nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒10‒30
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. Fiscal Policy, Inequality and the Poor in the Developing World By Nora Lustig
  2. Coping with Change: International Differences in the Returns to Skills By Hanushek, Eric A.; Schwerdt, Guido; Wiederhold, Simon; Woessmann, Ludger
  3. Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa By Nora Lustig
  4. SWB as a Measure of Individual Well-Being By Andrew E. Clark
  5. Economic Growth Evens-Out Happiness: Evidence from Six Surveys By Andrew E. Clark; Sarah Flèche; Claudia Senik
  6. Do Women Ask? By Mujcic, Redzo.,; Oswald, Andrew.J
  7. Retirement and the Marginal Utility of Income By Andrew E. Clark; Yarine Fawaz
  8. Adaptation and the Easterlin Paradox By Andrew E. Clark

  1. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: Using comparable fiscal incidence analysis, this paper examines the impact of fiscal policy on inequality and poverty in twenty-five countries for around 2010. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in four countries using US$1.25/day PPP poverty line, in 8 countries using US$2.50/day line, and 15 countries using the US$4/day line (over and above market income poverty). While spending on pre-school and primary school is pro-poor (i.e., the per capita transfer declines with income) in almost all countries, pro-poor secondary school spending is less prevalent, and tertiary education spending tends to be progressive only in relative terms (i.e., equalizing but not pro-poor). Health spending is always equalizing except for Jordan.
    Keywords: fiscal incidence, social spending, inequality, poverty, Developing Countries.
    JEL: H22 H5 D31 I3
    Date: 2016
    URL: http://d.repec.org/n?u=RePEc:tul:ceqwps:1323&r=ltv
  2. By: Hanushek, Eric A. (Stanford University); Schwerdt, Guido (University of Konstanz); Wiederhold, Simon (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: Expanded international data from the PIAAC survey of adult skills allow us to analyze potential sources of the cross-country variation of comparably estimated labor-market returns to skills in a more diverse set of 32 countries. Returns to skills are systematically larger in countries that have grown faster in the recent past, consistent with models where skills are particularly important for adaptation to dynamic economic change.
    Keywords: economic growth, returns to education, cognitive skills, international comparisons
    JEL: J31 I20 O15
    Date: 2016–09
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp10249&r=ltv
  3. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in Brazil and Colombia (over and above market income poverty) due to high consumption taxes on basic goods. The marginal contribution of direct taxes, direct transfers and in- kind transfers is always equalizing. The marginal effect of net indirect taxes is unequalizing in Brazil, Colombia, Indonesia and South Africa. Total spending on education is pro-poor except for Indonesia, where it is neutral in absolute terms. Health spending is pro-poor in Brazil, Chile, Colombia and South Africa, roughly neutral in absolute terms in Mexico, and not pro-poor in Indonesia and Peru. Length: 34 pages
    Keywords: fiscal incidence, social spending, inequality, developing countries
    JEL: H22 D31 I3
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:tul:ceqwps:1331&r=ltv
  4. By: Andrew E. Clark (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics)
    Abstract: There is much discussion about using subjective well-being measures as inputs into a social welfare function, which will tell us how well societies are doing. But we have (many) more than one measure of subjective well-being. I here consider examples of the three of the main types (life satisfaction, affect, and eudaimonia) in three European surveys. These are quite strongly correlated with each other, and are correlated with explanatory variables in pretty much the same manner. I provide an overview of a recent literature which has compared how well different subjective well-being measures predict future behaviour, and address the issue of the temporality of well-being measures, and whether they should be analysed ordinally or cardinally.
