nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2014‒12‒19
fourteen papers chosen by
Maximo Rossi
Universidad de la República

  1. Happiness and Work By Krause, Annabelle
  2. Should income inequality be reduced and who should benefit ? redistributive preferences in Europe and Central Asia By Cojocaru, Alexandru; Diagne, Mame Fatou
  3. Introducing a Statutory Minimum Wage in Middle and Low Income Countries By David Margolis
  4. Income Inequality, Redistribution and their Effect on Inequality in Longevity By Plümper, Thomas; Neumayer, Eric
  5. World Income Inequality Databases: An Assessment of WIID and SWIID By Jenkins, Stephen P.
  6. Gender Gaps across Countries and Skills: Demand, Supply and the Industry Structure By Claudia Olivetti; Barbara Petrongolo
  7. Love thy neighbor: Religion and prosocial behavior By Heineck, Guido
  8. Unemployment Insurance, Job Search, and Informal Employment By David Margolis; Lucas Navarro; David A. Robalino
  9. Performance Pay, Competitiveness, and the Gender Wage Gap: Evidence from the United States By McGee, Andrew; McGee, Peter; Pan, Jessica
  10. 'The Choice Agenda' in European Health Systems: The Role of 'Middle Class Demands' By Joan Costa-i-Font; Valentina Zigante
  11. Trade Adjustment: Worker Level Evidence By Autor, David; Dorn, David; Hanson, Gordon H.; Song, Jae
  12. Empirical Linkages between Good Government and National Well-being By John F. Helliwell; Haifang Huang; Shawn Grover; Shun Wang
  13. Introduction to A Theory of the Allocation of Time by Gary Becker By Heckman, James J.
  14. The Evolution of Rotation Group Bias: Will the Real Unemployment Rate Please Stand Up? By Krueger, Alan B.; Mas, Alexandre; Niu, Xiaotong

  1. By: Krause, Annabelle (IZA)
    Abstract: The relationship between happiness and work is subject to an ever growing empirical literature in economics. The analyses are mostly based on large-scale survey data to measure subjective well-being. Whereas one large strand of research investigates the effect of job loss and becoming unemployed, another field of study focuses on the determinants of job satisfaction evolving around employment conditions, self-employment, and potential public sector satisfaction premiums. A smaller part of the literature investigates potential driving effects of happiness on labor market outcomes. This article will give an overview about the most significant subareas of research and the empirical literature in economics to date.
    Keywords: life satisfaction, happiness, anticipation and adaptation effects, employment conditions, self-employment, unemployment, work, job satisfaction, subjective well-being
    JEL: I31 J28 J60 J64
    Date: 2014–08
  2. By: Cojocaru, Alexandru; Diagne, Mame Fatou
    Abstract: This paper examines support for reducing inequality and for income redistribution to specific groups in Europe and Central Asia. The paper uses the Life in Transition Survey to analyze cross-country differences in redistributive preferences and the determinants of individual-level differences in such preferences. The analysis tests for various possible motivations, such as self-interest, beliefs about the fairness of the income-generating process, past social mobility experience, or expectations of future social mobility. Fewer people wanted to reduce the gap between the rich and the poor in 2010 than in 2006 in transition countries. Support for redistribution toward specific groups is highest for the disabled and the elderly, but there is high heterogeneity across countries in support for various redistributive policies, as well as in the alignment between average beliefs and actual policies. The empirical analysis confirms the importance of beliefs about fairness in influencing redistributive preferences, together with self-interest and past and expected social mobility in European Union member states (Western European and new member states), but only to a limited extent in the non-European Union member state group of transition countries. Regarding redistribution to specific groups, self-interest appears to be an important motivation for support for the elderly and families with children, whereas values and beliefs are important drivers of support for the working poor and the unemployed. Although framing matters, the results are broadly robust to alternative measures of support for reducing inequality.
