nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒04‒02
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. The Marriage Market, Labor Supply and Education Choice By Pierre-Andre Chiappori; Monica Costa Dias; Costas Meghir
  2. The Earnings and Employment Losses Before Entering the Disability System By Cervini-Plá, María; Vall-Castello, Judit
  3. Obituary: Gary Becker and the Art of Economics By Aloysius Siow
  4. How the Demand for Labor May Adapt to the Availability of Labor: A Preliminary Exploration with Historical Data By Duleep, Harriet; Liu, Xingfei
  5. What Do We Know So Far about Multigenerational Mobility? By Gary Solon
  6. The Evolution of Hourly Compensation in Canada between 1980 and 2010 By Duclos, Jean-Yves; Pellerin, Mathieu
  7. Career Choices and the Evolution of the College Gender Gap By Martín Rossi; Christian Ruzzier
  8. Parental leave and the glass ceiling in Sweden By Albrecht, James; Skogman Thoursie, Peter; Vroman, Susan
  9. Misallocation of Talent in Competitive Labor Markets By Daniel Ferreira; Radoslawa Nikolowa

  1. By: Pierre-Andre Chiappori (Dept. of Economics, Columbia University); Monica Costa Dias (Institute for Fiscal Studies); Costas Meghir (Cowles Foundation, Yale University)
    Abstract: We develop an equilibrium lifecycle model of education, marriage and labor supply and consumption in a transferable utility context. Individuals start by choosing their investments in education anticipating returns in the marriage market and the labor market. They then match based on the economic value of marriage and on preferences. Equilibrium in the marriage market determines intrahousehold allocation of resources. Following marriage households (married or single) save, supply labor and consume private and public under uncertainty. Marriage thus has the dual role of providing public goods and offering risk sharing. The model is estimated using the British HPS.
    Keywords: Marriage market, Human capital, Labor supply, Life cycle models, Intrahousehold allocations, Collective model, Education choice, Returns to education
    JEL: J12 J16 J22 J24 H31 I24
    Date: 2015–03
  2. By: Cervini-Plá, María (Universitat de Girona); Vall-Castello, Judit (Universitat Pompeu Fabra)
    Abstract: Although a number of papers in the literature have shown the employment and wage differences between disabled and non-disabled individuals, not much is known about the potential employment and wage losses that disabled individuals suffer before being officially accepted into the disability insurance system (DI). Therefore, in this paper we distinguish between individuals that enter the DI system due to a working accident (sudden health shock) and individuals that become disabled due to an ordinary illness to identify the differences in employment and wages between these two groups before they are officially accepted into the DI system. We combine matching models and difference-in-difference and we find that the wage (employment) growth patterns of both groups of workers become significantly different three (six) years before entering the DI system. More specifically, our estimates suggest that one year before entering the system, there is a difference of 27 Euros/month in the wages of the two groups (3% of average wage) as well as a 10 percentage point difference in employment probabilities.
    Keywords: disability system, employment, wage loss
    JEL: J31 I13
    Date: 2015–03
  3. By: Aloysius Siow
    Abstract: The obituary discusses why Gary Becker is one of the most successful social scientist in the second half of the twentieth century. It argues that his success was due to his ability to recognize which resources are scarce in non-market situations and environments, and to use economics to analyze how these scarcities affected the non-market outcomes.
    Keywords: obituary, Gary Becker
    JEL: B0
    Date: 2015–03–24
  4. By: Duleep, Harriet (College of William and Mary); Liu, Xingfei (IZA)
    Abstract: This note presents and tests a general model to help explain why the demand for labor adapts to the availability of labor. In particular, we postulate that the cost of hiring declines with a growth in available labor for two reasons: (1) individuals seeking employment would be coming to employers instead of the latter seeking them out and (2) the larger set of potential employees would increase the probability of employers finding individuals suitable for unfilled jobs. Moreover, individuals seeking employment likely encourage employers to think of new ways in which labor can be used. An increase in the number of entrants to the labor force would lower the cost of hiring and increase employment demand at any given wage rate. Hence, a change in the labor force – such as the addition of women or immigrants – does not increase unemployment as much as is predicted for current workers because demand for labor increases as the cost of hiring decreases. Failure to taken into account what we term an – "encouraged employer effect" may also explain why surges in employment are often underestimated.
