nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒04‒23
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. Female labour supply, human capital and welfare reform By Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan Shaw
  2. Suicide, age, and wellbeing: an empirical investigation By Anne Case; Angus Deaton
  3. Poverty trends in Turkey By Sirma Demir Șeker; Stephen P. Jenkins
  4. Does Postponing Minimum Retirement Age Improve Healthy Behaviours Before Retirement? Evidence from Middle-Aged Italian Workers By Bertoni, Marco; Brunello, Giorgio; Mazzarella, Gianluca
  5. The Simple Analytics of Job Displacement Insurance By Parsons, Donald O.
  6. Allocating Effort and Talent in Professional Labor Markets By Barlevy, Gadi; Neal, Derek
  7. Explaining job polarization: routine-biased technological change and offshoring By Maarten Goos; Alan Manning; Anna Salomons
  8. Comparing The Incidence Of Taxes And Social Spending In Brazil And The United States By Sean Higgins; Nora Lustig; Whitney Ruble; Timothy Smeeding
  9. Firms and Labor Market Inequality: Evidence and Some Theory By Card, David; Cardoso, Ana Rute; Heining, Jörg; Kline, Patrick
  10. Beyond Job Lock: Impacts of Public Health Insurance on Occupational and Industrial Mobility By Ammar Farooq; Adriana Kugler

  1. By: Richard Blundell (Institute for Fiscal Studies and IFS and UCL); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Costas Meghir (Institute for Fiscal Studies and Yale University); Jonathan Shaw (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: We estimate a dynamic model of employment, human capital accumulation - including education, and savings for women in the UK, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy. We find substantial elasticities for labor supply and particularly for lone mothers. Returns to experience, which are important in determining the longer-term effects of policy, increase with education, but experience mainly accumulates when in full-time employment. Tax credits are welfare improving in the UK and increase lone-mother labor supply, but the employment effects do not extend beyond the period of eligibility. Marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts.
    Date: 2016–02
  2. By: Anne Case (Princeton University); Angus Deaton (Princeton University)
    Abstract: Suicide rates, life evaluation, and measures of affect are all plausible measures of the mental health and well being of populations. Yet in the settings we examine, correlations between suicide and measured well being are at best inconsistent. Differences in suicides between men and women, between Hispanics, blacks, and whites, between age groups for men, between countries or US states, between calendar years, and between days of the week, do not match differences in life evaluation. By contrast, reports of physical pain are strongly predictive of suicide in many contexts. The prevalence of pain is increasing among middle-aged Americans, and is accompanied by a substantial increase in suicides and deaths from drug and alcohol poisoning. Our measure of pain is now highest in middle age—when life evaluation and positive affect are at a minimum. In the absence of the pain epidemic, suicide and life evaluation are likely unrelated, leaving unresolved whether either one is a useful overall measure of population wellbeing.
    JEL: I3
    Date: 2015–06
  3. By: Sirma Demir Șeker; Stephen P. Jenkins
    Abstract: This paper provides new evidence about poverty trends in Turkey between 2003 and 2012 and the factors accounting for them. We give particular attention to issues of statistical inference, and the choice of the poverty line and the poverty measure. Our robust conclusion is that absolute poverty declined rapidly between 2003 and 2008 but fell only slightly between 2008 and 2012. Changes in relative poverty were negligible throughout. Using decomposition methods, we argue that the declines in the absolute poverty rate are largely accounted for by changes in the rate of economic growth rather than by distributional changes or changes in population composition.
    Keywords: poverty; Turkey; poverty dominance; consumption; basic needs; poverty line; poverty decomposition
    JEL: C12 D31 I32
    Date: 2015
  4. By: Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova); Mazzarella, Gianluca (University of Padova)
    Abstract: By increasing the residual working horizon of employed individuals, pension reforms that raise minimum retirement age are likely to affect the returns to investments in health-promoting behaviours before retirement, with consequences for individual health. Using the exogenous variation in minimum retirement age induced by a sequence of Italian pension reforms during the 1990s and 2000s, we show that Italian males aged 40 to 49 reacted to the longer time to retirement by raising regular exercise and by reducing smoking and regular alcohol consumption. Dietary habits were also affected, with positive consequences on obesity and self-reported satisfaction with health.
    Keywords: retirement, working horizon, healthy behaviours, pension reforms
    JEL: H55 I12 J26
    Date: 2016–03
  5. By: Parsons, Donald O. (George Washington University)
    Abstract: Job displacement in the U.S. is a serious threat to the earnings of long-tenured workers, through both (i) unemployment spells and (ii) reduced reemployment wages. Although full insurance requires both unemployment benefits and wage insurance, supply difficulties limit actual-loss insurance, and separation packages typically include partial unemployment insurance and scheduled (fixed sum) severance pay. The design of this two dimensional package requires a systems approach as well as a generalized replacement ratio measure of adequacy). Job search moral hazard and layoff moral hazard (firing costs), individually and in combination, introduce potentially serious contracting concerns. Economic theory provides a practical guide to the integration of these insurance instruments in this complex planning environment. One important implication: given the structure of earnings losses at displacement in the U.S., severance pay should increase with length of service in the firm ("tenure"), which is common, and unemployment insurance benefit levels should fall, which is not.
