New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒03‒30
eleven papers chosen by

  1. Post-1970 Trends in Within-Country Inequality and Poverty: Rich and Middle Income Countries By Salvatore Morelli; Timothy Smeeding; Jeffrey Thompson
  2. Wealth Gradients in Early Childhood Cognitive Development in Five Latin American Countries By Norbert Schady; Jere Behrman; Maria Caridad Araujo; Rodrigo Azuero; Raquel Bernal; David Bravo; Florencia López Bóo; Karen Macours; Daniela Marshall; Christina Paxson; Renos Vakis
  3. What Has Happened to Middle-Class Earnings? Distributional Shifts in Earnings in Canada, 1970-2005 By Beach, Charles M.
  4. The role of urban green space for human well-being By Christine Bertram; Katrin Rehdanz
  5. Does Grief Transfer across Generations? In-Utero Deaths and Child Outcomes By Black, Sandra E.; Devereux, Paul J.; Salvanes, Kjell G.
  6. Income Distributions, Inequality, and Poverty in Asia, 1992–2010 By Chotikapanich, Duangkamon; Griffiths, William E.; Rao, D.S. Prasada; Karunarathne, Wasana
  7. Labor market reforms and unemployment dynamics By Fabrice Murtin; Jean-Marc Robin
  8. The Effects of Family Policy on Mothers' Labor Supply: Combining Evidence from a Structural Model and a Natural Experiment By Johannes Geyer; Peter Haan; Katharina Wrohlich
  9. Labor market regulations : what do we know about their impacts in developing countries ? By Betcherman, Gordon
  10. The Vulnerability of Minority Homeowners in the Housing Boom and Bust By Patrick Bayer; Fernando Ferreira; Stephen L. Ross
  11. The Role of Gender in Promotion and Pay over a Career By John T. Addison; Orgul D. Ozturk; Si Wang

  1. By: Salvatore Morelli (UCSEF, University of Naples and INET Oxford, University of Oxford); Timothy Smeeding (University of Wisconsin); Jeffrey Thompson (Federal Reserve Board of Governors)
    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 a comprehensive review of a particular area of research. We examine the literature on post-1970 trends in poverty and income inequality, up to 2010 or 2011 in most countries. We provide measures of the levels and trends in each of these areas, as well as an integrated discussion of empirical choices made in the measurement of poverty, overall income inequality, and inequality amongst those with top incomes.
    Date: 2014–03–25
  2. By: Norbert Schady (Inter-American Development Bank (IDB)); Jere Behrman (Department of Economics, University of Pennsylvania); Maria Caridad Araujo (World Bank Group; Inter-American Development Bank (IDB)); Rodrigo Azuero (Department of Economics, University of Pennsylvania); Raquel Bernal (Universidad de los Andes, Colombia - Department of Economics; Northwestern University - Department of Economics); David Bravo (Department of Economics, Universidad de Chile); Florencia López Bóo (Inter-American Development Bank (IDB); IZA); Karen Macours (Paris School of Economics); Daniela Marshall (Populations Study Center, University of Pennsylvania); Christina Paxson (Office of the Dean, Brown University); Renos Vakis (District of Columbia, Washington DC, The World Bank)
    Abstract: Research from the United States shows that gaps in early cognitive and non-cognitive ability 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, we use the same measure of receptive language ability for all five countries. We find important differences in development in early childhood across countries, and steep socioeconomic gradients within every country. For the three countries where we can follow children over time, there are few substantive changes in scores once children enter school. Our results are robust to different ways of defining socioeconomic status, to different ways of standardizing outcomes, and to selective non-response on our measure of cognitive development.
    Keywords: early childhood, socioeconomic gaps, Latin-American
    JEL: J13 I38
    Date: 2014–01–16
  3. By: Beach, Charles M.
    Abstract: This paper examines how middle-class earnings in Canada have changed between 1970 and 2005 using Census microdata. Middle-class earnings are defined as workers’ earnings between 50 and 150 percent of the median or as earnings between the 20th and 80th percentile earnings. The analysis looks at the proportion of workers (“workers’ shareâ€) with middle-class earnings and the proportion of earnings (“earnings shareâ€) received by middle-class workers. The study finds: (i) there has been a marked decline of full-time full-year middle-class workers and corresponding marked increases of higher- and lower-earning workers in the Canadian workplace; (ii) there has been an even larger shift in earnings with middle-class workers losing out to strong earnings gains of higher-earning workers; and (iii) the majority of the decline of the middle-class earnings share was due to the fall in their workers’ share for male and for full-time full-year female workers.
