nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒08‒30
twelve papers chosen by
Maximo Rossi
Universidad de la República

  1. Economic Growth Evens-Out Happiness: Evidence from Six Surveys By Andrew E. Clark; Sarah Flèche; Claudia Senik
  2. Inequality when effort matters By Martin Ravallion
  3. Are the world’s poorest being left behind? By Martin Ravallion
  4. Wage Compression within the Firm By Leonardi, Marco; Pellizzari, Michele; Tabasso, Domenico
  5. Remittances and Relative Concerns in Rural China By Akay, Alpaslan; Bargain, Olivier B.; Giulietti, Corrado; Robalinod , Juan D.; Zimmermann, Klaus F.
  6. The Labour Market Effects of Academic and Vocational Education over the Life Cycle: Evidence from Two British Cohorts By Brunello, Giorgio; Rocco, Lorenzo
  7. Why Work More? The Impact of Taxes, and Culture of Leisure on Labor Supply in Europe By Mocan, Naci; Pogorelova, Luiza
  8. Racial Discrimination in Local Public Services: A Field Experiment in the US By Giulietti, Corrado; Tonin, Mirco; Vlassopoulos, Michael
  9. Do we value mobility? By Yoram Amiel; Michele Bernasconi; Frank Cowell; Valentino Dardanoni
  10. Long-Run Impacts of Land Regulation: Evidence from Tenancy Reform in India By Besley, Timothy J.; Leight, Jessica; Pande, Rohini; Rao, Vijayendra
  11. Parental Incentives and Early Childhood Achievement: A Field Experiment in Chicago Heights By Roland G. Fryer, Jr.; Steven D. Levitt; John A. List
  12. Intertemporal pro-poorness By Florent Bresson; Jean-Yves Duclos; Flaviana Palmisano

  1. By: Andrew E. Clark (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, 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)); Sarah Flèche (Centre for Economic Performance - LSE - London School of Economics); Claudia Senik (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, 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), UP4 - Université Paris-Sorbonne)
    Abstract: In spite of the great U-turn that saw income inequality rise in Western countries in the 1980s, happiness inequality has fallen in countries that have experienced income growth (but not in those that did not). Modern growth has reduced the share of both the “very unhappy” and the “perfectly happy”. Lower happiness inequality is found both between and within countries, and between and within individuals. Our cross-country regression results argue that the extension of various public goods helps to explain this greater happiness homogeneity. This new stylised fact arguably comes as a bonus to the Easterlin paradox, offering a somewhat brighter perspective for developing countries.
    Date: 2014–11
    URL: http://d.repec.org/n?u=RePEc:hal:psewpa:hal-01080877&r=all
  2. By: Martin Ravallion (Georgetown University and NBER, U.S.A.)
    Abstract: It is sometimes argued that poorer people choose to work less, implying less welfare inequality than suggested by observed incomes. Social policies have also acknowledged that efforts differ, and that people respond to incentives. Prevailing measures of inequality (in outcomes or opportunities) do not, however, measure incomes consistently with personal choices of effort. The direction of bias is unclear given the heterogeneity in efforts and preferences. Data on the labor supplies of single American adults suggest that adjusting for effort imposing common preferences attenuates inequality, although the effect is small. Allowing for preference heterogeneity consistently with behavior suggests higher inequality.
    Keywords: income, welfare, inequality, poverty, effort, labor supply.
    JEL: D31 D63
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2015-367&r=all
  3. By: Martin Ravallion (Georgetown University and NBER, U.S.A.)
    Abstract: Traditional assessments of economic growth and progress against poverty put little or no weight on increasing the standard of living of the poorest—raising the floor for permanent consumption above the biological minimum. Yet raising the floor is often emphasized by policy makers, moral philosophers and social choice theorists. To address this deficiency, the paper defines and measures the expected value of the floor as a weighted mean of observed consumptions for the poorest stratum. Using data for the developing world over 1981-2011, the estimated floor is about half the \$1.25 a day poverty line. Economic growth and social policies have delivered only modest progress in raising the floor, despite progress in reducing the number living near the floor.
    Keywords: Poverty, consumption floor, Rawls, growth, safety-nets.
