nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2015‒12‒28
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Early Childhood Education By Sneha Elango; Jorge Luis García; James J. Heckman; Andrés Hojman
  2. Urban Networks: Connecting Markets, People, and Ideas By Edward L. Glaeser; Giacomo A. M. Ponzetto; Yimei Zou
  3. Inequality and welfare: Is Europe special? By Alain Trannoy
  4. Caught in the Middle? The Economics of Middle-Income Traps By Pierre-Richard AGENOR
  5. On the Equilibrium and Welfare Consequences of Going Ahead of the Smiths By Frédéric Gavrel; Thérèse Rebière
  6. Mismatch of Talent Evidence on Match Quality, Entry Wages, and Job Mobility By Fredriksson, Peter; Hensvik, Lena; Nordström Skans, Oskar
  7. The Effect of Wealth on Individual and Household Labor Supply: Evidence from Swedish Lotteries By David Cesarini; Erik Lindqvist; Matthew J. Notowidigdo; Robert Östling
  8. Immigrants and Gender Roles: Assimilation vs. Culture By Francine D. Blau
  9. The impact of immigration on occupational wages: evidence from Britain By Nickell, Stephen; Saleheen, Jumana

  1. By: Sneha Elango; Jorge Luis García; James J. Heckman; Andrés Hojman
    Abstract: This paper organizes and synthesizes the literature on early childhood education and childcare. In it, we go beyond meta-analysis and reanalyze primary data sources in a common framework. We consider the evidence from means-tested demonstration programs, large-scale means-tested programs and universal programs without means testing. We discuss which programs are beneficial and whether they are cost-effective for certain populations. The evidence from high-quality demonstration programs targeted toward disadvantaged children shows beneficial effects. Returns exceed costs, even accounting for the deadweight loss of collecting taxes. When proper policy counterfactuals are constructed, Head Start has beneficial effects on disadvantaged children compared to home alternatives. Universal programs benefit disadvantaged children.
    JEL: C93 I28 J13
    Date: 2015–11
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:21766&r=ltv
  2. By: Edward L. Glaeser; Giacomo A. M. Ponzetto; Yimei Zou
    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.
    JEL: F15 O18 R10 R58
    Date: 2015–12
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:21794&r=ltv
  3. By: Alain Trannoy (Aix-Marseille University, CNRS and EHESS, France)
    Abstract: We review the literature about inequality and welfare with a particular focus on whether Europe has a special sensitivity to these matters or specific outcomes. We argue that both statements are likely to be true which raises the possibility of a causal link. Europe has relatively good results in terms of inequality and welfare in comparison with other continents and more specifically America, because these issues matter for European people. Still, research needs to be fostered in at least 5 areas that are detailed at the end of this review. A specific attention is devoted to the contribution of other social sciences and natural sciences (cognitive science) to the development of our knowledge for these fields.
    Keywords: Inequality, income inequality, equality of opportunity, welfare, well-being, Europe, the U.S.
    JEL: D63 I31 P52 O51 O52
    Date: 2015–11
    URL: http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2015-384&r=ltv
  4. By: Pierre-Richard AGENOR (Université de Manchester)
    Abstract: This paper provides an overview of the recent analytical and empirical literature on middle-income traps. The first part examines the descriptive and statistical evidence on these traps. The second discusses the various arguments that have been put forward to explain the existence, and persistence, of middle-income traps. These arguments include diminishing returns to physical capital, exhaustion of cheap labor and imitation gains, insufficient quality of human capital, inadequate contract enforcement and intellectual property protection, distorted incentives and misallocation of talent, lack of access to advanced infrastructure, and lack of access to finance, especially in the form of venture capital. The third part considers public policies aimed at avoiding, and escaping from, middle-income traps. The concluding part identifies a number of directions in which the empirical and theoretical literature could fruitfully evolve.
    JEL: H54 O31 O41
    Date: 2015–12
    URL: http://d.repec.org/n?u=RePEc:fdi:wpaper:2520&r=ltv
  5. By: Frédéric Gavrel (CREM - Centre de Recherche en Economie et Management - CNRS - Centre National de la Recherche Scientifique - Université de Caen Basse-Normandie - UR1 - Université de Rennes 1); Thérèse Rebière (IZA Bonn)
    Abstract: This paper provides an analysis of the social consequences of people seeking to go ahead of the Smiths. All individuals attempt to reach a higher rank than the Smiths, including the Smiths themselves. This attitude gives rise to an equilibrium in which all individuals have equal utilities but unequal (gross) incomes. Due to a rat-race effect, individuals devote too much energy to climbing the social scale. However, laissez-faire equilibrium is an equal-utility constrained social optimum. Conversely, an utilitarian social planner would not choose utility equality. Unexpectedly, this social ambition theory fairly well accounts for empirical intermediate wage inequality.
