nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒07‒04
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. Trust and the Welfare State: the Twin Peaks Curve By Yann Algan; Pierre Cahuc; Marc Sangnier
  2. Technological Change, Occupational Tasks and Declining Immigrant Outcomes: Implications for Earnings and Income Inequality in Canada By Casey Warman; Christopher Worswick
  3. Human Capital Quality and Aggregate Income Differences: Development Accounting for U.S. States By Hanushek, Eric A.; Ruhose, Jens; Woessmann, Ludger
  4. Trust, Well-Being and Growth: New Evidence and Policy Implications By Yann Algan; Pierre Cahuc
  5. Biases in standard measures of intergenerational income dependence By Nybom, Martin; Stuhler, Jan
  6. Cognitive, Non-Cognitive Skills and Gender Wage Gaps: Evidence from Linked Employer-Employee Data in Bangladesh By Nordman, Christophe Jalil; Sarr, Leopold; Sharma, Smriti
  7. Youth Unemployment in France By Pierre Cahuc; Stéphane Carcillo
  8. 'Human capital and income distribution in a model of corruption' By Humna Ahsan; Keith Blackburn
  9. Import Competition and the Great U.S. Employment Sag of the 2000s By Acemoglu, Daron; Autor, David; Dorn, David; Hanson, Gordon; Price, Brendan
  10. Relationship Skills in the Labor and Marriage Markets By Gueorgui Kambourov; Aloysius Siow; Laura Turner

  1. By: Yann Algan (Département d'économie); Pierre Cahuc (Department of Economics); Marc Sangnier (Aix-Marseille School of Economics)
    Abstract: We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviors and this twin peaks relation in the OECD countries.
    Keywords: Welfare State; Trust; Civism; Corruption; Redistribution
    JEL: H1 Z1
    Date: 2014–06
  2. By: Casey Warman; Christopher Worswick
    Abstract: The earnings and occupational task requirements of immigrants to Canada are analyzed. The growing education levels of immigrants in the 1990s have not led to a large improvement in earnings as one might expect if growing computerization and the resulting technological change was leading to a rising return to non-routine cognitive skills and a greater wage return to university education. Controlling for education, we find a pronounced cross-arrival cohort decline in earnings that coincided with cross-cohort declines in cognitive occupational task requirements and cross-cohort increases in manual occupational task requirements. The immigrant earnings outcomes had only a small effect on overall Canadian earnings inequality.
    JEL: J15 J24 J31 J61 J71
    Date: 2015–06
  3. By: Hanushek, Eric A. (Stanford University); Ruhose, Jens (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: Although many U.S. state policies presume that human capital is important for state economic development, there is little research linking better education to state incomes. In a complement to international studies of income differences, we investigate the extent to which quality-adjusted measures of human capital can explain within-country income differences. We develop detailed measures of state human capital based on school attainment from census micro data and on cognitive skills from state- and country-of-origin achievement tests. Partitioning current state workforces into state locals, interstate migrants, and immigrants, we adjust achievement scores for selective migration. We use the new human capital measures in development accounting analyses calibrated with standard production parameters. We find that differences in human capital account for 20-35 percent of the current variation in per-capita GDP among states, with roughly even contributions by school attainment and cognitive skills. Similar results emerge from growth accounting analyses.
    Keywords: economic growth, human capital, cognitive skills, schooling, U.S. states
    JEL: I25 O47 J24
    Date: 2015–06
  4. By: Yann Algan (Département d'économie); Pierre Cahuc (Department of Economics)
    Abstract: This survey reviews the recent research on trust, institutions, and economic development. It discusses the various measures of trust and documents the substantial heterogeneity of trust across space and time. The conceptual mechanisms that explain the influence of trust on economic performance and the methods employed to identify the causal impact of trust on economic performance are reviewed. We document the mechanisms of interactions between trust and economic development in the realms of finance, innovation, the organization of firms, the labor market, and the product market. The last part reviews recent progress to identify how institutions and policies can affect trust.
    Keywords: Trust; Growth; Economic Development; Institutions; Well-being
    JEL: O11 O43 Z13
    Date: 2014
  5. By: Nybom, Martin (IFAU - Institute for Evaluation of Labour Market and Education Policy); Stuhler, Jan (Universidad Carlos III de Madrid)
    Abstract: Estimates of the most common mobility measure, the intergenerational elasticity, can be severely biased if snapshots are used to approximate lifetime income. However, little is known about biases in other popular dependence measures. We use long Swedish income series to provide such evidence for linear and rank correlations, and rank-based transition probabilities. Attenuation bias is considerably weaker in rank-based measures. Life-cycle bias is strongest in the elasticity; moderate in the linear correlation; and small in rank-based measures. However, with important exceptions: persistence in the tails of the distribution is considerably higher, and long-distance downward mobility considerably lower, than estimates from short-run income suggest.
