nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒06‒28
eight papers chosen by
Maximo Rossi
University of the Republic

  1. Poverty reduction and shared prosperity in Tajikistan : a diagnostic By Azevedo, Joao Pedro; Atamanov, Aziz; Rajabov, Alisher
  2. An exploration of the factors influencing well-being of farm and non-farm households By Miller, Ana Corina; Jack, Claire G.; Anderson, Duncan J.
  3. Taxation and the Long Run Allocation of Labor: Theory and Danish Evidence By Kreiner, Claus Thustrup; Munch, Jakob R.; Whitta-Jacobsen, Hans Jørgen
  4. Data for Studying Earnings, the Distribution of Household Income and Poverty in China By Gustafsson, Björn Anders; Li, Shi; Sato, Hiroshi
  5. The puzzling fall in the wage skill premium in Spain By Manuel Hidalgo-Pérez; Sergi Jiménez-Martín; Florentino Felgueroso
  6. Income inequality and violent crime : evidence from Mexico's drug war By Enamorado, Ted; Lopez-Calva , Luis-Felipe; Rodriguez-Castelan, Carlos; Winkler, Hernan
  7. Trying to Understand the PPPs in ICP2011: Why are the Results so Different? By Angus Deaton; Bettina Aten
  8. Free to Leave? A Welfare Analysis of Divorce Regimes By Raquel Fernández; Joyce Cheng Wong

