nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒08‒13
twelve papers chosen by
Maximo Rossi
Universidad de la República

  1. Do More of Those in Misery Suffer from Poverty, Unemployment or Mental Illness? By Flèche, Sarah; Layard, Richard
  2. Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth By Black, Sandra E.; Devereux, Paul J.; Lundborg, Petter; Majlesi, Kaveh
  3. Partial insurance and investments in children By Pedro Carneiro; Rita Ginja
  4. Marital sorting, inequality and the role of female labor supply: Evidence from East and West Germany By Pestel, Nico
  5. The marriage market, labor supply and education choice By Pierre-André Chiappori; Monica Costa Dias; Costas Meghir
  6. Single Motherhood in East and West Germany: What Can Explain the Differences? By Uwe Jirjahn; Cornelia Struewing
  7. Subjective well-being across the lifespan in Europe and Central Asia By Bauer,Jan Michael; Levin,Victoria; Munoz Boudet,Ana Maria; Nie,Peng; Sousa-Poza,Alfonso
  8. Life-cycle consumption patterns at older ages in the US and the UK: can medical expenditures explain the difference? By James Banks; Richard Blundell; Peter Levell; James P. Smith
  9. Challenges to promoting social inclusion of the extreme poor: evidence from a large scale experiment in Colombia By Laura Abramovsky; Orazio Attanasio; Kai Barron; Pedro Carneiro; George Stoye
  10. Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa By Nora Lustig
  11. Violence and Birth Outcomes: Evidence from Homicides in Brazil By Foureaux Koppensteiner, Martin; Manacorda, Marco
  12. Estimating the production function for human capital: results from a randomized controlled trial in Colombia By Orazio Attanasio; Sarah Cattan; Emla Fitzsimons; Costas Meghir; Marta Rubio Codina