    Keywords: Intergenerational mobility; correlation; measurement error
    JEL: J62
    Date: 2015–06–15
  6. By: Nordman, Christophe Jalil (IRD, DIAL, Paris-Dauphine); Sarr, Leopold (World Bank); Sharma, Smriti (UNU-WIDER)
    Abstract: We use a first-hand linked employer-employee dataset representing the formal sector of Bangladesh to explain gender wage gaps by the inclusion of measures of cognitive skills and personality traits. Our results show that while cognitive skills are important in determining mean wages, personality traits have little explanatory power. However, quantile regressions indicate that personality traits do matter in certain parts of the conditional wage distribution, especially for wages of females. Cognitive skills as measured by reading and numeracy also confer different benefits across the wage distribution to females and males respectively. Quantile decompositions indicate that these skills and traits reduce the unexplained gender gap, mainly in the upper parts of the wage distribution. Finally, results suggest that employers place greater consideration on observables such as academic background and prior work experience, and may also make assumptions about the existence of sex-specific skills of their workers, which could then widen the within-firm gender wage gap.
    Keywords: gender wage gap, cognitive skills, personality traits, matched worker-firm data, quantile decompositions, Bangladesh
    JEL: J16 J24 J31 J71 C21 O12
    Date: 2015–06
  7. By: Pierre Cahuc (Department of Economics); Stéphane Carcillo (Departement d'Economie de Sciences Po)
    Abstract: In France, 17% of youths between the ages of 15 and 29 are not in education, employment or training. Many of them are unemployed or inactive, and are poorly qualified to integrate into the job market. This chapter discusses the main obstacles this group faces, as well as possible remedies. Programmes, vocational training, and support in the search for jobs could be wise long-term investments, but including young people in the minimum income scheme and reducing the cost of work are as important. [Résumé éditeur]
    Keywords: Jeunesse; Europe; Marché du travail; Insertion; Inégalités sociales
    Date: 2015
  8. By: Humna Ahsan; Keith Blackburn
    Abstract: This paper studies the role of corruption in determining the distribution of income and, with this, the degree of poverty and inequality. The analysis is based on an overlapping generations model in which individuals may seek to improve their productive e¢ ciency by supplementing or substituting publicly-provided services (education and health care) with their own expenditures on human capital formation. Financial market imperfections mean that their ability to do this depends on their initial wealth status, implying the possibility of persistent inequality in multiple long-run equilibria. We show how corruption may exacerbate this by compromising public service provision. This occurs through the double whammy of both reducing the earnings and increasing the population of those who rely most on such services. Higher levels of corruption are associated with higher levels of poverty and may result in a complete polarisation between the rich and poor through the elimination of any middle class.
    Date: 2015
  9. By: Acemoglu, Daron; Autor, David; Dorn, David; Hanson, Gordon; Price, Brendan
    Abstract: Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable employment gains achieved during the 1990s, with a historic contraction in manufacturing employment being a prime contributor to the slump. We estimate that import competition from China, which surged after 2000, was a major force behind both recent reductions in U.S. manufacturing employment and-through input-output linkages and other general equilibrium channels-weak overall U.S. job growth. Our central estimates suggest job losses from rising Chinese import competition over 1999 through 2011 in the range of 2.0 to 2.4 million.
    Keywords: labor demand; trade flows
    JEL: F16 J21
    Date: 2015–06
  10. By: Gueorgui Kambourov; Aloysius Siow; Laura Turner
    Abstract: This paper examines the roles of relationship skill and human capital in determining life-cycle outcomes in education, labor, and marriage markets. We find strong empirical evidence of an individual fixed factor that affects both job and marriage separation hazards and extract an index of non-cognitive skill that increases the durability of relationships in marriages and in the labor market. Using this index, we develop and estimate a two-factor life-cycle model of schooling, job search, and marriage. We find that relationship skill can explain about 40% of the persistence in employment turnover and 35% of the persistence in marriage turnover.
    Keywords: relationship skill, social skills, search and matching, marriage, occupational sorting, two-factor models, human capital, non-cognitive skills
    JEL: D13 J12 J24 J64
    Date: 2015–06–25

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