nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒04‒11
nine papers chosen by
Maximo Rossi
University of the Republic

  1. Attitudes to Income Inequality: Experimental and Survey Evidence By Andrew E. Clark; Conchita D'ambrosio
  2. What predicts a successful life? A life-course model of well-being By Richard Layard; Andrew Clark; Nattavudh Powdthavee; Francesca Cornaglia
  3. Does Labor Legislation Benefit Workers? Well-Being after an Hours Reduction By Hamermesh, Daniel S.; Kawaguchi, Daiji; Lee, Jungmin
  4. Mobility and Inequality in the First Three Waves of NIDS By Finn, Arden; Leibbrandt, Murray
  5. Recent Trends in Income Redistribution in Australia: Can Changes in the Tax-Transfer System Account for the Decline in Redistribution?* By Nicolas Herault; Francisco Azpitarte
  6. Matching, Sorting and Wages By Jeremy Lise; Costas Meghir; Jean-Marc Robin
  7. Trade Liberalization, Inequality and Poverty in Brazilian States By Marta Castilho; Marta Menéndez; Aude Sztulman
  8. Home Sweet Home? Macroeconomic Conditions in Home Countries and the Well-Being of Migrants By Alpaslan Akay; Olivier Bargain; Klaus F. Zimmermann
  9. Youth Unemployment in Mediterranean Countries By Eichhorst, Werner; Neder, Franziska

