nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒09‒26
twelve papers chosen by
Maximo Rossi
Universidad de la República

  1. (Mis-)Predicted Subjective Well-Being Following Life Events By Reto Odermatt; Alois Stutzer
  2. Intertemporal pro-poorness By Florent Bresson; Jean-Yves Duclos; Flaviana Palmisano
  3. The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out By Farber, Henry S; Rothstein, Jesse; Valletta, Robert G
  4. From Motherhood Penalties to Husband Premia: The New Challenge for Gender Equality and Family Policy, Lessons from Norway By Petersen, Trond; Penner, Andrew M; Høgsnes, Geir
  5. A European Perspective on Long‐Term Unemployment By Eichhorst, Werner; Neder, Franziska; Tobsch, Verena; Wozny, Florian
  6. The Subcontracted Labor Market: David Weil’s book, The Fissured Workplace, describes a disturbing trend for workers. By Freeman, Richard Barry
  7. Urban Networks: Spreading the Flow of Goods, People, and Ideas By Glaeser, Edward L; Ponzetto, Giacomo AM; Zou, Yimei
  8. Middle Class Flight from Post-Katrina New Orleans: A Theoretical Analysis of Inequality and Schooling By Stefano Barbieri; John H. Y. Edwards
  9. A "Healthy Immigrant Effect" or a "Sick Immigrant Effect"? Selection and Policies Matter By Constant, Amelie F.; García-Muñoz, Teresa; Neuman, Shoshana; Neuman, Tzahi
  10. Earnings and Consumption Dynamics: A Nonlinear Panel Data Framework By Arellano, Manuel; Blundell, Richard; Bonhomme, Stephane
  11. Pacts for Employment and Competitiveness as a Role Model? Their Effects on Firm Performance By John T. Addison; Paulino Teixeira; Katalin Evers; Lutz Bellmann
  12. Human Capital, Labour Supply and Tax Reform By Richard Blundell

