nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒02‒21
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Longitudinal Evidence for a Midlife Nadir in Human Well-being: Results from Four Data Sets By Cheng, Terence Chai; Powdthavee, Nattavudh; Oswald, Andrew J.
  2. Labor income dynamics and the insurance from taxes, transfers and the family By Richard Blundell; Michael Graber; Magne Mogstad
  3. Human Well-being and In-Work Benefits: A Randomized Controlled Trial By Dorsett, Richard; Oswald, Andrew J.
  4. Economic Growth Evens-Out Happiness: Evidence from Six Surveys By Andrew E. Clark; Sarah Flèche; Claudia Senik
  5. Biased Perceptions of Income Inequality and Redistribution By Engelhardt, Carina; Wagener, Andreas
  6. Overeducation among graduates: An overlooked facet of the gender pay gap? Evidence from East and West Germany By Boll, Christina; Leppin, Julian Sebastian
  7. Wealth gradients in early childhood cognitive development in five Latin American countries By Schady,, Norbert; Behrman, Jere; Araujo, Maria Caridad; Azuero,, Rodrigo; Bernal, Raquel; Bravo, David; Lopez-Boo, Florencia; Macours, Karen; Marshall, Daniela; Paxson, Christina; Vakis, Renos
  8. The Minimum Wage from a Two-Sided Perspective By Alessio J. G. Brown; Christian Merkl; Dennis Snower
  9. Women's and men's responses to in-work benefits: The influence of younger children By Andrén, Daniela; Andrén, Thomas
  10. Obesity and the Labor Market: A Fresh Look at the Weight Penalty By Caliendo, Marco; Gehrsitz, Markus

  1. By: Cheng, Terence Chai (Melbourne Institute of Applied Economic and Social Research); Powdthavee, Nattavudh (London School of Economics); Oswald, Andrew J. (University of Warwick)
    Abstract: There is a large amount of cross-sectional evidence for a midlife low in the life cycle of human happiness and well-being (a 'U shape'). Yet no genuinely longitudinal inquiry has uncovered evidence for a U-shaped pattern. Thus some researchers believe the U is a statistical artefact. We re-examine this fundamental cross-disciplinary question. We suggest a new test. Drawing on four data sets, and only within-person changes in well-being, we document powerful support for a U-shape in unadjusted longitudinal data without the need for regression equations. The paper's methodological contribution is to exploit the first-derivative properties of a well-being equation.
    Keywords: life-cycle happiness, subjective well-being, longitudinal study, U shape
    JEL: I31 D01 C18
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7942&r=ltv
  2. By: Richard Blundell (Institute for Fiscal Studies and University College London); Michael Graber (Institute for Fiscal Studies); Magne Mogstad (Institute for Fiscal Studies)
    Abstract: What do labor income dynamics look like over the life-cycle? What is the relative importance of persistent shocks, transitory shocks and heterogeneous profiles? To what extent do taxes, transfers and the family attenuate these various factors in the evolution of life-cycle inequality? In this paper, we use rich Norwegian data to answer these important questions. We let individuals with different education levels have a separate income process; and within each skill group, we allow for non-stationarity in age and time, heterogeneous experience profiles, and shocks of varying persistence. We find that the income processes differ systematically by age, skill level and their interaction. To accurately describe labor income dynamics over the life-cycle, it is necessary to allow for heterogeneity by education levels and account for non-stationarity in age and time. Our findings suggest that the progressive nature of the Norwegian tax-transfer system plays a key role in attenuating the magnitude and persistence of income shocks, especially among the low skilled. By comparison, spouse's income matters less for the dynamics of inequality over the life-cycle.
    Date: 2014–01
    URL: http://d.repec.org/n?u=RePEc:ifs:ifsewp:14/01&r=ltv
  3. By: Dorsett, Richard (National Institute of Economic and Social Research (NIESR)); Oswald, Andrew J. (University of Warwick)
    Abstract: Many politicians believe they can intervene in the economy to improve people's lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy.
    Keywords: randomized controlled trials, government policy, in-work benefits, wage subsidies, well-being, happiness
    JEL: I31 D03 D60 H11 J38
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7943&r=ltv
  4. By: Andrew E. Clark (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) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Sarah Flèche (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) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Claudia Senik (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) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), UP4 - Université Paris 4, Paris-Sorbonne - Université Paris IV - Paris Sorbonne - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)
    Abstract: In spite of the great U-turn that saw income inequality rise in Western countries in the 1980s, happiness inequality has dropped in countries that have experienced income growth (but not in those that did not). Modern growth has reduced the share of both the "very unhappy" and the "perfectly happy". The extension of public amenities has certainly contributed to this greater happiness homogeneity. This new stylized fact comes as an addition to the Easterlin paradox, offering a somewhat brighter perspective for developing countries.
    Keywords: Happiness ; Inequality ; Economic growth ; Development ; Easterlin paradox
    Date: 2014–01
    URL: http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00936145&r=ltv
  5. By: Engelhardt, Carina; Wagener, Andreas
    Abstract: When based on perceived rather than o n objective income distributions, the Meltzer- Richards hypothesis and the POUM hypothesis work quite well empirically: there exists a positive link between perceived inequality or perceived upward mobility and the extent of redistribution in democratic regimes - though such a link does not exist when objective measures of inequality and social mobility are used. These observations highlight that political preferences and choices might depend more on perceptions than on factual data.
