nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒11‒07
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Are we architects of our own happiness? The importance of family background for well-being By Schnitzlein, Daniel D.; Wunder, Christoph
  2. Two-Sample Two-Stage Least Squares (TSTSLS) estimates of earnings mobility: how consistent are they? By John Jerrim; Alvaro Choi; Rosa Simancas Rodriguez
  3. Online networks and subjective well-being By Fabio Sabatini; Francesco Sarracino
  4. Information Effect Regarding Inequality of Opportunities on Redistribution: A Lab Experiment By Gustavo Caballero
  5. What, If Anything, Can Labor Do to Rejuvenate Itself and Improve Worker Well-being in an Era of Inequality and Crisis-driven Austerity? By Freeman, Richard Barry

  1. By: Schnitzlein, Daniel D.; Wunder, Christoph
    Abstract: This paper analyzes whether individuals have equal opportunity to achieve happiness (or well- being). We estimate sibling correlations and intergenerational correlations in self-reported life satisfaction, satisfaction with household income, job satisfaction, and satisfaction with health. We find high sibling correlations for all measures of well-being. The results suggest that family background explains, on average, between 30% and 60% of the inequality in permanent well-being. The influence is smaller when the siblings’ psychological and geographical distance from their parental home is larger. Results from intergenerational correlations suggest that parental characteristics are considerably less important than family and community factors.
    Keywords: subjective well-being, family background, intergenerational mobility, siblings
    JEL: D3 I31 J62
    Date: 2014–10
  2. By: John Jerrim (Department of Quantitative Social Science, Institute of Education, University of London); Alvaro Choi (Institut d’Economia de Barcelona, University of Barcelona); Rosa Simancas Rodriguez (University of Extremadura)
    Abstract: Academics and policymakers have shown great interest in cross-national comparisons of intergenerational earnings mobility. However, producing consistent and comparable estimates of earnings mobility is not a trivial task. In most countries researchers are unable to observe earnings information for two generations. They are thus forced to rely upon imputed data instead. This paper builds upon previous work by considering the consistency of the intergenerational correlation (Ï) as well as the elasticity (β), how this changes when using a range of different instrumental (imputer) variables, and highlighting an important but infrequently discussed measurement issue. Our key finding is that, while TSTSLS estimates of β and Ï are both likely to be inconsistent, the magnitude of this problem is much greater for the former than it is for the latter. We conclude by offering advice on estimating earnings mobility using this methodology.
    Keywords: : Earnings mobility, two sample two stage least squares
    JEL: I20 I21 I28
    Date: 2014–10–15
  3. By: Fabio Sabatini; Francesco Sarracino
    Abstract: Does Facebook make people lonely and unhappy? Empirical studies have produced conflicting results about the effect of social networking sites (SNS) use on individual welfare. We use a representative sample of the Italian population to investigate how actual and virtual networks of social relationships influence subjective well-being (SWB). We find a significantly negative correlation between online networking and self-reported happiness. We address endogeneity in online networking by exploiting technological characteristics of the pre-existing voice telecommunication infrastructures that exogenously determined the availability of broadband for high-speed Internet. We try to further disentangle the direct effect of SNS use on well-being from the indirect effect possibly caused by the impact of SNS’s on trust and sociability in a SEM analysis. We find that online networking plays a positive role in SWB through its impact on physical interactions. On the other hand, SNS use is associated with lower social trust, which is in turn positively correlated with SWB. The overall effect of networking on individual welfare is significantly negative.
    Keywords: Social participation; online networks; Facebook; social trust; social capital; subjective well-being; hate speech; broadband; digital divide.
    JEL: C36 D85 O33 Z13
    Date: 2014–10–11
  4. By: Gustavo Caballero (University of Calgary)
    Abstract: This paper presents evidence from a laboratory experiment regarding the effect of information about opportunities and effort in redistributive behaviour. In the experiment, individuals are randomly selected into one of two groups, each endowed with differing probabilities of earning $20. By exerting effort, individuals increase their probability of earning the $20 but conditional on effort the difference in probabilities remain constant so groups are determining opportunities. After initial earnings are determined, I examine redistribution using a dictator game where the dictator earned $20 and the receiver earned $0. Treatments vary the level of inequality of opportunities and information regarding receivers' opportunities and effort. I find dictators consistently rewarding receivers' high effort. However, dictators do not consider receivers' opportunities nor their own opportunities when redistributing.
