nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒11‒12
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Deadbeat Dads By Shannon Seitz; Geoffrey Sanzenbacher; Andrew Beauchamp; Meghan Skira
  2. The Distributional Effects of Redistributional Tax Policy By Jason DeBacker; Richard W. Evans; Evan Magnusson; Kerk L. Phillips; Shanthi P. Ramnath; Isaac Swift
  3. Gender, Geography and Generations: Intergenerational Educational Mobility in Post-reform India By Emran, M. Shahe; Shilpi, Forhad
  4. Financial Distress and Happiness of Employees in Times of Economic Crisis By Efstratia Arampatzi; Martijn J. Burger; Ruut Veenhoven
  5. Exploring the Late Impact of the Financial Crisis using Gallup World Poll Data By Luisa Natali; Goran Holmqvist; UNICEF Innocenti Research Centre
  6. Equilibrium Labor Turnover, Firm Growth and Unemployment By Dale Mortensen; Melvyn Coles
  7. Does Religion Affect Economic Growth and Happiness? Evidence from Ramadan By Campante, Filipe; Yanagizawa-Drott, David

  1. By: Shannon Seitz (Boston College); Geoffrey Sanzenbacher (Analysis Group); Andrew Beauchamp (Boston College); Meghan Skira (University of Georgia)
    Abstract: Why do some men father children outside of marriage but not provide support? Why are single women willing to have children outside of marriage when they receive little or no support from unmarried fathers? To answer these questions, we develop and estimate a dynamic equilibrium model of marriage, employment, fertility, and child support. We consider the extent to which two explanations account for the prevalence of 'deadbeat dads' and non-marital childbearing: low wages and a shortage of single men relative to single women. Even if women prefer to have children within marriage, when faced with a shortage of high wage spouses it may be optimal to have children with low wage men outside of marriage. In response, some men have incentives to have children and not support them. The model is estimated by efficient method of moments using data from the National Longitudinal Survey of Youth 1979. We conduct several counterfactual experiments including equating black and white population supplies and eliminating the racial gap in wages to explore the implications of the model. We also analyze a counterfactual policy in which child support enforcement is perfect.
    Date: 2014
  2. By: Jason DeBacker (Department of Economics, Middle Tennessee State University); Richard W. Evans (Department of Economics, Brigham Young University); Evan Magnusson (Department of Economics, Brigham Young University); Kerk L. Phillips (Department of Economics, Brigham Young University); Shanthi P. Ramnath (U.S. Department of the Treasury, Office of Tax Analysis); Isaac Swift (Department of Economics, Brigham Young University)
    Abstract: This paper constructs a large scale overlapping generations model with heterogeneity across the lifecycle and over earnings ability types. The model is calibrated to the U.S. economy and includes realistic demographics, earnings distribution, taxes, and mortality risk. We consider the effects of two policies: an increase in income tax rates and a progressive wealth tax. We find that a more progressive income tax does not change inequality in consumption, income, or wealth across the life cycle, but it does reduce inequality across ability types. In contrast, a wealth tax reduces inequality over the life cycle, but slightly increases inequality across ability types. Inequality over ability types is greater concern than changes in equality over the lifecycle.
    Keywords: inequality, Piketty, wealth tax, income tax, overlapping generations
    JEL: D51 H21 H23 H30 P16
    Date: 2014–10
  3. By: Emran, M. Shahe; Shilpi, Forhad
    Abstract: The existing studies report substantial improvements in educational mobility in post-reform India using intergenerational regression coefficient (IGRC) across age cohorts in a cross-section survey. In contrast, our estimates of sibling (SC) and intergenerational (IGC) correlations for the same age cohort from two surveys show strong persistence, stronger than in Latin America, which remained largely unchanged from 1991/92-2006. Only the women in urban areas experienced substantial improvements, with the lower caste urban women benefitting the most. As measures of mobility, IGC and SC are more informative and robust than IGRC, and the widely accepted conclusions based on IGRC alone may be misleading.
