nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒11‒29
eleven papers chosen by
Maximo Rossi
University of the Republic

  1. Changes in Income Distributions and the Role of Tax-Benefit Policy During the Great Recession: An International Perspective By Bargain, Olivier; Callan, Tim; Doorley, Karina; Keane, Claire
  2. Income Mobility By Jäntti, Markus; Jenkins, Stephen P.
  3. The Ins and Outs of Top Income Mobility By Aaberge, Rolf; Atkinson, Anthony B.; Modalsli, Jorgen Heibo
  4. Recent Trends in Inequality and Poverty in Developing Countries By Facundo Alvaredo; Leonardo Gasparini
  5. Child deprivation in Ontario: A (less than perfect) comparison with Europe By Notten, Geranda
  6. Top incomes and the measurement of inequality in Egypt By Vladimir Hlasny; Paolo Verme
  7. Does Wealth Inequality Matter for Growth? The Effect of Billionaire Wealth, Income Distribution, and Poverty By Bagchi, Sutirtha; Svejnar, Jan
  8. The Side Effect of Pension Reforms on Training: Evidence from Italy By Brunello, Giorgio; Comi, Simona
  9. The occupational segregation of Black women in the United States: A look at its evolution from 1940 to 2010 By Olga Alonso-Villar; Coral del Rio
  10. Income Comparisons and Non-Cognitive Skills By Santi Budria; Ada Ferrer-i-Carbonell
  11. On a family of achievement and shortfall inequality indices By Satya R. Chakravarty; Nachiketa Chattopadhyay; Conchita D’Ambrosio

