nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒01‒31
eleven papers chosen by
Maximo Rossi
Universidad de la República

  1. The German Labor Market for Older Workers in Comparative Perspective By John S. Heywood ; Uwe Jirjahn
  2. Income-based Inequality in Educational Outcomes: Learning from State Longitudinal Data Systems By John P. Papay ; Richard J. Murnane ; John B. Willett
  3. Accounting for Changes in Between-Group Inequality By Ariel Burstein ; Eduardo Morales ; Jonathan Vogel
  4. Early Life Environment and Racial Inequality in Education and Earnings in the United States By Chay, Kenneth Y. ; Guryan, Jonathan ; Mazumder, Bhashkar
  5. The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013 By David Card ; Andrew Johnston ; Pauline Leung ; Alexandre Mas ; Zhuan Pei
  6. The Long-Term Impact of Inequality on Entrepreneurship and Job Creation By Roxana Gutierrez-Romero ; Luciana Méndez Errico
  7. An Economic Analysis of Proposals to Improve Coverage of Longevity Risk By David Boisclair ; Jean-Yves Duclos ; Steeve Marchand ; Pierre-Carl Michaud
  8. Contract staggering and unemployment during the great recession: evidence from Spain By Luis Diéz-Catalán ; Ernesto Villanueva
  9. The Insurance Role of Household Labor Supply for Older Workers By Yanan Li ; Victoria Prowse
  10. Catastrophic job destruction during the Portuguese economic crisis By Anabela Carneiro ; Pedro Portugal ; Jose Varejao
  11. Vertical Transmission of Overweight: Evidence From English Adoptees By Joan Costa-Font ; Mireia Jofre-Bonet ; Julian Le Grand

  1. By: John S. Heywood ; Uwe Jirjahn
    Abstract: This paper focuses on the German labor market for older workers. It does so in comparison with other countries and with a unique focus on the role of employer incentives for retaining and hiring older workers. It argues that while employment of older German workers has improved due to changes in government policy, the labor market for older workers remains characterized by far less mobility and opportunity. While we recognize the potential explanations of reduced productivity and age discrimination, we review evidence pointing to the importance of life-cycle contracts (Hutchens 1986, Lazear 1979). These contracts can be efficient but typically imply that older workers will have difficulty being re-hired into career jobs after separation. We suggest that attempts to reduce or eliminate such life-cycle contracts are likely to be counter-productive but suggest how other countries, particularly Japan, have dealt with this issue.
    Keywords: Older workers, deferred compensation, productivity, discrimination, labor market institutions
    JEL: J14 J33
    Date: 2015
  2. By: John P. Papay ; Richard J. Murnane ; John B. Willett
    Abstract: We report results from our long-standing research partnership with the Massachusetts Department of Elementary and Secondary Education. We make two primary contributions. First, we illustrate the wide range of informative analyses that can be conducted using a state longitudinal data system and the advantages of examining evidence from multiple cohorts of students. Second, we document large income-based gaps in educational attainments, including high-school graduation rates and college-going. Importantly, we show that income-related gaps in both educational credentials and academic skill have narrowed substantially over the past several years in Massachusetts.
    JEL: I2 I21 I24 I28
    Date: 2014–12
  3. By: Ariel Burstein ; Eduardo Morales ; Jonathan Vogel
    Abstract: We provide an assignment model to decompose changes in between-group wage inequality into changes in the composition of the workforce, the productivity/demand for tasks, computerization, and labor productivity. The model incorporates comparative advantage between many groups of workers, many types of equipment, and many tasks and yet may be parameterized and estimated in a transparent manner. Our identification of parameters, measurement of shocks, and the equilibrium equation determining wages are all very similar to what have been used in previous reduced-form analyses. We use U.S. data on the allocation of workers to occupations and computer usage as well as changes in average wages across worker groups between 1984 and 2003 to parameterize our model. We find that computerization and changes in task productivity/demand, which are both measured without directly using data on changes in wages, jointly explain the majority of the rise in the skill premium and more disaggregated measures of between-eduation group inequality as well as roughly half of the rise in the relative wage of women over this time period. We show how to link the strength of these two forces to changes in the extent of international trade.