    Keywords: Rural Poverty Reduction,Inequality,Services&Transfers to Poor,Poverty Impact Evaluation,Gender and Law
    Date: 2014–11–01
  3. By: David Margolis (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Paris School of Economics - Université Paris I - Panthéon-Sorbonne, IZA - Institute for the Study of Labor, IZA - Forschungsinstitut zur Zukunft der Arbeit (Institute for the Study of Labor) - Bonn Universität - University of Bonn)
    Abstract: The motivation for introducing statutory minimum wages in many developing countries is often threefold: poverty-reduction, social justice and growth. How well the policy succeeds in attaining these goals will depend on the national context and the numerous choices made when designing the policy. Institutional capacity in developing countries tends to be limited, so institutional arrangements must be adapted. Nevertheless, a statutory minimum wage appears to have the potential to help low- and middle-income countries advance toward the aforementioned development objectives, even in the face of weak enforcement capacity and pervasive informality.
    Keywords: Minimum wages; development; institutions; enforcement
    Date: 2014–05
  4. By: Plümper, Thomas (University of Essex); Neumayer, Eric (London School of Economics)
    Abstract: Objectives. We examined the effects of market income inequality (income inequality before taxes and transfers) and income redistribution via taxes and transfers on inequality in longevity. Methods. Life tables were used to compute Gini coefficients of longevity inequality for all individuals and for individuals that survived at least to the age of ten. Longevity inequality was regressed on market income inequality and income redistribution controlling for a range of potential confounders in a cross-sectional time-series sample of up to 29 predominantly Western developed countries and up to 37 years. Results. Income inequality before taxes and transfers had a positive effect on inequality in the number of years lived, while income redistribution (the difference between market income inequality and income inequality after taxes and transfers have been accounted for) had a negative effect on longevity inequality. Conclusions. Governments can reduce inequality in the number of years lived not only via public health policies, but also via their influence on market income inequality and the redistribution of incomes from the relatively rich to the relatively poor.
    Keywords: London School of Economics
    Date: 2014
  5. By: Jenkins, Stephen P. (London School of Economics)
    Abstract: This article assesses two secondary data compilations about income inequality – the World Income Inequality Database (WIIDv2c), and the Standardized World Income Inequality Database (SWIIDv4.0) which is based on WIID but with all observations multiply-imputed. WIID and SWIID are convenient and accessible sources for researchers seeking cross-national data with global coverage for relatively long time periods. Against these benefits must be set costs arising from lack of data comparability and quality and also, in the case of SWIID, questions about its imputation model. WIID and SWIID users need to recognize this benefit-cost trade-off and ensure their substantive conclusions are robust to potential data problems. I provide detailed description of the nature and contents of both sources plus illustrative regression analysis. From a data issues perspective, I recommend WIID over SWIID, though my support for use of WIID is conditional.
    Keywords: WIID, imputation, global inequality, inequality, Gini, SWIID
    JEL: C81 C82 D31
    Date: 2014–09
  6. By: Claudia Olivetti (Boston University and NBER); Barbara Petrongolo (Queen Mary University of London and CEP (LSE), CEPR)
    Abstract: The comovement between gender gaps in hours and wages across countries and skills reveals the presence of net demand forces shaping gender differences in labor market outcomes. This paper links the rich pattern of variation in gender gaps to the process of structural transformation. Based on a stylized, multi-sector equilibrium model, we illustrate that the gender bias in labor demand can be decomposed into measurable within- and between-industry components. Using comparable micro data across countries, we find that international differences in the industry structure explain more than eighty percent of the overall variation in labor demand between the U.S. and all other countries in our sample, and roughly one third of the overall cross-country variation in wage and hours gaps.