    Keywords: Intergenerational Mobility, Education, Equality of Opportunity, Sibling Correlation, Intergenerational Correlation, Economic Liberalization, Rural-Urban Inequality, Gender Gap, India
    JEL: I0 I3 O1
    Date: 2014–09–03
  4. By: Efstratia Arampatzi (EURAC b.v.); Martijn J. Burger (Erasmus University Rotterdam); Ruut Veenhoven (Erasmus University Rotterdam, the Netherlands)
    Abstract: Using data for 28 European countries for the 2008-2012 period, we examine whether employed individuals are affected by the economic crisis. We provide robust evidence that unfavourable macroeconomic conditions are negatively associated with the life satisfaction of employees. In addition, we find that higher levels of regional unemployment and inflation are predominantly associated with lower levels of life satisfaction for employees who are in a bad financial situation or who expect that their future financial situation will be worse. By contrast, employed people who do well financially and who have good prospects are not affected by the crisis.
    Keywords: life satisfaction, financial distress, economic crisis, Europe
    JEL: I00 D60
    Date: 2014–07–04
  5. By: Luisa Natali; Goran Holmqvist; UNICEF Innocenti Research Centre
    Abstract: This paper explores the use of Gallup World Poll Data to assess the impact of the Great Recession on various dimensions of well-being in 41 OECD and/or EU countries from 2007 up until 2013. It should be read as a complementary background paper to the UNICEF Report Card which explores trends in child well-being in EU/OECD countries since 2007/8. Overall the findings provide clear indications that the crisis has had an impact across a number of self-reported dimensions of well-being. Indeed, a strong correlation between the intensity of the recession and the worsening of people’s perceptions about their own life is recorded since 2007. Data also indicate that the impact has still not peaked in a number of countries where indicators were still deteriorating as late as 2013. A “League Table” is also presented where countries are ranked in terms of change between 2007 and 2013 for four selected Gallup World Poll indicators related material well-being, perceptions of how society treats its children, health and subjective well-being.
    Keywords: child well-being; economic crisis; indicators; surveys;
    Date: 2014
  6. By: Dale Mortensen (Northwestern University); Melvyn Coles
    Abstract: This paper considers a labor market employers differ in productivity, which is private information, and face hiring costs. Each employer sets its current wage but does not commit to future wages. Workers search on the job for better paid employment. A signalling equilibrium is show to exist and characterized in which more productive firms pay higher wages in every state of the market and workers transit from less to more productive employers. There is firm turnover: new small start-up firms are created while some existing firms die. Consistent with Gibrat's law, firm growth rates are size independent but increase with firm productivity (which evolves stochastically). With endogenous aggregate job creation rates and job-to-job transitions, the model provides a rich, coherent, non-steady state framework of equilibrium wage formation and worker flows. Existence of a steady state equilibrium for any finite number of firm productivity types is established. Steady state is unique when firm productivity is permanent and there are many firm types. A unique non-steady state equilibrium exists in the case of one type. In the general case, a unique equilibrium can be established when the elasticity of the hire rate with respect to productivity is sufficiently small.
    Date: 2014
  7. By: Campante, Filipe (Harvard University); Yanagizawa-Drott, David (Harvard University)
    Abstract: We study the economic effects of religious practices in the context of the observance of Ramadan fasting, one of the central tenets of Islam. To establish causality, we exploit variation in the length of the fasting period due to the rotating Islamic calendar. We report two key, quantitatively meaningful results: 1) longer Ramadan fasting has a negative effect on output growth in Muslim countries, and 2) it increases subjective well-being among Muslims. We then examine labor market outcomes, and find that these results cannot be primarily explained by a direct reduction in labor productivity due to fasting. Instead, the evidence indicates that Ramadan affects Muslims' relative preferences regarding work and religiosity, suggesting that the mechanism operates at least partly by changing beliefs and values that influence labor supply and occupational choices beyond the month of Ramadan itself. Together, our results indicate that religious practices can affect labor supply choices in ways that have negative implications for economic performance, but that nevertheless increase subjective well-being among followers.
    JEL: E20 J20 O40 O43 Z12
    Date: 2013–12

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