  1. By: Bargain, Olivier (University of Aix-Marseille II); Callan, Tim (Economic and Social Research Institute, Dublin); Doorley, Karina (IZA); Keane, Claire (ESRI, Dublin)
    Abstract: This paper examines the impact on inequality and poverty of the economic crisis in four European countries, namely France, Germany, the UK and Ireland, and the contribution of tax and benefit policy changes. The period examined, 2008 to 2010, was one of great economic turmoil, yet it is unclear whether changes in inequality and poverty rates over this time period were mainly driven by changes in market income distributions or by tax-benefit policy reforms. We disentangle these effects by producing counterfactual ("no reform") scenarios using tax-benefit microsimulation and representative household surveys of each country. For the period under study, we find that the policy reaction has contributed to stabilizing or even decreasing inequality and relative poverty in the UK, France and especially in Ireland, a country where rising unemployment would have otherwise increased poverty. Market income inequality has nonetheless pushed up inequality and relative poverty in France. Relative poverty and, notably, child poverty, have increased in Germany due to policy responses combined with the increasing inequality of market income.
    Keywords: tax-benefit policy, inequality, poverty, decomposition, microsimulation, crisis
    JEL: H23 H53 I32
    Date: 2013–11
  2. By: Jäntti, Markus (SOFI, Stockholm University); Jenkins, Stephen P. (London School of Economics)
    Abstract: This paper is prepared as a chapter for the Handbook of Income Distribution, Volume 2 (edited by A. B. Atkinson and F. Bourguignon, Elsevier-North Holland, forthcoming). Like the other chapters in the volume (and its predecessor), the aim is to provide comprehensive review of a particular area of research. We survey the literature on income mobility, aiming to provide an integrated discussion of mobility within- and between-generations. We review mobility concepts, descriptive devices, measurement methods, data sources, and recent empirical evidence.
    Keywords: intragenerational mobility, intergenerational mobility, income mobility, earnings mobility
    JEL: D31 I30
    Date: 2013–11
  3. By: Aaberge, Rolf (Statistics Norway); Atkinson, Anthony B. (Nuffield College, Oxford); Modalsli, Jorgen Heibo (Statistics Norway)
    Abstract: This paper is concerned with the question of whether top income earners are permanently there or only temporarily receive the highest incomes. How much mobility is there at the top of the income distribution, and how has mobility changed over time? The paper makes both a methodological and an empirical contribution to answering these questions. The first part of the paper introduces a family of top income mobility measures based on differences in average annual incomes of top income earners in short-term and long-term distributions of income. Norwegian income tax records are then employed to study top income mobility in Norway since 1967. The results reveal low levels of top income mobility, but a relatively large increase in mobility starting at the same time as the income shares of the top income receivers started to increase around 1990.
    Keywords: top income shares, income mobility, inequality
    JEL: J31 E24 D63 N34
    Date: 2013–11
  4. By: Facundo Alvaredo (EMod/OMI-Oxford University, Paris School of Economics and CONICET.); Leonardo Gasparini (CEDLAS, UNLP.)
    Abstract: This chapter reviews the empirical evidence on the levels and trends in income/consumption inequality and poverty in developing countries. It includes a discussion of data sources and measurement issues, evidence on the levels of inequality and poverty across countries and regions, an assessment of trends in these variables since the early 1980s, and a general discussion of their determinants. There has been tremendous progress in the measurement of inequality and poverty in the developing world, although serious problems of consistency and comparability still remain. The available evidence suggests that on average the levels of national income inequality in the developing world increased in the 1980s and 1990s, and declined in the 2000s. There was a remarkable fall in income poverty since the early 1980s, driven by the exceptional performance of China over the whole period, and the generalized improvement in living standards in all the regions of the developing world in the 2000s.
    JEL: D31 I32
    Date: 2013–11
  5. 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
  6. By: Vladimir Hlasny (Ewha Womans University, Seoul, Korea); Paolo Verme (World Bank)
    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: Top incomes, inequality measures, survey nonresponse, Pareto distribution, parametric estimation, Egypt.
    JEL: D31 D63 N35
    Date: 2013–08
  7. By: Bagchi, Sutirtha (University of Michigan); Svejnar, Jan (Columbia University)
    Abstract: A fundamental question in social sciences relates to the effect of wealth inequality on economic growth. Yet, in tackling the question, researchers have had to use income as a proxy for wealth. We derive a global measure of wealth inequality from Forbes magazine's listing of billionaires and compare its effect on growth to the effects of income inequality and poverty. We find that wealth inequality reduces economic growth, but when we control for the fact that some billionaires acquired wealth through political connections, the effect of politically connected wealth inequality is negative, while politically unconnected wealth inequality, income inequality, and initial poverty have no significant effect.
    Keywords: economic growth, wealth inequality, income inequality, billionaires, political connections
    JEL: D31 O40 O43
    Date: 2013–11
  8. By: Brunello, Giorgio (University of Padova); Comi, Simona (University of Milan Bicocca)
    Abstract: Due to pension reforms, minimum retirement age increased substantially in Italy between the second part of the 1990s and the early 2000s. We compare the training participation of pre- and post - reform cohorts of private sector employees and estimate that adding one year to minimum retirement age increases training incidence by 6.9 to 10.7 percent, depending on the empirical specification. We find that policies that increase the residual working horizon are effective in increasing training participation by senior workers, and that traditional training policies that aim at reducing training costs by providing subsidies are ineffective.
    Keywords: pension reforms, training, Italy
    JEL: J24 J26
    Date: 2013–11
  9. By: Olga Alonso-Villar (Universidade de Vigo); Coral del Rio (Universidade de Vigo and EQUALITAS)
    Abstract: Based on harmonized and detailed occupation titles and making use of measures that do not require pair-wise comparisons among demographic groups, this paper shows that the occupational segregation of Black women dramatically declined from 1940 to 1980 (especially in the 1960s and 1970s), it slightly decreased from 1980 to 2000, and it remained stagnated in the first decade of the 21st century. To assess the reduction in segregation, this paper extends recent measures that penalize the concentration of Black women in low-paid jobs and finds that the integration process slightly reversed after 2000. Regarding the role that education has played, this study highlights that only from 1990 onward, Black women with either some college or university degrees have lower segregation (as compared with their peers) than those with lower education. Nevertheless, in 2010, Black women with university degrees still tend to concentrate in occupations that have wages below the average wage of occupations that high-skilled workers fill.
    Keywords: occupational segregation, local segregation measures, race, gender, Black women, status, wages, United States.
    JEL: J15 J16 J71 D63
    Date: 2013–09
  10. By: Santi Budria; Ada Ferrer-i-Carbonell
    Abstract: People gain utility from occupying a higher ranked position in the income distribution of the reference group. This paper investigates whether these gains depend on an individual’s set of non-cognitive skills. Using the 2000-2008 waves of the German Socioeconomic Panel dataset (SOEP), a subjective question on Life Satisfaction, and three different sets of non-cognitive skills indicators, we find significant and robust differences across skills groups. People who are more neurotic, extravert and have low external locus of control and low negative reciprocity are more sensitive to their individual position in the economic ladder. By contrast, the Life Satisfaction reaction to changes in economic status is significantly lower among individuals who score high (low) in negative (positive) reciprocity, and are at the bottom of the distribution of neuroticism, extraversion. The heterogeneity on the importance of income comparisons needs to be taken into account when, for example, introducing them into economic models, predicting individuals’ behaviour, or making welfare judgments.
    Keywords: life satisfaction, income comparisons, personality traits
    JEL: D62 I31
    Date: 2013–11
  11. By: Satya R. Chakravarty (Indian Statistical Institute, Kolkata , India); Nachiketa Chattopadhyay (Indian Statistical Institute, Kolkata , India); Conchita D’Ambrosio (Université du Luxembourg)
    Abstract: This paper identifies a family of absolute consistent inequality indices using a weakly decomposable postulate suggested by Ebert (2010). Since one member employs an Atkinson (1970) type aggregation we refer to it as the Atkinson index of consistent inequality. A second member of this family parallels the Kolm (1976) index of inequality while a third member of the family can be regarded as the normalized Theil (1972) consistent mean logarithmic deviation index. Two innovative features of these indices are that no specific structure is imposed on the form of the index at the outset and no transformation of any existing index is considered to ensure consistency. Each of them regards an achievement distribution as equally unequal as the corresponding shortfall distribution. We apply these indices to study inequality in mental health in Britain between 1991 and 2008.
    Keywords: Achievement inequality, shortfall inequality, consistency, BHPS.
    JEL: D63 I31
    Date: 2013–08

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