nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒04‒29
six 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 C.; Powdthavee, Nattavudh; Oswald, Andrew J.
  2. Income Inequality and Health: Evidence from Developed and Developing Countries By Herzer, Dierk; Nunnenkamo, Peter
  3. Social Norms and Mothers' Labor Market Attachment: The Medium-Run Effects of Parental Benefits By Kluve, Jochen; Schmitz, Sebastian
  4. Single Mothers and the Earned Income Tax Credit: Insurance Without Disincentives? By Artheya, Kartik; Reilly, Devin; Simpson, Nicole B.
  5. Conditional Cash Transfers, Civil Conflict and Insurgent Influence: Experimental Evidence from the Philippines By Benjamin Crost; Joseph H. Felter; Patrick B. Johnston
  6. On the Welfare Cost of Consumption Fluctuations in the Presence of Memorable Goods, Second Version By Rong Hai; Andrew Postlewaite; Dirk Krueger

  1. By: Cheng, Terence C. (University of Melbourne); Powdthavee, Nattavudh (London School of Economics); Oswald, Andrew J. (University of Warwick and CAGE)
    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
    Keywords: Life-cycle happiness, subjective well-being, longitudinal study, U shape
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:cge:wacage:187&r=ltv
  2. By: Herzer, Dierk (Helmut Schmidt University, Hamburg); Nunnenkamo, Peter (Kieler Institut für Weltwirtschaft)
    Abstract: We assess the effect of income inequality on life expectancy by performing separate estimations for developed and developing countries. Our empirical analysis challenges the widely held view that inequality matters more for health in richer countries than for health in poorer countries. Employing panel cointegration and conventional panel regressions, we find that income inequality increases life expectancy in developed countries. By contrast, the effect on life expectancy is significantly negative in developing countries. While the quantitative effects are small, the striking contrast between the two country groups proves to be robust to modifications in measurement, specification and methodological choices.
    Keywords: health; inequality; panel cointegration
    JEL: C23 I14
    Date: 2014–04–17
    URL: http://d.repec.org/n?u=RePEc:ris:vhsuwp:2014_141&r=ltv
  3. By: Kluve, Jochen (Humboldt University Berlin, RWI); Schmitz, Sebastian (Freie Universität Berlin)
    Abstract: Increasing mothers' labor supply is a key policy challenge in many OECD countries. Germany recently introduced a generous parental benefit that allows for strong consumption smoothing after childbirth and, by taking into account opportunity costs of childbearing, incentivizes working women to become mothers and return to the labor force rapidly. Using a sharp regression discontinuity design, we estimate policy impacts for up to 5 years after childbirth and find significant and striking patterns. First, medium-run effects on mothers' employment probability are positive, significant and large, for some subgroups ranging up to 10 per cent. The effects are driven by gains in part-time but not full-time employment. We also find significant increases in working hours. Second, the probability of job continuity rises significantly, i.e. mothers return to their pre-childbirth employer at higher rates. Third, employers reward this return to work by raising job quality significantly and substantially. We argue that the policy generated a profound change in social norms: the new parental benefit defines an "anchor", i.e. a societally preferred point in time at which mothers return to work after childbirth.
    Keywords: regression discontinuity, female labor supply, parental benefits
    JEL: H31 J13 J22
    Date: 2014–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp8115&r=ltv
  4. By: Artheya, Kartik (Federal Reserve Bank of Richmond); Reilly, Devin (University of Pennsylvania); Simpson, Nicole B. (Colgate University)
    Abstract: The Earned Income Tax Credit (EITC) is the single most important transfer program in place in the United States. An aspect of the EITC that has received little attention thus far is its role as a public insurance program. Yet, the structure of the EITC necessarily protects its primary class of recipients, unskilled single mothers, against major risks they face to both wages and changes in family structure. Our study provides the first quantitative statement about the insurance provided by the EITC. We study a dynamic model of consumption, savings, and labor supply in which households face wage and demographic risk, but have only limited self-insurance capacity. We use the model to compare outcomes under the EITC to the counterfactual in which it is completely eliminated. We find that the EITC provides substantial insurance to unskilled single mothers: The program reduces consumption volatility, as measured by the coefficient of the variation, by 12 percentage points or more, even as it allows these households to save less. Importantly, this insurance provision may not be compromising incentives to work: The model suggests that the EITC increases the labor supply of unskilled single mothers substantially at the extensive margin.
    Keywords: Taxation and Subsidies; Labor Supply; Insurance
    JEL: H22 H24 J22
    Date: 2014–04–14
    URL: http://d.repec.org/n?u=RePEc:fip:fedrwp:14-11&r=ltv
  5. By: Benjamin Crost (University of Colorado Denver); Joseph H. Felter (Stanford University); Patrick B. Johnston (RAND Corporation)
    Abstract: Conditional cash transfer (CCT) programs are an increasingly popular tool for reducing poverty in conflict-affected areas. Despite their growing popularity, there is limited evidence on how CCT programs affect conflict and theoretical predictions are ambiguous. We estimate the effect of conditional cash transfers on civil conflict in the Philippines by exploiting an experiment that randomly assigned eligibility for a CCT program at the village level. We find that cash transfers caused a substantial decrease in conflict-related incidents in treatment villages relative to control villages. Using unique data on local insurgent influence, we also find that the program significantly reduced insurgent influence in treated villages.
    Date: 2014–04
    URL: http://d.repec.org/n?u=RePEc:hic:wpaper:174&r=ltv
  6. By: Rong Hai (Department of Economics, University of Chicago); Andrew Postlewaite (Department of Economics, University of Pennsylvania); Dirk Krueger (Department of Economics, University of Pennsylvania)
    Abstract: We propose a new category of consumption goods, memorable goods, that generate a flow of utility after consumption. We analyze an otherwise standard consumption model that distinguishes memorable goods from other nondurable goods. Consumers optimally choose lumpy consumption of memorable goods. We then empirically document significant differences between levels and volatilities of memorable and other nondurable good expenditures. In two applications we find that the welfare cost of consumption fluctuations driven by income shocks are significantly overstated if memorable goods are not accounted for and that estimates of excess sensitivity of consumption might be entirely due to memorable goods.
    Keywords: Memorable Goods, Consumption Volatility, Welfare Cost
    JEL: D91 E21
    Date: 2013–08–23
    URL: http://d.repec.org/n?u=RePEc:pen:papers:14-012&r=ltv

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