nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒08‒07
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women By David Card; Ana Rute Cardoso; Patrick Kline
  2. Welfare Rules, Incentives, and Family Structure By Robert A. Moffitt; Brian J. Phelan; Anne E. Winkler
  3. Pareto Weights in Practice: Income Inequality and Tax Reform By Yongsung Chang; Sun-Bin Kim; Bo Hyun Chang
  4. Neighbor Discrimination: Theory and evidence from the French rental market By Pierre-Philippe Combes; Bruno Decreuse; Benoît, Department Of Economics) Schmutz; Alain Trannoy
  5. The Welfare State and Migration:Coalition-formation dynamics By Assaf Razin
  6. The effect of parental background along the son's earnings distribution : does one model fit for all? By Michele Rainato; Francesco Vona
  7. Job Quality in Segmented Labor Markets: The Israeli Case By Neuman, Shoshana
  8. Aggregating Elasticities:\ Intensive and Extensive Margins of Female Labour Supply (4197 / 9169) By Attanasio, Orazio; Levell, Peter; Low, Hamish; Sánchez-Marcos, Virginia
  9. Pricing Genius: The Market Evaluation of Innovation By David Galenson; Simone Lenzu

  1. By: David Card; Ana Rute Cardoso; Patrick Kline
    Abstract: There is growing evidence that firm-specific pay premiums are an important source of wage inequality. These premiums will contribute to the gender wage gap if women are less likely to work at high-paying firms or if women negotiate (or are offered) worse wage bargains with their employers than men. Using longitudinal data on the hourly wages of Portuguese workers matched with income statement information for firms, we show that the wages of both men and women contain firm-specific premiums that are strongly correlated with simple measures of the potential bargaining surplus at each firm. We then show how the impact of these firm-specific pay differentials on the gender wage gap can be decomposed into a combination of sorting and bargaining effects. We find that women are less likely to work at firms that pay higher premiums to either gender, with sorting effects being most important for low- and middle-skilled workers. We also find that women receive only 90% of the firm-specific pay premiums earned by men. Importantly, we find the same gender gap in the responses of wages to changes in potential surplus over time. Taken together, the combination of sorting and bargaining effects explain about one-fifth of the cross-sectional gender wage gap in Portugal.
    JEL: J16 J31 J71
    Date: 2015–07
  2. By: Robert A. Moffitt (Department of Economics, Johns Hopkins University); Brian J. Phelan (Department of Economics, DePaul University); Anne E. Winkler (Department of Economics, University of Missouri-St. Louis)
    Abstract: In this study we provide a new examination of the incentive effects of welfare rules on family structure. Focusing on the AFDC and TANF programs, we first emphasize that the literature, by and large, has assumed that the rules of those programs make a key distinction between married women and cohabiting women, but this is not a correct interpretation. In fact, it is the biological relationship between the children and any male in the household that primarily determines how the family is treated. In an empirical analysis conducted over the period 1996 to 2004 that correctly matches family structure outcomes to welfare rules, we find significant effects of several welfare policies on family structure, both work-related policies and family-oriented policies, effects that are stronger than in most past work. Many of our significant effects show that these rules led to a decrease in single motherhood and an increase in biological partnering. For all of our results, our findings indicate that the impact of welfare rules crucially hinges on the biological relationship of the male partner to the children in the household.
    Keywords: family structure, welfare, incentive effects.
    JEL: I38 J1
    Date: 2015–06
  3. By: Yongsung Chang (University of Rochester / Yonsei Univ.); Sun-Bin Kim (Yonsei University); Bo Hyun Chang (University of Rochester)
    Abstract: We develop a quantitative, heterogeneous-agents general equilibrium model that reproduces the income inequalities of 31 countries in the Organization for Economic Co-operation and Development. Using this model, we compute the optimal income tax rate for each country under the equal-weight utilitarian social welfare function. We simulate the voting outcome for the utilitarian optimal tax reform for each country. Finally, we uncover the Pareto weights in the social welfare functions of each country that justify the current redistribution policy.
    Date: 2015
  4. By: Pierre-Philippe Combes (Departement d'Economie de Sciences Po); Bruno Decreuse (Groupement de Recherche en Économie Quantitative d'Aix-Marseille); Benoît, Department Of Economics) Schmutz (2441/vcs597o2o8tpqsfunpbgvptj7); Alain Trannoy (Aix-Marseille School of Economics)
    Abstract: This paper describes a novel concept of customer discrimination in the housing market, neighbor discrimination. We build up a matching model with ethnic externalities where landlords differ in the number of apartments they own within the same building. Larger landlords discriminate more often only if some tenants are prejudiced against the minority group. Testing the null hypothesis whereby minority tenants are equally likely to have a large landlord provides a natural test for the existence of neighbor discrimination. In an empirical application, we show that this null hypothesis is rejected for African immigrants in the French private rental market. We then show that the local proportion of large landlords is positively correlated with African tenants’ probability of living in public housing, whereas this is not the case of other demographic groups.
