nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒07‒21
three papers chosen by
Maximo Rossi
University of the Republic

  1. Offshoring and Directed Technical Change By Daron Acemoglu; Gino Gancia; Fabrizio Zilibotti
  2. Unhappy Cities By Edward L. Glaeser; Joshua D. Gottlieb; Oren Ziv
  3. Trust and Happiness: Comparative Study Before and After the Great East Japan Earthquake By Eiji Yamamura; Yoshiro Tsutsui; Chisako Yamane; Shoko Yamane; Nattavudh Powdthavee

  1. By: Daron Acemoglu; Gino Gancia; Fabrizio Zilibotti
    Abstract: We study the short- and long-run implications of offshoring on innovation, technology adoption, wage and income inequality in a Ricardian model with directed technical change. In our model, profit maximization determines both the extent of offshoring and the direction of technological progress. A fall in the cost of offshoring induces technical change with an ambiguous factor bias. When the initial offshoring cost is high, an increase in offshoring opportunities triggers a transition with falling real wages for unskilled workers in the West, skill-biased technical change and rising skill premia worldwide. When the offshoring cost is sufficiently low, instead, further increases in offshoring opportunities induce technical change biased in favor of the unskilled workers and may lower the skill premium. Although offshoring improves the welfare of workers in the East, it may benefit or harm unskilled workers in the West depending on parameters, the level of offshoring and the equilibrium growth rate.
    Keywords: China, directed technical change, offshoring, productivity growth, skill premium
    JEL: F43 O31 O33
    Date: 2014–06
    URL: http://d.repec.org/n?u=RePEc:bge:wpaper:768&r=ltv
  2. By: Edward L. Glaeser; Joshua D. Gottlieb; Oren Ziv
    Abstract: There are persistent differences in self-reported subjective well-being across U.S. metropolitan areas, and residents of declining cities appear less happy than other Americans. Newer residents of these cities appear to be as unhappy as longer term residents, and yet some people continue to move to these areas. While the historical data on happiness are limited, the available facts suggest that cities that are now declining were also unhappy in their more prosperous past. One interpretation of these facts is that individuals do not aim to maximize self-reported well-being, or happiness, as measured in surveys, and they willingly endure less happiness in exchange for higher incomes or lower housing costs. In this view, subjective well-being is better viewed as one of many arguments of the utility function, rather than the utility function itself, and individuals make trade-offs among competing objectives, including but not limited to happiness.
    JEL: D00 I00 J00 R00
    Date: 2014–07
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:20291&r=ltv
  3. By: Eiji Yamamura; Yoshiro Tsutsui; Chisako Yamane; Shoko Yamane; Nattavudh Powdthavee
    Abstract: The positive relationship between trust and happiness has been demonstrated by the literature. However, it is not clear how much this relationship depends on environmental conditions. The Great East Japan Earthquake of 2011 is considered one of the most catastrophic events in human history. This disaster caused not only physical damage for Japanese people, but also perceived damage. Using individual-level panel data from Japan covering the period 2009-2012, this paper attempts to probe how the relationship between trust and happiness was influenced by the Great East Japan Earthquake by comparing the same individuals before and after the earthquake. A fixed-effects estimation showed that there is a statistically well-determined positive relationship between trust and happiness and this relationship was strengthened by disaster, especially for residents in the damaged area. We argue that social trust is a substitute for formal institutions and markets, which mitigates the effect of disaster-related shock on psychological conditions such as happiness. Therefore, a trustful society is invulnerable to a gigantic disaster.
    Date: 2014–07
    URL: http://d.repec.org/n?u=RePEc:dpr:wpaper:0904&r=ltv

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