nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒04‒11
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Does the choice of well-being measure matter empirically? An illustration with German data By DECANCQ, Koen; NEUMANN, Dirk
  2. Insurance in extended family networks By Orazio Attanasio; Costas Meghir; Corina Mommaerts
  3. Intergenerational mobility in the United States and Great Britain: a comparative study of parent-child pathways By Jo Blanden; Robert Haveman; Timothy M. Smeeding; Kathryn Wilson
  4. Stated and Revealed Inequality Aversion in Three Subject Pools By Beranek, Benjamin; Cubitt, Robin; Gächter, Simon
  5. Who Benefits from a Minimum Wage Increase? By John W. Lopresti; Kevin J. Mumford
  6. Creative Destruction and Subjective Wellbeing By Philippe Aghion; Ufuk Akcigit; Angus Deaton; Alexandra Roulet
  7. Equality of opportunity: Theory and evidence By Francisco H. G. Ferreira; Vito Peragine
  8. Unions and Collective Bargaining in the Wake of the Great Recession By Addison, John T.; Portugal, Pedro; Vilares, Hugo
  9. Decentralizing Education Resources: School Grants in Senegal By Carneiro, Pedro; Koussihouèdé, Oswald; Lahire, Nathalie; Meghir, Costas; Mommaerts, Corina

  1. By: DECANCQ, Koen (University Antwerp); NEUMANN, Dirk (Université catholique de Louvain, CORE, Belgium)
    Abstract: We discuss and compare five measures of individual well-being, namely income, an objective composite well-being index, a measure of subjective well-being, equivalent income, and a well-being measure based on the von Neumann-Morgenstern utilities of the individuals. After examining the information requirements of these measures, we illustrate their implementation using data from the German Socio-Economic Panel (SOEP) for 2010. We find sizeable differences in the characteristics of the individuals identified as worst off according to the different well-being measures. Less than 1% of the individuals belong to the bottom decile according to all five measures. Moreover, the measures lead to considerably different well-being rankings of the individuals. These findings highlight the importance of the choice of well-being measure for policy making.
    Keywords: income, composite well-being index, life satisfaction, equivalent income, von Neumann-Morgenstern utility function, worst off, Germany
    JEL: D31 D63 I30
    Date: 2014–10–31
  2. By: Orazio Attanasio; Costas Meghir; Corina Mommaerts
    Abstract: We investigate partial insurance and group risk sharing in extended family networks. Our approach is based on decomposing income shocks into group aggregate and idiosyncratic components, allowing us to measure the extent to which each is insured, having accounted for public insurance programs. We apply our framework to extended family networks in the United States by exploiting the unique intergenerational structure of the PSID. We find that over 60% of shocks to household income are potentially insurable within family networks. However, we find little evidence that the extended family provides insurance for such idiosyncratic shocks.
    JEL: D12 D31 D91 E21 E24 H31
    Date: 2015–04
  3. By: Jo Blanden; Robert Haveman; Timothy M. Smeeding; Kathryn Wilson
    Abstract: We build on cross-national research to examine the relationships underlying estimates of relative intergenerational mobility in the United States and Great Britain using harmonized longitudinal data and focusing on men. We examine several pathways by which parental status is related to offspring status, including education, labor market attachment, occupation, marital status, and health, and perform several sensitivity analyses to test the robustness of our results. We decompose differences between the two nations into that part attributable to the strength of the relationship between parental income and the child's characteristics and the labor market return to those child characteristics. We find that the relationships underlying these intergenerational linkages differ in systematic ways between the two nations. In the United States, primarily because of the higher returns to education and skills, the pathway through offspring education is relatively more important than it is in Great Britain; by contrast, in Great Britain the occupation pathway forms the primary channel of intergenerational persistence
    Keywords: education; intergenerational mobility; occupation
    JEL: I2 J24 J62
    Date: 2014–09
  4. By: Beranek, Benjamin (University of Nottingham); Cubitt, Robin (University of Nottingham); Gächter, Simon (University of Nottingham)
    Abstract: This paper reports data from three subject pools (n=717 subjects) using techniques based on those of Loewenstein, et al. (1989) and Blanco, et al. (2011) to obtain parameters, respectively, of stated and revealed inequality aversion. We provide a replication opportunity for those papers, with two innovations: (i) a design which allows stated and revealed preferences to be compared at the individual level; (ii) assessment of robustness of findings across subjects from a UK university, a Turkish university and Amazon Mechanical Turk. Our findings on stated aversion to inequality are qualitatively similar to those of Loewenstein, et al. in each of our subject pools, whereas there are notable differences between some of our findings on revealed preference and those of Blanco, et al. We find that revealed advantageous inequality aversion is often stronger than revealed dis-advantageous inequality aversion. In most subject pools, we find some (weak) correlation between corresponding parameters of stated and revealed inequality aversion.