  1. By: Azevedo, Joao Pedro; Atamanov, Aziz; Rajabov, Alisher
    Abstract: Tajikistan was one of the fastest growing countries in the Europe and Central Asia region during the last decade. The economic growth was widely shared by the population and as a result poverty (measured by the national poverty line) declined from 73 percent in 2003 to 47 percent in 2009 accompanied by falling inequality. Consumption growth of the bottom 40 percent of the population -- a measure of shared prosperity proposed by the World Bank- was positive, pointing out that the growth was shared among the less well off. This work presents a diagnostic of shared prosperity and poverty reduction in Tajikistan during 2003-2009. The paper also focuses on quantifying the main drivers of poverty reduction, shared prosperity, and intra-generational mobility (class transitions). Some of the mechanisms of poverty reduction are explored in detail. Finally, main impediments to inter-generational mobility are discussed.
    Keywords: Rural Poverty Reduction,Regional Economic Development,Achieving Shared Growth,Population Policies
    Date: 2014–06–01
  2. By: Miller, Ana Corina; Jack, Claire G.; Anderson, Duncan J.
    Abstract: Traditionally the definition and analysis of household well-being has focused on the main economic measures of income and wealth. However, there is now an increased interest within the wider economic literature in exploring those measures which contribute to household well-being which can extend beyond purely economic measures. Furthermore, from a farm household perspective, there is increased research and policy interest in the general well-being of farm households, including how decision-making processes within the farm family influence overall well-being. This paper explores the causal effect of both economic an non-economic factors on well-being for farm and non-farm households in Northern Ireland. The methodology incorporates two complimentary data sources. The results suggest that almost three fifths of those living in Northern Ireland report a high level of satisfaction with life overall, with farm households recording a slightly lower rate of life satisfaction compared with the non-farm group. Regression results support the U-shaped life-cycle effect hypothesis. In terms of gender, for farm based females, the level of education and having an off-farm job has a positive impact on life satisfaction compared to males. For males, being in full time employment brings an increase in the life satisfaction overall.
    Keywords: households well-being, econometric analysis, farm households, Agribusiness, Consumer/Household Economics, Farm Management, Research Methods/ Statistical Methods,
    Date: 2014–04
  3. By: Kreiner, Claus Thustrup (University of Copenhagen); Munch, Jakob R. (University of Copenhagen); Whitta-Jacobsen, Hans Jørgen (University of Copenhagen)
    Abstract: Inspired by Hayek (1945), we study the distortionary effects of taxation on labor mobility and the long run allocation of labor across different profitable opportunities. These effects are not well detected by the methods applied in the large public finance literature estimating the elasticity of taxable income and quantifying the efficiency loss from taxation. Our analysis builds on a standard search theoretic framework where workers are continually seeking better paid jobs, but are also fired from time to time because of economic development and productivity shocks. We incorporate non-linear taxation into this setting and estimate the structural parameters of the model using employer-employee register based data for the full Danish population of workers and workplaces for the years 2004-2006. Our results indicate that along the intensive margin the Danish taxation generates an overall efficiency loss corresponding to a 12 percent reduction in total income. It is possible to reap 4/5 of this potential efficiency gain by going from a high-tax Scandinavian system to a level of taxation in line with low-tax OECD countries such as the United States. The tax-responsiveness of labor mobility and allocation corresponds to an elasticity of taxable income with respect to the net-of-tax rate in the range 0.15-0.35.
    Keywords: tax distortions, labor mobility, elasticity of taxable income
    JEL: J62 H24
    Date: 2014–06
  4. By: Gustafsson, Björn Anders (University of Gothenburg); Li, Shi (Beijing Normal University); Sato, Hiroshi (Hitotsubashi University)
    Abstract: This paper discusses data used in publishing statistics on earnings, the distribution of household income and poverty in China by the National Bureau of Statistics (NBS) which is widely used by policy makers, international agencies and researchers. Unlike many other countries, China until recently had a dual system of household surveys - one rural and one urban. This has had consequences for providing official data on wages, income and poverty which we discuss along with other challenges. Since the end of the 1980s, researchers have been active in the construction of large databases aimed at mapping earnings, household income and poverty, and we present seven of these in the paper.
    Keywords: earnings, income, inequality, poverty, data, China, National Bureau of Statistics
    JEL: C83 D31 I32 P36
    Date: 2014–06
  5. By: Manuel Hidalgo-Pérez (Department of Economics, Universidad Pablo de Olavide de Sevilla); Sergi Jiménez-Martín (Department of Economics, Universitat Pompeu Fabra and FEDEA); Florentino Felgueroso (Department of Economics, Universidad de Oviedo and FEDEA)
    Abstract: In contrast to most EU countries and other developed economies, the Wage Skill Premium (WSP) has been steadily falling over the past decades in Spain. The main purpose of this work is to document and explain the fall in the WSP in Spain over the past two decades using Social Security data. Our estimation procedure follows and extends Dustman and Meghir (2005), which allows us to estimate the returns to various sources of experience, as well as seniority, while controlling for the likely biases and endogeneity associated with these models. The results reveal that the fall in the WSP can be explained in part by an increase in the share of college graduates that are mismatched, that is, working in positions for which they are a priori overeducated. However, this phenomenon only partially explains the fall in the WSP: differences between high and low-educated workers in the returns to all types of experiences and tenure have been substantially reduced since the end of the 90s.
    Keywords: wage premium, returns to education, experience, seniority
    JEL: J31 J24 J41
    Date: 2014–06
  6. By: Enamorado, Ted; Lopez-Calva , Luis-Felipe; Rodriguez-Castelan, Carlos; Winkler, Hernan
    Abstract: The relationship between income inequality and crime has attracted the interest of many researchers, but little convincing evidence exists on the causal effect of inequality on crime in developing countries. This paper estimates this effect in a unique context: Mexico's Drug War. The analysis takes advantage of a unique data set containing inequality and crime statistics for more than 2,000 Mexican municipalities covering a period of 20 years. Using an instrumental variable for inequality that tackles problems of reverse causality and omitted variable bias, this paper finds that an increment of one point in the Gini coefficient translates into an increase of more than 10 drug-related homicides per 100,000 inhabitants between 2006 and 2010. There are no significant effects before 2005. The fact that the effect was found during Mexico's Drug War and not before is likely because the cost of crime decreased with the proliferation of gangs (facilitating access to knowledge and logistics, lowering the marginal cost of criminal behavior), which, combined with rising inequality, increased the expected net benefit from criminal acts after 2005.
    Keywords: Rural Poverty Reduction,Crime and Society,Inequality,Gender and Law,Services&Transfers to Poor
    Date: 2014–06–01
  7. By: Angus Deaton; Bettina Aten
    Abstract: The 2011 round of the International Comparison Program (ICP) has published a set of purchasing power parities (PPPs) that are sharply different from those that were expected from extrapolation of the 2005 round. In particular, the world in 2011 looks sharply more equal than previously calculated, because consumption and GDP in most poor countries were revised upward relative to the U.S. and other rich countries. Here we attempt to find out what happened. It is first noted that the 2005 round was itself sharply different from what was then expected, and made the world much less equal. We argue that the 2011 round is superior to the 2005 round, and that many of the changes in 2011 undo what happened in 2005. We identify a likely source of the problem, which is the way that the regions of the ICP were linked in 2005. We use two different methods for measuring the size of the effect. Both suggest that the 2005 PPPs for consumption for countries in Asia (excluding Japan), Western Asia, and Africa were overstated by between 20 to 30 percent. If these results are correct, they call for substantive backward revision of international comparisons, as well as estimates of global poverty and inequality.
    JEL: E01 F00 O11 O47
    Date: 2014–06
  8. By: Raquel Fernández; Joyce Cheng Wong
    Abstract: During the 1970s the US underwent an important change in its divorce laws, switching from mutual consent to a unilateral divorce regime. Who benefitted and who lost from this change? To answer this question we develop a dynamic life-cycle model in which agents make consumption, saving, labor force participation (LFP), and marriage and divorce decisions subject to several shocks and given a particular divorce regime. We calibrate the model using statistics relevant to the life-cycle of the 1940 cohort. Conditioning solely on gender, our ex ante welfare analysis finds that women would fare better under mutual consent whereas men would prefer a unilateral system. Once we condition not only on gender but also on initial productivity, we find that men in the top three quintiles of the initial productivity distribution are made better off by a unilateral system as are the top two quintiles of women; the rest prefer mutual consent. We also find that although the change in divorce regime had only a small effect on the LFP of married women in the 1940 cohort, these effects would be considerably larger for a cohort who lived its entire life under a unilateral divorce system.
    JEL: J12 J16 K36
    Date: 2014–06

This nep-ltv issue is ©2014 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.