nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒08‒19
twelve papers chosen by
Maximo Rossi
Universidad de la República

  1. Are Comparisons Luxuries? Subjective Poverty and Positional Concerns in Indonesia By Jinan Zeidan
  2. Introducing a Statutory Minimum Wage in Middle and Low Income Countries By David Margolis
  3. (Mis-)Predicted Subjective Well-Being Following Life Events By Odermatt, Reto; Stutzer, Alois
  4. Adaptation and the Easterlin Paradox By Andrew E. Clark
  5. SWB as a Measure of Individual Well-Being By Andrew E. Clark
  6. Children, time allocation and consumption insurance By Richard Blundell; Luigi Pistaferri; Itay Saporta-Eksten
  7. Human Capital Spillovers and the Geography of Intergenerational Mobility By Brant Abbott; Giovanni Gallipoli
  8. Do Social Networks Improve Chinese Adults' Subjective Well-being? By Lei, Xiaoyan; Shen, Yan; Smith, James P.; Zhou, Guangsu
  9. Feeling Useless: The Effect of Unemployment on Mental Health in the Great Recession By Farré, Lídia; Fasani, Francesco; Mueller, Hannes
  10. Tempora mutantur, nos et mutamur in illis: Religion and Female Employment over Time By Fischer, Justina A.V.; Pastore, Francesco
  11. Decentralizing education resources: school grants in Senegal By Pedro Carneiro; Oswald Koussihouèdé; Nathalie Lahire; Costas Meghir; Corina Mommaerts
  12. Decomposing the Wage Losses of Displaced Workers: The Role of the Reallocation of Workers into Firms and Job Titles By Raposo, Pedro; Portugal, Pedro; Carneiro, Anabela

  1. By: Jinan Zeidan (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université)
    Abstract: We explore (i) the usual determinants of happiness in Indonesia, with a special focus on the role of various measures of absolute income; (ii) the presence of relativistic concerns or positive external effects in shaping attitudes to subjective well-being; and (iii) whether this potential effect changes sign with income level. Additional evidence offered by our investigation relates to the effect of past income levels as well as to that of aspirations. In line with other literature from poor contexts, we find that the subjective well-being of Indonesians is positively affected by the comparison with the income of people around them. This positive influence is unambiguously more important for the poor than for the rich. This pattern is consistent through different measures of well-being and holds also when accounting for past income levels, and lagged income expectations.
    Date: 2015–02
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01114396&r=ltv
  2. By: David Margolis (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, IZA - Institute for the Study of Labor, IZA - Forschungsinstitut zur Zukunft der Arbeit (Institute for the Study of Labor) - Bonn Universität - University of Bonn)
    Abstract: The motivation for introducing statutory minimum wages in many developing countries is often threefold: poverty-reduction, social justice and growth. How well the policy succeeds in attaining these goals will depend on the national context and the numerous choices made when designing the policy. Institutional capacity in developing countries tends to be limited, so institutional arrangements must be adapted. Nevertheless, a statutory minimum wage appears to have the potential to help low- and middle-income countries advance toward the aforementioned development objectives, even in the face of weak enforcement capacity and pervasive informality.
    Date: 2014–05
    URL: http://d.repec.org/n?u=RePEc:hal:pseose:hal-00926545&r=ltv
  3. By: Odermatt, Reto (University of Basel); Stutzer, Alois (University of Basel)
    Abstract: The correct prediction of how alternative states of the world affect our lives is a cornerstone of economics. We study how accurate people are in predicting their future well-being when facing major life events. Based on individual panel data, we compare people's forecast of their life satisfaction in five years' time to their actual realisations later on. This is done after the individuals experience widowhood, marriage, unemployment or disability. We find systematic prediction errors that are at least partly driven by unforeseen adaptation.