    Keywords: inequality aversion, replication, revealed and stated preferences, robustness across subject pools, MTurk
    JEL: C90
    Date: 2015–03
  5. By: John W. Lopresti (College of William and Mary); Kevin J. Mumford (Purdue University)
    Abstract: This paper addresses the question of how a minimum wage increase affects the wages of low-wage workers. Most studies assume that there is a simple mechanical increase in the wage for workers earning a wage between the old and the new minimum wage, with some studies allowing for spillovers to workers with wages just above this range. Rather than assume that the wages of these workers would have remained constant, this paper estimates how a minimum wage increase impacts a low-wage worker's wage relative to the wage the worker would have if there had been no minimum wage increase. The method allows for the effect to depend not only on the initial wage of the worker, but also nonlinearly on the size of the minimum wage increase. Using Current Population Survey data from 2005 to 2008, a period with a large number of U.S. state-level minimum wage increases, this paper finds that low-wage workers who experience a small increase in the minimum wage tend to have lower wage growth than if there had been no minimum wage increase. A large increase to the minimum wage increases the wages of not only those workers who previously earned less than the new minimum wage, but also spill over to workers with moderately higher wages. Finally, this paper finds little evidence of heterogeneity in the effect by age, gender, income, and race.
    Keywords: Wage effects, minimum wage
    JEL: J31 J38
    Date: 2015–03
  6. By: Philippe Aghion; Ufuk Akcigit; Angus Deaton; Alexandra Roulet
    Abstract: In this paper we analyze the relationship between turnover-driven growth and subjective wellbeing, using cross-sectional MSA level US data. We find that the effect of creative destruction on wellbeing is (i) unambiguously positive if we control for MSA-level unemployment, less so if we do not; (ii) more positive on future wellbeing than on current well-being; (iii) more positive in MSAs with faster growing industries or with industries that are less prone to outsourcing; (iv) more positive in MSAs within states with more generous unemployment insurance policies.
    JEL: I31 J63 J65 O33 O38 Z19
    Date: 2015–04
  7. By: Francisco H. G. Ferreira (World Bank, USA); Vito Peragine (University of Bari, Italy)
    Abstract: Building on earlier work by political philosophers, economists have recently sought to define a concept of equity that accommodates the fairness of reward to individual responsibility and effort, while allowing for the existence of some inequalities which are unfair and should be compensated. This paper provides a critical review of the economic literature on equality and inequality of opportunity. A simple 'canonical model' of equal opportunity is proposed, and used to explore the two fundamental concepts in this (relatively) new theory of social justice: the principles of compensation and reward. Ex-ante and ex-post versions of the compensation principle are presented, and the tensions between them are discussed. Different approaches to the measurement of inequality of opportunity - and empirical applications - are reviewed, and implications for the measurement of poverty and of the rate of economic development are discussed.
    Keywords: Equality of opportunity, inequality of opportunity, compensation, reward.
    JEL: D63 I32
    Date: 2015–03
  8. By: Addison, John T. (University of South Carolina); Portugal, Pedro (Banco de Portugal); Vilares, Hugo (Banco de Portugal)
    Abstract: This paper provides the first definitive estimates of union density in Portugal, 2010-2012, using a unique dataset. The determinants of union density at firm level are first modeled. Next, we draw upon a very recent study of the union wage premium to provide summary estimates of the union wage gap for different ranges of union density. Since these estimates fully reflect the reality of an industrial relations system in which collective agreements are extended to nonunion workers and firms, the final issue examined is contract coverage. Although there has occurred a pronounced fall in the number of new extension agreements in recent years, this decline has been uncritically linked with a fall in coverage. We show that the number of workers covered by new and existing agreements has been largely unaffected by economic crisis. The reduced frequency of new agreements and extensions is viewed as an aspect of downward nominal wage rigidity in deflationary times (the counterpart of "upward nominal wage rigidity" in more normal times) rather than the immediate expression of a crisis in collective bargaining per se.
    Keywords: collective bargaining, union density, collective agreement coverage, union wage premium, nominal wage rigidity, Portugal
    JEL: J31 J52 J53
    Date: 2015–03
  9. By: Carneiro, Pedro (University College London); Koussihouèdé, Oswald (University Gaston Berger); Lahire, Nathalie (World Bank); Meghir, Costas (Yale University); Mommaerts, Corina (Yale University)
    Abstract: The impact of school resources on the quality of education in developing countries may depend crucially on whether resources are targeted efficiently. In this paper we use a randomized experiment to analyze the impact of a school grants program in Senegal, which decentralized a portion of the country's education budget. We find large positive effects on test scores at younger grades that persist at least two years. We show that these effects are concentrated among schools that focused funds on human resources improvements rather than school materials, suggesting that teachers and principals may be a central determinant of school quality.
    Keywords: quality of education, decentralization, school resources, child development, clustered randomized control trials
    JEL: H52 I20 I22 I25 O15
    Date: 2015–03

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