    JEL: I32 I38 O15
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2015-369&r=all
  4. By: Leonardi, Marco (University of California, Berkeley); Pellizzari, Michele (University of Geneva); Tabasso, Domenico (University of Geneva)
    Abstract: We study the distributional effect of a wage indexation mechanism - the Scala Mobile (SM) - that heavily compressed the distribution of Italian wages during the 1970s and 1980s. The SM imposed large real wage increases at the bottom of the distribution and was essentially irrelevant for high-wage workers. We document that this mechanism triggered a strong redistribution within the firm. Skilled workers received lower wage adjustments when employed at firms with many unskilled workers and they tended to move towards more skill-intensive firms. We rationalize these findings with a simplified model of intra-firm bargaining with on-the- job search.
    Keywords: labor market institutions, wage indexation, inequality, intra-firm bargaining
    JEL: J01 J31 J50
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9254&r=all
  5. By: Akay, Alpaslan (Department of Economics, School of Business, Economics and Law, Göteborg University); Bargain, Olivier B. (Aix-Marseille Université and IZA); Giulietti, Corrado (IZA); Robalinod , Juan D. (Cornell University); Zimmermann, Klaus F. (IZA and Bonn University)
    Abstract: The paper investigates the impact of remittances on the relative concerns of households in rural China. Using the Rural to Urban Migration in China (RUMiC) dataset we estimate a series of well-being functions to simultaneously explore the relative concerns with respect to income and remittances. Our results show that although rural households experience substantial utility loss due to income comparisons, they gain utility by comparing their remittances with those received by their reference group. In other words, we find evidence of a “status-effect” with respect to income and of a “signal-effect” with respect to remittances. The magnitudes of these two opposite effects are very similar, implying that the utility reduction due to relative income is compensated by the utility gain due to relative remittances. This finding is robust to various specifications, controlling for the endogeneity of remittances and selective migration, as well as a measure of current migrants’ net remittances calculated using counterfactual income and expenditures.
    Keywords: positional concerns; remittances; subjective well-being
    JEL: C90 D63
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:hhs:gunwpe:0623&r=all
  6. By: Brunello, Giorgio (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: Several commentators have argued that vocational education provides a smoother school to work transition than academic education. In the long - run, however, the skills it provides depreciate faster and individuals with this type of education are less capable of adapting to technical change. Because of this, its short – term advantages trade off with expected long-term disadvantages in terms of employment, wages or both. Using two UK cohort studies, that allow us to follow individuals for at least 16 years in the labour market, we investigate whether this view has empirical support. For employment, our results indicate that the initial advantage associated to vocational education declines over time, without turning however into a disadvantage at later ages. For real net wages, the picture is more nuanced, with results that vary by cohort and educational level. Overall, our evidence suggests that vocational education is associated to lower expected long-term utility only for the younger cohort with higher (post-secondary) education. We further distinguish between dominant and non-dominant vocational education to account for the different bundles of skills held by individuals, and find that those with a more balanced bundle tend to have higher expected long-term earnings.
    Keywords: vocational, academic education, UK
    JEL: J31
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9275&r=all
  7. By: Mocan, Naci (Louisiana State University); Pogorelova, Luiza (Louisiana State University)
    Abstract: We use micro data from the European Social Survey to investigate the impact of “culture of leisure” and taxes on labor force participation and hours worked of second-generation immigrants who reside in 26 European countries. These individuals are born in Europe, and they have been exposed to institutional, legal and labor market structures of their countries, including the tax rates. Fathers of these individuals are first-generation immigrants who migrated from 81 different countries. We construct measures of "taste for leisure" in the country of origin of each immigrant father. We employ average and marginal taxes for each country of residence, and control for a large set of individual characteristics, in addition to attributes of the country of residence and country of ancestry. The results show that for women, both taxes and culture of leisure impact participation and hours worked. For men, taxes influence labor supply both at the intensive and the extensive margins, but culture of leisure has no impact.
    Keywords: tax, labor supply, leisure, immigrant, culture, origin
    JEL: J22 Z1
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9281&r=all
  8. By: Giulietti, Corrado (IZA); Tonin, Mirco (University of Southampton); Vlassopoulos, Michael (University of Southampton)
    Abstract: Discrimination in access to public services can act as a major obstacle towards addressing racial inequality. We examine whether racial discrimination exists in access to a wide spectrum of public services in the US. We carry out an email correspondence study in which we pose simple queries to more than 19,000 local public service providers. We find that emails are less likely to receive a response if signed by a black-sounding name compared to a white-sounding name. Given a response rate of 72% for white senders, emails from putatively black senders are almost 4 percentage points less likely to receive an answer. We also find that responses to queries coming from black names are less likely to have a cordial tone. Further tests demonstrate that the differential in the likelihood of answering is due to animus towards blacks rather than inferring socioeconomic status from race.
