nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒07‒09
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. The Scandinavian Fantasy: The Sources of Intergenerational Mobility in Denmark and the U.S. By Landerso, Rasmus; Heckman, James J.
  2. Apprenticeship as a stepping stone to beter jobs: Evidence from brazilian matched employer-employee data By Carlos Henrique Corseuil; Miguel Foguel; Gustavo Gonzaga
  3. The Dynamics of Capital Accumulation in the US: Simulations after Piketty By Philippe De Donder; John E. Roemer
  4. Parental Unemployment and Child Health in China By Pieters, Janneke; Rawlings, Samantha
  5. The effects of productivity and benefits on unemployment: Breaking the link By Brown, Alessio; Kohlbrecher, Britta; Merkl, Christian; Snower, Dennis J.
  6. Mind the Gap: Identifying Latent Objective and Subjective Multi-dimensional Indices of Well-Being By Luisa Corrado; Giuseppe De Michele
  7. Capabilities and Skills By Heckman, James J.; Corbin, Chase O.
  8. Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants By Mullen, Kathleen J.; Autor, David H.; Maestas, Nicole; Strand, Alexander

  1. By: Landerso, Rasmus (Rockwool Foundation Research Unit); Heckman, James J. (University of Chicago)
    Abstract: This paper examines the sources of differences in social mobility between the U.S. and Denmark. Measured by income mobility, Denmark is a more mobile society, but not when measured by educational mobility. There are pronounced nonlinearities in income and educational mobility in both countries. Greater Danish income mobility is largely a consequence of redistributional tax, transfer, and wage compression policies. While Danish social policies for children produce more favorable cognitive test scores for disadvantaged children, these do not translate into more favorable educational outcomes, partly because of disincentives to acquire education arising from the redistributional policies that increase income mobility.
    Keywords: inequality, education, social mobility, comparative analysis of systems
    JEL: I32 I28 I24 P51
    Date: 2016–06
  2. By: Carlos Henrique Corseuil (IPEA); Miguel Foguel (IPEA); Gustavo Gonzaga (Department of Economics, PUC-Rio)
    Abstract: The objective of this paper is to evaluate the Brazilian Apprenticeship program (Lei do Aprendiz). This program is a youth-targeted ALMP that has been adopted at a large scale since 2000 in Brazil. The program concedes payroll subsidies to firms that hire and train young workers under special temporary contracts aiming to help them successfully complete the transition from school to work. We make use of a very rich longitudinal matched employee-employer dataset covering the universe of formally employed workers in Brazil, including apprentices. Our identification strategy exploits a discontinuity by age in the eligibility to enter the program in the early 2000’s, when 17 was the age limit to take part in the program. We examine the impacts on employability, wage growth and attachment to the formal labor market using other temporary workers as a control group. We find that the program increases the probability of employment in permanent jobs in 2-3- and 4-5-year horizons. We also find a positive impact on real wages that increases over time. These results hold when we isolate the effects of the training dimension of the program by using an alternative control group composed of subsidized temporary workers. We show evidence that the positive effects of the program are much larger for less-educated workers and for workers who had their first jobs in large firms. These results are robust to other choices of methods to address selection into the program based on unobservables. Creation-Date: 2016-04
  3. By: Philippe De Donder (Toulouse School of Economics); John E. Roemer (Dept. of Political Science & Cowles Foundation, Yale University)
    Abstract: We develop a dynamic model where a competitive ?rm produces a single good from labor and capital, with market clearing rates of return. Individuals are heterogeneous in skills, with an endowment in capital/wealth increasing in skill. Individuals aspire to a standard consumption level, with a constant marginal propensity to consume out of income above this level. We de?ne a steady state of this model as an equilibrium where factor returns and wealth shares remain constant. We calibrate the model to the US economy and obtain that a steady state exists. We then study three variants of the model: one with a higher rate of return for large capitals than for smaller ones, one with social mobility, and one with a capital levy ?nancing a lump sum transfer. In all variants, a steady state exists. We also run the model starting from the 2012 US wealth distribution and obtain convergence to the steady state in the basic model as well as in all variants. Convergence takes a long time and is non monotone, with factor returns and wealth shares moving away from their steady state values for long periods.
    Keywords: Piketty, dynamics of wealth accumulation, convergence to steady state, spirit of capitalism, differential rates of return to capital, intergenerational mobility, capital levy, US calibration
    JEL: D31 D58 E37
    Date: 2016–06
  4. By: Pieters, Janneke (Wageningen University); Rawlings, Samantha (University of Reading)
    Abstract: This paper studies the causal effect of maternal and paternal unemployment on child health in China, analyzing panel data for the period 1997-2004, when the country underwent economic reforms leading to massive layoffs. We find that paternal unemployment reduces child health, while maternal unemployment has beneficial child health impacts. Analysis of channels shows that paternal and maternal unemployment have different effects on income, time use, mothers' blood pressure, and certain health investments, including children's diets. Our results support the notion that traditional gender roles can explain why mothers and fathers' unemployment affect child health so differently.
