New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒05‒17
eleven papers chosen by

  1. Wealth gradients in early childhood cognitive development in five Latin American countries By Norbert Schady; Jere Behrman; Maria Caridad Araujo; Raquel Bernal
  2. Economic Well-being and Anti-Semitic, Xenophobic, and Racist Attitudes in Germany By Naci H. Mocan; Christian Raschke
  3. Limited Income Mobility in Korea By Hyungna Oh; Yun Jeong Choi
  4. Growth, inequality, and social welfare : cross-country evidence By Dollar, David; Kleineberg, Tatjana; Kraay, Aart
  5. The colonial legacy: Income inequality in former British African colonies By Atkinson, A.B.
  6. Falling real wages By David Blanchflower; Stephen Machin
  7. Racial Discrimination in the U.S. Labor Market: Employment and Wage Differentials by Skill By Daniel Borowczyk-Martins; Jake Bradley; Linas Tarasonis
  8. Dimensions of African inequality By Bigsten, Arne
  9. Minimum wages: the economics and the politics By Alan Manning
  10. Online and offline social participation and social poverty traps. Can social networks save human relations? By A. Antoci; F. Sabatini; M. Sodini
  11. Long-Term Impacts of Compensatory Preschool on Health and Behavior: Evidence from Head Start By Pedro Carneiro; Rita Ginja

