and earnings in South Africa – A cohort analysis By Nicola Branson; Cally Ardington; David Lam; Murray Leibbrandt
  9. Parental benefits improve parental well-being: evidence from a 2007 policy change in Germany By Mikko Myrskylä; Rachel Margolis
  10. Segregated integration : recent trends in the Austrian gender division of labor By Margareta Kreimer; Ricardo Mora
  11. Preferences and biases in educational choices and labor market expectations: shrinking the black box of gender By Ernesto Reuben; Matthew Wiswall; Basit Zafar

  1. By: Jeffrey P. Thompson; Timothy M. Smeeding
    Abstract: This paper explores trends in inequality and poverty using both market and after-tax and transfer income in the period during and after the Great Recession (through 2011). Using market income (or wages), inequality and poverty rose sharply between 2008 and 2010. The primary exception is measures for the top of the distribution; annual wage and income shares of the top one percent dipped in 2008 and 2009. Including taxes and transfers, broad-based inequality measures also fell, and the poverty increase was muted. Tax and transfer policies lowered inequality and poverty, but those policies were not equal across the population. Poverty declined among the elderly, changed little among children, and rose sharply among the working-age. Inequality fell across the total population, but was unchanged among working-age households. Since 2009, as the economy has grown slowly, inequality has risen for all groups, and poverty remains high for the working-age.
    Date: 2013
  2. By: Kai Daniel Schmid; Ulrike Stein
    Abstract: In Germany, inequality of net equivalized income increased noticeably in the first half of the new millennium. We aim to identify the main drivers of this rise in income inequality since the early 1990s. We provide a broad overview of the circumstances under which inequality evolved, i.e. which changes in the German economy are most likely to provide an explanation for changes in income concentration. To explain the development of the distribution of net equivalized income we analyze changes in the distribution of market income as well as shifts in the effectiveness of public redistribution mechanisms. We find that cyclical and structural changes in the labor market, the increasing relevance of capital income as well as the decreasing effectiveness of the public mechanisms of income redistribution are the main explanatory factors for the development of income inequality. In addition to this, we discuss several issues that are of high relevance for the distribution of economic resources but are not directly covered in the analysis of net equivalized income. Most significantly, the design of the tax and social security contributions burden as well as the rising relevance of value-added taxes have exhibited negative redistributive effects for low income households.
    Keywords: Income Inequality, Redistribution, SOEP
    JEL: D12 I30 J30
    Date: 2013
  3. By: Ekaterina Selezneva; Philippe Van Kerm
    Abstract: This paper exploits data from the German Socio-Economic Panel (SOEP) to re-examine the gender wage gap in Germany on the basis of inequality-adjusted measures of wage differentials which fully account for gender differences in pay distributions. The inequality-adjusted gender pay gap measures are significantly larger than suggested by standard indicators, especially in East Germany. Women appear penalized twice, with both lower mean wages and greater wage inequality. A hypothetical risky investment question collected in 2004 in the SOEP is used to estimate individual risk aversion parameters and benchmark the ranges of inequality-adjusted wage differentials measures.
    Keywords: Gender gap, wage differentials, wage inequality, expected utility, risk aversion, East and West Germany, SOEP, Singh-Maddala distribution, copula-based selection model
    JEL: D63 J31 J70
    Date: 2013
  4. By: Giannelli, Gianna Claudia (University of Florence); Jaenichen, Ursula (Institute for Employment Research (IAB), Nuremberg); Rothe, Thomas (Institute for Employment Research (IAB), Nuremberg)
    Abstract: The German "employment miracle", with a weak decline in employment and low unemployment during the great recession, seems to be a good example for a successful labour market reform. Nevertheless, there are concerns about rising inequality in the labour market. In this paper we analyze the quality of newly started jobs between 1998 and 2010 using a huge administrative data set which allows us to look at job durations and earnings for different groups of workers. We discuss changes in the distributions of job durations and earnings over time, and present microeconometric models controlling for individual, firm and regional characteristics. Our results show a fairly constant level of overall job stability, but decreasing real wages and rising wage dispersion over time.
    Keywords: labour market reforms, job quality, job duration, real wages, Germany, 1998-2010
    JEL: C34 C41 J31 J62 J68
    Date: 2013–08
  5. By: Jerome Adda (Institute for Fiscal Studies and European University Institute); Christian Dustmann (Institute for Fiscal Studies and University College London); Costas Meghir (Institute for Fiscal Studies and Yale University); Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po)
    Abstract: This paper analyses the career progression of skilled and unskilled workers with a focus on how careers are affected by economic downturns and whether formal skills, acquired early on, can shield workers from the effect of recessions. Using detailed administrative data for Germany for numerous birth cohorts across different regions, we follow workers from labour market entry onwards and estimate a dynamic life-cycle model of vocational training choice, labour supply, and wage progression. Most particularly, our model allows for labour market frictions that vary by skill group and over the business cycle. We find that sources of wage growth differ: learning-by-doing is an important component for unskilled workers early on in their careers, while job mobility is important for workers who acquire skills in an apprenticeship scheme before labour market entry. Likewise, economic downturns affect skill groups through very different channels: unskilled workers lose out from a decline in productivity and human capital, whereas skilled individuals suffer mainly from lack of mobility.