    Keywords: middle-class earnings, polarization of earnings, Canadian inequality
    JEL: J24 J31 J39
    Date: 2014–03–26
  4. By: Christine Bertram; Katrin Rehdanz
    Abstract: Most people in Europe live in urban environments. For these people, urban green space is an important element of well-being, but it is often in short supply. We use self-reported information on life satisfaction and different individual green space measures to explore how urban green space affects the well-being of the residents of Berlin, the capital city of Germany. We combine spatially explicit survey data with spatially highly disaggregated GIS data on urban green spaces. We observe a significant, inverted U-shaped effect of the amount of and distance to urban green space on life satisfaction. According to our results, the optimal amount of green space in a 1 km buffer is 36 ha, or 11.5% of the buffer area, and 75% of the respondents have less green space available. Our results are robust to a number of robustness checks
    Keywords: life satisfaction, urban ecosystem services, urban green space, well-being
    JEL: I31 Q51 Q57 R00
    Date: 2014–03
  5. By: Black, Sandra E. (University of Texas at Austin); Devereux, Paul J. (University College Dublin); Salvanes, Kjell G. (Norwegian School of Economics (NHH))
    Abstract: While much is now known about the effects of physical health shocks to pregnant women on the outcomes of the in-utero child, we know little about the effects of psychological stresses. One clear form of stress to the mother comes from the death of a parent. We examine the effects of the death of the mother's parent during pregnancy on both the short-run and the long-run outcomes of the infant. Our primary specification involves using mother fixed effects – comparing the outcomes of two children with the same mother but where a parent of the mother died during one of the pregnancies – augmented with a control for whether there is a death around the time of the pregnancy in order to isolate true causal effects of a bereavement during pregnancy. We find small negative effects on birth outcomes, and these effects are bigger for boys than for girls. The effects on birth outcomes seems to be driven by deaths due to cardiovascular causes suggesting that sudden deaths are more difficult to deal with. However, we find no evidence of adverse effects on adult outcomes. The results are robust to alternative specifications.
    Keywords: stress, birthweight, education, pregnancy
    JEL: I1 I2 J1
    Date: 2014–03
  6. By: Chotikapanich, Duangkamon (Asian Development Bank Institute); Griffiths, William E. (Asian Development Bank Institute); Rao, D.S. Prasada (Asian Development Bank Institute); Karunarathne, Wasana (Asian Development Bank Institute)
    Abstract: In this paper, income distributions for developing countries in Asia are modeled using beta-2 distributions, which are estimated by a method of moments procedure applied to grouped data. Estimated parameters of these distributions are used to calculate measures of inequality, poverty, and pro-poor growth in four time periods over 1992–2010. Changes in these measures are examined for 11 countries, with a major focus on the People’s Republic of China (PRC), India, and Indonesia, which are separated into rural and urban regions. We find that the PRC has grown rapidly with increasing inequality accompanying this growth. India has been relatively stagnant. Indonesia has grown rapidly after suffering an initial set back from the Asian financial crisis in 1997.
    Keywords: growth; inequality; poverty; income distribution
    JEL: C13 C16 D31
    Date: 2014–03–18
  7. By: Fabrice Murtin; Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po)
    Abstract: In this paper, we quantify the contribution of labor market reforms to unemployment dynamics in nine OECD countries (Australia, France, Germany, Japan, Portugal, Spain, Sweden, the United Kingdom and the United States). We build and estimate a dynamic stochastic search-matching model with heterogeneous workers, where aggregate shocks to productivity fuel up the cycle, and unanticipated policy interventions shift structural parameters and displace the long-term equilibrium. We show that the heterogeneous-worker mechanism proposed by Robin (2011) to explain unemployment volatility by productivity shocks works well in all countries. The amount of resources injected into placement and employment services, the reduction of UI benefits and product market deregulation stand out as the most prominent policy levers for unemployment reduction. All other LMPs have a significant but lesser impact. We also find that business cycle shocks and LMPs explain about the same share of unemployment volatility (except for Japan, Portugal and the US).
