nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒04‒19
six papers chosen by
Maximo Rossi
Universidad de la República

  1. The Marriage Market, Labor Supply and Education Choice By Pierré-Andre Chiappori; Monica Costa Dias; Costas Meghir
  2. Selective schooling systems increase inequality By Simon Burgess; Matt Dickson
  3. Dynastic Inequality, Mobility and Equality of Opportunity By Kanbur, Ravi; Stiglitz, Joseph E
  4. Distributional and Behavioral Effects of the Gender Wage Gap By Patricia Gallego-Granados; Johannes Geyer
  5. Child Care Arrangements and Labor Supply By Daniela Del Boca
  6. The Evolution of Hourly Compensation in Canada between 1980 and 2010 By Jean-Yves Duclos; Mathieu Pellerin

  1. By: Pierré-Andre Chiappori; Monica Costa Dias; Costas Meghir
    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.
    JEL: H31 J12 J16 J22 J24
    Date: 2015–04
  2. By: Simon Burgess; Matt Dickson
    Abstract: We investigate the impact on earnings inequality of a selective education system in which school assignment is based on initial test scores. We use a large, representative household panel survey to compare adult earnings inequality of those growing up under a selective education system with those educated under a comprehensive system. Controlling for a range of background characteristics and the current location, the wage distribution for individuals who grew up in selective schooling areas is quantitatively and statistically significantly more unequal. The total effect sizes are large: 14% of the raw 90-10 earnings gap and 18% of the conditional 90-10 earnings gap can be explained by differences across schooling systems.
    Keywords: selective schooling, inequality, wages
    JEL: I24 J31
    Date: 2014–05
  3. By: Kanbur, Ravi; Stiglitz, Joseph E
    Abstract: One often heard counter to the concern on rising income and wealth inequality is that it is wrong to focus on inequality of outcomes in a “snapshot.” Intergenerational mobility and “equality of opportunity”, so the argument goes, is what matters for normative evaluation. In response to this counter, we ask what pattern of intergenerational mobility leads to lower inequality not between individuals but between the dynasties to which they belong? And how does this pattern in turn relate to commonly held views on what constitutes equality of opportunity? We revive and revisit here our earlier contributions which were in the form of working papers (Kanbur and Stiglitz (1982, 1986) in order to engage with the current debate. Focusing on bistochastic transition matrices in order to hold constant the steady state snapshot income distribution, we develop an explicit partial ordering which ranks matrices on the criterion of inequality between infinitely lived dynasties. A general interpretation of our result is that when comparing two transition matrices, if one matrix is “further away” from the identity matrix then it will lead to lower dynastic inequality. More specifically, the result presents a computational procedure to check if one matrix dominates another on dynastic inequality. We can also assess “equality of opportunity”, defined as identical prospects irrespective of starting position. We find that this is not necessarily the mobility pattern which minimizes dynastic inequality.
    Keywords: Dynastic Inequality; Equality of Opportunity; Inequality; Mobility
    JEL: D31 D63
    Date: 2015–04
  4. By: Patricia Gallego-Granados; Johannes Geyer
    Abstract: The gender wage gap is a persistent labor market phenomenon. Most research focuses on the determinants of these wage differences. We contribute to this literature by exploring a different research question: if wages of women are systematically lower than male wages, what are the distributional consequences (disposable income) and what are the labor market effects (labor supply) of the wage gap? We demonstrate how the gender gap in gross hourly wages shows up in the distribution of disposable income of households. This requires taking into account the distribution of working hours as well as the tax-benefit system and other sources of household income. We present a methodological framework for deriving the gender wage gap in terms of disposable income which combines quantile decomposition, simulation techniques and structural labor supply estimation. This allows us to examine the implications of the gender wage gap for income inequality and working incentives. We illustrate our approach with an application to German data.
    Keywords: gender wage gap, quantile regression, wage decomposition, labor supply, microsimulation, income distribution, tax-benefit system
    JEL: D31 J31 J16 H23
    Date: 2015
  5. By: Daniela Del Boca
    Abstract: This paper discusses several approaches to examining the relationship between child care and mothers' labor supply. The focus is on child care for children aged 0-3, because this is a critical period for working mothers and their children and because most European and American households with children aged 3-5 already use child care centers. The paper provides data concerning availability of, government spending on, and quantity and quality standards for child care in different countries, then compares different approaches to the determinants of child care demand and labor supply. The paper subsequently reviews and compares empirical results regarding the impact of child care costs, availability and quality. Finally, the paper discusses different impacts across different groups and provides concluding remarks.
    Keywords: Labor Policy, Child development, Child care, Mothers' employment, Child development, IDB-WP-569
    Date: 2015–02
  6. By: Jean-Yves Duclos; Mathieu Pellerin
    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: 2015–04–15

This nep-ltv issue is ©2015 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.