nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒07‒30
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. The Marriage Market, Labor Supply and Education Choice By Pierre-Andre Chiappori; Monica Costa Dias; Costas Meghir
  2. Can Online Learning Bend the Higher Education Cost Curve? By Deming, David James; Goldin, Claudia D.; Katz, Lawrence F.; Yuchtman, Noam
  3. The UK wage premium puzzle: how did a large increase in university graduates leave the education premium unchanged? By Richard Blundell; David Green; Wenchao (Michelle) Jin
  4. Job Creation in a Multi-Sector Labor Market Model for Developing Economies By Arnab K. Basu; Nancy H. Chau; Gary S. Fields; Ravi Kanbur
  5. Life-Cycle Consumption Patterns at Older Ages in the US and the UK: Can Medical Expenditures Explain the Difference? By Banks, James; Blundell, Richard; Levell, Peter; Smith, James P.
  6. Child and Adolescent Obesity in Ireland: A Longitudinal Perspective By Madden, D.
  7. Long-Term Unemployment and the Great Recession: The Role of Composition, Duration Dependence, and Nonparticipation By Kroft, Kory; Lange, Fabian; Notowidigdo, Matthew J.; Katz, Lawrence F.
  8. Returns to Education: The Causal Effects of Education on Earnings, Health and Smoking By James J. Heckman; John Eric Humphries; Gregory Veramendi

  1. By: Pierre-Andre Chiappori (Dept. of Economics, Columbia University); Monica Costa Dias (Institute for Fiscal Studies); Costas Meghir (Cowles Foundation, Yale University)
    Abstract: We develop an equilibrium lifecycle model of education, marriage and labor supply and consumption in a transferable utility context. Individuals start by choosing their investmentsin education anticipating returns in the marriage market and the labor market. They then match based on the economic value of marriage and on preferences. Equilibrium in the marriage market determines intrahousehold allocation of resources. Following marriage households (married or single) save, supply labor and consume private and public commodities under uncertainty. Marriage thus has the dual role of providing public goods and offering risk sharing. The model is estimated using the British HPS.
    Keywords: Marriage market, Human capital, Labor supply, Life cycle models, Intrahousehold allocations, Collective model, Education choice, Returns to education
    JEL: J12 J16 J22 J24 H31 I24 I26
    Date: 2015–03
  2. By: Deming, David James; Goldin, Claudia D.; Katz, Lawrence F.; Yuchtman, Noam
    Abstract: We examine whether online learning technologies have led to lower prices in higher education. Using data from the Integrated Postsecondary Education Data System, we show that online education is concentrated in large for-profit chains and less-selective public institutions. Colleges with a higher share of online students charge lower tuition prices. We present evidence that real and relative prices for full-time undergraduate online education declined from 2006 to 2013. Although the pattern of results suggests some hope that online technology can “bend the cost curve†in higher education, the impact of online learning on education quality remains uncertain.
    Date: 2015
  3. By: Richard Blundell (Institute for Fiscal Studies and IFS and UCL); David Green (Institute for Fiscal Studies and University of British Colombia); Wenchao (Michelle) Jin (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: Since the early-1990s the UK experienced an unprecedented increase in university graduates. The proportion of people with a university degree by age 30 more than doubled from 16% for born in 1965-69 to 33% for those born ten years later. At the same time the age profile of the graduate premium remained largely unchanged across cohorts. This paper first establishes the facts using a detailed analysis of micro-data on wage and employment patterns over the last two decades, benchmarked against the US economy. We then show that the stability of the age profile in the premium across different birth cohorts is unlikely to be explained by either composition changes or selection on unobservables. We also argue that it is inconsistent with skill-biased technical change affecting all advanced economies in the same way. We further rule out explanations based on factor price equalisation. Our resolution of the puzzle is a model in which increases in level of education induce firms to transit toward a decentralised technology in which decision-making is spread more widely through the workforce. We provide empirical support for this view.
    Keywords: Wage premium, education differential, skill biased technical change, general purpose technology.