    Keywords: Gender gaps, Skills, Demand and supply, Industry structure
    JEL: E24 J16 J31
    Date: 2014–09
  7. By: Heineck, Guido
    Abstract: There is a long tradition in psychology, the social sciences and, more recently though, economics to hypothesize that religion enhances prosocial behavior. Evidence from both survey and experimental data however yield mixed results and there is barely any evidence for Germany. This study adds to this literature by exploring data from the German Socio-Economic Panel (SOEP), which provides both attitudinal (importance of helping others, of being socially active) and behavioral components of prosociality (volunteering, charitable giving and blood donations). Results from analyses that avoid issues of reverse causality suggest mainly for moderate, positive effects of individuals' religious involvement as measured by church affiliation and church attendance. Despite the historic divide in religion, results in West and East Germany do not differ substantially.
    Keywords: Religion,prosocial behavior,Germany
    JEL: D64 Z12 Z13
    Date: 2014
  8. By: David Margolis (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, IZA - Forschungsinstitut zur Zukunft der Arbeit (Institute for the Study of Labor) - Bonn Universität - University of Bonn); Lucas Navarro (ILADES - Universidad Alberto Hurtado); David A. Robalino (Social Protection and Labor Sector, Human Development Department - The World Bank)
    Abstract: This paper analyses the potential impacts of introducing unemployment insurance (UI) in middle income countries using the case of Malaysia, which today does not have such a system. The analysis is based on a job search model with unemployment and three employment sectors: formal and informal wage employment, and self employment. The parameters of the model are estimated to replicate the structure of the labor market in Malaysia in 2009 and the distribution of earnings for informal, formal and self employed workers. The results suggest that unemployment insurance would have only a modest negative effect on unemployment if benefits are not overly generous. The main effect would be a reallocation of labor from wage into self employment while increasing average wages in the formal and informal sectors.
    Keywords: Unemployment insurance, Informal sector, Self employment, Job search
    Date: 2014–07
  9. By: McGee, Andrew (Simon Fraser University); McGee, Peter (National University of Singapore); Pan, Jessica (National University of Singapore)
    Abstract: Evidence that women are less likely to opt into competitive compensation schemes in the laboratory has generated speculation that a gender difference in competitiveness contributes to the gender wage gap. Using data from the NLSY79 and NLSY97, we show that women are less likely to be employed in jobs using competitive compensation. The portion of the gender wage gap explained by gender segregation in compensation schemes is small in the NLSY79 but somewhat larger in the NLSY97 – suggesting an increasing role for competitiveness in explaining the gender wage gap.
    Keywords: gender wage gap, competitiveness, performance pay
    JEL: J16 A12
    Date: 2014–10
  10. By: Joan Costa-i-Font; Valentina Zigante
    Abstract: We examine the role of political economy drivers of the choice agenda in European health systems including middle class electoral support. Building on the reform trajectories and current institutional framework in eight western European countries where there have been significant choice reforms, we explore the preferences for choice and health system satisfaction in those countries. We find provider choice to be supported by middle class demands and health systems satisfaction, but weak evidence of other alternative political motivations for the expansion of provider choice. We conclude that in addition to efficiency improvements, provider choice is largely correlated with the demands for choice among the middle class. The provider choice agenda responds as much to political economy consideration as it does to efficiency arguments.
    Keywords: provider choice, health system satisfaction, tax funded health systems, middle class demands
    Date: 2014–11
  11. By: Autor, David (MIT); Dorn, David (University of Zurich); Hanson, Gordon H. (University of California, San Diego); Song, Jae (U.S. Social Security Administration)
    Abstract: We analyze the effect of exposure to international trade on earnings and employment of U.S. workers from 1992 through 2007 by exploiting industry shocks to import competition stemming from China's spectacular rise as a manufacturing exporter paired with longitudinal data on individual earnings by employer spanning close to two decades. Individuals who in 1991 worked in manufacturing industries that experienced high subsequent import growth garner lower cumulative earnings, face elevated risk of obtaining public disability benefits, and spend less time working for their initial employers, less time in their initial two-digit manufacturing industries, and more time working elsewhere in manufacturing and outside of manufacturing. Earnings losses are larger for individuals with low initial wages, low initial tenure, and low attachment to the labor force. Low-wage workers churn primarily among manufacturing sectors, where they are repeatedly exposed to subsequent trade shocks. High-wage workers are better able to move across employers with minimal earnings losses, and are more likely to move out of manufacturing conditional on separation. These findings reveal that import shocks impose substantial labor adjustment costs that are highly unevenly distributed across workers according to their skill levels and conditions of employment in the pre-shock period.
