nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒03‒08
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Income mobility as an equalizer of permanent income By Rolf Aaberge; Magne Mogstad
  2. Impact of minimum wage on income distribution and poverty in Russia By Kapelyuk Sergey
  3. Rising Inequality in Asia and Policy Implications By Zhuang, Juzhong; Kanbur, Ravi; Rhee, Changyong
  4. Obesity and the Labor Market: A Fresh Look at the Weight Penalty By Marco Caliendo; Markus Gehrsitz
  5. Equality of Opportunity By John E. Roemer; Alain Trannoy
  6. Microfinance at the margin: Experimental evidence from Bosnia and Herzegovina By Augsburg, Britta; de Haas, Ralph; Harmgart, Heike; Meghir, Costas
  7. When Do Remittances Facilitate Asset Accumulation? The Importance of Remittance Income Uncertainty By Amuedo-Dorantes, Catalina; Pozo, Susan
  8. Inequity in long-term care use and unmet need: two sides of the same coin By Pilar García-Gómez; Christina Hernandez-Quevedo; Dolores Jiménez-Rubio; Juan Oliva
  9. Youth Turnover in Brazil: Job and Worker Flows and an Evaluation of a Youth-Targeted Training Program By Carlos Henrique Corseuil; Miguel Foguel; Gustavo Gonzaga; Eduardo Pontual Ribeiro
  10. Institutions, Human Capital and Development By Daron Acemoglu; Francisco A. Gallego; James A. Robinson

  1. By: Rolf Aaberge; Magne Mogstad (Statistics Norway)
    Abstract: Do market-orientated economies with relatively large cross-sectional levels of inequality have higher income mobility and therefore less permanent inequality? To answer this question, we introduce a formal representation of income mobility as an equalizer of permanent income. The proposed representation is called a mobility curve and forms the basis for comparison of income distributions according to income mobility. The mobility curve captures the extent to which the distribution of permanent income is equalized because of changes in individuals’ relative income over time. From the derivative of the mobility curve, we can assess the equalizing effect of income mobility in the lower, middle and upper part of the distribution of permanent income. The mobility curve allows us to develop dominance criteria that provide partial orderings of income distributions according to income mobility. We obtain complete orderings through an axiomatically justified family of rank-dependent measures of income mobility, which summarizes the informational content of the mobility curve. We illustrate the usefulness of these methods by re-examining previous findings of income mobility across countries. In contrast to the conclusions in previous studies, we find that changes in relative income over time contribute more (as much) to equality in permanent income in the US as in the Nordic countries and Germany.
    Keywords: Inequality; Mobility; Permanent income; Social welfare; Rank-dependent measures
    JEL: D31 D63
    Date: 2014–01
  2. By: Kapelyuk Sergey
    Abstract: To the best of our knowledge, the influence of the minimum wage on poverty in Russia has never before been investigated. Russian data provide a unique opportunity for studying the poverty effects related to the minimum wage due to the significant increases of the minimum wage in recent years, almost complete coverage, and a high representation of full-time workers in poor households. This paper examines the effect of the minimum wage in Russia on the incidence of poverty and transitions into and out of poverty using data from the Russia Longitudinal Monitoring Survey of Higher School of Economics (RLMS-HSE) for the years 2006 to 2011. The results indicate slight poverty-reducing effects of the minimum wage in Russia.
    JEL: J31 J38
    Date: 2014–02–26
  3. By: Zhuang, Juzhong (Asian Development Bank Institute); Kanbur, Ravi (Asian Development Bank Institute); Rhee, Changyong (Asian Development Bank Institute)
    Abstract: This paper looks at the recent trends of rising inequality in developing Asia, asks why inequality matters, examines the driving forces of rising inequality, and proposes policy options for tackling high and rising inequality. Technological change, globalization, and market-oriented reform have driven Asia’s rapid growth, but have also had significant distributional consequences. These factors have favored owners of capital over labor, skilled over unskilled workers, and urban and coastal areas over rural and inland regions. Furthermore, unequal access to opportunity, caused by institutional weaknesses and social exclusion, has compounded the impacts of these forces. All these combined have led to a falling share of labor income in national income, increasing premiums on human capital, and growing spatial disparity—all contributing to rising inequality. The three drivers of rising inequality cannot and should not be blocked, because they are the same forces that drive productivity and income growth. This paper outlines a number of policy options for Asian policy makers to consider in addressing rising inequality. These options, aiming to equalize opportunities and, thereby, reduce inequality, include efficient fiscal measures that reduce inequality in human capital, policies that work toward increasing the number and quality of jobs, interventions that narrow spatial disparity, and reforms that strengthen governance, level the playing field, and eliminate social exclusion.