    Keywords: Information, redistribution, inequality of opportunities, lab experiment
    JEL: C91 D6
    Date: 2014–10–15
  5. By: Freeman, Richard Barry
    Abstract: The economic position of workers has weakened in much of the advanced world. Over the past 30–40 years the share of national income going to labor has fallen. Labor earnings have become more unequally distributed. The proportion of workers in trade unions has trended downward, accompanied in some countries with commensurate declines in collective bargaining coverage. Union influence on the direction of the economy has diminished even in countries where firms and unions negotiate wage and working conditions for most employees and where left-oriented parties are in government. Increases in government deficits and debt resulting from the Great Recession have induced many governments to introduce austerity policies that are likely to perpetuate high joblessness and inequality into the foreseeable future. Finance's speculative excesses fed market capitalism but much of the costs of the implosion of finance and ensuing Great Recession will fall on labor into the foreseeable future. There is no easy answer to the title question. As the phrase “if anything†indicates, it is unclear whether labor can rejuvenate itself and pressure societies to restore full employment and raise living standards in the face of inequality and pressures for austerity programs. Differences in the labor relations systems among countries, in levels of inequality, in the importance of money in politics, and in the post Great Recession state of economies will undoubtedly produce different responses across countries and labor movements. In this paper I examine the situation in the US, where the ability of trade unions to represent labor's interest has declined more than in any other major economy. Collective bargaining in the US is co-terminus with union density. For over half a century union density has fallen in the private sector. In 2012 6.6% of private sector workers were union members (US BLS, 2013, table 3) – below the 1900 level when total density, then based almost entirely on private sector workers, was 6.8% (Freeman, 1998, p 291). In the 2000s unions gained so few members in National Labor Relations Board representation elections or in other ways that the anti-unionists’ once quixotic dream of a union-free labor market has become a reality in the private sector. American labor law and custom makes it difficult for workers and firms to substitute other forms of workplace labor activity for collective bargaining. The law forbids employer-initiated works councils. There are no mechanisms for extending collective contracts beyond the firm and local unions who negotiate and sign a contract. Employer associations are more interested in undermining collective bargaining than in discussing labor issues with the AFL-CIO or some other union federation. Unionism and collective bargaining have followed a different path in the public sector. Union density increased from the 1960s to the 2000s when about 37% of employees were union members, including teachers, police, firefighters, university professors, graduate student teaching assistants, as well as bus drivers, clerical workers, and so on.1 When recession-induced budget crises hit cities and states in the late 2000s, however, opponents of unions attacked public sector bargaining as a contributing factor to the deficits. In the US federal system, state law governs state and local government collective bargaining. Some states encourage public sector collective bargaining. Other states, largely in the South, make it illegal for public sector employers to bargain with unions. Following the 2008 elections, Republican-dominated legislatures in several states that had encouraged collective bargaining passed bills to restrict bargaining, outlaw dues checkoffs/agency fees (which provide a funding stream to unions), and limit union political activities. Wisconsin, which had pioneered laws favorable to public sector bargaining, added provisions to its budget bill that effectively eliminated collective bargaining for all state and local workers except police and fire. Ohio enacted legislation of a similar kind that targeted all state and local employees including police and fire. Opponents of the Wisconsin legislation forced the state's governor into a recall election but failed to turn him out of office or reverse the legislative decision. Opponents of the Ohio legislation overturned their law in a referendum (Freeman and Han, 2012), which seemed to stem the anti-union movement. But in 2012 the Republican dominated legislature in historically pro-union Michigan passed a bill to weaken unions there. At this writing anti-union groups have bills pending in the legislatures of many other states. Unions have circled their wagons to defend the one part of the labor market where they still hold considerable sway. The experience of the US is extreme but nonetheless informative for other advanced countries where crisis-driven austerity and increased inequality weaken union ability to represent workers and may embolden groups opposed to collective action, welfare state protections of workers and the like to follow the lead of their US counterparts. The failure of US unions to develop alternatives to collective bargaining to advance worker interests as union density fell is a “canary in the mine†warning to labor elsewhere. The new efforts by US labor activists, social entrepreneurs, some unions, and in 2013 the AFL-CIO itself to mobilize citizens to defend workers’ interests without collective bargaining directs attention to innovative ways for labor to develop countervailing power and press for full employment and rising living standards for all. The paper is divided into three sections. Section one reviews the decline in labor as a force determining outcomes in modern capitalism, with particular attention to the collapse of the firm-based collective bargaining model in the US. Section two highlights the need for a strong labor movement to help reform the finance-dominated model of capitalism that underlies the implosion of Wall Street and ensuing economic crisis. Section three examines the ways that labor activists, social entrepreneurs, and unions are developing ways to rejuvenate labor power and improve labor conditions absent collective bargaining. There is a brief conclusion.
    Date: 2013

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