  1. By: Reto Odermatt; Alois Stutzer
    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
    Date: 2015
  2. By: Florent Bresson; Jean-Yves Duclos; Flaviana Palmisano
    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: 2015–09–16
  3. By: Farber, Henry S; Rothstein, Jesse; Valletta, Robert G
    Abstract: Unemployment Insurance benefit durations were extended during the Great Recession, reaching 99 weeks for most recipients. The extensions were rolled back and eventually terminated by the end of 2013. Using matched CPS data from 2008-2014, we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of rollback. In both periods, we find little or no effect on job-finding but a reduction in labor force exits due to benefit availability. We estimate that the rollbacks reduced the labor force participation rate by about 0.1 percentage point in early 2014.
    Keywords: Social and Behavioral Sciences
    Date: 2015–01–01
  4. By: Petersen, Trond; Penner, Andrew M; Høgsnes, Geir
    Abstract: Given the key role that processes occurring in the family play in cre- ating gender inequality, the family is a central focus of policies aimed at creating greater gender equality. We examine how family status affects the gender wage gap using longitudinal matched employer- employee data from Norway, 1979 – 96, a period with extensive expan- sion of family policies. The motherhood penalty dropped dramatically from 1979 to 1996. Among men the premia for marriage and father- hood remained constant. In 1979, the gender wage gap was primarily due to the motherhood penalty, but by 1996 husband premia were more important than motherhood penalties.
    Keywords: Social and Behavioral Sciences
    Date: 2014–03–01
  5. By: Eichhorst, Werner (IZA); Neder, Franziska (IZA); Tobsch, Verena (E-x-AKT WIRTSCHAFTSFORSCHUNG); Wozny, Florian (IZA)
    Abstract: In contrast to the recently decreasing unemployment rates in the EU, long-term unemployment remains at alarming levels. An economic recovery will not be sufficient to get all long-term unemployed back to work; rather, there is a need for effective policies addressing the long-term unemployed. To address these issues, this paper starts with an interpretation of standard measures of long-term unemployment and alternative measures of long-term non-employment. Next, we take a closer look at active labor market policies such as training, subsidized employment and public work and investigate which kind is most effective for the reintegration of long-term unemployed persons. Subsequently, the special role of Public Employment Services (PES) and the importance of an individual approach and targeting is stressed to increase the employability of hard-to-place and distant jobseekers from the labor market. Furthermore, we take into account the role of alternative benefit systems for working-age non-employed people. In the final section, we conclude and offer policy advice with a particular focus on the EU.
    Keywords: long‐term unemployment, activation, Europe, disability benefits
    JEL: J64 J65 J68
    Date: 2015–09
  6. By: Freeman, Richard Barry
    Date: 2014
  7. By: Glaeser, Edward L; Ponzetto, Giacomo AM; Zou, Yimei
    Abstract: Should China build mega-cities or a network of linked middle-sized metropolises? Can Europe's mid-sized cities compete with global agglomeration by forging stronger inter-urban links? This paper examines these questions within a model of recombinant growth and endogenous local amenities. Three primary factors determine the trade-off between networks and big cities: local returns to scale in innovation, the elasticity of housing supply, and the importance of local amenities. Even if there are global increasing returns, the returns to local scale in innovation may be decreasing, and that makes networks more appealing than mega-cities. Inelastic housing supply makes it harder to supply more space in dense confines, which perhaps explains why networks are more popular in regulated Europe than in the American Sunbelt. Larger cities can dominate networks because of amenities, as long as the benefits of scale overwhelm the downsides of density. In our framework, the skilled are more likely to prefer mega-cities than the less skilled, and the long-run benefits of either mega-cities or networks may be quite different from the short-run benefits.
    Keywords: cities; growth; migration; networks
    JEL: F15 O18 R10 R58
    Date: 2015–09
  8. By: Stefano Barbieri (Department of Economics, Tulane University); John H. Y. Edwards (Department of Economics, Tulane University)
    Abstract: This paper stylizes the most salient characteristics of New Orleans' people and the Katrina evacuation and constructs a formal, theoretical model of their decision to return. We use the model to examine the post-Katrina population composition of the city, the evolution in its income distribution and in the welfare of its citizens, and changes in the level of education privately and publicly provided. Our results are, overall, positive for the new New Orleans. While smaller, the new New Orleans is more skill-intensive and education levels improve; these changes are broadly consistent with observed effects of Katrina on New Orleans. Moreover, while the possibility remains that Katrina-like events cause "middle-class flight," inequality is reduced under standard distributional assumptions, such as log-concavity. Nonetheless, the fact that many among the unskilled are unable to return remains problematic from an ethical point of view. Our analysis of a disaster's long term impact on a city through its effects on demographic composition, income and human capital distribution, and fiscal structure elucidates major determinants of urban resilience after a natural disaster.
    Keywords: local public goods, inequality, disasters, income distribution, education, resilience
    JEL: H3 H4 I2 I3
    Date: 2015–09
  9. By: Constant, Amelie F. (George Washington University, Temple University); García-Muñoz, Teresa (Universidad de Granada); Neuman, Shoshana (Bar-Ilan University); Neuman, Tzahi (Hebrew University, Jerusalem)
    Abstract: An extensive body of research related to immigrants in a variety of countries has documented a "healthy immigrant effect" (HIE). When immigrants arrive in the host country they are healthier than comparable native populations, but their health status may deteriorate with additional years in the country. HIE is explained through the positive self-selection of the health of immigrants and the positive selection, screening and discrimination applied by the host countries. In this paper we study the health assimilation of immigrants within the context of selection and migration policies. Using SHARE data we are able to compare Israel and Europe that have fundamentally different migration policies. Israel has virtually unrestricted open gates for Jewish people around the world, who in turn have ideological rather than economic considerations to move. European countries have selective policies with regards to the health, education and wealth of migrants, who self-select themselves. Our hypothesis is that the HIE, evidenced in many countries will not be found in Israel. Instead, immigrants to Israel may arrive with lower health than that of natives and improve their health with residence in the country, due to the universal health coverage and generous socio-economic support of the government. Our results provide evidence that a) immigrants to Israel have compromised health and suffer from many health ailments upon arrival, making them less healthy than comparable natives. Their health does not improve for up to twenty years of living in Israel, after which they become similar to natives; b) immigrants to Europe have better health than natives upon arrival and up to eleven years since arrival in the host country, after which they are not significantly different than natives. Our results are important for policy.
    Keywords: self-reported health status, immigration, Europe, Israel, older population, multilevel regression, SHARE
    JEL: C22 J11 J12 J14 O12 O15 O52
    Date: 2015–09
  10. By: Arellano, Manuel (CEMFI, Madrid); Blundell, Richard (University College London); Bonhomme, Stephane (University of Chicago)
    Abstract: We develop a new quantile-based panel data framework to study the nature of income persistence and the transmission of income shocks to consumption. Log-earnings are the sum of a general Markovian persistent component and a transitory innovation. The persistence of past shocks to earnings is allowed to vary according to the size and sign of the current shock. Consumption is modeled as an age-dependent nonlinear function of assets and the two earnings components. We establish the nonparametric identification of the nonlinear earnings process and the consumption policy rule. Exploiting the enhanced consumption and asset data in recent waves of the Panel Study of Income Dynamics, we find nonlinear persistence and conditional skewness to be key features of the earnings process. We show that the impact of earnings shocks varies substantially across earnings histories, and that this nonlinearity drives heterogeneous consumption responses. The transmission of shocks is found to vary systematically with assets.
    Keywords: earnings dynamics, consumption, panel data, quantile regression, latent variables
    JEL: C23 D31 D91
    Date: 2015–09
  11. By: John T. Addison (University of South Carolina, Durham University, University of Coimbra/GEMF, and IZA Bonn.); Paulino Teixeira (Faculty of Economics, University of Coimbra/GEMF and IZA Bonn); Katalin Evers (Institute for Employment Research (IAB)); Lutz Bellmann (Friedrich-Alexander-Universität Erlangen-Nürnberg, IAB and IZA Bonn)
    Abstract: Pacts for employment and competitiveness are an integral component of the ongoing process of decentralization of collective bargaining in Germany, a phenomenon that has been hailed as key to that nation's economic resurgence. Yet little is known about the effects of pacts on firm performance. The evidence largely pertains to employment and is decidedly mixed. The present paper investigates the association between pacts and a wider set of outcomes – wages, employment, investment, productivity, innovation, and survivability – in a RDD framework where the controls comprise establishments that negotiated over pacts but failed to reach agreement on their implementation. An extensive set of simulations are run to test for robustness of the key findings of the model. There is no evidence of pacts negatively impacting any of the selected measures of establishment performance. Indeed, the positive effects reported for wages, productivity, and innovation are sustained in simulations.
    Keywords: pacts for employment and competitiveness, concession bargaining, opening clauses decentralization, firm performance, regression discontinuity design, Germany.
    JEL: D22 J3 J41 J50 J53
    Date: 2015–09
  12. By: Richard Blundell (University College London)
    Abstract: Slides for plenary talk delivered at the annual meeting of the Society for Economic Dynamics.
    Date: 2015

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