    Keywords: wage determination, skills, business cycles, apprenticeship training, job mobility
    Date: 2013–08
  6. By: Bryan, Mark L. (University of Essex); Jenkins, Stephen P. (London School of Economics)
    Abstract: Cross-national differences in outcomes are often analysed using regression analysis of multilevel country datasets, examples of which include the ECHP, ESS, EU-SILC, EVS, ISSP, and SHARE. We review the regression methods applicable to this data structure, pointing out problems with the assessment of country-level factors that appear not to be widely appreciated, and illustrate our arguments using Monte-Carlo simulations and analysis of women's employment probabilities and work hours using EU SILC data. With large sample sizes of individuals within each country but a small number of countries, analysts can reliably estimate individual-level effects within each country but estimates of parameters summarising country effects are likely to be unreliable. Multilevel (hierarchical) modelling methods are commonly used in this context but they are no panacea.
    Keywords: multilevel modelling, cross-national comparisons, country effects
    JEL: C52 C81 O57
    Date: 2013–08
  7. By: Bas ter Weel; Lex Borghans; Bruce A. Weinberg
    Abstract: This paper shows that people skills are important determinants of labor-market outcomes, including occupational choice and wages. Technological and organizational changes have increased the importance of people skills in the workplace. We particularly focus on how the increased importance of people skills has affected the labor-market outcomes of underrepresented groups assuming gender differences in interactions and that cultural differences (including prejudice) may impede cross-racial and ethnic interactions. Our estimates for Britain, Germany and the United States are consistent with such an explanation. Acceleration in the rate of increase in the importance of people skills between the late 1970s and early 1990s in the US can help explain why the gender-wage gap closed and the black-white wage gap stagnated in these years relative to the preceding and following years.
    JEL: J16 J21 J24 J31
    Date: 2013–09
  8. By: Nicola Branson (SALDRU, School of Economics, University of Cape Town); Cally Ardington (SALDRU, School of Economics, University of Cape TownAuthor-Email:); David Lam (; Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town)
    Abstract: Rapid increases in educational attainment and the massification of secondary education in South Africa resulted in substantial differences in the supply and quality of educated workers across generations. This paper describes changes in the distribution of education across birth cohorts and how these relate to changes in the probability of employment, the distribution of earnings and the earnings premiums to complete secondary and tertiary education. Tracking cohorts over time allows us to disentangle generational and life-cycle components of these changes. Younger cohorts are shown to have increasingly faced worse labour market conditions than their predecessors, although this may be changing for cohorts born after 1980. Furthermore, the relative reward to complete secondary and tertiary education has remained positive, and increased for tertiary educated cohorts born since the 1960s. Increases in earnings inequality among those with complete secondary education suggests increased variance in education quality during the period when completed secondary education expanded rapidly.
    Keywords: Educational attainment, Earnings, Employment, South Africa, Cohort analysis
    JEL: I25 I24 J24
    Date: 2013
  9. By: Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Rachel Margolis
    Abstract: Family policies aim to influence fertility and labor force participation, and support families. However, often only fertility and labor supply are considered in policy evaluations. For example, the 2007 extension of parental leave benefits in Germany is generally considered unsuccessful because changes in fertility and labor force participation were modest. However, parental wellbeing is also important, in itself and as a determinant of child well-being. This paper is the first to consider the effect of parental leave policies on parental well-being. We analyze the German 2007 parental benefits reform and find that the extension of benefits strongly increased parental well-being around the birth of a child. The effect is observed for first and second births and for various sub-populations. A placebo test using data from Britain where there was no policy change supports the causal interpretation. Our results cast the success of the German 2007 policy change in new light. Parental leave benefits have an important direct impact on parental wellbeing.
    Keywords: Germany, parenthood
    JEL: J1 Z0
    Date: 2013–08
  10. By: Margareta Kreimer; Ricardo Mora
    Abstract: Using micro data from the Austrian Labor Force Survey, this paper explores how decreases in the gender differential in participation rates together with increasing differentials in the incidence of part-time jobs and stable or rising levels of occupational segregation by gender affect the gender division of labor. To so so, we propose an index for the gender division of labor based on the Mutual Information index. Our main results show that the gender division of labor is very stable along the 16-year period. This is so because although the rising female labor force participation reduces the gender division of labor, increases in gender differences in the incidence of part-time jobs and increases in occupational segregation result in greater division of labor across genders. These results are robust to alternative definitions of economic activity and labor market involvement and can also be found after controlling for educational levels and fields.
    Keywords: Gender segregation, Female labor force participation, Part-time jobs
    Date: 2013–09
  11. By: Ernesto Reuben; Matthew Wiswall; Basit Zafar
    Abstract: Standard observed characteristics explain only part of the differences between men and women in education choices and labor market trajectories. Using an experiment to derive students' levels of overconfidence, and preferences for competitiveness and risk, this paper investigates whether these behavioral biases and preferences explain gender differences in college major choices and expected future earnings. In a sample of high-ability undergraduates, we find that competitiveness and overconfidence, but not risk aversion, are systematically related with expectations about future earnings: Individuals who are overconfident and overly competitive have significantly higher earnings expectations. Moreover, gender differences in overconfidence and competitiveness explain about 18 percent of the gender gap in earnings expectations. These experimental measures explain as much of the gender gap in earnings expectations as a rich set of control variables, including test scores and family background, and they are poorly proxied by these same control variables, underscoring that they represent independent variation. While expected earnings are related to college major choices, the experimental measures are not related with college major choice.
    Keywords: Career development - Sex differences ; Women - Education ; Universities and colleges ; Risk-taking (Psychology) ; Prediction (Psychology) ; Competition
    Date: 2013

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