    Keywords: trade flows, labor demand, earnings, job mobility, social security programs
    JEL: F16 H55 J23 J31 J63
    Date: 2014–09
  12. By: John F. Helliwell; Haifang Huang; Shawn Grover; Shun Wang
    Abstract: This paper first reviews existing studies of the links between good governance and subjective well-being. It then brings together the largest available sets of national-level measures of the quality of governance to assess the extent to which they contribute to explaining the levels and changes in life evaluations in 157 countries over the years 2005-2012, using data from the Gallup World Poll. The results show not just that people are more satisfied with their lives in countries with better governance quality, but also that actual changes in governance quality since 2005 have led to large changes in the quality of life. For example, the ten-most-improved countries, in terms of delivery quality changes between 2005 and 2012, when compared to the ten countries with most worsened delivery quality, are estimated to have thereby increased average life evaluations by as much as would be produced by a 40% increase in per capita incomes. The results also confirm earlier findings that the delivery quality of government services generally dominates democratic quality in supporting better lives. The situation changes as development proceeds, with democratic quality having a positive influence among countries that have already achieved higher quality of service delivery.
    JEL: H11 I31 P52
    Date: 2014–11
  13. By: Heckman, James J. (University of Chicago)
    Abstract: Gary Becker's classic study, A Theory of the Allocation of Time, laid the analytical foundations for the study of household production and the allocation of time within the household. The analytical framework of household production theory developed in this paper remained a pillar of his later work on the economics of the family and the economics of nonmarket activities more generally. Becker provided a formal model of households producing outputs like food, children, and housing that bundled goods and time. Becker's great contribution was to apply the model to interpret a broad array of empirical phenomena. Becker's framework allowed for a deeper understanding of the mechanisms of consumer choice, and interpretation of income and substitution effects. Its continuing relevance in empirical economics is a testimony to its power.
    Keywords: household production, economics of the family, empirical economics
    JEL: B31 D13 J24
    Date: 2014–08
  14. By: Krueger, Alan B. (Princeton University); Mas, Alexandre (Princeton University); Niu, Xiaotong (Congressional Budget Office)
    Abstract: This paper documents that rotation group bias – the tendency for labor force statistics to vary systematically by month in sample in labor force surveys – in the Current Population Survey (CPS) has worsened considerably over time. The estimated unemployment rate for earlier rotation groups has grown sharply relative to the unemployment rate for later rotation groups; both should be nationally representative samples. The rise in rotation group bias is driven by a growing tendency for respondents to report job search in earlier rotations relative to later rotations. We investigate explanations for the change in bias. We find that rotation group bias increased discretely after the 1994 CPS redesign and that rising nonresponse is likely a significant contributor. Survey nonresponse increased after the redesign, and subsequently trended upward, mirroring the time pattern of rotation group bias. Consistent with this explanation, there is only a small increase in rotation group bias for households that responded in all eight interviews. An analysis of rotation group bias in Canada and the U.K. reveal no rotation group bias in Canada and a modest and declining bias in the U.K. There is not a “Heisenberg Principle” of rotation group bias, whereby the bias is an inherent feature of repeated interviewing. We explore alternative weightings of the unemployment rate by rotation group and find that, despite the rise in rotation group bias, the official unemployment does no worse than these other measures in predicting alternative measures of economic slack or fitting key macroeconomic relationships.
    Keywords: unemployment rate, measurement
    JEL: J01 J64
    Date: 2014–09

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