nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒06‒22
six papers chosen by
Maximo Rossi
University of the Republic

  1. Inequality and bi-polarization in socioeconomic status and health: Ordinal approaches By Bénédicte H. Apouey; Jacques Silber
  2. Inequality of opportunity and economic growth : a cross-country analysis By Ferreira, Francisco H. G.; Lakner, Christoph; Lugo, Maria Ana; Ozler, Berk
  3. Intra-household Welfare By Pierre-André Chiappori; Costas Meghir
  4. Human Capital and Unemployment Dynamics: Why More Educated Workers Enjoy Greater Employment Stability By Cairo, Isabel; Cajner, Tomaz
  5. Non-contributory pensions By Rosangela Bando; Paul Gertler; Sebastián Galiani
  6. Comparing the Incidence of Taxes and Social Spending in Brazil and the United States - Working Paper 360 By Sean Higgins, Nora Lustig, Whitney Ruble, and Timothy Smeeding

  1. By: Bénédicte H. Apouey (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)); Jacques Silber (Department of Economics - Bar-Ilan University, CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development)
    Abstract: Traditional indices of bi-dimensional inequality and polarization were developed for cardinal variables and cannot be used to quantify dispersion in ordinal measures of socioeconomic status and health. This paper develops two approaches to the measurement of inequality and bi-polarization using only ordinal information. An empirical illustration is given for 24 European Union countries in 2004-2006 and 2011. Results suggest that inequalities and bi-polarization in income and health are especially large in Estonia and Portugal, and that inequalities have significantly increased in recent years in Austria, Belgium, Finland, Germany, and the Netherlands, whereas bi-polarization significantly decreased in France, Portugal, and the UK.
    Keywords: Inequality ; Bi-polarization ; Ordinal variables ; Self-assessed health
    Date: 2013–08–05
  2. By: Ferreira, Francisco H. G.; Lakner, Christoph; Lugo, Maria Ana; Ozler, Berk
    Abstract: Income differences arise from many sources. While some kinds of inequality, caused by effort differences, might be associated with faster economic growth, other kinds, arising from unequal opportunities for investment, might be detrimental to economic progress. This study uses two new metadata sets, consisting of 118 household surveys and 134 Demographic and Health Surveys, to revisit the question of whether inequality is associated with economic growth and, in particular, to examine whether inequality of opportunity -- driven by circumstances at birth -- has a negative effect on subsequent growth. The results are suggestive but not robust: while overall income inequality is generally negatively associated with growth in the household survey sample, we find no evidence that this is due to the component associated with unequal opportunities. In the Demographic and Health Surveys sample, both overall wealth inequality and inequality of opportunity have a negative effect on growth in some of the preferred specifications, but the results are not robust to relatively minor changes. On balance, although the results are suggestive of a negative association between inequality and growth, the data do not permit robust conclusions as to whether inequality of opportunity is bad for growth.
    Keywords: Inequality,Equity and Development,Poverty Impact Evaluation,Services&Transfers to Poor,Achieving Shared Growth
    Date: 2014–06–01
  3. By: Pierre-André Chiappori; Costas Meghir
    Abstract: In this paper we develop an approach to measuring inequality and poverty that recognizes the fact that individuals within households may have both different preferences and differential access to resources. We argue that a measure based on estimates of the sharing rule is inadequate as an approach that seeks to understand how welfare is distributed in the population because it ignores public good and the allocation of time to market work, leisure and household production. We develop a money metric measure of welfare that accounts for public goods (by using personalized prices) household production and for the allocation of time.
    JEL: D1 D11 D13
    Date: 2014–06
  4. By: Cairo, Isabel (Universitat Pompeu Fabra); Cajner, Tomaz (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: Why do more educated workers experience lower unemployment rates and lower employment volatility? A closer look at the data reveals that these workers have similar job finding rates, but much lower and less volatile separation rates than their less educated peers. We argue that on-the-job training, being complementary to formal education, is the reason for this pattern. Using a search and matching model with endogenous separations, we show that investments in match-specific human capital reduce the outside option of workers, implying less incentives to separate. The model generates unemployment dynamics that are quantitatively consistent with the cross-sectional empirical patterns.
    Keywords: Unemployment; education; on-the-job training; specific human capital
    Date: 2013–11–01
  5. By: Rosangela Bando; Paul Gertler; Sebastián Galiani
    Abstract: The creation of non-contributory pension schemes is becoming increasingly common as countries struggle to reduce poverty. Drawing on data from Mexico's Adultos Mayores Program (Older Adults Program) --a cash transfer scheme aimed at rural adults over 70 years of age-- we evaluate the effects of this program on the well-being of the beneficiary population. Exploiting a quasi-experimental design whereby the program relies on exogenous geographical and age cutoffs to identify its target group, we find that the mental health of elderly adults in the program is significantly improved, as their score on the Geriatric Depression Scale decreases by 12%. We also find that the proportion of treated individuals doing paid work is reduced by 20%, with most of these people switching from their former activities to work in family businesses; treated households show higher levels of consumption expenditures (on average, an increase of 23%). Very importantly, we also rule out significant anticipation effects that might have been associated with the program transfers. Thus, overall, we find that non-contributory pension schemes target to the poor in developing countries can improve the well-being of poor older adults without having any indirect impact (through potential anticipation effects) on the earnings or savings of future program participants.
    Keywords: Poverty, Pension funds, Social Security, Income, Consumption & Saving, mental health, non-contributory pensions, poverty, mental health, well-being
    Date: 2014–06
  6. By: Sean Higgins, Nora Lustig, Whitney Ruble, and Timothy Smeeding
    Abstract: We perform the first comprehensive fiscal incidence analyses in Brazil and the US, including direct cash and food transfers, targeted housing and heating subsidies, public spending on education and health, and personal income, payroll, corporate income, property, and expenditure taxes. In both countries, primary spending is close to 40 percent of GDP. The US achieves higher redistribution through direct taxes and transfers, primarily due to underutilization of the personal income tax in Brazil and the fact that Brazil’s highly progressive cash and food transfer programs are small while larger transfer programs are less progressive. However, when health and non-tertiary education spending are added to income using the government cost approach, the two countries achieve similar levels of redistribution. This result may be a reflection of better-off households in Brazil opting out of public services due to quality concerns rather than a result of government effort to make spending more equitable.
    Keywords: inequality, fiscal policy, taxation, social spending
    JEL: D31 H22 I38
    Date: 2014–03

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