nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒09‒11
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. The Evolution of the Middle Class in Latin America By Leopoldo Tornarolli
  2. Social Protection Systems in Latin America and the Caribbean: A Comparative Perspective By Simone Cecchini; Fernando Filgueira; Claudia Robles
  3. On the Middle Class By Michael MacLennan; Beatriz Judice Magalhães
  4. Retirement and the Marginal Utility of Income By Andrew E. Clark; Yarine Fawaz
  5. The challenge of measuring UK wealth inequality in the 2000s By Alvaredo, Facundo; Atkinson, Tony; Morelli, Salvatore
  6. Hospital Employment and Local Unemployment: Evidence from French Health Reforms By Andrew E. Clark; Carine Milcent
  7. Can Universal Screening Increase the Representation of Low Income and Minority Students in Gifted Education? By David Card; Laura Giuliano

  1. By: Leopoldo Tornarolli (IPC-IG)
    Abstract: Latin American countries have always been characterised by relatively high levels of income inequality, even taking into account their degree of economic development. If such excess inequality is combined with the fact that these are mostly middle-income and low-income countries, it can be understood that, in general, the middle class has not historically represented a significant proportion of the population in many countries in the region. However, since the beginning of the 21st century, most countries in Latin America have enjoyed a relatively stable process of economic growth, accompanied by decreases in income inequality. This has resulted in a significant reduction in the incidence of poverty in the region and an increase in the share of the population belonging to the middle class. Currently, the size of the middle class in most countries in the region is similar to or even exceeds that of the poor population. (…)
    Keywords: Evolution, Middle Class, Latin America
    Date: 2014–08
  2. By: Simone Cecchini (IPC-IG); Fernando Filgueira (IPC-IG); Claudia Robles (IPC-IG)
    Abstract: "National case studies on social protection systems in Latin America and the Caribbean, published by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), reveal that over the past 10 years social protection systems and, in general, social policies in the region have been transformed. This shift is very different than the nature of reforms in the 1980s and early 1990s. While that time period was characterised by the State pulling back from and limiting its role in social actions (reducing or freezing social spending, privatisation, restricted targeting), the new century has seen the State play a larger role in social issues (expanded coverage, partial or total re-nationalisation, increased social spending)."(...)
    Keywords: Social Protection Systems, Latin America, Caribbean, Comparative Perspective
    Date: 2015–04
  3. By: Michael MacLennan (IPC-IG); Beatriz Judice Magalhães (IPC-IG)
    Abstract: The Middle class as a concept has evolved over time, taking on various meanings at various points throughout history, becoming an object to aspire to for poor people, an object of desire for a strong government, a buzzword for politicians the world over, and the source of new customers for firms, and the global economy more broadly. This special issue of Poverty in Focus, exclusively devoted to the exploration of themes related to the middle class is part of a larger endeavour initiated by The International Policy Centre for Inclusive Growth (IPC-IG), in collaboration with the Secretariat for Strategic Affairs of the Office of the Brazilian Presidency, to explore the middle class within a development context at national, regional and international levels. Contributions to this middle-class-themed issue have come from leading scholars and development practitioners from across the globe who have addressed the phenomenon of the middle class from several different ideological, academic and regional perspectives to explore a variety of issues in relation to the significance of a growing middle class and overall development achievements. The middle class is a highly contested concept as is evident by the diversity of its many definitions. Contributing authors here seek to navigate this unstable terrain; at times utilizing, and at others critiquing the prominent sociological and income-based definitions while being mindful of the middle classes? historically and culturally specific realities. For policy-guided purposes, although quantitative-based approaches to define the middle class may seem to be directly applicable and appropriate for the context, it is also important to bear in mind that they sometimes require a further analysis to address definitional or operational aspects otherwise left out of income-based (quantitative) approaches. Income-based approaches in general reflect the middle of an income distribution (i.e., the middle class as the middle third of an income distribution), yet they all too often do not take into account many of the socio-cultural, psychological and, in some cases, political aspects of being a part of the middle class. When speaking about the middle class, one must determine the reason or objective for trying to define the concept in the first place. It seems as though the term is quite relative, as incomebased cut off points and conceptions can be easily adapted. However the usefulness of infusing development discussions with examinations of a clearly defined middle class is not to be ignored. Those that are out of poverty but not yet economically secured in the middle class (via a definition of middle class based on economic security) as highlighted by several articles in this publication, form a group that is of significant importance to ensure development gains are not lost and that this very vulnerable group is enabled to continue to develop socio-economically towards entering such a middle class. The past decade and a half of economic