    Keywords: Measurement,Predicting behaviour,Affect,Eudaimonia,Subjective well-being,Life satisfaction
    Date: 2015–03
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01134483&r=ltv
  5. By: Andrew E. Clark (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)); Sarah Flèche (Centre for Economic Performance - LSE - London School of Economics and Political Science); Claudia Senik (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), UP4 - Université Paris-Sorbonne)
    Abstract: In spite of the great U-turn that saw income inequality rise in Western countries in the 1980s, happiness inequality has fallen in countries that have experienced income growth (but not in those that did not). Modern growth has reduced the share of both the “very unhappy” and the “perfectly happy”. Lower happiness inequality is found both between and within countries, and between and within individuals. Our cross-country regression results argue that the extension of various public goods helps to explain this greater happiness homogeneity. This new stylised fact arguably comes as a bonus to the Easterlin paradox, offering a somewhat brighter perspective for developing countries.
    Keywords: development,economic growth,inequality,Happiness,Easterlin paradox
    Date: 2014–11
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01080877&r=ltv
  6. By: Mujcic, Redzo., (Faculty of Health and Behavioural Sciences, University of Queensland); Oswald, Andrew.J (Department of Economics, University of Warwick)
    Abstract: Objectives : To explore whether improvements in psychological well-being occur after increases in fruit and vegetable consumption.Methods : Longitudinal food diaries were examined on 12,000 randomly samples Australian adults over 2007, 2009, and 2013. The study examined fixed-effects regression equations on individuals' happiness and life satisfaction. It adjusted for a large set of other influences, including people's changing incomes and personal circumstances. Prospective analysis, Granger-causality tests, and instrumental-variable estimation were also done.Results : Increases in fruit and vegetable intake were predictive of increases in happiness and life satisfaction. Well-being improvements were of up to 0.24 life-satisfaction points (for an increase of 8 portions a day), which is equal size to the psychological gain of moving from unemployment to employment. Improvements occurred within 24 months. Conclusions : People's motivation to eat healthy food is weakened by the fact that physical-health benefits accrue decades later. This study offers a new possibility. Public-health policy could emphasise immediate well-being improvement from healthy eating. Policy Implications : Citizens could be shown longitudinal evidence that 'happiness' gains from healthy eating can occur quickly and many years before enhances physical health.
    Date: 2016
    URL: http://d.repec.org/n?u=RePEc:wrk:warwec:1128&r=ltv
  7. By: Andrew E. Clark (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Yarine Fawaz (UAB - Universitat Autònoma de Barcelona [Barcelona])
    Abstract: The individual level of subjective well-being (SWB) has been shown to predict a number of future observable outcomes. Behaviour may however also be affected by the slope of SWB with respect to certain variables. We here use latentclass analysis to model both intercept and slope heterogeneity in the SWB-income relationship, and construct a continuous measure of the marginal utility of income. We show this marginal utility does predict future behaviour: those who value income more (who have a higher income elasticity of well-being) are less likely to retire. This correlation is found conditional on both the level of income and the level of well-being.
    Keywords: Subjective Well-being,Retirement,Marginal Utility of Income,Latent Class Models
    Date: 2015–09
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01189009&r=ltv
  8. By: Andrew E. Clark (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics)
    Abstract: Two behavioural explanations of the Easterlin Paradox are commonly advanced. The first appeals to social comparisons, whereby individual i compares her income (Yit) to a comparison income level earned by some other individual or group j (Y*jt). The second explanation is that of adaptation to higher levels of income. This is of the same nature, but here the individual’s current income is compared to her own income in the past (i.e. Yit is compared to Yit-τ, for some positive value or values of τ). The first of these explanations has attracted far more empirical attention than has the second. This is probably for data-availability reasons, as the investigation of the latter requires panel information. There is also a suspicion that large changes in Yit might be accompanied by a movement in some other variable that is also correlated with subjective well-being. We here review the empirical evidence that individuals do indeed compare current to past income, and then whether individuals adapt in general to aspects of their economic and social life. Last, we ask whether adaptation is in fact a viable explanation of the Easterlin Paradox.
    Keywords: Income,Adaptation,Easterlin Paradox
    Date: 2015–02
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01112725&r=ltv

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