nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒02‒28
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. The income distribution in the UK: A picture of advantage and disadvantage By Stephen P Jenkins
  2. Share Capitalism and Worker Wellbeing By Alex Bryson ; Andrew E. Clark ; Richard B. Freeman ; Colin P. Green
  3. Measuring Mobility By Franck A. Cowell ; Emmanuel Flachaire
  4. Gender Differences in Attitudes Towards Competition: Evidence from the Italian Scientific Qualification By Maria De Paola ; Michela Ponzo ; Vincenzo Scoppa
  5. Estimating the Production Function for Human Capital: Results from a Randomized Control Trial in Colombia By Attanasio, Orazio ; Cattan, Sarah ; Fitzsimons, Emla ; Meghir, Costas ; Rubio-Codina, Marta
  6. Optimism and Pessimism with Expected Utility, Fifth Version By David Dillenberger ; Andrew Postlewaite ; Kareen Rozen
  7. Trust and Racial Income Inequality: Evidence from the U.S. By Andrea Tesei
  8. Partner Choice and the Marital College Premium: Analyzing Marital Patterns Over Several Decades By Chiappori, Pierre-André ; Salanié, Bernard ; Weiss, Yoram
  9. Unequal Bequests By Francesconi, Marco ; Pollak, Robert A. ; Tabasso, Domenico
  10. Family, Community and Long-Term Earnings Inequality By Paul Bingley ; Lorenzo Cappellari ; Konstantinos Tatsiramos

  1. By: Stephen P Jenkins
    Abstract: This paper describes the UK income distribution and how it has evolved over the last 50 years. It also includes some comparisons with the income distributions of other rich countries. Multiple perspectives on the distribution are provided: there is evidence about real income levels and inequality, and the prevalence of affluence and of poverty.
    Keywords: Inequality, poverty, affluence, income distribution, United Kingdom
    JEL: D31 I32
    Date: 2015–02
  2. By: Alex Bryson ; Andrew E. Clark ; Richard B. Freeman ; Colin P. Green
    Abstract: We show that worker wellbeing is not only related to the amount of compensation workers receive but also how they receive it. While previous theoretical and empirical work has often been pre-occupied with individual performance-related pay, we here demonstrate a robust positive link between the receipt of a range of group performance schemes (profit shares, group bonuses and share ownership) and job satisfaction. Critically, this relationship remains after conditioning on wage levels, which suggests these pay methods provide utility to workers in addition to that through higher wages. These findings survive a variety of methods aimed at accounting for unobserved individual and job-specific characteristics. We investigate two potential channels for this effect. We first demonstrate that half of the positive effect can be accounted for by employees' tendency to reciprocate in return for the "gift" of share capitalism. Second, we show that these 'share capitalist' modes of pay dampen the negative wellbeing effects of what we typically think of as "bad" aspects of job quality. Finally, share-capitalist pay methods also have positive wellbeing spill-over effects on co-workers.
    Keywords: Job satisfaction, wages, compensation methods, working conditions
    JEL: J28 J33 J54 J63 J81 M52
    Date: 2015–02
  3. By: Franck A. Cowell (STICERD London School of Economics ; Université du Québec à Montréal CREM & GERAD ); Emmanuel Flachaire (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS Institut Universitaire de France )
    Abstract: Our new approach to mobility measurement involves separating out the valuation of positions in terms of individual status (using income, social rank, or other criteria) from the issue of movement between positions. The quantification of movement is addressed using a general concept of distance between positions and a parsimonious set of axioms that characterise the distance concept and yield a class of aggregative indices. This class of indices induces a superclass of mobility measures over the different status concepts consistent with the same underlying data. We investigate the statistical inference of mobility indices using two well-known status concepts, related to income mobility and rank mobility.
    Keywords: Mobility measures, axiomatic approach, bootstrap
    JEL: D63
    Date: 2015–02
  4. By: Maria De Paola (Università della Calabria and IZA ); Michela Ponzo (Università di Napoli and CSEF ); Vincenzo Scoppa (Università della Calabria and IZA )
    Abstract: We exploit a natural experiment based on the Italian promotion system for associate and full professor positions to investigate gender differences in the willingness to enter competition. Using data on about 42,000 professors and controlling for productivity and a number of individual and field characteristics, we find that females have a lower probability of applying for competition of about 4 percentage points. The determinants of this gap seem to be gender differences in risk-aversion and self-confidence and women’s fear of discrimination: the lower tendency to enter competition is especially relevant for women in the lower tail of the distribution of scientific productivity and in fields in which productivity is not easily measurable; furthermore, women are less likely to apply for promotion in fields in which promotions of females in the past were rare.
    Keywords: Attitudes towards competition; Gender gaps; Risk-aversion; Self-confidence; Discrimination; Academic Promotions; Natural Experiment.