growth that has been experienced in the emerging economies of Brazil, Russia, India, China and South Africa (the BRICS nations), among others, has attracted much international investment, finance and social development attention, particularly to the regions that have lifted many people out of poverty throughout the same period. The growth of the middle class within such societies has also attracted much attention, and has been considered a segment of the global population that is set to be a new driver of the global economy. The relevance of such a segment of society in securing development gains, and its role in development more broadly remains a highly debated topic, reflected in the diversity of articles included in this issue. This special issue introduces the reader to a variety of ongoing discussions while helping to raise a number of salient questions about the role of the middle class in development, among other questions such as: Will this rising middle class align its interests with the poor and vulnerable of society or with those of the wealthy? Is the middle class a force that strengthens democratic institutions? In developing countries will this rising middle class demand better quality and a larger quantity of public services from their governments? Or, will they increasingly opt out of public options, for services provided by the private sector (i.e., private health care, private schools etc.)? On behalf of all of us here at the IPC-IG, I hope that the following set of articles exploring the different facets of the middle class, will help to inform readers of the complexity of trying to define the middle class as a quantitative grouping as well as a sociological phenomenon, and that they serve as a good introduction to the ongoing debates about the middle class within discussions concerning poverty reduction, democracy, civic action, economic growth and development more broadly.
    Keywords: On the Middle Class
    Date: 2013–10
  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); Yarine Fawaz (UAB - Universitat Autonoma de Barcelona)
    Abstract: The individual level of subjective well-being (SWB) has been shown to predict a number of future observable outcomes. Behaviour may however also be affected by the slope of SWB with respect to certain variables. We here use latentclass analysis to model both intercept and slope heterogeneity in the SWB-income relationship, and construct a continuous measure of the marginal utility of income. We show this marginal utility does predict future behaviour: those who value income more (who have a higher income elasticity of well-being) are less likely to retire. This correlation is found conditional on both the level of income and the level of well-being.
    Date: 2015–09
  5. By: Alvaredo, Facundo; Atkinson, Tony; Morelli, Salvatore
    Abstract: The concentration of personal wealth is now receiving a great deal of attention – after having been neglected for many years. One reason is the growing recognition that, in seeking explanations for rising income inequality, we need to look not only at wages and earned income but also at income from capital, particularly at the top of the distribution. In this paper, we use evidence from existing data sources to attempt to answer three questions: (i) what is the share of total personal wealth that is owned by the top 1 per cent, or the top 0.1 per cent? (ii) is wealth much more unequally distributed than income? (iii) is the concentration of wealth at the top increasing over time? The main conclusion of the paper is that the evidence about the UK concentration of wealth post-2000 is seriously incomplete and significant investment is necessary if we are to provide satisfactory answers to the three questions.
    Keywords: inequality; United Kingdom; wealth
    JEL: D3 H2
    Date: 2015–09
  6. 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)); Carine Milcent (CEPREMAP - Centre pour la recherche économique et ses applications - Centre pour la recherche économique et ses applications, 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: We here ask whether French local authorities respond to depressed local labour markets by increasing employment in State-owned hospitals. We use 2006-2010 panel data to examine within-hospital employment changes: higher local unemployment is associated with greater employment in State-owned hospitals, but not for any other hospital type. Our data cover a reimbursement reform introducing competition between hospitals. This reform reduced public-hospital employment, but had no overall effect on the relationship between public-hospital employment and local unemployment. Further analysis shows that this continuing relationship is only found in higher unemployment areas, where public-hospital employment remained counter-cyclical.
    Date: 2015–08
  7. By: David Card; Laura Giuliano
    Abstract: Low income and minority students are under-represented in gifted education programs. One explanation for this pattern is that the usual process for identifying gifted students, through parent and teacher referrals, systematically misses many potentially qualified disadvantaged students. We use the experiences in a large urban school district following the introduction of a universal screening program for second grade students to study this hypothesis. With no change in the standards for gifted eligibility the screening program led to large increases in the fractions of economically disadvantaged students and minorities placed in gifted programs. Comparisons of the newly identified gifted students with those who would have been placed in the absence of screening show that blacks and Hispanics, free/reduced price lunch participants, English language learners, and girls are all systematically "under-referred" in the traditional parent/teacher referral system.
    JEL: I21
    Date: 2015–09

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