nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒03‒01
seven 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. Overeducation among Graduates - An Overlooked Facet of the Gender Pay Gap?: Evidence from East and West Germany By Christina Boll; Julian Sebastian Leppin
  3. The Own-Wage Elasticity of Labor Demand: A Meta-Regression Analysis By Lichter, Andreas; Peichl, Andreas; Siegloch, Sebastian
  4. Why Is There No Income Gap Between the Hui Muslim Minority and the Han Majority in Rural Ningxia, China? By Gustafsson, Björn Anders; Sai, Ding
  5. Firm Dynamics and Residual Inequality in Open Economies By Felbermayr, Gabriel; Impullitti, Giammario; Prat, Julien
  6. Social Attitudes on Gender Equality and Firms' Discriminatory Pay-Setting By Janssen, Simon; Tuor Sartore, Simone N.; Backes-Gellner, Uschi
  7. The Economics of Human Development and Social Mobility By James J. Heckman; Stefano Mosso

  1. By: Bargain, Olivier; Callan, Tim; Doorley, Karina; Keane, Claire
    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.
    Date: 2014–01
    URL: http://d.repec.org/n?u=RePEc:esr:wpaper:wp474&r=ltv
  2. By: Christina Boll; Julian Sebastian Leppin
    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:diw:diwsop:diw_sp627&r=ltv
  3. By: Lichter, Andreas (IZA); Peichl, Andreas (ZEW Mannheim); Siegloch, Sebastian (IZA)
    Abstract: Firms' labor demand responses to wage changes are of key interest in empirical research and policy analysis. However, despite extensive research, estimates of labor demand elasticities remain subject to considerable heterogeneity. In this paper, we conduct a comprehensive meta-regression analysis to re-assess the empirical literature on labor demand elasticities. Building on 942 elasticity estimates from 105 different studies, we identify sources of variation in the absolute value of this elasticity. Heterogeneity due to the theoretical and empirical specification of the labor demand model, different datasets used or sectors and countries considered explains more than 80% of the variation in the estimates. We further find substantial evidence for the presence of publication selection bias, as estimates of the own-wage elasticity of labor demand are upwardly inflated.
    Keywords: labor demand, wage elasticity, meta-analysis
    JEL: J23 C10 C83
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7958&r=ltv
  4. By: Gustafsson, Björn Anders (University of Gothenburg); Sai, Ding (Chinese Academy of Social Sciences)
    Abstract: Using a household sample survey for 2006 we show that the Hui population in the rural part of Ningxia autonomous region of China is disadvantaged compared to the Han majority as regards length of education and household per capita wealth. Yet there is no gap in average disposable income between the two ethnic groups and poverty rates are very similar. This paradox is due to members of Hui households earning more income outside the farm than members of Han households. Particularly young male Hui living in poor villages have a remarkably high likelihood of migrating, thereby bringing home income to their households.
    Keywords: China, ethnic minorities, Hui ethnicity, income, poverty, migration
    JEL: D31 J15 R23
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7970&r=ltv
  5. By: Felbermayr, Gabriel (University of Munich); Impullitti, Giammario (University of Nottingham); Prat, Julien (CREST)
    Abstract: Increasing wage inequality between similar workers plays an important role for overall inequality trends in industrialized societies. To analyze this pattern, we incorporate directed labor market search into a dynamic model of international trade with heterogeneous firms and homogeneous workers. Wage inequality across and within firms results from their different hiring needs along their life cycles and the convexity of their adjustment costs. The interaction between wage posting and firm growth explains some recent empirical regularities on firm and labor market dynamics. Fitting the model to capture key features obtained from German linked employer-employee data, we investigate how falling trade costs and institutional reforms interact in shaping labor market outcomes. Focusing on the period 1996-2007, we find that neither trade nor key features of the Hartz labor market reforms account for the sharp increase in residual inequality observed in the data. By contrast, inequality is highly responsive to the increase in product market competition triggered by domestic regulatory reform.
    Keywords: wage inequality, international trade, directed search, firm dynamics, product and labor market regulation
    JEL: F12 F16 E24
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7960&r=ltv
  6. By: Janssen, Simon (University of Zurich); Tuor Sartore, Simone N. (University of Zurich); Backes-Gellner, Uschi (University of Zurich)
    Abstract: We analyze the relationship between social attitudes on gender equality and firms' pay-setting behavior by combining information about regional votes relative to gender equality laws with a large data set of multi-branch firms and workers. The results show that multi-branch firms pay more discriminatory wages in branches located in regions with a higher social acceptance of gender inequality than in branches located in regions with a lower acceptance. The results are similar for different subsamples of workers, and we cannot find evidence that regional differences in social attitudes influence how firms assign women and men to jobs and occupations. The investigation of a subsample of performance pay workers for whom we are able to observe their time-based and performance pay component separately shows that social attitudes on gender equality only influence the time-based pay component but not the performance pay component of the same workers. Because regional-specific productivity differences should influence the workers' performance pay and time-based pay, unobserved gender-specific productivity differences are not likely to explain the regional variation in within firm gender pay gaps. The results support theories and previous evidence showing that social attitudes influence gender pay gaps in the long run.
    Keywords: gender pay gaps, social attitudes, firms' pay setting
    JEL: J31 J33 J71 M5
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp7959&r=ltv
  7. By: James J. Heckman; Stefano Mosso
    Abstract: This paper distills and extends recent research on the economics of human development and social mobility. It summarizes the evidence from diverse literatures on the importance of early life conditions in shaping multiple life skills and the evidence on critical and sensitive investment periods for shaping different skills. It presents economic models that rationalize the evidence and unify the treatment effect and family influence literatures. The evidence on the empirical and policy importance of credit constraints in forming skills is examined. There is little support for the claim that untargeted income transfer policies to poor families significantly boost child outcomes. Mentoring, parenting, and attachment are essential features of successful families and interventions to shape skills at all stages of childhood. The next wave of family studies will better capture the active role of the emerging autonomous child in learning and responding to the actions of parents, mentors and teachers.
    JEL: I20 I24 I28 J13
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:19925&r=ltv

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