    Keywords: adaptation, life satisfaction, life events, projection-bias, subjective well-being, utility prediction, unemployment
    JEL: D03 D12 D60 I31
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9252&r=ltv
  4. By: Andrew E. Clark (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: Two behavioural explanations of the Easterlin Paradox are commonly advanced. The first appeals to social comparisons, whereby individual i compares her income (Yit) to a comparison income level earned by some other individual or group j (Y*jt). The second explanation is that of adaptation to higher levels of income. This is of the same nature, but here the individual’s current income is compared to her own income in the past (i.e. Yit is compared to Yit-τ, for some positive value or values of τ). The first of these explanations has attracted far more empirical attention than has the second. This is probably for data-availability reasons, as the investigation of the latter requires panel information. There is also a suspicion that large changes in Yit might be accompanied by a movement in some other variable that is also correlated with subjective well-being. We here review the empirical evidence that individuals do indeed compare current to past income, and then whether individuals adapt in general to aspects of their economic and social life. Last, we ask whether adaptation is in fact a viable explanation of the Easterlin Paradox.
    Date: 2015–02
    URL: http://d.repec.org/n?u=RePEc:hal:pseose:halshs-01112725&r=ltv
  5. By: Andrew E. Clark (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: There is much discussion about using subjective well-being measures as inputs into a social welfare function, which will tell us how well societies are doing. But we have (many) more than one measure of subjective well-being. I here consider examples of the three of the main types (life satisfaction, affect, and eudaimonia) in three European surveys. These are quite strongly correlated with each other, and are correlated with explanatory variables in pretty much the same manner. I provide an overview of a recent literature which has compared how well different subjective well-being measures predict future behaviour, and address the issue of the temporality of well-being measures, and whether they should be analysed ordinally or cardinally.
    Date: 2015–03
    URL: http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01134483&r=ltv
  6. By: Richard Blundell (Institute for Fiscal Studies and IFS and UCL); Luigi Pistaferri (Institute for Fiscal Studies and Stanford University); Itay Saporta-Eksten (Institute for Fiscal Studies)
    Abstract: We consider the life-cycle problem of a household that in each period decides how much to consume and how to allocate spouses’ time to work, leisure, and childcare. In an environment with uncertainty, the allocation of goods and time over the life cycle plays the further role of providing insurance against shocks. We use longitudinal data on consumption, and husband and wife separate information on hourly wages, hours of work, and time spent with children to estimate structural parameters measuring the sensitivity of consumption and time allocation choices to transitory and permanent wage shocks. These structural parameters provide a full picture regarding the ability of household to smooth marginal utility in response to shocks. In addition, information on hours of work and hours spent on childcare allows to decompose overall Frisch response into two components, one reflecting the degree of complementarity between husband’s and wife’s leisure ("companionship" or "love") and another reflecting the degree of substitutability of their childcare time in the production of childcare services.
    Date: 2015–03
    URL: http://d.repec.org/n?u=RePEc:ifs:ifsewp:15/13&r=ltv
  7. By: Brant Abbott (Yale University); Giovanni Gallipoli (UBC)
    Abstract: We develop and estimate an equilibrium model of geographic variation in the intergenerational earnings elasticity (IGE). The theory extends the Becker-Tomes model, introducing a production sector in which human capital inputs are strategic complements. We show that the equilibrium return to human capital investments is lower in places where strategic complementarity is more intense, and that this is associated with less intergenerational persistence (lower IGEs). Furthermore, optimal education policies are more progressive where these complementarities are stronger, leading to a negative correlation between progressive public policy and IGEs. Using microdata we construct various location-specific measures of skill complementarity and document that the patterns of geographic variation in IGEs are consistent with our hypothesis. Quantitatively, geographic differences in skill complementarity account for up to 1/5 of cross-country variation in intergenerational earnings persistence. Governments in countries where prominent industries exhibit greater skill complementarities tend to spend larger fractions of GDP on public education, suggesting that underlying technology differences may indirectly explain an even larger proportion of cross-country IGE variation.