    Keywords: Biased Perception, Majority Voting, Redistribution
    JEL: H53 D72 D31
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:han:dpaper:dp-526&r=ltv
  6. By: Boll, Christina; Leppin, Julian Sebastian
    Abstract: Germany's occupational and sectoral change towards a knowledge-based economy calls for high returns to education. Nevertheless, female graduates are paid much less than their male counterparts. We wonder whether overeducation affects sexes differently and whether this might answer for part of the gender pay gap. We decompose total year of schooling in years of over- (O), required (R), and undereducation (U). As ORU earnings estimations based on German SOEP cross-section and panel data indicate, overeducation pays off less than required education in the current job even when unobserved heterogeneity is taken into account. Moreover, analyses of job satisfaction and self-assessed overeducation point to some real mismatch. However, overeducation does not matter for the gender pay gap. By contrast, women's fewer years of required education reasonably do, answering for 7.61 pp. of the East German (18.79 %) and 2.22 pp. of the West German (32.98 %) approximate gap. Moreover, job biography and the household context affect the gap more seriously in the old Bundesländer than in the new ones. Overall, the West German pay gap almost doubles the East German one, and different endowments answer for roughly three quarters of the approximate gap in the Western but only for two thirds in the Eastern part. We conclude that the gendered earnings gap among German graduates is rather shaped by an employment behaviour suiting traditional gender roles and assigned gender stereotypes than being subject to gendered educational inadequacy. --
    JEL: J31 J24 J16
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:zbw:hwwirp:147&r=ltv
  7. By: Schady,, Norbert; Behrman, Jere; Araujo, Maria Caridad; Azuero,, Rodrigo; Bernal, Raquel; Bravo, David; Lopez-Boo, Florencia; Macours, Karen; Marshall, Daniela; Paxson, Christina; Vakis, Renos
    Abstract: Research from the United States shows that gaps in early cognitive and noncognitive abilities appear early in the life cycle. Little is known about this important question for developing countries. This paper provides new evidence of sharp differences in cognitive development by socioeconomic status in early childhood for five Latin American countries. To help with comparability, the paper uses the same measure of receptive language ability for all five countries. It finds important differences in development in early childhood across countries, and steep socioeconomic gradients within every country. For the three countries where panel data to follow children over time exists, there are few substantive changes in scores once children enter school. These results are robust to different ways of defining socioeconomic status, to different ways of standardizing outcomes, and to selective non-response on the measure of cognitive development.
    Keywords: Youth and Governance,Educational Sciences,Street Children,Primary Education,Population Policies
    Date: 2014–02–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:6779&r=ltv
  8. By: Alessio J. G. Brown; Christian Merkl; Dennis Snower
    Abstract: This paper sheds new light on the effects of the minimum wage on employment from a two-sided theoretical perspective, in which firms' job offer and workers' job acceptance decisions are disentangled. Minimum wages reduce job offer incentives and increase job acceptance incentives. We show that sufficiently low minimum wages may do no harm to employment, since their job-offer disincentives are countervailed by their job-acceptance incentives
    Keywords: Minimum wage, labor market, employment, unemployment, job offer, job acceptance
    JEL: J3 J6 J2
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:kie:kieliw:1906&r=ltv
  9. By: Andrén, Daniela (Örebro University School of Business); Andrén, Thomas (The Swedish Confederation of Professional Associations and IZA)
    Abstract: This study examines how the non-targeted earned income tax credit (EITC) introduced in Sweden in 2007 has affected the labor supply of men and women living together in two-adault households and the extent to which children affect related outcomes. Using a structural discrete labor supply model for two adult households, we estimate the impact of the EITC on both labor supply and disposable income separately for households with and without children. Our results suggest that wage elasticities differ for men and women with or without children, a result that is in line with earlier literature. However, women increased their labor supply bu 0.9 percent regardless of children in the household, whereas men with children increased their labor supply by approximately 0.5 percent and those without children increased their labor supply by 0.7 percent.
    Keywords: structural discrete labor supply model; EITC; younger children; two-adult households
    JEL: I30 I38 J18
    Date: 2014–01–20
    URL: http://d.repec.org/n?u=RePEc:hhs:oruesi:2014_001&r=ltv
  10. By: Caliendo, Marco (University of Potsdam); Gehrsitz, Markus (City University of New York)
    Abstract: This paper applies semiparametric regression models to shed light on the relationship between body weight and labor market outcomes in Germany. We find conclusive evidence that these relationships are poorly described by linear or quadratic OLS specifications, which have been the main approaches in previous studies. Women's wages and employment probabilities do not follow a linear relationship and are highest at a body weight far below the clinical threshold of obesity. This indicates that looks, rather than health, is the driving force behind the adverse labor market outcomes to which overweight women are subject. Further support is lent to this notion by the fact that wage penalties for overweight and obese women are only observable in white-collar occupations. On the other hand, bigger appears to be better in the case of men, for whom employment prospects increase with weight, albeit with diminishing returns. However, underweight men in blue-collar jobs earn lower wages because they lack the muscular strength required in such occupations.
    Keywords: obesity, wages, employment, semiparametric regression, gender differences
    JEL: J31 J71 C14
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7947&r=ltv

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