  1. By: Flèche, Sarah (CEP, London School of Economics); Layard, Richard (London School of Economics)
    Abstract: Studies of deprivation usually ignore mental illness. This paper uses household panel data from the USA, Australia, Britain and Germany to broaden the analysis. We ask first how many of those in the lowest levels of life-satisfaction suffer from unemployment, poverty, physical ill health, and mental illness. The largest proportion suffer from mental illness. Multiple regression shows that mental illness is not highly correlated with poverty or unemployment, and that it contributes more to explaining the presence of misery than is explained by either poverty or unemployment. This holds both with and without fixed effects.
    Keywords: mental health, life-satisfaction, wellbeing, poverty, unemployment
    JEL: I1 I31 I32
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9224&r=ltv
  2. By: Black, Sandra E. (University of Texas at Austin); Devereux, Paul J. (University College Dublin); Lundborg, Petter (Lund University); Majlesi, Kaveh (Lund University)
    Abstract: Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for genetics. We also examine the role played by bequests and find that, when they are taken into account, the role of adoptive parental wealth becomes much stronger. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth.
    Keywords: intergenerational mobility, nature versus nurture, portfolio allocation
    JEL: G11 J01 J13 J62
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9227&r=ltv
  3. By: Pedro Carneiro (Institute for Fiscal Studies and cemmap and UCL); Rita Ginja (Institute for Fiscal Studies and University of Uppsala)
    Abstract: This paper studies the impact of permanent and transitory shocks to income on parental investments in children. We use panel data on family income, and an index of investments in children in time and goods, from the Children of the National Longitudinal Survey of Youth. Consistent with the literature focusing on non-durable expenditure, we find that there is only partial insurance of parental investments against permanent income shocks, but the magnitude of the estimated responses is small. We cannot reject the hypothesis full insurance against temporary shocks. Another interpretation of our findings is that there is very little insurance available, but the fact that skill is a non-separable function of parental investments over time results in small reactions of these investments to income shocks, especially at later ages.
    Keywords: Insurance; human capital; consumption
    JEL: D12 D91 I30
    Date: 2015–04
    URL: http://d.repec.org/n?u=RePEc:ifs:cemmap:19/15&r=ltv
  4. By: Pestel, Nico
    Abstract: This paper examines to what extent marital sorting affects cross-sectional earnings inequality in Germany over the past three decades, while explicitly taking into account labor supply choices. Using rich micro data, the observed distribution of couples' earnings is compared to a counterfactual of randomly matched spouses. Hypothetical earnings are predicted based on a structural model of household labor supply. For West Germany, a positive effect of marital sorting on inequality is found after adjusting for labor supply behavior, while the effect is limited when earnings are taken as given. This means that there is positive sorting in earnings potential which is veiled by relatively low female labor force participation. In East Germany, the impact of marital sorting on inequality is highly disequalizing irrespective of adjusting for labor supply choices. This is mainly due to the fact that East German women are much more attached to the labor market.
    Keywords: earnings inequality,marital sorting,labor supply,Germany
    JEL: D31 D63 J12 J22
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:15047&r=ltv
  5. By: Pierre-André Chiappori (Institute for Fiscal Studies and Columbia University); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Costas Meghir (Institute for Fiscal Studies and 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 intra-household 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.
    Date: 2015–03
    URL: http://d.repec.org/n?u=RePEc:ifs:cemmap:14/15&r=ltv
  6. By: Uwe Jirjahn; Cornelia Struewing
    Abstract: The share of single mothers is higher in East Germany than in West Germany. Using data from the Socio-Economic Panel (SOEP), we examine two transmission channels leading to single motherhood, namely out-of-partnership births and separations of couples with minor children. Women in East Germany have both a higher probability of out-of-partnership birth and a higher probability of separation. We find no evidence that availability of child care plays a role in the differences between East and West Germany. The differences in single motherhood appear to be rather driven by cultural and economic factors.
    Keywords: Out-of-partnership birth, separation of couples, cohabitation, child care, unemployment, culture
    JEL: J12 J13 P20
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:trr:wpaper:201508&r=ltv
  7. By: Bauer,Jan Michael; Levin,Victoria; Munoz Boudet,Ana Maria; Nie,Peng; Sousa-Poza,Alfonso
    Abstract: This paper uses data from the Integrated Values Survey, the Life in Transition Survey, and the Russia Longitudinal Monitoring Survey to analyze the relation between age and subjective well-being in the Europe and Central Asia region. Although the results generally confirm the findings of previous studies of a U-shaped relation between subjective well-being and age for most of the lifecycle, the paper also finds that well-being declines again after people reach their 60s and 70s, giving rise to an S-shaped relation across the entire lifespan. This pattern generally remains robust for most of the cross-sectional and panel analyses. Hence, despite significant heterogeneity in the pattern of well-being across the lifespan in the Europe and Central Asia region, the paper does not observe high levels of cross-country or cross-cohort variation.
    Keywords: Science Education,Educational Sciences,Youth and Government,Scientific Research&Science Parks,Population&Development
    Date: 2015–07–28
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:7378&r=ltv
  8. By: James Banks (Institute for Fiscal Studies and University of Manchester); Richard Blundell (Institute for Fiscal Studies and IFS and UCL); Peter Levell (Institute for Fiscal Studies); James P. Smith (Institute for Fiscal Studies)
    Abstract: In this paper we document significantly steeper declines in nondurable expenditures in the UK compared to the US, in spite of income paths being similar. We explore several possible causes, including different employment paths, housing ownership and expenses, levels and paths of health status, and out-of -pocket medical expenditures. Among all the potential explanations considered, we find that those to do with healthcare – differences in levels, age paths, and uncertainty in medical expenses – are the main factor accounting for the steeper declines in nondurable expenses in the UK compared to the US.
    JEL: D10 D11 D12 D14 D91
    Date: 2015–03
    URL: http://d.repec.org/n?u=RePEc:ifs:ifsewp:15/12&r=ltv
  9. By: Laura Abramovsky (Institute for Fiscal Studies); Orazio Attanasio (Institute for Fiscal Studies and University College London); Kai Barron (Institute for Fiscal Studies and University College London); Pedro Carneiro (Institute for Fiscal Studies and cemmap and UCL); George Stoye (Institute for Fiscal Studies)
    Abstract: We evaluate the large scale pilot of an innovative and major welfare intervention in Colombia, which combines homes visits by trained social workers to households in extreme poverty with preferential access to social programs. We use a randomized control trial and a very rich dataset collected as part of the evaluation to identify program impacts on the knowledge and take-up of social programs and the labor supply of targeted households. We find no consistent impact of the program on these outcomes, possibly because the way the pilot was implemented resulted in very light treatment in terms of home visits. Importantly, administrative data indicates that the program has been rolled out nationally in a very similar fashion, suggesting that this major national program is likely to fail in making a significant contribution to reducing extreme poverty. We suggest that the program should undergo substantial reforms, which in turn should be evaluated.
    Date: 2014–11
    URL: http://d.repec.org/n?u=RePEc:ifs:ifsewp:14/33&r=ltv
  10. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in Brazil and Colombia (over and above market income poverty) due to high consumption taxes on basic goods. The marginal contribution of direct taxes, direct transfers and in-kind transfers is always equalizing. The marginal effect of net indirect taxes is unequalizing in Brazil, Colombia, Indonesia and South Africa. Total spending on education is pro-poor except for Indonesia, where it is neutral in absolute terms. Health spending is pro-poor in Brazil, Chile, Colombia and South Africa, roughly neutral in absolute terms in Mexico, and not pro-poor in Indonesia and Peru.
    Keywords: fiscal incidence, social spending, inequality, developing countries
    JEL: H22 D31 I3
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:tul:wpaper:1505&r=ltv
  11. By: Foureaux Koppensteiner, Martin (University of Leicester); Manacorda, Marco (Queen Mary, University of London)
    Abstract: This paper uses microdata from Brazilian natality and mortality vital statistics between 2000 and 2010 to estimate the impact of in-utero exposure to local violence – measured by homicide rates - on birth outcomes. The estimates show that exposure to violence during the first trimester of pregnancy leads to a small but precisely estimated increase in the risk of low birthweight and prematurity. Effects are found in both rural areas, where homicides are rare, and in urban areas, where violence is endemic and are particularly pronounced among children of poorly educated mothers, implying that violence compounds the disadvantage that these children already suffer as a result of their households' lower socioeconomic status.
    Keywords: birth outcomes, birthweight, homicides, stress, Brazil
    JEL: I12 I15 I39 J13 K42
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9211&r=ltv
  12. By: Orazio Attanasio (Institute for Fiscal Studies and University College London); Sarah Cattan (Institute for Fiscal Studies); Emla Fitzsimons (Institute for Fiscal Studies and Institute of Education, University of London); Costas Meghir (Institute for Fiscal Studies and Yale University); Marta Rubio Codina (Institute for Fiscal Studies)
    Abstract: We examine the channels through which a randomized early childhood intervention in Colombia led to significant gains in cognitive and socio-emotional skills among a sample of disadvantaged children. We estimate production functions for cognitive and socio-emotional skills as a function of maternal skills and child's past skills, as well as material and time investments that are treated as endogenous. The effects of the program can be fully explained by increases in parental investments, which have strong effects on outcomes and are complementary to both maternal skills and child's past skills.
    Keywords: Development, childhood, human capital, Colombia
    Date: 2015–02
    URL: http://d.repec.org/n?u=RePEc:ifs:ifsewp:15/06&r=ltv

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