    Date: 2014–03
  8. By: Johannes Geyer; Peter Haan; Katharina Wrohlich
    Abstract: Parental leave and subsidized child care are prominent examples of family policies supporting the reconciliation of family life and labor market careers for mothers. In this paper, we combine different empirical strategies to evaluate the employment effects of these policies for mothers in Germany. In particular we estimate a structural labor supply model and exploit a natural experiment, i.e. the reform of parental leave benefits. By exploiting and combining the advantages of the different methods, i.e the internal validity of the natural experiment and the external validity of the structural model, we can go beyond evaluation studies restricted to one particular methodology. Our findings suggest that a combination of parental leave benefits and subsidized child care leads to sizable employment effects of mothers.
    Keywords: Labor supply, parental leave benefits, childcare costs, structural model, natural experiment
    JEL: J22 H31 C52
    Date: 2014
  9. By: Betcherman, Gordon
    Abstract: Labor market regulation is a high-profile, and often contentious, area of public policy. Although these regulations have been studied most extensively in developed countries, there is a growing body of literature on their effects in developing countries. This paper reviews that literature and focuses on the impacts of two important types of labor market regulation, minimum wages and employment protection legislation (EPL), on employment, earnings, and productivity. Strong and opposing views exist regarding the costs and benefits of these regulations, but the results of this review suggest that their impacts are generally smaller than the heat of the debates would suggest. Efficiency effects are found sometimes, but not always, and the effects can be in either direction and are usually modest. The distributional impacts of both minimum wage and employment protection legislation are clearer, with two effects predominating: an equalizing effect among covered workers, but with groups such as youth, women, and the less skilled disproportionately outside the coverage and its benefits. Although the overall conclusion is one of modest effects in most cases, the policy implication is not that these regulations do not matter. On the one hand, both minimum wages and EPL can affect distributional objectives. On the other hand, these regulations can generate undesirable economic or social impacts if they are established or operate in ways that exacerbate the labor market imperfections that they were designed to address.
    Keywords: Labor Markets,Labor Policies,Banks&Banking Reform,Markets and Market Access,Tertiary Education
    Date: 2014–03–01
  10. By: Patrick Bayer (Duke University); Fernando Ferreira; Stephen L. Ross (University of Connecticut)
    Abstract: This paper examines mortgage outcomes for a large, representative sample of individual home purchases and refinances linked to credit scores in seven major US markets in the recent housing boom and bust. We find that among those with similar credit scores, black and Hispanic homeowners had much higher rates of delinquency and default in the downturn. These differences are not explained by the likelihood of receiving a subprime loan or by differential exposure to local shocks in the housing and labor market and are especially pronounced for loans originated near the peak of the boom. There is also heterogeneity within minorities: black and Hispanics that live in areas with lower employment rates and that have high debt to income ratios are the driving force of the observed racial differences in foreclosures and delinquencies. Our findings suggest that those black and Hispanic homeowners drawn into the market near the peak were especially vulnerable to adverse economic shocks and raise serious concerns about homeownership as a mechanism for reducing racial disparities in wealth.
    Keywords: Mortgage, Foreclosure, Delinquency, homeownership, minority, wealth disparities
    JEL: I38 J15 J71 R21
    Date: 2014–03
  11. By: John T. Addison (Department of Economics, Moore School of Business, University of South Carolina, Department of Economics and Finance, Durham University Business School, and GEMF, University of Coimbra); Orgul D. Ozturk (Department of Economics, Moore School of Business, University of South Carolina); Si Wang (Department of Economics, Moore School of Business, University of South Carolina)
    Abstract: Using data from the National Longitudinal Survey of Youth (NLSY79), this paper considers the role of gender in promotion and subsequent earnings development and how this evolves over a career. In its use of three career stages, the study builds on earlier work using the NLSY79 that considers gender differences in the early career years alone. The raw data suggest reasonably favorable promotion outcomes for females over a career. But the advantages seem to be confined to less-educated females. And while there are strong returns to education for males through enhanced promotion probability and attendant wage growth in later career this is not the case for females. Although this latter finding is not inconsistent with fertility choices on the part of educated females, choice is seemingly only part of the explanation.
    Keywords: promotion, earnings, early/mid/peak career, gender, public sector, private sector.
    JEL: J16 J31 J51 J62
    Date: 2014–02

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