    Keywords: labor demand, hiring cost, encouraged employer effect, labor force
    JEL: J20 J21 J23
    Date: 2015–03
  5. By: Gary Solon
    Abstract: “Multigenerational mobility” refers to the associations in socioeconomic status across three or more generations. This article begins by summarizing the longstanding but recently growing empirical literature on multigenerational mobility. It then discusses multiple theoretical interpretations of the empirical patterns, including the one recently proposed in Gregory Clark’s book The Son Also Rises.
    JEL: D1 D31 D63 J62
    Date: 2015–03
  6. By: Duclos, Jean-Yves (Université Laval); Pellerin, Mathieu (Université Laval)
    Abstract: We consider changes in the distribution of hourly compensation in Canada using confidential census data and the recent National Household Survey over the last three decades. We find that the coefficient of variation of wages among full-time workers has almost doubled between 1980 and 2010. The rapid growth of the 99.9th percentile is the main driver of that increase. Changes in the composition of the workforce explain less than 25% of the rise in wage inequality. However, composition changes explain most of the increase in average hourly compensation over those three decades, while wages stagnate within skill groups.
    Keywords: wage distribution, inequality, Canada, composition effects
    JEL: J11 J31
    Date: 2015–03
  7. By: Martín Rossi (Department of Economics, Universidad de San Andres); Christian Ruzzier (Department of Economics, Universidad de San Andres)
    Abstract: We propose a complementary explanation for the evolution of the college gender gap that emphasizes the raising opportunity cost of pursuing a college degree for men, due to the increase in the rewards to becoming a superstar in men-dominated occupations, like professional sports. We support our explanation with causal evidence from a natural experiment in European soccer markets that provides exogenous variation in male earnings in a superstar path. Consistent with our story, we nd a signicant positive eect of an increase in male superstar earnings on the ratio of female to male tertiary enrollment in college education.
    Keywords: gender gap, superstars, education
    JEL: I20 J16 J24
    Date: 2015–03
  8. By: Albrecht, James (Department of Economics, Georgetown University); Skogman Thoursie, Peter (Department of Economics, Stockholm University); Vroman, Susan (Department of Economics, Georgetown University)
    Abstract: In this paper, we update and extend “Is There a Glass Ceiling in Sweden?” (Albrecht et al. 2003) by documenting the extent to which the gender log wage gap across the distribution in Sweden has changed over the period 1998-2008. We then examine the Swedish glass ceiling in 2008 in more detail by documenting how it differs for white-collar versus blue-collar workers and for private- versus public-sector workers. We also examine when in the life cycle the glass ceiling effect arises and how this effect develops around the birth of the first child. Finally, we investigate the possible connection between the glass ceiling and the parental leave system in Sweden by linking wage data with data on parental leave from different Swedish registers.
    Keywords: Gender gap; parental leave; quantile regression
    JEL: J16 J31 J71
    Date: 2015–03–04
  9. By: Daniel Ferreira (London School of Economics); Radoslawa Nikolowa (Queen Mary University of London)
    Abstract: We develop a model in which competition in the labor market may produce worker-firm matches that are inferior to those obtained in the absence of competition. This result contrasts with the conventional wisdom that competition among employers allocates scarce talent efficiently. In a model in which employers asymmetrically learn about the ability of their workers, we show that constraining labor market competition may be socially desirable precisely because it leads to better talent allocation. The model provides a cautionary counterpoint to one of the most popular arguments against the regulation of pay, i.e., the argument that price-distorting regulation leads to inefficient matches of workers and firms.
    Keywords: Labor markets, Asymmetric employer learning, Misallocation, Adverse selection
    JEL: D82 J31 M5
    Date: 2015–03

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