nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2013‒12‒06
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Earnings inequality and informal Employment in Russia By Anna Lukiyanova
  2. Political institutions and income (re-)distribution: Evidence from developed economies By Feld, Lars P.; Schnellenbach, Jan
  3. What do labor market institutions do? By Holmlund, Bertil
  4. How selective are real wage cuts? A micro-analysis using linked employer-employee data By Hirsch, Boris; Zwick, Thomas
  5. In-work benefits for married couples: an ex-ante evaluation of EITC and WTC policies in Italy By Giuseppe De Luca; Claudio Rossetti; Daniela Vuri
  6. The impact of family-friendly policies on the labor market: Evidence from Spain and Austria By Sara de la Rica; Lucía Gorjón García
  7. Gender Gaps in Performance Pay: New Evidence from Spain By Sara de la Rica; Juan J. Dolado; Raquel Vegas
  8. Offshoring and Directed Technical Change By Daron Acemoglu; Gino Gancia; Fabrizio Zilibotti
  9. On gender gaps and self-fulfilling expectations: alternative implications of paid-for training By Juan J. Dolado; Cecilia García-Peñalosa; Sara de la Rica
  10. Happiness of economists By Feld, Lars P.; Necker, Sarah; Frey, Bruno S.

  1. By: Anna Lukiyanova (Senior Reseacher, Centre for Labor Market Studies, Higher School of Economics, Moscow.)
    Abstract: In this paper I investigate the impact of informality on earnings inequality in Russia using RLMS-HSE data for 2000-2010. I find that during the whole period earnings inequality was substantially higher in the informal sector. Informality increases earnings polarization, thereby widening both tails of the distribution. Changes in the earning distribution of the formal sector were mainly generated by changes in the distribution of hourly earnings. In the informal sector, reduction of inequality occurred via two channels: Differences in hourly rates and working hours both declined. Changes in the structure of informality and conditional wage differentials did not have a significant impact on the overall earnings inequality, with the exception of decline in irregular employment
    Keywords: earnings inequality, informal economy, decomposition, recentered influence functions
    JEL: C21 D63 J31 J42
    Date: 2013
  2. By: Feld, Lars P.; Schnellenbach, Jan
    Abstract: We discuss the effect of formal political institutions (electoral systems, fiscal decentralization, presidential and parliamentary regimes) on the extent and direction of income (re-) distribution. Empirical evidence is presented for a large sample of 70 economies and a panel of 13 OECD countries between 1981 and 1998. The evidence indicates that presidential regimes are associated with a less equal distribution of disposable incomes, while electoral systems have no significant effects. Fiscal competition is associated with less income redistribution and a less equal distribution of disposable incomes, but also with a more equal primary income distribution. Our evidence also is in line with earlier empirical contributions that find a positive relationship between trade openness and equality in primary and disposable incomes, as well as the overall redistributive effort. --
    Keywords: Redistribution,Formal Institutions,Fiscal Decentralization,Presidential and Parliamentary Regimes,Electoral Systems
    JEL: D31 H22 H11 H50 I38 P50
    Date: 2013
  3. By: Holmlund, Bertil (Uppsala Center for Labor Studies)
    Abstract: The past couple of decades have seen a huge increase in research on various labor market institutions. This paper offers a brief overview and discussion of research on the labor market impacts of minimum wages (MW), unemployment insurance (UI), and employment protection legislation (EPL). It is argued that research on UI is largely a success story, involving a fruitful interplay between search theory and empirical work. This research has established that UI matters for labor market behavior, in particular the duration of unemployment, although there remains substantial uncertainty about the magnitudes of the effects. The research on MW should have shaken economists’ belief in the competitive labor market model as a result of frequent failures to find noticeable employment effects despite considerable effects on wages. EPL research has established that employment protection reduces labor and job turnover but the jury is still out regarding the impact on overall employment and productivity.
    Keywords: minimum wages; unemployment Insurance; employment protection
    JEL: J01
    Date: 2013–11–28
  4. By: Hirsch, Boris; Zwick, Thomas
    Abstract: Using linked employer-employee panel data for Germany, this paper investigates whether firms implement real wage reductions in a selective manner. In line with insider-outsider and several strands of efficiency wage theory, we find strong evidence for selective wage cuts with high-productivity workers being spared even when controlling for permanent differences in firms' wage policies. In contrast to some recent contributions stressing fairness considerations, we also find that wage cuts increase wage dispersion among peers rather than narrowing it. Notably, the same selectivity pattern shows up when restricting our analysis to firms covered by collective agreements or having a works council. --
    Keywords: real wage rigidity,real wage cuts,selectivity,Germany
    JEL: J30 J31
    Date: 2013
  5. By: Giuseppe De Luca; Claudio Rossetti; Daniela Vuri
    Abstract: This paper investigates labor supply and redistributive effects of in-work benefits for Italian married couples using a tax-benefit microsimulation model and a multi-sectoral discrete choice model of labor supply. We consider in-work benefits based on the Earned Income Tax Credit (EITC) and the Working Tax Credit (WTC) existing in the US and the UK, respectively. The standard design of these income support mechanisms is however augmented with a premium for two-earner households to avoid potential disincentive effects on secondary earners. Revenue neutral policy simulations show that our reforms may greatly improve the current Italian tax-benefit system in terms of both incentive and redistributive effects. Furthermore, neglecting sector-specific attributes of the various job opportunities may lead to an oversimplified representation of the choice set that does not allow to capture some labor market transitions and thus results in attenuated labor supply responses.
