nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒01‒09
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Adaptation to Poverty in Long-Run Panel Data By Andrew E. Clark; Conchita D'Ambrosio; Simone Ghislandi
  2. Employment Adjustment and Part-time Jobs: The US and the UK in the Great Recession By Daniel Borowczyk-Martins; Etienne Lalé
  3. Dual Labour Markets and (Lack of) On-the-Job Training: PIAAC Evidence from Spain and Other EU Countries By Cabrales, Antonio; Dolado, Juan J.; Mora, Ricardo
  4. A more level playing field? Explaining the decline in earnings inequality in Brazil, 1995-2012 By Francisco H. G. Ferreira; Sergio P. Firpo; Julian Messina
  5. Incomes, inequality, and poverty in Kenya: A long-term perspective By Bigsten, Arne; Manda, Damiano Kulundu; Mwabu, Germano; Wambugu, Anthony
  6. Universal Basic Income versus Unemployment Insurance By Fabre, Alice; Pallage, Stéphane; Zimmermann, Christian
  7. Dynamic Optimization and Conformity in Health Behavior and Life Enjoyment over the Life Cycle By Hernán Bejarano; Hillard Kaplan; Stephen Rassenti

  1. By: Andrew E. Clark; Conchita D'Ambrosio; Simone Ghislandi
    Abstract: We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 54,000 individuals living in Germany from 1985 to 2012 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any cause of poverty entry which explains the overall lack of poverty adaptation.
    Keywords: Income, Poverty, Subjective well-being, Adaptation, SOEP
    JEL: I31 D60
    Date: 2014–11
  2. 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
  3. By: Cabrales, Antonio (University College London); Dolado, Juan J. (European University Institute); Mora, Ricardo (Universidad Carlos III de Madrid)
    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.
    Keywords: dual labour market, on-the-job training, cognitive skills, severance pay
    JEL: C14 C52 D24 J24
    Date: 2014–11
  4. By: Francisco H. G. Ferreira; Sergio P. Firpo; Julian Messina
    Abstract: The Gini coefficient of labour earnings in Brazil fell by 20% between 1995 and 2012, from 0.5 to 0.4. The decline was even larger by other measures, with the 90-10 percentile ratio falling by almost 40%. Although the conventional explanation of falling returns to education did play a role, a RIF regression-based decomposition analysis suggests that substantial reductions in the gender, race and spatial wage gaps, conditional on human capital and institutional variables, explain the lion’s share of the decline in earnings inequality. Lower male, white, urban and Southeast wage premia, alongside lower formal-informal wage gaps, account for 6.3 of the ten Gini points difference between 1995 and 2012. Although rising minimum wages contributed to the decline during 2004-2012, they had no such effect during 1995-2002.
    Date: 2014
  5. By: Bigsten, Arne; Manda, Damiano Kulundu; Mwabu, Germano; Wambugu, Anthony
    Abstract: This paper seeks to measure and explain changes in incomes, inequality, and poverty in Kenya. It starts from a very long-term perspective covering the last century, but then focuses on a more detailed analysis of the recent period for which data from hous
    Keywords: endowments, employment, growth inequality, Kenya, poverty
    Date: 2014
  6. By: Fabre, Alice (Aix-Marseille University); Pallage, Stéphane (University of Québec at Montréal); Zimmermann, Christian (Federal Reserve Bank of St. Louis)
    Abstract: In this paper we compare the welfare effects of unemployment insurance (UI) with a universal basic income (UBI) system in an economy with idiosyncratic shocks to employment. Both policies provide a safety net in the face of idiosyncratic shocks. While the unemployment insurance program should do a better job at protecting the unemployed, it suffers from moral hazard and substantial monitoring costs, which may threaten its usefulness. The universal basic income, which is simpler to manage and immune to moral hazard, may represent an interesting alternative in this context. We work within a dynamic equilibrium model with savings calibrated to the United States for 1990 and 2011, and provide results that show that UI beats UBI for insurance purposes because it is better targeted towards those in need.
    Keywords: universal basic income, idiosyncratic shocks, unemployment insurance, heterogeneous agents, moral hazard
    JEL: E24 D7 J65
    Date: 2014–11
  7. 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: This article examines individual and social influences on investments in health and enjoyment from immediate consumption. We report the results of a lab experiment that mimics the problem of health investment over a lifetime, building on Grossman’s (1972a, 1972b) theoretical framework. Subjects earn money through the experiment in proportion to the sum of the life enjoyment they have consumed. However, income in each period is a function of previous health investments, so there is a dynamic optimum for maximizing earnings through the appropriate expenditures on life enjoyment and health in each period. In order to model social effects in the experiment, we randomly assigned individuals to chat/observation groups, composed of four subjects each. Two treatments were employed: In the Independent treatment, an individual’s rewards from investments in life enjoyment depend only on his choice and in the Interdependent treatment, rewards not only depend on an individual’s choices but also on their similarity to the choices of the others in their group. Seven predictions were tested and each was supported by the data. We found: 1) Subjects engaged in helpful chat in both treatments; 2) there was significant heterogeneity among both subjects and groups in chat frequencies; and 3) chat was most common early in the experiment. The interdependent treatment 4) increased strategic chat frequency, 5) decreased within-group variance, 6) increased between-group variance, and 7) increased the likelihood of behavior far from the optimum with respect to the dynamic problem. Individual incentives explain a large part, but not all, of the variance in prosocial behavior in the form of strategic advice. Incentives for conformity appear to promote prosocial behavior, but also increase variance among groups in equilibrium outcomes, leading to convergence on suboptimal strategies for some groups
    Keywords: experimental economics, behavioral economics, health economics, dynamic programming
    Date: 2014

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