    Keywords: growth; globalization; inequality; governance
    JEL: D63 O15 O53
    Date: 2014–02–21
  4. By: Marco Caliendo; Markus Gehrsitz
    Abstract: This paper applies semiparametric regression models to shed light on the relation-ship 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
  5. By: John E. Roemer; Alain Trannoy
    Date: 2014–02–24
  6. By: Augsburg, Britta; de Haas, Ralph; Harmgart, Heike; Meghir, Costas
    Abstract: We use a randomised controlled trial (RCT) to analyse the impact of microcredit on poverty reduction in Bosnia and Herzegovina. The study population are loan appli-cants that would normally have just been rejected based on regular screening. We find that access to credit allowed borrowers to start and expand small-scale busi-nesses. Households that already had a business and where the borrower had more education, ran down their savings, presumably to complement the loan and to achieve the minimum amount necessary to expand their business. In less-educated households, however, consumption went down. A key new result is that there was a substantial increase in the labour supply of young adults (16-19 year olds). This was accompanied by a reduction in school attendance. --
    Keywords: microfinance,liquidity constraints,human capital,andomised controlled trial
    JEL: O16 G21 D21 I32
    Date: 2014
  7. By: Amuedo-Dorantes, Catalina (San Diego State University, California); Pozo, Susan (Western Michigan University)
    Abstract: A sizable literature has concluded that remittances impact the expenditure patterns of households. We explore how the uncertainty of remittance income inflows affects the accumulation of human, physical and financial assets of Mexican households, while accounting for the level of transfers from family abroad. We find that both the level and the uncertainty of remittance inflows raise asset accumulation among remittance-receiving households. Specifically, as predicted by the permanent income hypothesis and theories of precautionary saving, a one standard deviation increase in the uncertainty of remittance income raises the likelihood of household spending on asset accumulation by about 2 percentage points while raising the share of household expenditures on asset accumulation by 4 to 9 percent. These results suggest that both the level and the predictability of remittance income should be given full consideration in the analysis of household expenditure patterns and in the design of policies to leverage the most out of remittance inflows into developing economies.
    Keywords: international remittances, uncertainty, household expenditures, asset accumulation, Mexico
    JEL: F22 J20
    Date: 2014–02
  8. By: Pilar García-Gómez; Christina Hernandez-Quevedo; Dolores Jiménez-Rubio; Juan Oliva
    Abstract: International studies have shown evidence on inequity in use of health services of different kinds, depending on the type of health care service analysed. However, equity in the access to long-term care (LTC) services has received much less attention. We investigate the determinants of several LTC services and the existence of unmet need by the disabled population using unique data from a survey conducted on the disabled population in Spain in 2008. We further measure the level of horizontal inequity using methods based on the Concentration Index, a widely used indicator of income-related inequality in health. At the time of the analysis, only those respondents with the highest dependency level were covered by the recently introduced universal LTC system, which allows us to explore whether inequities remain for this subgroup of the population. In addition, we compare results using self-reported versus a more objective indicator of unmet needs. Evidence suggests that after controlling for a wide set of need variables, there is not an equitable distribution of use and unmet need of LTC services in Spain, with socioeconomic status being an important factor in access to LTC. We find that individuals at the higher end of the income distribution utilize a relatively larger share of formal services (provided by a professional), while intensive informal care (provided by friends and family) is concentrated among the worst-off. In terms of unmet needs for LTC services, their distribution depends on the service considered as well as on whether we focus on subjective or objective measures. Interestingly, for the population covered by the new universal LTC system, inequities in most LTC services and unmet needs remain statistically significant and even increase for certain services, in particular, formal services provided by professionals.
    Keywords: disability; equity in utilisation; dependency; long-term care; unmet needs; Spain
    JEL: N0
    Date: 2014–01
  9. By: Carlos Henrique Corseuil (IPEA); Miguel Foguel (IPEA); Gustavo Gonzaga (PUC-Rio); Eduardo Pontual Ribeiro (UFRJ)
    Abstract: Understanding what drives the attachment of young workers to formal jobs seems to be a promising path to reduce both youth turnover and unemployment rates. In this study we tackle the issue of turnover and labor market attachment of young workers from two perspectives.
    Date: 2014–02
  10. By: Daron Acemoglu; Francisco A. Gallego; James A. Robinson
    Abstract: In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about 4 to 5 times greater than that implied by micro (Mincerian) estimates, found in some of the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically-determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the human capital endowments of early European colonists have been a major factor in the subsequent institutional development of these polities.
    Keywords: Economic Development, Institutions, Human Capital
    JEL: I25 P16 O10
    Date: 2014

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