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:red:sed015:319&r=ltv
  8. By: Lei, Xiaoyan (Peking University); Shen, Yan (Peking University); Smith, James P. (RAND); Zhou, Guangsu (Peking University)
    Abstract: This paper studies relationships between social networks, health and subjective well-being (SWB) using nationally representative data of the Chinese Population – the Chinese Family Panel Studies (CFPS). Our data contain SWB indicators in two widely used variants – happiness and life-satisfaction. Social network variables used include kinship relationships measured by marital status, family size, and having a genealogy; ties with friends/relatives/neighbors measured by holiday visitation, frequency of contacts, and whether and value gifts given and received; total number and time spent in social activities, and engagement in organizations including the communist party, religious groups, and other types. We find that giving and receiving gifts has a larger impact on SWB than either just giving or receiving them. Similarly the number of friends is more important than number of relatives, and marriage is associated with higher levels of SWB. Time spent in social activities and varieties of activities both matter for SWB but varieties matters more. Participation in organization is associated with higher SWB across such diverse groups as being a member of the communist party or a religious organization. China represents an interesting test since it is simultaneously a traditional society with long-established norms about appropriate social networks and a rapidly changing society due to substantial economic and demographic changes. We find that it is better to both give and receive, to engage in more types of social activities, and that participation in groups all improves well-being of Chinese people.
    Keywords: China, social networks, subjective well-being
    JEL: O10 O53
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9226&r=ltv
  9. By: Farré, Lídia (University of Barcelona); Fasani, Francesco (Queen Mary, University of London); Mueller, Hannes (IAE Barcelona (CSIC))
    Abstract: This article documents a strong connection between unemployment and mental disorders using data from the Spanish Health Survey. We exploit the collapse of the construction sector to identify the causal effect of job loss. Our results suggest that an increase of the unemployment rate by 10 percent due to collapse of the sector raised mental disorders in the affected population by 3 percent. We argue that the large size of this effect responds to the fact that the construction sector was at the centre of the macroeconomic shock. As a result, workers exposed to the negative employment shock faced very low chances of re-entering employment. We show that this led to long unemployment spells, hopelessness and feelings of uselessness.
    Keywords: mental health, great recession, unemployment, Spain
    JEL: I10 J60 C26
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9235&r=ltv
  10. By: Fischer, Justina A.V. (University of Mannheim); Pastore, Francesco (University of Naples II)
    Abstract: This study analyses whether the role of religion for employment of married women in Europe has changed over time and along women's life cycles. Using information on 44'000 married European women from the World Values Survey 1981-2013, we find that in OECD-Europe there is little difference among women of any age since 1997. For non-OECD-Europe, we find differences by religion among young women, but not among those older than 40 years, which we attribute to an upbringing under communist regimes. Only Muslim women show a lower employment probability that persists across time, regions, and life cycles.
    Keywords: religion, labor market participation, modernization, gender, Europe, transition countries, Eastern Europe, OECD, World Values Survey
    JEL: D83 J16 J22 N34 Z12 Z13
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9244&r=ltv
  11. By: Pedro Carneiro (Institute for Fiscal Studies and cemmap and UCL); Oswald Koussihouèdé (Institute for Fiscal Studies); Nathalie Lahire (Institute for Fiscal Studies); Costas Meghir (Institute for Fiscal Studies and Yale University); Corina Mommaerts (Institute for Fiscal Studies)
    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 I22 I25 O15
    Date: 2015–03
    URL: http://d.repec.org/n?u=RePEc:ifs:cemmap:15/15&r=ltv
  12. By: Raposo, Pedro (Universidade Catolica Portuguesa, Lisbon); Portugal, Pedro (Banco de Portugal); Carneiro, Anabela (University of Porto)
    Abstract: Using an unusually rich matched employer-employee-job title data set for Portugal, this paper evaluates the sources of wage losses of workers displaced due to firm closure based on the comparison of workers' wages differentials before and after displacement. Potential wage losses of displaced workers can be related to firm, job title, and match heterogeneity in the pre- and post-displacement jobs. In this vein, we estimate a three-way high-dimensional fixed effects regression model that enables us to decompose the sources of the wage losses into the contribution of firm, job title, and match fixed effects. The worker-firm match plays a very sizable role. We found that the allocation of workers into poorer matches accounts for 38 percent of the total average wage loss. Sorting among firms accounts for 36 percent. Job downgrading also plays a significant role in explaining the wage loss of displaced workers, accounting for the remaining 26 percent.
    Keywords: match effects, job title, high-dimensional fixed effects, displaced, wage losses
    JEL: J31 J63 J65 E24
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9220&r=ltv

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