nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒01‒03
eleven papers chosen by

  1. Employment Adjustment and Part-time Jobs: The US and the UK in the Great Recession By Daniel Borowczyk-Martins; Etienne Lalé
  2. Inequality, income, and well-being By DECANCQ, Koen; FLEURBAEY, Marc; SCHOKKAERT, Erik
  4. Technological Change and Declining Immigrant Outcomes, Implications for Income Inequality in Canada By Warman, Casey; Worswick, Christopher
  5. Free to Leave? A Welfare Analysis of Divorce Regimes By Fernández, Raquel; Wong, Joyce Cheng
  6. Measuring Top Incomes and lnequality in the Middle East: Data Limitations and Illustration with the Case of Egypt By Alvaredo, Facundo; Piketty, Thomas
  7. Labor policies and capital mobility in theory and in EMU By Bertola, Giuseppe
  8. Do Market Incentives in the Hospital Industry Affect Subjective Health Perceptions? Evidence from the Italian PPS-DRG Reform By Cappellari, Lorenzo; De Paoli, Anna; Turati, Gilberto
  9. Genuine Saving and Conspicuous Consumption By Aronsson, Thomas; Johansson-Stenman, Olof
  10. Effects of Retirement and Lifetime Earnings Profile on Health Investment By Hernán Bejarano; Hillard Kaplan; Stephen Rassenti
  11. Behavioral design: A new approach to development policy By Datta, Saugato; Mullainathan, Sendhil