    JEL: E24 F16 J2
    Date: 2015–01
  4. By: Chay, Kenneth Y. (Brown University ); Guryan, Jonathan (Northwestern University ); Mazumder, Bhashkar (Federal Reserve Bank of Chicago )
    Keywords: Education; racial inequality
    JEL: I12 I14 J13 J24 J31
    Date: 2014–11–13
  5. By: David Card ; Andrew Johnston ; Pauline Leung ; Alexandre Mas ; Zhuan Pei
    Abstract: We provide new evidence on the effect of the unemployment insurance (UI) weekly benefit amount on unemployment insurance spells based on administrative data from the state of Missouri covering the period 2003-2013. Identification comes from a regression kink design that exploits the quasi-experimental variation around the kink in the UI benefit schedule. We find that UI durations are more responsive to benefit levels during the recession and its aftermath, with an elasticity between 0.65 and 0.9 as compared to about 0.35 pre-recession.
    JEL: J64 J65
    Date: 2015–01
  6. By: Roxana Gutierrez-Romero (Departament d’Economia Aplicada, Universitat Autonama de Barcelona ); Luciana Méndez Errico (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona )
    Abstract: We assess the extent to which historical levels of inequality affect the likelihood of businesses being created, surviving and of these creating jobs overtime. To this end, we build a pseudo-panel of entrepreneurs across 48 countries using the Global Entrepreneurship Monitor Survey over 2001-2009. We complement this pseudo-panel with historical data of income distribution and indicators of current business regulation. We find that in countries with higher levels of inequality in the 1700s and 1800s, businesses today are more likely to die young and create fewer jobs. Our evidence supports economic theories that argue initial wealth distribution influences countries’ development path, having therefore important policy implications for wealth redistribution.
    Keywords: Entrepreneurship, income distribution, job creation, pseudo-panel, instrumental variables
    JEL: M2 O1 D3 C23
    Date: 2015–01
  7. By: David Boisclair ; Jean-Yves Duclos ; Steeve Marchand ; Pierre-Carl Michaud
    Abstract: We use simulation methods to analyze the impacts of certain proposed reforms to improve the coverage of longevity risk. This risk, which may in principle be adequately covered by classic defined-benefit pension plans, has been of particular interest in Quebec for some years now, notably due to the decline in the participation to such plans. Recent proposals which aim to increase the coverage of longevity risk mostly deal with expansion of the “2nd pillar" of the retirement income system, currently comprised of the Quebec Pension Plan. We therefore consider a key proposal of the D’Amours committee (the longevity pension), in addition to two other proposals: that of Mintz and Wilson, which aims to increase the generosity of the current regime, and that of Wolfson, which introduces a concept of contribution and benefit rates differentiated by income. Using data from Statistics Canada surveys, we analyze the internal rate of return (IRR) of these proposals for various types of individuals taking into consideration inequality in life expectancy, temporal variability of income, and interactions with taxation and the different retirement income support programs. We contrast the results with those obtained when opting instead for additional contributions into existing voluntary savings vehicles combined with a basic annuity purchased at retirement.
