nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒03‒23
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. The Welfare Costs of Well-being Inequality By Leonard Goff; John F. Helliwell; Guy Mayraz
  2. The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade By David H. Autor; David Dorn; Gordon H. Hanson
  3. Experimental Research on Labor Market Discrimination By David Neumark
  4. How Serious is the Neglect of Intra-Household Inequality in Multi-dimensional Poverty Indices? By Stephan Klasen; Rahul Lahoti
  5. How are you? How's it going? What's up? What's happening? Nudging people to tell us how they really are By Carlsson, Fredrik; Kataria, Mitesh
  6. Field Experiments on Discrimination By Marianne Bertrand; Esther Duflo
  7. Partners in Crime: Schools, Neighborhoods and the Formation of Criminal Networks By Stephen B. Billings; David J. Deming; Stephen L. Ross
  8. What is Different About Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States By Juan Pablo Chauvin; Edward Glaeser; Yueran Ma; Kristina Tobio

  1. By: Leonard Goff; John F. Helliwell; Guy Mayraz
    Abstract: If welfare is measured using satisfaction with life (SWL), its variance is a natural measure of inequality that incorporates all the determinants of well-being with the same weights that determine welfare itself. In this paper we explore this possibility empirically in three different ways. First we show that inequality of subjective well-being has a negative effect on life satisfaction considerably greater than does income inequality. Second, we show that this comparative result is stronger for those who report themselves as valuing equality. Finally we show that social trust, which has been shown to support subjective well-being both directly and indirectly, is more fully explained by well-being inequality than by income inequality.
    JEL: D6 D63 I31
    Date: 2016–01
  2. By: David H. Autor; David Dorn; Gordon H. Hanson
    Abstract: China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.
    JEL: F14 J23 J31
    Date: 2016–01
  3. By: David Neumark
    Abstract: Understanding whether labor market discrimination explains inferior labor market outcomes for many groups has drawn the attention of labor economists for decades – at least since the publication of Gary Becker’s The Economics of Discrimination in 1957. The decades of research on discrimination in labor markets began with a regression-based “decomposition” approach, asking whether raw wage or earnings differences between groups – which might constitute prima facie evidence of discrimination – were in fact attributable to other productivity-related factors. Subsequent research – responding in large part to limitations of the regression-based approach – moved on to other approaches, such as testing direct predictions of the Becker model using data on discriminatory tastes, or using firm-level data to estimate both marginal productivity and wage differentials. In recent years, however, there has been substantial growth in experimental research on labor market discrimination – even though the earliest experiments were done decades ago. Some experimental research on labor market discrimination takes place in the lab. But far more of it is done in the field, which makes this particular area of experimental research unique relative to the explosion of experimental economic research more generally. This paper surveys the full range of experimental literature on labor market discrimination, places it in the context of the broader research literature on labor market discrimination, discusses the experimental literature from many different perspectives (empirical, theoretical, policy, and legal), and reviews what this literature has taught us thus far, and what remains to be done.
    JEL: J1 J7 K31
    Date: 2016–02
  4. By: Stephan Klasen (Georg-August University Göttingen); Rahul Lahoti (University of Göttingen)
    Abstract: Income-based as well as most existing multidimensional poverty indices (MPI) assume equal distribution within the household and thus are likely to lead to yield a biased assessment of individual poverty, and poverty by age or gender. In this paper we first show that the direction of the bias depends on how these measures use individual data to determine the poverty status of households, while the impact of these assumptions on inequality between individual cannot be determined a priori. We then use data from the 2012 Indian Human Development Survey to create a standard household-based MPIs closely related to the MPI proposed by Alkire and Santos (2014) as well as UNDP (2014), and compare that to an individual level MPI that individualizes education and nutrition and some aspects of the living standards dimensions. We find that the poverty rate of females is 14 percentage points higher than that of men in our individual MPI measure but only 2 percentage points higher when using the household-based measure. Similarly, the age differentials in poverty are much larger using the individual-based measure. Using a decomposable inequality measure, we find the contribution of intrahousehold inequality to the total inequality in the individual deprivation score inequality to be 30% and total inequality is also some 30% higher using the individual-based measure, while inequality among the poor is found to be 5% smaller using the individual measure.
    Keywords: multi-dimensional poverty; poverty measurement; intra-household inequality; India
    JEL: I3 I32 D1 D13 D6 D63 O5 O53
    Date: 2016–03–13
  5. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Kataria, Mitesh (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We investigate a novel approach to reduce measurement error in subjective well-being (SWB) data. Using a between-subject design, half of the subjects are asked to promise to answer the survey questions truthfully in an attempt to make them commit to truth-telling. This allows us to experimentally test whether making a promise affects their responses. We find a statistically significant difference between mean stated well-being between the two groups (with and without a promise, although the effect sizes are rather small). We then investigate to what extent the differences in stated well-being also affect the inference from regressions models on the determinants of SWB. We find important differences in terms of size and statistical significance of the coefficients between the two models, despite the small effect sizes on the dependent stated well-being variable.
    Keywords: measurement error; social desirability; subjective well-being; truth-telling
    JEL: C90 I30
    Date: 2016–03
  6. By: Marianne Bertrand; Esther Duflo
    Abstract: This article reviews the existing field experimentation literature on the prevalence of discrimination, the consequences of such discrimination, and possible approaches to undermine it. We highlight key gaps in the literature and ripe opportunities for future field work. Section 1 reviews the various experimental methods that have been employed to measure the prevalence of discrimination, most notably audit and correspondence studies; it also describes several other measurement tools commonly used in lab-based work that deserve greater consideration in field research. Section 2 provides an overview of the literature on the costs of being stereotyped or discriminated against, with a focus on self-expectancy effects and self-fulfilling prophecies; section 2 also discusses the thin field-based literature on the consequences of limited diversity in organizations and groups. The final section of the paper, Section 3, reviews the evidence for policies and interventions aimed at weakening discrimination, covering role model and intergroup contact effects, as well as socio-cognitive and technological de-biasing strategies.
    JEL: J0 J01 J1 J15 J16 J7 J71
    Date: 2016–02
  7. By: Stephen B. Billings; David J. Deming; Stephen L. Ross
    Abstract: Why do crime rates differ greatly across neighborhoods and schools? Comparing youth who were assigned to opposite sides of newly drawn school boundaries, we show that concentrating disadvantaged youth together in the same schools and neighborhoods increases total crime. We then show that these youth are more likely to be arrested for committing crimes together – to be “partners in crime”. Our results suggest that direct peer interaction is a key mechanism for social multipliers in criminal behavior. As a result, policies that increase residential and school segregation will – all else equal – increase crime through the formation of denser criminal networks.
    JEL: I21 I24
    Date: 2016–02
  8. By: Juan Pablo Chauvin; Edward Glaeser; Yueran Ma; Kristina Tobio
    Abstract: Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with comparable geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that the spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop.
    JEL: O15 O18 R12 R23
    Date: 2016–02

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