  1. By: Daniel Borowczyk-Martins (Departement d'Economie de Sciences Po); Etienne Lalé (École Nationale de la Statistique et de l'Administration Économique (ENSAE))
    Abstract: We document a new fact about the cyclical behavior of aggregate hours. Using microdata for the US and the UK, we show that changes in hours per worker are driven by fluctuations in part-time employment, which are in turn explained by the cyclical behavior of transitions between full-time and part-time jobs. This reallocation occurs almost exclusively within firms and entails large changes in employees’ schedules of working hours. These patterns are consistent with the view that employers adjust the hours of their employees in response to shocks, and they partly account for the poor recovery that followed the Great Recession.
    Keywords: Employment; Hours; Part-time Work; Great Recession.
    JEL: E24 E32 J21
    Date: 2014–11
  2. By: DECANCQ, Koen (University of Antwerp, Katholieke Universiteit Leuven and Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); FLEURBAEY, Marc (Princeton University); SCHOKKAERT, Erik (Katholieke Universiteit Leuven; Université catholique de Louvain, CORE, Belgium)
    Abstract: Individual well-being depends not only on income but also on other dimensions of life, such as health, the quality of social relations and of the environment, employment, and job satisfaction. In this paper we survey the economic literature on how to construct such overall measures of well-being. We distinguish three approaches: the capability (and functionings) approach, the use of subjective life satisfaction measures and the calculation of equivalent incomes. We discuss the normative assumptions underlying these three approaches, focusing on two issues: the degree to which individual preferences are respected and where in each approach the boundaries of individual responsibility are drawn. We compare the measurement of inequality in well-being with the use of multidimensional inequality measures. We illustrate the general theoretical issues in three domains of application: measuring the effects of household size and composition in the literature on equivalence scales, valuing publicly provided goods and services, and making international comparisons of well-being involving international PPP comparisons.
    Date: 2014–06–11
  3. By: Antonio Cabrales; Juan J. Dolado; Ricardo Mora
    Abstract: Using the Spanish micro data from the Programme for the International Assessment of Adult Competencies (PIAAC), we first document how the excessive gap in employment protection between indefinite and temporary workers leads to large differentials in on-the-job training (OTJ) against the latter. Next, we find that that the lower specific training received by temporary workers is correlated with lower literacy and numeracy scores achieved in the PIAAC study. Finally, we provide further PIAAC cross-country evidence showing that OJT gaps are quite lower in those European labour markets where dualism is less entrenched than in those where it is more extended.
    Date: 2014–11
  4. By: Warman, Casey; Worswick, Christopher
    Abstract: The earnings and occupational task requirements of immigrants to Canada are analyzed. The growing education levels of immigrants in the 1990s have not led to a large improvement in earnings as one might expect if growing computerization was leading to a rising return to non-routine cognitive skills and a greater wage return to university education. Controlling for education, we find a pronounced cross-arrival cohort decline in earnings that coincided with cross cohort declines in cognitive task requirements and cross cohort increases in manual task requirements. The immigrant earnings outcomes had only a small effect on overall Canadian earnings inequality.
    Keywords: Occupational mobility; Earnings; Language Proficiency; Skills; Human Capital; Immigration
    JEL: J15 J24 J31 J61 J62 J71
    Date: 2014–11–25
  5. By: Fernández, Raquel; Wong, Joyce Cheng
    Abstract: During the 1970s the US underwent an important change in its divorce laws, switching from mutual consent to a unilateral divorce regime. Who benefited 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.
    Keywords: divorce; gender inequality; household bargaining; life-cycle behavior
    JEL: D13 J12 J16 K36
    Date: 2014–06
  6. By: Alvaredo, Facundo; Piketty, Thomas
    Abstract: This paper discusses the data limitations associated with the measurement of top incomes and inequality in the Middle East, with special emphasis to the case of Egypt. It has been noted that high inequality might have contributed to the Arab spring revolt movement. Some studies have argued however that measured inequality in Middle East countries is not particularly large by international standards, and that popular discontent mostly reflects the perceived level of inequality, and the perceived (un)fairness of the distribution. In this paper we review the evidence and present new estimates. We come with two main conclusions. First, data sources at the national level are insufficient to derive reliable estimates of top income shares in a country like Egypt(or in other Middle East countries). One would need reliable fiscal sources in order to make a precise comparison with other emerging or developed countries. Unfortunately, such sources are lacking in most of the region. Next, and irrespective of these uncertainties on within-country inequalities, there is no doubt that income inequality is extremely large at the level of the Middle East taken as whole-simply because regional inequality in per capita GNP is particularly large. According to our benchmark estimates, the share of total Middle East income accruing to the top 10% income receivers is currently 55% (vs.48% in the United States,36% in Western Europe, and 54% in South Africa). Under plausible assumptions, the top 10% income share could be well over 60%, and the top 1% share might exceed 25% (vs. 20% in the United States,11% in Western Europe, and 17% in South Africa). Popular discontent might reflect the fact that perceptions about inequality and the (un)fairness of the distribution are determined by regional (and/or global) inequality, and not only on national inequality.
    Keywords: Egypt; inequality; Middle East; top incomes
    JEL: D3
    Date: 2014–07
  7. By: Bertola, Giuseppe
    Abstract: "Race-to-the-bottom" deregulation is to be expected when markets operate across the borders of countries that independently choose and enforce labor policies. Less obviously, in pre-crisis EMU reforms of labor market policies were uneven and related to international imbalances. That pattern is readily explained by this paper's model of financial integration between differently capital-abundant countries, within which labor policies benefit individuals with wealth/labor income ratios different from country's aggregate.
    Keywords: policy competition; public choice
    JEL: F36 J08
    Date: 2014–08
  8. By: Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); De Paoli, Anna (University of Milan Bicocca); Turati, Gilberto (University of Turin)
    Abstract: We exploit time variation across Italian Regions in the implementation of a prospective pay systems (PPS) for hospitals based on Diagnosis Related Groups (DRGs) to assess their impact on self-assessed health status and on the use of health care services. We consider a survey of more than 600,000 individuals, over the years 1993-2007, with information on both individuals' perceived health and their access to a number of health services. Results suggest that the introduction of market incentives via a fixed-price payment system does not lead to worst health perceptions. Instead, the reform marked a moderate decrease in hospitalization and day hospital treatments, coupled with a clear decrease in the access to emergency services. Results are robust to a number of sensitivity checks.
    Keywords: health reforms, self-assessed health
    JEL: I11 I18
    Date: 2014–11
  9. By: Aronsson, Thomas (Department of Economics, Umeå School of Business and Economics); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law)
    Abstract: Much evidence suggests that people are concerned with their relative consumption, i.e., their consumption in relation to the consumption of others. Yet, the social costs of conspicuous consumption have so far played little (or no) role in savings-based indicators of sustainable development. The present paper examines the implications of such behavior for measures of sustainable development by deriving analogues to genuine saving when people are concerned with their relative consumption. Unless the resource allocation is a social optimum, an indicator of positional externalities must be added to genuine saving to arrive at the proper measure of intertemporal welfare change. A numerical example based on U.S. and Swedish data suggests that conventional measures of genuine saving (which do not reflect conspicuous consumption) are likely to largely overestimate this welfare change. We also show how relative consumption concerns affect the way public investment ought to be reflected in genuine saving.
    Keywords: Welfare change; investment; saving; relative consumption
    JEL: D03 D60 D62 E21 H21 I31 Q56
    Date: 2014–11–20
  10. By: Hernán Bejarano (Economic Science Institute, Chapman University, Orange, CA); Hillard Kaplan (Economic Science Institute, Chapman University, Orange, CA and University of New Mexico, Albuquerque, NM); Stephen Rassenti (Economic Science Institute, Chapman University, Orange, CA)
    Abstract: We report the results of experiments where in each period of her lifetime the subject must choose how to allocate real earned income between health investment and life enjoyment in each period of a nine-period life in order to maximize aggregate life enjoyment. The key dynamic optimization challenge of the experiment to subjects derives from the fact that investments in health affect future income, but detract from current consumption. Our experimental results show that subjects were successful at reproducing the qualitative predictions of the theoretical model, investing more in health in the absence of retirement and with increasing income profiles. However, we did observe a systematic bias in health investments, being less than optimal in early periods and greater than optimal in late periods of life. We also found a significant effect due to social groupings. These results highlight the potential of lab experiments as a method to study health decisions and understand their determinants.
    Keywords: experimental economics, behavioral economics, health economics, dynamic programming
    Date: 2014
  11. By: Datta, Saugato; Mullainathan, Sendhil
    Abstract: Successful development programs rely on people to behave and choose in certain ways, and behavioral economics helps us understand why people behave and choose as they do. Approaching problems in development using behavioral economics thus leads to better
    Keywords: behavioral economics, development, program design
    Date: 2014

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