    Keywords: discrimination, public services provision, school districts, libraries, sheriffs, field experiment, correspondence study
    JEL: D73 H41 J15
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9290&r=all
  9. By: Yoram Amiel; Michele Bernasconi; Frank Cowell; Valentino Dardanoni
    Abstract: Is there a trade-off between people’s preference for income equality and income mobility? Testing for the existence of such a trade-off is difficult because mobility is a multifaceted concept. We analyse results from a questionnaire experiment based on simple precise concepts of income inequality and income mobility. We find no direct trade-off in preference between mobility and equality, but an indirect trade-off, applying when more income mobility can only be obtained at the expense of some income inequality. Mobility preference—but not equality preference—appears to be driven by personal experience of mobility.
    JEL: N0
    Date: 2014–08–23
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:59415&r=all
  10. By: Besley, Timothy J.; Leight, Jessica; Pande, Rohini; Rao, Vijayendra
    Abstract: Agricultural tenancy reforms have been widely enacted, but evidence on their long-run impact remains limited. In this paper, we provide such evidence by exploiting the quasi-random assignment of linguistically similar areas to different South Indian states that subsequently varied in tenancy regulation policies. Given imperfect credit markets, the impact of tenancy reform should vary by household wealth status, allowing us to exploit historic caste-based variation in landownership. Thirty years after the reforms, land inequality is lower in areas that saw greater intensity of tenancy reform, but the impact differs across caste groups. Tenancy reforms increase own-cultivation among middle-caste households, but render low-caste households more likely to work as daily agricultural laborers. At the same time, agricultural wages increase. These results are consistent with tenancy regulations increasing land sales to relatively richer and more productive middle-caste tenants, but reducing land access for poorer low-caste tenants.
    Keywords: inequality; Land reform; long-run impact of institutions
    JEL: H73 O12 Q15
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:10780&r=all
  11. By: Roland G. Fryer, Jr.; Steven D. Levitt; John A. List
    Abstract: This article describes a randomized field experiment in which parents were provided financial incentives to engage in behaviors designed to increase early childhood cognitive and executive function skills through a parent academy. Parents were rewarded for attendance at early childhood sessions, completing homework assignments with their children, and for their child’s demonstration of mastery on interim assessments. This intervention had large and statistically significant positive impacts on both cognitive and non-cognitive test scores of Hispanics and Whites, but no impact on Blacks. These differential outcomes across races are not attributable to differences in observable characteristics (e.g. family size, mother’s age, mother’s education) or to the intensity of engagement with the program. Children with above median (pre-treatment) non cognitive scores accrue the most benefits from treatment.
    JEL: I20 J01
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:21477&r=all
  12. By: Florent Bresson (CERDI, Université d’Auvergne and CNRS, France); Jean-Yves Duclos (CIRPEE, Université Laval and FERDI, Canada); Flaviana Palmisano (Université du Luxembourg)
    Abstract: A long-lasting scientific and policy debate queries the impact of growth on distribution. A specific branch of the micro-oriented literature, known as ‘pro-poor growth’, seeks in particular to understand the impact of growth on poverty. Much of that literature supposes that the distributional impact should be measured in an anonymous fashion. The income dynamics and mobility impacts of growth are thus ignored. The paper extends this framework in two important manners. First, the paper uses an ‘intertemporal pro-poorness’ formulation that accounts separately for anonymous and mobility growth impacts. Second, the paper’s treatment of mobility encompasses both the benefit of “mobility as equalizer” and the variability cost of poverty transiency. Several decompositions are proposed to measure the importance of each of these impacts of growth on the pro-poorness of distributional changes. The framework is applied to panel data on 23 European countries drawn from the ‘European Union Statistics on Income and Living Conditions’ (EU-SILC) survey.
    Keywords: pro-poorness, income mobility, growth, poverty dynamics.
    JEL: D31 D63 I32
    Date: 2015–07
    URL: http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2015-368&r=all

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