    JEL: J71 M51 J45 J16 D72 D78
    Date: 2015–02–20
  5. By: Attanasio, Orazio (University College London ); Cattan, Sarah (Institute for Fiscal Studies, London ); Fitzsimons, Emla (University College London ); Meghir, Costas (Yale University ); Rubio-Codina, Marta (Institute for Fiscal Studies, London )
    Abstract: We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children. We estimate production functions for cognitive and socio-emotional skills as a function of maternal skills and child's past skills, as well as material and time investments that are treated as endogenous. The effects of the program can be fully explained by increases in parental investments, which have strong effects on outcomes and are complementary to both maternal skills and child's past skills.
    Keywords: early childhood development, human capital, poverty alleviation, nonlinear factor models
    JEL: J13 J24 I24 I25 I32 O15
    Date: 2015–02
  6. By: David Dillenberger (Department of Economics, University of Pennsylvania ); Andrew Postlewaite (Department of Economics, University of Pennsylvania ); Kareen Rozen (Department of Economics, Yale University )
    Abstract: Maximizing subjective expected utility is the classic model of decision making under uncertainty. Savage (1954) provides axioms on preference over acts that are equivalent to the existence of a subjective expected utility representation, and further establishes that such a representation is essentially unique. We show that there is a continuum of other \expected utility" representations in which the probability distributions over states used to evaluate acts depend on the set of possible outcomes of the act and suggest that these alternate representations can capture pessimism or optimism. We then extend the DM's preferences to be defined over both subjective acts and objective lotteries, allowing for source-dependent preferences. Our result permits modeling ambiguity aversion in Ellsberg's two-urn experiment using a single utility function and pessimistic probability assessments over prizes for lotteries and acts, while maintaining the axioms of Savage and von Neumann-Morganstern on the appropriate domains.
    Keywords: Subjective expected utility, optimism, pessimism, stake-dependent probability
    JEL: D80 D81
    Date: 2013–11–01
  7. By: Andrea Tesei (Queen Mary University of London )
    Abstract: Existing studies of trust formation in U.S. metropolitan areas have found that trust is lower when there is more income inequality and greater racial fragmentation. I add to this literature by examining the role of income inequality between racial groups (racial income inequality). I find that greater racial income inequality reduces trust. Also, racial fragmentation is no longer a significant determinant of trust once racial income inequality is accounted for. I also show that racial income inequality has a more detrimental effect in more racially fragmented communities and that trust falls more in minority groups when racial income inequality increases. The results hold under both least squares and instrumental variable estimation.
    Keywords: Trust, Racial income inequality, U.S.
    JEL: D31 Z10 J15
    Date: 2015–01
  8. By: Chiappori, Pierre-André ; Salanié, Bernard ; Weiss, Yoram
    Abstract: We construct a structural model of household decision-making and matching and estimate the returns to schooling within marriage. We consider agents with idiosyn- cratic preferences for marriage that may be correlated with education, and we allow the education levels of spouses to interact in producing joint surplus. Using US data on marriages of individuals born between 1943 and 1972, we show that the preference for assortative matching by education has significantly increased for the white population, particularly for highly educated individuals; but not for blacks. Moreover, in line with theoretical predictions, we find that the “marital college-plus premium” has increased for women but not for men.
    Keywords: college premium; marriage
    JEL: D1 J1
    Date: 2015–02
  9. By: Francesconi, Marco ; Pollak, Robert A. ; Tabasso, Domenico
    Abstract: Using data from the Health and Retirement Study (HRS), we make two contributions to the literature on end-of-life transfers. First, we show that unequal bequests are much more common than generally recognized, with one-third of parents with wills planning to divide their estates unequally among their children. These plans for unequal division are particularly concentrated in complex families, that is, families with stepchildren and families with genetic children with whom the parent has had no contact (e.g., children from previous marriages). We find that in complex families past and current contact between parents and children reduces or eliminates unequal bequests. Second, although the literature focuses on the bequest intentions of parents who have made wills, we find that many elderly Americans have not made wills. Although the probability of having a will increases with age, 30 percent of HRS respondents aged 70 and over have no wills. Of HRS respondents who died between 1995 and 2010, 38 percent died intestate (i.e., without wills). Thus, focusing exclusively on the bequest intentions of parents who have made wills provides an incomplete and misleading picture of end-of-life transfers.
    Keywords: altruism; bequests; evolutionary motives; exchange; family structure; intergenerational transfers
    JEL: D13 J12 K36
    Date: 2015–02
  10. By: Paul Bingley ; Lorenzo Cappellari (Università Cattolica del Sacro Cuore ; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore ); Konstantinos Tatsiramos
    Abstract: Correlations between the earnings of siblings reflect shared family and community background, but evidence is mixed on the relative magnitudes of these influences. We estimate long run earnings correlations between brothers, school mates and teenage neighbors jointly in a unified framework. Using administrative data on the Danish population we find that (1) family is by far the most relevant factor that shapes long-term earnings; (2) the contribution of neighborhood and school quality on long-term earnings is overestimated if the family component is ignored, and becomes negligible and not significantly different from zero by age 30; and (3) the importance of family declines over the life-cycle.
    Keywords: Sibling correlations; Neighborhoods; Schools; Life-cycle earnings; Inequality
    JEL: D31 J62
    Date: 2014–10

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