    Keywords: Customer Discrimination; Housing Market; Matching Frictions; Neighborhood Externalities
    JEL: J71 R21
    Date: 2015–06
  5. By: Assaf Razin (tel aviv university)
    Abstract: We develop a dynamic political-economic theory of welfare state and immigration policies, featuring three distinct voting groups: skilled work- ers, unskilled workers, and old retirees. The essence of inter - and intra- generational redistribution of a typical welfare system is captured with a proportional tax on labor income to nance a transfer in a balanced- budget manner. We provide an analytical characterization of political- economic equilibrium policy rules consisting of the tax rate, the skill com- position of migrants, and the total number of migrants. When none of these groups enjoy a majority (50 percent of the voters or more), political coalitions will form. With overlapping generations and policy-determined influx of immigrants, the formation of the political coalitions changes over time. These future changes are taken into account when policies are shaped.
    Date: 2015
  6. By: Michele Rainato (Sapienza University of Rome); Francesco Vona (OFCE)
    Abstract: This paper shows that returns to parental background increase along the sons' distribution in four EU countries. Although this indicates a common mechanism, substantial differences in returns’ steepness question the one-model-fits-all story.
    Keywords: Intergenerational inequality,; international comparison; unconditional quantile regressions
    JEL: J31 J62 D31 C21
    Date: 2015–07
  7. By: Neuman, Shoshana
    Abstract: Till the early-1990s the collectively-bargained labor contract (between the trade-union that presented the employees, and the employer or the employers'-association) was the norm, granting salaried workers a stable and protected labor contract. Thereafter, and more significantly after 1995, the share of unionized workers dropped constantly, to almost half of its peak level (of more than 80 percent). In parallel, two other types of contracts became more common: personal temporary contracts (between an individual worker and his employer), and contracts between a labor-contractor and employees who are employed in a triangular mode of employment (employee-contractor-client). The latter involves precarious employment and is more common among the more vulnerable sub-populations of new-immigrants, disabled individuals, Israeli-Arabs, foreign-workers and women. The contractual changes resulted in work instability, growth of the secondary labor market and segmentation. Efforts to protect the disadvantaged secondary labor-market workers include legislation, reforms, new regulations, and enforcement of all the above.
    Keywords: collective bargaining; contracted labor; foreign workers; immigrants; Israel; labor contracts; labor market segmenting; regulation
    JEL: J15 J21 J31 J41 J51 J58 J61 J81
    Date: 2015–07
  8. By: Attanasio, Orazio; Levell, Peter; Low, Hamish; Sánchez-Marcos, Virginia
    Abstract: There is a renewed interest in the size of labour supply elasticities and the discrepancy between micro and macro estimates. Recent contributions have stressed the distinction between changes in labour supply at the extensive and the intensive margin. In this paper, we stress the importance of individual heterogeneity and aggregation problems. At the intensive margins, simple specifications that seem to fit the data give rise to non linear expressions that do not aggregate in a simple fashion. At the extensive margin, aggregate changes in participation are likely to depend on the cross sectional distribution of state variables when a shock hits and, therefore, are likely to be history dependent. We tackle these aggregation issues directly by specifying a life cycle model to explain female labour supply in the US and estimate its various components. We estimate the parameters of different component of the model. Our results indicate that (i) at the intensive margin, Marshallian and Hicksian elasticities are very heterogeneous and, on average, relatively large; (ii) Frisch elasticities are, as implied by the theory, even larger; (iii) aggregate labour supply elasticities seem to vary over the business cycle, being larger during recessions.
    Keywords: aggregation; heterogeneity; labour supply elasticities; non-separability
    JEL: D91 J22
    Date: 2015–07
  9. By: David Galenson (University of Chicago); Simone Lenzu (University of Chicago)
    Abstract: Economists have neglected a key issue for understanding and increasing technological change, in failing to study how talented individuals produce innovations. This paper takes a quantitative approach to this problem. Regression analysis of auction data from 1965-2015 reveals that the age-price profiles of Jackson Pollock and Andy Warhol – the two greatest painters born in the 20th century – closely resemble the age profiles of the two artists derived both from textbooks of art history and from retrospective exhibitions. The agreement of these sources confirms that the auction market assigns the highest prices to the most important art, and examination of the artists’ careers reveals that this art is the most important because it is the most innovative. These results lend strong support to our understanding of creativity at the individual level, with a sharp contrast between the extended experimental innovation of Pollock and the sudden conceptual innovation of Warhol.
    Date: 2015

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