    Date: 2016–06–17
  4. By: Arnab K. Basu (Cornell University); Nancy H. Chau (Cornell University and Centro Studi Luca d’Agliano); Gary S. Fields (Cornell University); Ravi Kanbur (Cornell University)
    Abstract: This paper proposes an overlapping generations multi†sector model of the labor market for developing countries with three heterogeneities – heterogeneity within self†employment, heterogeneity in ability, and heterogeneity in age. We revisit an iconic paradox in a class of multi†sector labor market models in which the creation of high†age employment exacerbates unemployment. Our richer setting allows for generational differences in the motivations for job search to be reflected in two distinct inverted U†shaped relationships between unemployment and high†wage employment, one for Youth and a different one for adults. In turn, the relationship between overall unemployment and high†wage employment is shown to be non†monotonic and multi†peaked.  The model also sheds light on the implications of increasing high†wage employment on self†employed workers, who make up most of the world’s poor. Non†monotonicity in unemployment notwithstanding, increasing high†wage employment has an unambiguous positive impact on high†paying self†employment, and an unambiguous negative impact on free†entry (low†wage) self†employment.
    Keywords: Multisector Labor Market, Overlapping Generations, Poverty Reduction, Harris†Todaro Model
    JEL: O17 I32
    Date: 2016–06–01
  5. By: Banks, James; Blundell, Richard; Levell, Peter; Smith, James P.
    Abstract: Our data indicate significantly steeper declines in nondurable expenditures in the UK compared to the US in spite of income paths at older ages exhibiting similar declines. We examine several possible causes, including different employment paths, housing ownership and expenses, levels and paths of health status, and out-of -pocket medical expenditures. Among all the factors we considered, we find that differences in levels, age paths, and uncertainty in medical expenses is the most likely reason for the steeper declines in nondurable expenses in the US compared to the UK.
    JEL: D12 D14 D91
    Date: 2015–04
  6. By: Madden, D.
    Abstract: This paper examines developments in childhood and adolescent obesity in Ireland using two waves of the Growing Up in Ireland survey. Obesity appears to level off between the two waves though there is tentative evidence that the socioeconomic gradient, measured with respect to maternal education and family income, becomes steeper. Exploiting the longitudinal nature of the data, transitions into and out of obesity are examined, with higher rates of transition into obesity observed for those whose mothers have the lowest level of education. Decomposition of the concentration index with respect to income reveals a greater role for income related obesity mobility rather than obesity related income mobility.
    Keywords: obesity; socioeconomic gradient; longitudinal
    JEL: I12 I14
    Date: 2016–07
  7. By: Kroft, Kory; Lange, Fabian; Notowidigdo, Matthew J.; Katz, Lawrence F.
    Abstract: We explore the role of composition, duration dependence, and labor force nonparticipation in accounting for the sharp increase in the incidence of long-term unemployment (LTU) during the Great Recession. We show that compositional shifts account for very little of the observed increase in LTU. Using panel data from the Current Population Survey for 2002–7, we calibrate a matching model that allows for duration dependence in unemployment and transitions between employment, unemployment, and nonparticipation. The calibrated model accounts for almost all of the increase in LTU and much of the observed outward shift in the Beveridge curve between 2008 and 2013.
    Date: 2016
  8. By: James J. Heckman (The University of Chicago); John Eric Humphries (University of Chicago, Department of Economics); Gregory Veramendi (W.P. Carey School of Business, Arizona State University)
    Abstract: This paper estimates returns to education using a dynamic model of educational choice that synthesizes approaches in the structural dynamic discrete choice literature with approaches used in the reduced form treatment effect literature. It is an empirically robust middle ground between the two approaches which estimates economically interpretable and policy-relevant dynamic treatment effects that account for heterogeneity in cognitive and non-cognitive skills and the continuation values of educational choices. Graduating college is not a wise choice for all. Ability bias is a major component of observed educational differentials. For some, there are substantial causal effects of education at all stages of schooling.
    Keywords: education, Earnings, Health, rates of return, causal effects of education, cognitive skills, non-cognitive skills
    JEL: C32 C38 I12 I14 I21
    Date: 2016–06

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