nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒06‒07
seven papers chosen by
Maximo Rossi
University of the Republic

  1. Labour-Market Institutions and the Dispersion of Wage Earnings By Salverda, Wiemer; Checchi, Daniele
  2. Are teams less inequality averse than individuals? By Haoran He; Marie Claire Villeval
  3. Social Norms and Mothers’ Labor Market Attachment – The Medium-run Effects of Parental Benefits By Jochen Kluve; Sebastian Schmitz
  4. Selective Schooling Systems Increase Inequality By Simon Burgess; Matt Dickson; Lindsey Macmillan
  5. Life Events and Subjective Well-being: The Case of Having Children By Pedersen, Peder J.; Schmidt, Torben Dall
  6. Tackling Social Exclusion: Evidence from Chile By Carneiro, Pedro; Galasso, Emanuela; Ginja, Rita
  7. Positional Concerns among the Poor: Does Reference Group Matter? Evidence from Survey Experiments By Akay, Alpaslan; Andersson, Lisa; Martinsson, Peter; Medhin, Haileselassie

  1. By: Salverda, Wiemer (University of Amsterdam); Checchi, Daniele (University of Milan)
    Abstract: Considering the contribution of the distribution of individual wages and earnings to that of household incomes we find two separate literatures that should be brought together, and bring 'new institutions' into play. Growing female employment, rising dual-earnership and part-time employment underline its relevance. We discuss the measurement of wage inequality, data sources, and stylized facts of wage dispersion for rich countries. The literature explaining the dispersion of wage rates and the role of institutions is evaluated, from the early 1980s to the recent literature on job polarization and tasks as well as on the minimum wage. Distinguishing between supply-and-demand approaches and institutional ones, we find the former challenged by the empirical measurement of technological change and a risk of ad hoc additions, without realizing their institutional preconditions. The institutional approach faces an abundance of institutions without a clear conceptual delineation of institutions and their interactions. Empirical cross-country analysis of the correlation between institutional measures and wage inequality incorporates unemployment and working hours dynamics, discussing the problems of matching individuals to their relevant institutional framework. Minimum wage legislation and active labour market policies come out negatively correlated to earnings inequality in US and EU countries.
    Keywords: labour-market institutions, household labour supply, hourly wages, hours worked, annual earnings, dispersion, inequality measures, household incomes, minimum wage, unions, employment protection
    JEL: D02 D13 D31 J22 J31 J51 J52
    Date: 2014–05
  2. By: Haoran He (School of Economics and Business Administration - Beijing Normal University / Beijing); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL))
    Abstract: We compare inequality aversion in individuals and teams by means of both within- and between-subject experimental designs, and we investigate how teams aggregate individual preferences. We find that team decisions reveal less inequality aversion than individual initial proposals in team decision-making. However, teams are no more selfish than individuals who decide in isolation. Individuals express strategically more inequality aversion in their initial proposals in team decision-making because they anticipate the selfishness of other members. Members with median social preferences drive team decisions. Finally, we show that social image has little influence because guilt and envy are almost similar in anonymous and non-anonymous interactions.
    Keywords: Team; inequity aversion; preference aggregation; social image; experiment
    Date: 2014
  3. By: Jochen Kluve; Sebastian Schmitz
    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: Parental benefits; female labor supply; regression discontinuity
    JEL: H31 J13 J22
    Date: 2014–04
  4. By: Simon Burgess (Department of Economics, University of Bristol); Matt Dickson (Department of Social and Policy Sciences, University of Bath); Lindsey Macmillan (Department of Quantitative Social Science, Institute of Education)
    Abstract: We investigate the impact on earnings inequality of a selective education system in which school assignment is based on initial test scores. We use a large, representative household panel survey to compare adult earnings inequality of those growing up under a selective education system with those educated under a comprehensive system. Controlling for a range of background characteristics and the current location, the wage distribution for individuals who grew up in selective schooling areas is quantitatively and statistically significantly more unequal. The total effect sizes are large: 14% of the raw 90-10 earnings gap and 18% of the conditional 90-10 earnings gap can be explained by differences across schooling systems
    Keywords: selective schooling, inequality, wages
    JEL: I24 J31
    Date: 2014–05–28
  5. By: Pedersen, Peder J. (Aarhus University); Schmidt, Torben Dall (University of Southern Denmark)
    Abstract: The literature on Happiness and Subjective Well-Being (SWB) has been dominated by studies of the impact from income and labour market status - and the impact on happiness from changes in these determinants. It seems obvious to expect an impact from non-economic factors as well. In the present paper we focus on the eventual impact on SWB from having children. The dominant result in the rather few studies until now is the finding of no – or even a negative – impact on subjective well being following birth of a child. We focus on the impact from having children using two very big panel data sets. The first is the European Community Household Panel (ECHP) with data collected over 8 annual waves from 1994 to 2001 in 15 EU member countries. Observations are available for up to 15 countries with big differences in fertility levels, child care institutions and labour force participation for married women. At the same time, the ECHP data contains a lot of relevant demographic and labour market background variables to be included in the econometric analyses of the SWB impact from children. The second data set is The German Socio Economic Panel (GSOEP). Like the ECHP, the GSOEP data contains many relevant background factors. This presents a unique opportunity to combine the cross country perspective in the ECHP data with the possibility presented by the GSOEP of following the impact from giving birth over a significantly longer period including approximately 11.000 households.
    Keywords: subjective well-being, life events, panel data
    JEL: D1 I31 J13
    Date: 2014–05
  6. By: Carneiro, Pedro (University College London); Galasso, Emanuela (World Bank); Ginja, Rita (Uppsala University)
    Abstract: We study an innovative welfare program in Chile which combines a period of frequent home visits to households in extreme poverty, with guaranteed access to social services. Program impacts are identified using a regression discontinuity design, exploring the fact that program eligibility is a discontinuous function of an index of family income and assets. We find strong and lasting impacts of the program on the take up of subsidies and employment services. These impacts are important only for families who had little access to the welfare system prior to the intervention.
    Keywords: social exclusion, social protection, Chile, extreme poverty
    JEL: C26 I38 J08
    Date: 2014–05
  7. By: Akay, Alpaslan (University of Gothenburg); Andersson, Lisa (University of Gothenburg); Martinsson, Peter (University of Gothenburg); Medhin, Haileselassie (University of Gothenburg)
    Abstract: Previous research suggests a lower degree of positional concerns among people from poor countries. Yet the evidence is limited and most often builds on the assumption that people’s reference groups are the same across all individuals. We conduct a survey experiment in urban Ethiopia that is modified to include multiplicity of reference groups. We estimate positional concerns considering various reference groups to test whether the low positional concerns found in the literature is due to misspecification of the reference groups. The results show a low degree of positional concern which is highly stable across different reference groups.
    Keywords: reference groups, income comparison, experiment
    JEL: D60 C90
    Date: 2014–05

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