nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒10‒16
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Inequality, Educational Choice and Public School Quality in Income Mixing Communities By Paolo Melindi-Ghidi
  2. Gender Biases in Delegation By Eleonora Bottino; Teresa García-Muñoz; Praveen Kujal
  3. Does Greater Inequality Lead to More Household Borrowing? New Evidence from Household Data By Coibion, Olivier; Gorodnichenko, Yuriy; Kudlyak, Marianna; Mondragon, John
  4. Lessons from the American Federal-State unemployment insurance system for a European unemployment benefits system By Christopher J. O'Leary; Burt S. Barnow
  5. Social protection systems in Latin America : an assessment By Ocampo, José Antonio.; Gómez-Arteaga, Natalie.

  1. By: Paolo Melindi-Ghidi (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales)
    Abstract: Why, in some urban communities, do rich and poor households cohabit while, in others, we observe sorting by income? To answer this question I develop a two-community general equilibrium framework of school quality, residential choice and tax decision with probabilistic voting. The model predicts that in highly unequal societies in which households segregate by schooling, low- and high-income households choose to live in the same community. When there is less inequality, we observe the typical sorting by income across communities. The theoretical model suggests that the effect of inequality on the quality of public schooling is ambiguous and depends on the relative endowments of housing in the two communities. When inequality increases, if housing in the community where rich and poor households cohabit is affordable, then an inflow of high-income middle class households towards this community emerges. As a consequence, inequality negatively impacts the quality of public schooling due to an ends-against-the-middle coalition that pushes tax rates down.
    Keywords: inequality,probabilistic voting,segregation,income mixing equilibrium
    Date: 2016–09
  2. By: Eleonora Bottino (ING Direct Madrid, Spain); Teresa García-Muñoz (Campus la Cartuja s/n, E-18011 Granada, Spain); Praveen Kujal (Middlesex University and Economic Science Institute, Chapman University)
    Abstract: We explore gender biases towards delegation in a modified (delegation) dictator game. Under compulsory delegation and no (gender) revelation no significant gender differences are observed for choices made by principals. Male agents share little with the recipients, meanwhile, female (agents) are not responsive to the incentive scheme and return less to the dictator. However, a clear dichotomy in female behavior is observed under gender revelation. As principals, females behave similar to their male counterparts and appoint as agents those who return more to them. On the other hand, as agents’ females show greater redistributive concerns relative to their male counterparts in the early periods even though it is detrimental to them over time. This results in both male and female principals delegating more to male agents over time.
    Keywords: Dictator game, delegation, gender
    JEL: J01 J16 J7
    Date: 2016
  3. By: Coibion, Olivier (University of Texas at Austin); Gorodnichenko, Yuriy (UC Berkeley); Kudlyak, Marianna (Federal Reserve Bank of San Francisco); Mondragon, John (Federal Reserve Bank of San Francisco)
    Abstract: Using household-level debt data over 2000-2012 and local variation in inequality, we show that low-income households in high-inequality regions (zip-codes, counties, states) accumulated less debt (relative to their income) than low-income households in lower-inequality regions, contrary to the prevailing view. Furthermore, the price of credit is higher and access to credit is harder for low-income households in high-inequality versus low-inequality regions. Lower quantities combined with higher prices suggest that the debt accumulation pattern by household income across areas with different inequality is a result of credit supply rather than credit demand. We propose a lending model to illustrate the mechanism.
    JEL: D14 E21 E51 G21
    Date: 2016–10–11
  4. By: Christopher J. O'Leary (W.E. Upjohn Institute for Employment Research); Burt S. Barnow (George Washington University)
    Abstract: The federal-state system of unemployment insurance (UI) in the United States was established by the Social Security Act of 1935 during the Great Depression. Under the program, states provide temporary partial wage replacement to involuntarily unemployed workers with significant labor force attachment. The federal government induced states to establish UI programs through two means: 1) a uniform federal tax imposed on employer payrolls, with a 90 percent reduction granted in states operating approved UI programs, and 2) grants to states to administer their programs. The system has evolved into a collection of separate state programs adapted to different regional, economic, and cultural contexts that all meet the same standards. This paper reviews state practices concerning applicant eligibility, benefit generosity, and benefit financing, with the aim of revealing lessons for a possible European unemployment benefit system (EUBS). We examine areas of federal leadership, explicit federal-state cooperation, and state innovation. While the U.S. system offers some good ideas for setting up an EUBS, there are also lessons in some shortcomings of the U.S. experience. We identify areas of risk for individual and institutional moral hazard in a multi-tiered UI system, and give examples of monitoring methods and incentives to ameliorate such risks. We suggest approaches for gradual system development, encouraging lower-tier behavior, benefit financing, and responses to regional and system-wide crises.
    Keywords: unemployment insurance, European unemployment benefit system, multi-tiered system, moral hazard, incentives, public finance
    JEL: J65 H81 H87
    Date: 2016–08
  5. By: Ocampo, José Antonio.; Gómez-Arteaga, Natalie.
    Keywords: social protection, social security, poverty alleviation, equal rights, economic development, Latin America
    Date: 2016

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