nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒08‒14
six 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 Rasmus Landersø; James J. Heckman
  2. New Evidence on Trust and Well-being By John F. Helliwell; Haifang Huang; Shun Wang
  3. The marriage market, labour supply and education choice By Pierre-André Chiappori; Monica Costa Dias; Costas Meghir
  4. Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries By Erling Barth; James Davis; Richard B. Freeman; Sari Pekkala Kerr
  5. How Japan and the US Can Reduce the Stress of Aging By Claudia Goldin
  6. Heads or Tails: The Impact of a Coin Toss on Major Life Decisions and Subsequent Happiness By Steven D. Levitt

  1. By: Rasmus Landersø; James J. Heckman
    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.
    JEL: I24 I28 I32 P51
    Date: 2016–07
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:22465&r=ltv
  2. By: John F. Helliwell; Haifang Huang; Shun Wang
    Abstract: This paper first uses data from three large international surveys – the Gallup World Poll, the World Values Survey and the European Social Survey – to estimate income-equivalent values for social trust, with a likely lower bound equivalent to a doubling of household income. Second, the more detailed and precisely measured trust data in the European Social Survey (ESS) show that social trust is only a part of the overall climate of trust. While social trust and trust in police are the most important elements, there are significant additional benefits from trust in three aspects of the institutional environment: the legal system, parliament and politicians. Thus estimates of the total well-being value of a trustworthy environment are larger than those based on social trust alone. Third, the ESS data show that living in a high-trust environment makes people more resilient to adversity. Being subject to discrimination, ill-health or unemployment, although always damaging to subjective well-being, is much less damaging to those living in trustworthy environments. These results suggest a fresh set of links between trust and inequality. Individuals who are subject to discrimination, ill-health or unemployment are typically concentrated towards the lower end of any national distribution of happiness. Thus the resilience-increasing feature of social trust reduces well-being inequality by channeling the largest benefits to those at the low end of the well-being distribution.
    JEL: I31 J15 O57
    Date: 2016–07
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:22450&r=ltv
  3. By: Pierre-André Chiappori (Institute for Fiscal Studies and Columbia University); Monica Costa Dias (Institute for Fiscal Studies and Institute for Fiscal Studies); Costas Meghir (Institute for Fiscal Studies and 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 investments in 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.
    Date: 2016–07–18
    URL: http://d.repec.org/n?u=RePEc:ifs:ifsewp:16/09&r=ltv
  4. By: Erling Barth; James Davis; Richard B. Freeman; Sari Pekkala Kerr
    Abstract: This paper finds that US employment changed differently relative to output in the Great Recession and recovery than in most other advanced countries or in the US in earlier recessions. Instead of hoarding labor, US firms reduced employment proportionately more than output in the Great Recession, with establishments that survived the downturn contracting jobs massively. Diverging from the aggregate pattern, US manufacturers reduced employment less than output while the elasticity of employment to gross output varied widely among establishments. In the recovery, growth of employment was dominated by job creation in new establishments. The variegated responses of employment to output challenges extant models of how enterprises adjust employment over the business cycle.
    JEL: J0 J00 J01 J08 J10 J24 J60 J64 J70 J80
    Date: 2016–07
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:22432&r=ltv
  5. By: Claudia Goldin
    Abstract: The Japanese are becoming older. Americans are also becoming older. Demographic stress in Japan, measured by the dependency ratio (DR), is currently about 0.64. In the immediate pre-WWII era it was even higher because Japan’s total fertility rate (TFR) was in the 4 to 5 range. As the TFR began to decline in the post-WWII era, the DR fell and hit a nadir of 0.44 in 1990. But further declining fertility and rising life expectancy caused the DR to shoot up after 1995. In this short note I simulate the DR under various conditions and make comparisons with the US. Japan has experienced a large increase in its DR because its fertility rate is low, its people are long lived and it has little immigration. Fertility is the largest of the contributors in Japan. If there are no demographic changes in Japan, the DR will be 0.88 by 2050. I also assess the role of the “baby boom” of the late 1940s and show that it was compensatory, unlike that in the US. The good news is that healthier older longer-lived people will continue to be employed for many more years than previously and that is one way to reduce demographic stress.
    JEL: I10 J11 J14 J26
    Date: 2016–07
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:22445&r=ltv
  6. By: Steven D. Levitt
    Abstract: Little is known about whether people make good choices when facing important decisions. This paper reports on a large-scale randomized field experiment in which research subjects having difficulty making a decision flipped a coin to help determine their choice. For important decisions (e.g. quitting a job or ending a relationship), those who make a change (regardless of the outcome of the coin toss) report being substantially happier two months and six months later. This correlation, however, need not reflect a causal impact. To assess causality, I use the outcome of a coin toss. Individuals who are told by the coin toss to make a change are much more likely to make a change and are happier six months later than those who were told by the coin to maintain the status quo. The results of this paper suggest that people may be excessively cautious when facing life-changing choices.
    JEL: D12 D81
    Date: 2016–08
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:22487&r=ltv

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