    Keywords: Going ahead of the Smiths,Social interactions,Well-being,Inequalities,Efficiency
    Date: 2015–12
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01242504&r=ltv
  6. By: Fredriksson, Peter (Stockholm University, UCLS, IZA, and IFAU); Hensvik, Lena (Institute for Evaluation of Labour Market and Education Policy (IFAU), Uppsala Center for Labor Studies (UCLS), and CESifo); Nordström Skans, Oskar (Uppsala University, UCLS, IFAU and IZA)
    Abstract: We examine the direct impact of idiosyncratic match quality on entry wages and job mobility using unique data on worker talents matched to job-indicators and individual wages. Tenured workers are clustered in jobs with high job-specific returns to their types of talents. We therefore measure mismatch by how well the types of talents of recent hires correspond to the talents of tenured workers performing the same jobs. A stylized model shows that match quality has a smaller impact on entry wages but a larger impact on separations and future wage growth if matches are formed under limited information. Empirically, we find such patterns for inexperienced workers and workers who were hired from non-employment, which are also groups where mismatch is more pronounced on average. Most learning about job-specific mismatch happens within a year. Experienced job-to-job movers appear to match under much less uncertainty. They are better matched on entry and mismatch have a smaller eect on their initial separation rates and later wage growth. Instead, match quality is priced into their starting wages.
    Keywords: Matching; Job search; Comparative advantage; Employer learning
    JEL: J24 J31 J62 J64
    Date: 2015–12–16
    URL: http://d.repec.org/n?u=RePEc:hhs:sunrpe:2015_0010&r=ltv
  7. By: David Cesarini; Erik Lindqvist; Matthew J. Notowidigdo; Robert Östling
    Abstract: We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. We find winning a lottery prize modestly reduces labor earnings, with the reduction being immediate, persistent, and similar by age, education, and sex. A calibrated dynamic model of individual labor supply implies an average lifetime marginal propensity to earn out of unearned income of -0.11, and labor-supply elasticities in the lower range of previously reported estimates. The earnings response is stronger for winners than their spouses, which is inconsistent with unitary household labor supply models.
    JEL: J22 J26
    Date: 2015–11
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:21762&r=ltv
  8. By: Francine D. Blau
    Abstract: This paper examines evidence on the role of assimilation versus source country culture in influencing immigrant women’s behavior in the United States—looking both over time with immigrants’ residence in the United States and across immigrant generations. It focuses particularly on labor supply but, for the second generation, also examines fertility and education. We find considerable evidence that immigrant source country gender roles influence immigrant and second generation women’s behavior in the United States. This conclusion is robust to various efforts to rule out the effect of other unobservables and to distinguish the effect of culture from that of social capital. These results support a growing literature that suggests that culture matters for economic behavior. At the same time, the results suggest considerable evidence of assimilation of immigrants. Immigrant women narrow the labor supply gap with native-born women with time in the United States, and, while our results suggest an important role for intergenerational transmission, they also indicate considerable convergence of immigrants to native levels of schooling, fertility, and labor supply across generations.
    JEL: J13 J16 J22 J24 J61
    Date: 2015–11
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:21756&r=ltv
  9. By: Nickell, Stephen (Nuffield College, University of Oxford); Saleheen, Jumana (Bank of England)
    Abstract: This paper asks whether immigration to Britain has had any impact on average wages. There seems to be a broad consensus among academics that the share of immigrants in the workforce has little or no effect on native wages. These studies typically have not refined their analysis by breaking it down into different occupational groups. Our contribution is to extend the existing literature on immigration to include occupations as well. We find that the immigrant to native ratio has a small negative impact on average British wages. This finding is important for monetary policy makers, who are interested in the impact that supply shocks, such as immigration, have on average wages and overall inflation. Our results also reveal that the biggest impact of immigration on wages is within the semi/unskilled services occupational group. We also investigate if there is any differential impact between immigration from the EU and non-EU, and find that there is no additional impact on aggregate UK wages as a result of migrants arriving specifically from EU countries. These findings accord well with intuition and anecdotal evidence, but have not been recorded previously in the empirical literature.
    Keywords: Immigration; occupation; wages
    Date: 2015–12–18
    URL: http://d.repec.org/n?u=RePEc:boe:boeewp:0574&r=ltv

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