    Keywords: job displacement, unemployment insurance, wage insurance, severance pay, moral hazard, insurance adequacy, replacement rate
    JEL: J65 J41 J33 J08
    Date: 2016–03
  6. By: Barlevy, Gadi (Federal Reserve Bank of Chicago); Neal, Derek (University of Chicago)
    Abstract: In many professional service firms, new associates work long hours while competing in up-or-out promotion contests. Our model explores why these firms require young professionals to take on heavy work loads while simultaneously facing significant risks of dismissal. We argue that the productivity of skilled partners in professional service firms (e.g. law, consulting, investment banking, and public accounting) is quite large relative to the productivity of their peers who are competent and experienced but not well-suited to the partner role. Therefore, these firms adopt personnel policies that facilitate the identification of new partners. In our model, both heavy work loads and up- or-out rules serve this purpose. Firms are able to identify more professionals who can function effectively as partners when they require new associates to perform more tasks. Further, when firms replace experienced associates with new less productive workers, they gain the opportunity to identify talented professionals who will have long careers as partners. Both of these personnel practices are costly. However, when the gains from increasing the number of talented partners exceed these costs, firms employ both practices in tandem. We present evidence on life-cycle patterns of hours and earnings among lawyers that support our claim that both heavy work loads and up-or-out rules are screening mechanisms.
    Keywords: up-or-out, long hours, screening
    JEL: J44 J22 M51
    Date: 2016–03
  7. By: Maarten Goos; Alan Manning; Anna Salomons
    Abstract: This paper documents the pervasiveness of job polarization in 16 Western European countries over the period 1993-2010. It then develops and estimates a framework to explain job polarization using routine-biased technological change and offshoring. This model can explain much of both total job polarization and the split into within- industry and between-industry components.
    JEL: J21 J23 J24 M55 O33
    Date: 2014–08
  8. By: Sean Higgins (Tulane University); Nora Lustig (Tulane University); Whitney Ruble (Tulane University); Timothy Smeeding (University of Wisconsin at Madison)
    Abstract: We perform the first comprehensive fiscal incidence analyses in Brazil and the US, including direct cash and food transfers, targeted housing and heating subsidies, public spending on education and health, and personal income, payroll, corporate income, property, and expenditure taxes. In both countries, primary spending is close to 40 percent of GDP. The US achieves higher redistribution through direct taxes and transfers, primarily due to underutilization of the personal income tax in Brazil and the fact that Brazil’s highly progressive cash and food transfer programs are small while larger transfer programs are less progressive. However, when health and non-tertiary education spending are added to income using the government cost approach, the two countries achieve similar levels of redistribution. This result may be a reflection of better-off households in Brazil opting out of public services due to quality concerns rather than a result of government effort to make spending more equitable.
    Keywords: inequality, fiscal policy, taxation, social spending
    JEL: D31 H22 I38
  9. By: Card, David (University of California, Berkeley); Cardoso, Ana Rute (IAE Barcelona (CSIC)); Heining, Jörg (Institute for Employment Research (IAB), Nuremberg); Kline, Patrick (University of California, Berkeley)
    Abstract: We review the literature on firm-level drivers of labor market inequality. There is strong evidence from a variety of fields that standard measures of productivity – like output per worker or total factor productivity – vary substantially across firms, even within narrowly-defined industries. Several recent studies note that rising trends in the dispersion of productivity across firms mirror the trends in the wage inequality across workers. Two distinct literatures have searched for a more direct link between these two phenomena. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks and control for the non-random sorting of workers to more and less productive firms typically find that a 10% increase in value-added per worker leads to somewhere between a 0.5% and 1.5% increase in wages. A second literature focuses on firm-specific wage premiums, using the wage outcomes of job changers. This literature also concludes that firm pay setting is important for wage inequality, with many studies finding that firm wage effects contribute approximately 20% of the overall variance of wages. To interpret these findings, we develop a model where workplace environments are viewed as imperfect substitutes by workers, and firms set wages with some degree of market power. We show that simple versions of this model can readily match the stylized empirical findings in the literature regarding rent-sharing elasticities and the structure of firm-specific pay premiums.
    Keywords: wage distribution, rent sharing, monopsony, job mobility, linked employer-employee data
    JEL: D22 J31 J42
    Date: 2016–03
  10. By: Ammar Farooq; Adriana Kugler
    Abstract: We examine whether greater Medicaid generosity encourages mobility towards riskier but better jobs in higher paid occupations and industries. We use Current Population Survey Data and exploit variation in Medicaid thresholds across states and over time through the 1990s and 2000s. We find that moving from a state in the 10th to the 90th percentile in terms of Medicaid income thresholds increases occupational and industrial mobility by 7.6% and 7.8%. We also find that higher income Medicaid thresholds increase mobility towards occupations and industries with greater wage spreads and higher separation probabilities, but with higher wages and higher educational requirements.
    JEL: I13 J6
    Date: 2016–03

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