    Keywords: Longevity risk, retirement savings, inequality, life expectancy
    JEL: I14 J18 J26 J32
    Date: 2014
  8. By: Luis Diéz-Catalán (University of Minnesota ); Ernesto Villanueva (Banco de España )
    Abstract: We study the impact of (widespread) downward wage rigidity on the fl ows from employment to non-employment at the onset of the Great Recession. Downward wage (growth) rigidity is due to the fact that sector-level collective agreements in Spain are automatically extended to all fi rms, setting wage minima for workers in the same province-industry-skill cell. We identify the impact of wage rigidity on employment because, unlike settled ones, newly bargained contracts can adjust to aggregate shocks. Using the exact dates of bargaining periods of all sector-level contracts in Spain, we fi nd that agreements reached after the fall of Lehman Brothers were for an average wage growth of 1.8%, while agreements signed before 15 September 2008 were for mean wage increases of 3.1%. Matching information on collective agreements with longitudinal Social Security records on workers, we document two fi ndings. Firstly, the probability of job loss between 2009 and 2010 was 1 percent higher among workers covered by agreements signed before the fall of Lehman Brothers than among workers covered by contracts signed afterwards. Secondly, the analysis of a subsample of contracts with information about the exact province-industry-skill level minimum wage suggests that the impact of date of contract signature on wage changes and employment losses is confi ned to workers whose pre-recession earnings were below 1.2 times the contract-specifi c minimum wage. Those fi ndings are consistent with the hypothesis that the staggering of contracts and the inability to renegotiate contracts amplify aggregate shocks. We end with a discussion of whether those results can be extrapolated to other sample periods.
    Keywords: collective bargaining, labor demand, aggregate shock, wage rigidity
    JEL: J23 J50
    Date: 2015–01
  9. By: Yanan Li (Cornell University ); Victoria Prowse (Cornell University )
    Abstract: In this paper, we explore and compare how older and younger couple house- holds use adjustments in the wife’s labor supply to mitigate the e?ects of negative shocks to the husband’s employment status. Using di?erence-in-di?erences match- ing methods, we document a substantial added worker e?ect for younger house- holds. However, the wives of older men do not increase employment in response to their husbands’ negative employment shocks. Instead, in older households, fe- male unemployment increases. These results are consistent with older women being constrained by the labor market in the extent to which they can adjust their labor supply to mitigate the e?ects of spousal employment shocks. Our ?ndings suggest that spousal labor supply is not an e?ective intra-household insurance device for older households.
    Date: 2014–09
  10. By: Anabela Carneiro (Universidade do Porto and CEF.UP ); Pedro Portugal (Banco de Portugal and NOVA School of Business and Economics ); Jose Varejao (Universidade do Porto and CEF.UP )
    Abstract: In this article we study the resilience of the Portuguese labor market, in terms of job flows, employment and wage developments, in the context of the current recession. We single out the huge contribution of job destruction, especially due to the closing of existing firms, to the dramatic decline of total employment and increase of the unemployment rate. We also document the very large increase in the incidence of minimum wage earners and nominal wage freezes. We explore three different channels that may have amplified the employment response to the great recession: the credit channel, the wage rigidity channel, and the labor market segmentation channel. We uncover what we believe is convincing evidence that the severity of credit constraints played a significant role in the current job destruction process. Wage rigidity is seen to be associated with lower net job creation and higher failure rates of firms. Finally, labor market segmentation seems to have favored a stronger job destruction that was facilitated by an increasing number of temporary workers.
    Keywords: Job Destruction; Credit constraints; Wage rigidity; Segmentation
    JEL: E24 J23 J63
    Date: 2013–07
  11. By: Joan Costa-Font ; Mireia Jofre-Bonet ; Julian Le Grand
    Abstract: We examine the vertical transmission of overweight drawing upon a sample of English children, both adopted and non-adopted, and their families. Our results suggest strong evidence of an intergenerational association of overweight among adoptees, indicating transmission through cultural factors. We find that, when both adoptive parents are overweight, the likelihood of an adopted child being overweight is between 10% and 20% higher than when they are not. We also find that the cultural transmission of overweight is not aggravated by having a full-time working mother, so do not confirm the existence of a female labour market participation penalty on child overweight among adoptees. Overall, our findings, despite subject to data limitations, are robust to a battery of robustness checks, specification and sample selection corrections.
    Keywords: Vertical transmission, cultural transmission, overweight, children, natural parents, Body Mass Index, sample selection
    JEL: I18 D13 Z1
    Date: 2015–01

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