    Keywords: child health, unemployment, nutrition, China
    JEL: I12 J13 J69 O15
    Date: 2016–06
  5. By: Brown, Alessio (UNU‐MERIT, Maastricht University); Kohlbrecher, Britta (Friedrich-Alexander-Universität Erlangen-Nürnberg); Merkl, Christian (Friedrich-Alexander-Universität Erlangen-Nürnberg, and IZA); Snower, Dennis J. (Kiel Institute for the World Economy, IZA, CEPR, and Christian -Albrechts-Universität Kiel)
    Abstract: In the standard macroeconomic search and matching model of the labour market, there is a tight link between the effects of (i) productivity on unemployment and (ii) unemployment benefits on unemployment. This tight link is at odds with the empirical literature. We present a two-sided model of labour market search where the household and firm decisions are decomposed into job offers, job acceptances, firing, and quits. In such a model, unemploy-ment benefits affect households’ behaviour directly, without having to run via the bargained wage. In line with the evidence, productivity shocks may have quantitatively large effects on unemployment, while benefits only have moderate effects. Our analysis shows the importance of investigating the effects of policies on the households’ work incentives and the firms’ employment incentives within the search process.
    Keywords: Unemployment benefits, search and matching, aggregate shocks, macro model, labour market
    JEL: E24 E32 J63 J64
    Date: 2016–05–24
  6. By: Luisa Corrado (DEF and CEIS, Università di Roma "Tor Vergata" and University of Cambridge); Giuseppe De Michele (DEF, Università di Roma "Tor Vergata")
    Abstract: Within the OECD Better Life Initiative, the Better Life Index (BLI) represents a major attempt to measure well-being and societal progress beyond GDP, following up the recommendations outlined in the Stiglitz-Sen-Fitoussi Commission report. Using a Structural Equation Modeling (SEM) approach, we estimate BLI as a latent construct starting from eleven underlying dimensions of well-being. This method, based on variance-covariance matrices, allow us to study the interrelations and causal relationships across well-being determinants and across the underlying drivers of well-being. In our analysis we utilize two di¤erent comparable OECD datasets for the year 2012, one based on average country-level data re?ecting well-being outcomes, the other one on microdata re?ecting people?s stated preferences on well-being indicators. In order to deal with the idiosyncratic structures of the datasets, we apply two Structural Equation Modeling techniques ?bootstrapped SEM and Generalised SEM MIMIC-to estimate the relative weights and rankings of BLI dimensions. We then build an 'objective' BLI measure predicted from the national-level data, whereas a ?subjective? BLI is obtained using the new OECD microdata. Finally, we conclude our analysis comparing the objective and subjective BLI dimensions weights and country rankings and discussing the main policy implications.
    Keywords: Structural Equation Modeling, Latent Multidimensional Index, Beyond GDP, SubjectiveWell-Being Index, ObjectiveWell-Being Index, Stated Preference, Generalised SEM MIMIC, GSEM, Bootstrapped SEM, Small Sample Size, Weights.
    JEL: C43 C83 D12 I31
    Date: 2016–06–24
  7. By: Heckman, James J. (University of Chicago); Corbin, Chase O. (Center for the Economics of Human Development (CEHD))
    Abstract: This paper discusses the relevance of recent research on the economics of human development to the work of the Human Development and Capability Association. The recent economics of human development brings insights about the dynamics of skill accumulation to an otherwise static literature on capabilities. Skills embodied in agents empower people. Enhanced skills enhance opportunities and hence promote capabilities. We address measurement problems common to both the economics of human development and the capability approach. The economics of human development analyzes the dynamics of preference formation, but is silent about which preferences should be used to evaluate alternative policies. This is both a strength and a limitation of the approach.
    Keywords: skills, capabilities, freedom, technology of skill formation
    JEL: D63 D04 D31 I31
    Date: 2016–06
  8. By: Mullen, Kathleen J.; Autor, David H.; Maestas, Nicole; Strand, Alexander
    Abstract: This paper measures the causal effect of time out of the labor force on subsequent employment of Social Security Disability Insurance (SSDI) applicants and distinguishes it from the discouragement effect of receiving disability benefits. Using a unique Social Security Administration workload database to identify exogenous variation in decision times induced by differences in processing speed among disability examiners to whom applicants are randomly assigned, we find that longer processing times reduce the employment and earnings of SSDI applicants for multiple years following application, with the effects concentrated among applicants awarded benefits during their initial application. A one standard deviation (2.1 month) increase in initial processing time reduces long-run "substantial gainful activity" rates by 0.36 percentage points (3.5%) and long-run annual earnings by $178 (5.1%). Because applicants initially denied benefits spend on average more than 15 additional months appealing their denials, previous estimates of the benefit receipt effect are confounded with the effect of delays on subsequent employment. Accounting separately for these channels, we find that the receipt effect is at least 50% larger than previously estimated. Combining the delay and benefits receipt channels reveals that the SSDI application process reduces subsequent employment of applicants on the margin of award by twice as much as prior literature suggests.
    Keywords: disability, labor force participation, transfer programs, social security
    JEL: H53 I13 J22 J38
    Date: 2015–01

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