  1. 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)); Conchita D'ambrosio (Université du Luxembourg - Université du Luxembourg)
    Abstract: We review the findings in surveys and experiments from the literature on attitudes to income inequality. We interpret the latter as any disparity in incomes between individuals. We classify these contributions into two broad groups of individual attitudes to income distribution in a society: the normative and the comparative view. The first can be thought of as the individual's disinterested evaluation of income inequality; on the contrary, the second view reflects self-interest, as individual's inequality attitudes depend not only on how much income they receive but also on how much they receive compared to others. We conclude with a number of extensions, outstanding issues and suggestions for future research.
    Keywords: Attitudes ; Distribution ; Experiments ; Income inequality ; Life satisfaction ; Reference groups
    Date: 2014–03–31
  2. By: Richard Layard (London School of Economics and Political Science); Andrew Clark (Department of Electrical and Computer Engineering); Nattavudh Powdthavee; Francesca Cornaglia
    Abstract: If policy-makers care about well-being, they need a recursive model of how adult life satisfaction is predicted by childhood influences, acting both directly and (indirectly) through adult circumstances. We estimate such a model using the British Cohort Study (1970).The most powerful childhood predictor of adult life-satisfaction is the child’s emotional health. Next comes the child’s conduct. The least powerful predictor is the child’s intellectual development. This has obvious implications for educational policy. Among adult circumstances, family income accounts for only 0.5% of the variance of life-satisfaction. Mental and physical health are much more important.
    Keywords: Well-being, Life-satisfaction, Intervention, Model, Life-course, Emotional health, Conduct, Intellectual performance, Success
    JEL: A12 D60 H00 I31
    Date: 2013–10
  3. By: Hamermesh, Daniel S. (University of Texas at Austin, Royal Holloway); Kawaguchi, Daiji (Hitotsubashi University); Lee, Jungmin (Sogang University)
    Abstract: Are workers in modern economies working "too hard" – would they be better off if an equilibrium with fewer work hours were achieved? We examine changes in life satisfaction of Japanese and Koreans over a period when hours of work were cut exogenously because employers suddenly faced an overtime penalty that had become effective with fewer weekly hours per worker. Using repeated cross sections we show that life satisfaction in both countries may have increased relatively among those workers most likely to have been affected by the legislation. The same finding is produced using Korean longitudinal data. In a household model estimated over the Korean cross-section data we find some weak evidence that a reduction in the husband's work hours increased his wife's well-being. Overall these results are consistent with the claim that legislated reductions in work hours can increase workers' happiness.
    Keywords: happiness, overtime work, rat-race
    JEL: J22 J23 J28
    Date: 2014–03
  4. By: Finn, Arden (SALDRU, School of Economics, University of Cape Town); Leibbrandt, Murray (SALDRU, School of Economics, University of Cape Town)
    Abstract: How much income mobility was there in South Africa between 2008 and 2012? Did this mobility serve to equalise or disequalise longer-term measures of income? In this paper we address the first question by assessing the extent of absolute and relative economic mobility. We then turn our attention to the second question of the joint relationship between mobility and inequality, and implement a new measure that is designed to reveal just how equalising or disequalising mobility has been. We find that there was a lot of absolute and relative mobility in the period covered by the first three waves of NIDS, and that this mobility served to equalise longer-term incomes slightly.
    Keywords: mobility; inequality; National Income Dynamics Study; NIDS
    Date: 2013
  5. By: Nicolas Herault (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Francisco Azpitarte (Brotherhood of St Laurence; and Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: We examine trends in the redistributive impact of the tax-transfer system in Australia between 1994 and 2009 using a framework that allows us to separate the contributions of taxes and benefits to overall income redistribution. Furthermore, we identify the effect of tax-transfer policy reforms on changes in income redistribution over the period by controlling for changes in the distribution of market incomes. We find that after reaching a peak value in the late 1990s, the redistributive impact of taxes and transfers steadily declined. Although reforms to the tax-transfer system contributed to the decline in redistribution, their contribution was limited.
    Keywords: Taxes and transfers, income inequality, progressivity, redistributive effect
    JEL: H23 J22 D31
    Date: 2014–01
  6. By: Jeremy Lise; Costas Meghir (UCL Department of Economics); Jean-Marc Robin (Département d'économie)
    Abstract: We develop an empirical search-matching model with productivity shocks so as to analyze policy interventions in a labor market with heterogeneous agents. To achieve this we develop an equilibrium model of wage determination and employment, which is consistent with key empirical facts. As such our model extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates long-term contracts, on-the-job search and counter-offers, and a vacancy creation and destruction process linked to productivity shocks. Importantly, the model allows for the possibility of assortative matching between workers and jobs, a feature that had been ruled out by assumption in the empirical equilibrium search literature to date. We use the model to estimate the potential gain from an optimal unemployment insurance scheme, as well as the redistributive effects of such a policy
    Date: 2013–03
  7. By: Marta Castilho (Universidade Federal Fluminense - Universidade Federal Fluminense); Marta Menéndez (DIAL - Développement, institutions et analyses de long terme - Institut de recherche pour le développement [IRD], UP9 - Université Paris 9, Dauphine - Université Paris IX - Paris Dauphine, 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)); Aude Sztulman (LEDa - DIAL - Laboratoire d'Economie de Dauphine - Equipe Economie de la mondialisation et du développement - Université Paris IX - Paris Dauphine)
    Abstract: This paper studies the impact of globalization on household income inequality end poverty using detailed microdata across Brazilian states from 1987 to 2005. Results suggest that the Brazilian states more exposed to tariff cuts experienced smaller reductions in household poverty and inequality. Contrasting results emerge when we disaggregate into rural and uraban areas within states: trade liberalization contributes to growth in poverty and inequality in urban areas and may be linked to evidence indicating that state poverty and inequality in Brazil decrease with rising export exposure and increase with import penetration.
    Keywords: Trade Liberalization ; Poverty and inequality ; Latin America ; Brazilian states
    Date: 2014–03–28
  8. By: Alpaslan Akay (University of Gothenburg - University of Göteborg, IZA - Institute for the Study of Labor); Olivier Bargain (IZA - Institute for the Study of Labor, AMSE - Aix-Marseille School of Economics - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Klaus F. Zimmermann (IZA - Institute for the Study of Labor, University of Bonn - University of Bonn)
    Abstract: This paper examines whether the subjective well-being of migrants is responsive to fluctuations in macroeconomic conditions in their country of origin. Using the German Socio-Economic Panel for the years 1984 to 2009 and macroeconomic variables for 24 countries of origin, we exploit country-year variation for identification of the effect and panel data to control for migrants' observed and unobserved characteristics. We find strong (mild) evidence that migrants' well-being responds negatively (positively) to an increase in the GDP (unemployment rate) of their home country. That is, we originally demonstrate that migrants regard home countries as natural comparators and, thereby, suggest an original assessment of the migration's relative deprivation motive. We also show that migrants are positively affected by the performances of the German regions in which they live (a 'signal effect'). We demonstrate that both effects decline with years-since-migration and with the degree of assimilation in Germany, which is consistent with a switch of migrants' reference point from home countries to migration destinations. Results are robust to the inclusion of country-time trends, to control for remittances sent to relatives in home countries and to a correction for selection into return migration. We derive important implications for labor market and migration policies.
    Keywords: migrants; well-being; GDP; unemployment; relative concerns/deprivation
    Date: 2014–03
  9. By: Eichhorst, Werner (IZA); Neder, Franziska (IZA)
    Abstract: In all Mediterranean countries youth unemployment has reached alarming record levels. This paper analyses the current situation in France, Greece, Italy, Portugal, and Spain. In all countries school dropout rates are high, returns to education are low and the transition from education to work is problematic and difficult. This is due to a poor working vocational training system, the dualization of the labor market and minimum wages that are set too high. The Great Recession deteriorated the situation of young people, but youth unemployment is mostly structural. To overcome this crisis the overall performance of the labor market has to be improved.
    Keywords: vocational training, Europe, Mediterranean countries, youth unemployment
    JEL: J21 J23 J24
    Date: 2014–03

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