  1. By: Norbert Schady; Jere Behrman; Maria Caridad Araujo; Raquel Bernal
    Abstract: 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: 2014–04–24
  2. By: Naci H. Mocan; Christian Raschke
    Abstract: The fear and hatred of others who are different has economic consequences because such feelings are likely to translate into discrimination in labor, credit, housing, and other markets. The implications range from earnings inequality to intergenerational mobility. Using German data from various years between 1996 and 2010, we analyze the determinants of racist and xenophobic feelings towards foreigners in general, and against specific groups such as Italians and Turks. We also analyze racist and anti-Semitic feelings towards German citizens who differ in ethnicity (Aussiedler from Eastern Europe) or in religion (German Jews). Individuals’ perceived (or actual) economic well-being is negatively related to the strength of these feelings. Education, and having contact with foreigners mitigate racist, anti-Semitic and xenophobic feelings. People who live in states which had provided above-median support of the Nazi party in the 1928 elections have stronger anti-Semitic feelings today. The results are not gender-driven. They are not an artifact of economic conditions triggering feelings about job priority for German males, and they are not fully driven by fears about foreigners taking away jobs. The results of the paper are consistent with the model of Glaeser (2005) on hate, and with that of Akerlof and Kranton (2000, 2005) on identity in the utility function.
    JEL: I30 J15 Z1
    Date: 2014–04
  3. By: Hyungna Oh (Kyung Hee University); Yun Jeong Choi (Yonsei University)
    Abstract: Using the Korea Labor and Income Panel Study from 1998 to 2010, we measure income mobility and determinants of income ranks and mobility. Empirical outcomes reveal that income mobility is quite limited for both the poorest and the richest income group households. Moreover, a macro economic shock had heterogeneous impacts on each income group and the low-income class was highly vulnerable to it. Given the long-lasting impacts of early stage factors and initial endowment on income, and the existence of senior poverty, this paper calls for policies to support citizens suffering from illness, family breakdown, poor initial conditions, and aging.
    Keywords: Intragenerational mobility, income elasticity, poverty, Korea
    JEL: D31 D63 I30
    Date: 2014–04
  4. By: Dollar, David; Kleineberg, Tatjana; Kraay, Aart
    Abstract: Social welfare functions that assign weights to individuals based on their income levels can be used to document the relative importance of growth and inequality changes for changes in social welfare. In a large panel of industrial and developing countries over the past 40 years, most of the cross-country and over-time variation in changes in social welfare is due to changes in average incomes. In contrast, the changes in inequality observed during this period are on average much smaller than changes in average incomes, are uncorrelated with changes in average incomes, and have contributed relatively little to changes in social welfare.
    Keywords: Inequality,Achieving Shared Growth,Economic Conditions and Volatility,Economic Theory&Research,Equity and Development
    Date: 2014–04–01
  5. By: Atkinson, A.B.
    Abstract: This paper examines the distribution of top incomes in 15 former British colonies in Africa, drawing on evidence available from income tax records. It seeks to throw light on the position of colonial elites during the period of British rule. Just how uneq
    Keywords: inequality, income distribution, colonial Africa
    Date: 2014
  6. By: David Blanchflower; Stephen Machin
    Abstract: The researchers note that there have been historically unprecedented falls in UK real wages since the start of the Great Recession. What's more, the long US experience of stagnant real wages (median real weekly earnings in the United States in 2013 were at about the same level as in 1979) might be viewed as a warning sign for the UK.
    Keywords: Wage inequality, real wage growth, unemployment, USA, UK, Great Recession
    Date: 2014–05
  7. By: Daniel Borowczyk-Martins (University of Bristol - University of Bristol); Jake Bradley (University of Bristol - University of Bristol); Linas Tarasonis (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))
    Abstract: In the US labor market the average black worker is exposed to a lower employment rate and earns a lower wage compared to his white counterpart. Lang and Lehmann (2012) argue that these mean differences mask substantial heterogeneity along the distribution of workers' skill. In particular, they argue that black-white wage and employment gaps are smaller for high-skill workers. In this paper we show that a model of employer taste-based discrimination in a labor market characterized by search frictions and skill complementarities in production can replicate these regularities. We estimate the model with US data using methods of indirect inference. Our quantitative results portray the degree of employer prejudice in the US labor market as being strong and widespread, and provide evidence of an important skill gap between black and white workers. We use the model to undertake a structural decomposition and conclude that discrimination resulting from employer prejudice is quantitatively more important than skill differences to explain wage and employment gaps. In the final section of the paper we conduct a number of counterfactual experiments to assess the effectiveness of different policy approaches aimed at reducing racial differences in labor market outcomes.
    Keywords: employment and wage differentials; discrimination; job search
    Date: 2014–04
  8. By: Bigsten, Arne
    Abstract: This paper discusses dimensions of inequality in sub-Saharan Africa and their causes. It starts with a review of the empirical evidence about inequality during the colonial period as well as the post-independence era. Then it discusses the forces that det
    Keywords: inequality, poverty, growth, structural change, endowments, employment, Africa
    Date: 2014
  9. By: Alan Manning
    Abstract: The UK's national minimum wage has tackled extreme low pay - but the wider problem of low pay remains as serious as ever. That is one of the conclusions of Professor Alan Manning in a discussion of the growing popularity of minimum wages as a way of tackling inequality - and the likelihood that it will lead to minimum wages that are much higher than we have seen before in some parts of the world. He notes that the driving force behind higher minimum wages is that they are very popular with voters - but even most economists now agree that they have little or no negative effect on employment. Big increases in minimum wages will test the view that negative effects on employment must eventually kick in.
    Keywords: National Minimum Wage, employment, living wage, politics, public policy
    JEL: J31 J38 J41
    Date: 2014–05
  10. By: A. Antoci; F. Sabatini; M. Sodini
    Abstract: In this study, we develop an evolutionary game model to analyse how human relations evolve in a context characterised by declining face-to-face interactions and growing online social participation. Our results suggest that online networks may constitute a coping response allowing individuals to “defend” their social life from increasing busyness and a reduction in the time available for leisure. Internet-mediated interaction can play a positive role in preventing the disruption of ties and the weakening of community life documented by empirical studies. In this scenario, the digital divide is likely to become an increasingly relevant factor of social exclusion, which may exacerbate inequalities in well-being and capabilities.
    Keywords: well-being, social participation, social capital, online networks, digital divide
    JEL: Z13 O33 D85 C73
    Date: 2014
  11. By: Pedro Carneiro (University College London); Rita Ginja (Uppsala Universitet)
    Abstract: This paper provides new estimates of the medium and long-term impacts of Head Start on health and behavioral problems. We identify these impacts using discontinuities in the probability of participation induced by program eligibility rules. Our strategy allows us to identify the effect of Head Start for the set of individuals in the neighborhoods of multiple discontinuities, which vary with family size, state and year. Participation in the program reduces the incidence of behavioral problems, health problems and obesity of male children at ages 12 and 13. It lowers depression and obesity among adolescents, and reduces engagement in criminal activities and idleness for young adults.
    Keywords: Head Start, Regression Discontinuity, poverty
    JEL: C26 I28 J13
    Date: 2014

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