nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒01‒03
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Measurement of Inequality of Opportunity Based on Counterfactuals By Van de gaer, Dirk; Ramos, Xavi
  2. Cultural Transmission of Civic Attitudes By Daniel Miles-Touya; Máximo Rossi
  3. Happiness, Inequality and Relative Concerns in European Countries By AMENDOLA, Adalgiso; DELL'ANNO, Roberto; PARISI, Lavinia
  4. Mismatch of Talent Evidence on Match Quality, Entry Wages, and Job Mobility By Fredriksson, Peter; Hensvik, Lena; Nordström Skans, Oskar
  5. The Effect of Linguistic Proximity on the Occupational Assimilation of Immigrant Men in Canada By Alicia Adsera; Ana Ferrer
  6. Parental Beliefs about Returns to Educational Investments: The Later the Better? By Teodora Boneva; Christopher Rauh
  7. Are Starting Wages Reduced by an Insurance Premium for Preventing Wage Decline? Testing the Prediction of Harris and Holmstrom (1982) By Hartog, Joop; Raposo, Pedro

  1. By: Van de gaer, Dirk (Ghent University); Ramos, Xavi (Universitat Autònoma de Barcelona)
    Abstract: The theoretical literature on inequality of opportunity formulates basic properties that measures of inequality of opportunity should have. Standard methods for the measurement of inequality of opportunity require the construction of counterfactual outcome distributions through statistical methods. We show that, when standard parametric procedures are used to construct the counterfactuals, the specification used determines whether the resulting measures of inequality of opportunity satisfy the basic properties.
    Keywords: counterfactuals, inequality measurement, opportunities
    JEL: D3 D63 C1
    Date: 2015–12
  2. By: Daniel Miles-Touya (RGEA, Universidad de Vigo); Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: In this empirical paper we attempt to measure the separate influence on civic engagement of educational attainment and cultural transmission of civic attitudes. Unlike most of the previous empirical works on this issue, we are able to observe both individuals' educational attainment and the transmission of civic attitudes. We observe that civic returns to education are overstated when the transmission of civic attitudes is ignored. Moreover, the transmission of civic attitudes significantly enhances civic involvement and reinforces civic returns to education (the interactions are significant).
    Keywords: returns to education, cultural transmission
    JEL: I20 H80
    Date: 2015–10
  3. By: AMENDOLA, Adalgiso (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy); DELL'ANNO, Roberto (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy); PARISI, Lavinia (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)
    Abstract: Absolute and relative levels of income as well as income inequality are regarded as determinants of individual happiness. The paper proposes a novel set of multidimensional indexes to control for the effect of the main dimensions of relative deprivation on happiness. We decompose the overall distribution of income into “between” and “within” reference groups with respect to inequality finding that inequality between reference groups does not affect happiness and that within group inequality negatively affects individual happiness. We interpret these results as an extension of social comparison theory and a validation of the hypothesis that people perceive the income of their reference group in terms of their own future prospects. The analysis is based on the European Quality of Life Survey.
    Keywords: Happiness; Subjective well-Being; Life satisfaction; Inequality; Deprivation; Multidimensional index; Reference groups; Social comparison theory
    JEL: D63 I31 I32
    Date: 2015–12–30
  4. By: Fredriksson, Peter (Uppsala Center for Labor Studies); Hensvik, Lena (Uppsala Center for Labor Studies); Nordström Skans, Oskar (Uppsala Center for Labor Studies)
    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 effect 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: 2015–11–18
  5. By: Alicia Adsera (Woodrow Wilson School of International and Public Affairs, Princeton University); Ana Ferrer (Department of Economics, University of Waterloo)
    Abstract: This paper contributes to the analysis of the integration of immigrants in the Canadian labour market by focusing in two relatively new dimensions. We combine the large samples of the restricted version of the Canadian Census (1991-2006) with both a new measure of linguistic proximity of the immigrant’s mother tongue to that of the destination country, and with information of the occupational skills embodied in the jobs immigrants hold. This allows us to assess the role that language plays in the labour market performance of immigrants and to better study their career progression relative to the native born. Weekly wage differences between immigrants and the native born are driven mostly by penalties associated with immigrants’ lower returns to social skills, but not to analytical or manual skills. Linguistic proximity affects the types of jobs immigrant hold. The influence of linguistic proximity on the skill content of jobs immigrants hold over time and the associated wages also varies by the educational level of the migrant. Low linguistic proximity between origin and destination language imposes larger wage penalties to the university-educated, and more significantly affects the status of the jobs they hold.
    JEL: J15 J24 J31 J61 F22
    Date: 2015–12
  6. By: Teodora Boneva (University of Cambridge); Christopher Rauh (University of Cambridge, INET Institute)
    Abstract: In this paper, we study parental beliefs about the technology which maps parental investments into future child outcomes. We document that parents perceive late investments as more productive than early investments, and that they perceive investments in different time periods as substitutes. These beliefs contrast with findings in the empirical literature which suggest that early investments are more productive and are complementary to late investments. We show that parental beliefs about the returns to investments vary substantially across the population and that individual beliefs are predictive of actual investment decisions. Moreover, we document that parental beliefs about the productivity of investments differ significantly across socio-economic groups. Perceived returns to parental investments are positively related to household income, thereby potentially contributing to intergenerational earnings persistence.
    Keywords: parental investments, skill accumulation, human capital, Inequality
    JEL: I24 J13 J24 J62
    Date: 2015–12
  7. By: Hartog, Joop (University of Amsterdam); Raposo, Pedro (Universidade Catolica Portuguesa, Lisbon)
    Abstract: In the model of Harris and Holmstrom (1982) workers pay an insurance premium to prevent a wage decline. As employers are unable to assess the ability of a labour market entrant, they would offer a wage equal to expected productivity of the worker's category and adjust it with unfolding information on true individual productivity. Workers are willing to accept a reduction in starting wage to prevent a reduction in their wage when their productivity is revealed to be below the expected value for their category. While Harris and Holmstrom indicate crystal clear how the prediction can be tested, their prescription has never been applied. Using Portuguese data covering virtually the entire labour force, we find that the prediction is unequivocally rejected. We interpret the results instead as confirmation of earlier results showing that workers are compensated for the financial risk of investing in an education.
    Keywords: risk premium, starting wages, unknown productivity, wage rigidity
    JEL: J31 D86
    Date: 2015–12

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