nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒12‒08
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Learning New Technology: The Polarization of the Wage Distribution By Manuel Hidalgo-Perez; Benedetto Molinari
  2. Left Behind but Doing Good? Civic Engagement in Two Post-Socialist Countries By Nikolova, Milena; Roman, Monica; Zimmermann, Klaus F.
  3. Health Disparities by Income in Spain before and after the Economic Crisis By Max Coveney; Pilar Garcia Gomez; Eddy Van Doorslaer; Tom Van Ourti
  4. Parental responses to public investments in children: evidence from a maximum class size rule By Fredriksson, Peter; Oosterbeek, Hessel; Öckert, Björn
  5. The growth-employment-poverty nexus in Latin America in the 2000s: Cross-country analysis By Guillermo Cruces; Gary Fields; David Jaume; Mariana Viollaz

  1. By: Manuel Hidalgo-Perez (Department of Economics, Universidad Pablo de Olavide, USA); Benedetto Molinari (Department of Economics, Universidad Pablo de Olavide, USA; The Rimini Centre for Economic Analysis, Italy)
    Abstract: This paper revisits the relationship between wage inequality and technological progress. By applying counterfactual quantile regressions to historic U.S. data, we show that the reduction of wage inequality among low-wage workers generated by routinization-biased technical change was fully driven by a reduction of within-group inequality, which was determined by more homogeneous remunerations paid to routine workers. Changes in wage differentials between workers performing technology-neutral and technology-substitute tasks played instead a negligible role, which casts some doubt on a theory of technical change operating through a labor-demand channel. To reconcile the theory with data, we develop a model in which skill-heterogeneous workers face endogenous occupational choices and learning costs in connection with operating a new technology. In this model, when wage differentials are fixed technical change still generates an empirically-consistent non-monotone effect on wage inequality by affecting the average levels of skills within different groups of workers.
    Date: 2015–11
  2. By: Nikolova, Milena (IZA); Roman, Monica (Bucharest University of Economic Studies); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: The fall of socialism in Central and Eastern Europe restored ordinary citizens' rights and freedoms and ended their political and social isolation. While the freedom of movement was quickly embraced, civil society revival lagged due to the eroded civic norms, declining social capital, and worsening economic conditions. In this paper, we examine the link between the out-migration of relatives and friends and the pro-social behavior of the left behinds in two post-socialist countries – Bulgaria and Romania – the EU's poorest, unhappiest, and among the most corrupt members. We show that having close contacts abroad is consistently positively associated with civic engagement and that the cultural transmission of norms from abroad could be driving the results. Specifically, the strength of the civic engagement culture of the family or friend's destination matters for the pro-social behavior of respondents in the home countries. Our results imply that the emigration of family and friends may have positive but previously undocumented consequences for the individuals and communities left behind in Bulgaria and Romania. Given civil society's role for development in post-socialist Europe and the socio-economic and institutional challenges that Bulgaria and Romania face compared with the rest of the EU, understanding the channels fostering civil society and well-being are important for national and EU policymakers.
    Keywords: international migration, left behind, civic engagement, social remittances, post-socialism
    JEL: I30 I31 F22 P30 Z10
    Date: 2015–11
  3. By: Max Coveney (Erasmus University Rotterdam); Pilar Garcia Gomez (Erasmus University Rotterdam); Eddy Van Doorslaer (Erasmus University Rotterdam); Tom Van Ourti (Erasmus University Rotterdam, the Netherlands)
    Abstract: Little is known about what the economic crisis has done to health disparities by income. We apply a decomposition method to unravel the contributions of income growth, income inequality and differential income mobility across socio-demographic groups to changes in health disparities by income in Spain using longitudinal data from the Survey of Income and Living Conditions (SILC) for the period 2004-2012. We find a modest rise in health inequality by income in Spain in the five years of economic growth prior to the start of the crisis in 2008, but a sharp fall after 2008. The drop mainly derives from the fact that loss of employment and earnings has disproportionately affected the incomes of the younger and healthier groups rather than the (mainly stable pension) incomes of the over 65s. This suggests that unequal distribution of income protection by age may reduce health inequality in the short run after an economic recession.
    Keywords: economic crisis; health inequality; Spain
    JEL: D30 D63 I14 I15
    Date: 2015–12–03
  4. By: Fredriksson, Peter (Stockholm university, IZA, IFAU and Uppsala center for Labor Studies (UCLS)); Oosterbeek, Hessel (University of Amsterdam); Öckert, Björn (IFAU and Uppsala Center for Labor Studies (UCLS))
    Abstract: We study differential parental responses to variation in class size induced by a maximum class size rule in Swedish schools. In response to an increase in class size: (i) only high-income parents help their children more with homework; (ii) all parents are more likely to move their child to another school; and (iii) only low-income children find their teachers harder to follow when taught in a larger class. These findings indicate that public and private investments in children are substitutes, and help explain why the negative effect of class size on achievement in our data is concentrated among low-income children.
    Keywords: class size; parental responses; social background; regression discontinuity
    JEL: C31 I21 I28 J24
    Date: 2015–12–02
  5. By: Guillermo Cruces; Gary Fields; David Jaume; Mariana Viollaz
    Abstract: In the great majority of Latin American countries in the 2000s, economic growth took place and brought about improvements in almost all labour market indicators and consequent reductions in poverty rates. Across countries, economic growth was not all that mattered; external factors were particularly important for changes in labour market conditions, while reductions in poverty were strongly related to improvements in earnings and employmentindicators. Although the 2008 crisis affected some countries differently from others, nearly all labour market indicators were at least as high or higher by 2012 than immediately before the crisis in all countries but one.
    Keywords: labour markets, economic growth, poverty, inequality, Latin America
    Date: 2015

This nep-ltv issue is ©2015 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.