    Keywords: In-work benefits, sectoral labor supply, poverty, microsimulation, married couples
    JEL: I38 H31 H53
    Date: 2013–11
  6. By: Sara de la Rica; Lucía Gorjón García
    Abstract: The policies under analysis are set out in Spanish Law 39/99 and Austrian Law Nr. 38/2004. In essence both policies were directed at allowing parents to work part-time if they had children under 7 years old, with an equivalent wage reduction. Furthermore, those workers who decided to use the law were protected against being laid off. Our results indicate that the law helped mothers to combine childcare and work because there was an increase in the probability of working PT for targeted mothers (direct effect). Furthermore, there is clear evidence that the law increased the probability of dismissal of non-eligible mothers – i.e. mothers with children over 10 years old. Finally, the law also increased the probability of potential mothers being hired under fixed-term contracts, presumably to avoid the possibility of their availing themselves of the reduced working hours and the protection against dismissal. Therefore, the law had some positive effects but also some negative ones which were largely unexpected.
    Date: 2013–11
  7. By: Sara de la Rica; Juan J. Dolado; Raquel Vegas
    Abstract: This paper analyzes the gender gap in the performance–pay component of hourly wages received by workers in Spain using detailed information drawn from a large wage survey for 2006. Under the assumption that performance pay is determined in a more competitive fashion than the remaining wage components, there should be less room for gender discrimination. However, this is not what we find. After controlling for observable characteristics, non-random selection into performance-pay jobs and for segregation into different firms and occupations, the estimated adjusted gap in favour of male remains large (around 30 log points). Further, there is evidence of a “glass ceiling” pattern throughout the distribution of performance pay. After examining alternative hypotheses that could rationalize these findings, we conjecture that employers’ discrimination, possibly due to monopsonistic power, might be the one which is more consistent with the evidence.
    Date: 2013–11
  8. By: Daron Acemoglu; Gino Gancia; Fabrizio Zilibotti
    Abstract: We study the short- and long-run implications of offshoring on innovation, technology adoption, wage and income inequality in a Ricardian model with directed technical change. A unique final good is produced by combining a skilled and an unskilled product, each produced from a continuum of intermediates (tasks). Some of these tasks can be transferred from a skill-abundant West to a skill-scarce East. Profit maximization determines both the extent of offshoring and technological progress. offshoring induces technical change with an ambiguous factor bias. When the initial level of offshoring is low, an increase in offshoring opportunities triggers a transition with falling real wages for unskilled workers in the West, skill-biased technical change and rising skill premia worldwide. As the extent of offshoring becomes sufficiently large, further increases in offshoring induce technical change biased in favor of the unskilled because offshoring closes the gap between unskilled wages in the West and the East, and this limits the power of the price effect fueling skill-biased technical change. Transitional dynamics reveal that offshoring and technical change are substitutes in the short run but complements in the long run. Finally, though offshoring improves the welfare of workers in the East, it may benefit or harm unskilled workers in the West depending on elasticities and the equilibrium growth rate.
    Keywords: directed technical change, offshoring, skill premium, growth and productivity
    JEL: F43 O31 O33
    Date: 2013–04
  9. By: Juan J. Dolado; Cecilia García-Peñalosa; Sara de la Rica
    Abstract: This paper presents a model of self-fulfilling expectations by firms and households which generates multiplicity of equilibria in pay and housework time allocation for ex-ante identical spouses. Multiplicity arises from statistical discrimination exerted by firms in the provision of paid-for training to workers, rather than from incentive problems in the labor market. Employers’ beliefs about differences in spouses’ reactions to housework shocks lead to symmetric (ungendered) and asymmetric (gendered) equilibria. We find that: (1) the ungendered equilibrium tends to prevail as aggregate productivity in the economy increases (regardless of the generosity of family aid policies), (2) the ungendered equilibrium could yield higher welfare under some scenarios, and (3) gender-neutral job subsidies are more effective that gender-targeted ones in removing the gendered equilibrium.
    Date: 2013–11
  10. By: Feld, Lars P.; Necker, Sarah; Frey, Bruno S.
    Abstract: This study investigates the determinants of economists' life satisfaction. The analysis is based on a survey of professional, mostly academic economists from European countries and beyond. We find that certain features of economists' professional situation influence their well-being. Happiness is increased by having more research time while the lack of a tenured position decreases satisfaction in particular if the contract expires in the near future or cannot be extended. Surprisingly, publication success has no effect on satisfaction. While the perceived level of external pressure also has no impact, the perceived change of pressure in recent years has. Economists may have accepted a high level of pressure when entering academia but do not seem to be willing to cope with the increase observed in recent years. --
    Keywords: happiness,academic labor market,extrinsic and intrinsic motivation,publish or perish-culture
    JEL: I31 A11 J28
    Date: 2013

This nep-ltv issue is ©2013 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.