nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒11‒06
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. The Marriage Market, Labor Supply and Education Choice By Monica Costa-Dias
  2. The Impact of Immigration: Why Do Studies Reach Such Different Results? By Christian Dustmann; Uta Schönberg; Jan Stuhler
  3. Sex-Differences in Language and Socio-Emotional Skills: Evidence from Large Scale Studies of Very Young Children By Bando, Rosangela; López Bóo, Florencia
  4. The Redistributive Impactive of Government Spending on Education and Health Evidence from Thirteen Developing Countries in the Commitment to Equity Project By Nora Lustig
  5. Health, Consumption and Inequality By Jose-Victor Rios-Rull; Josep Pijoan-Mas
  6. Marriage and Marriage Markets By Grossbard, Shoshana
  7. Earnings and Consumption Dynamics: A Nonlinear Panel Data Framework By Manuel Arellano; Richard Blundell; Stéphane Bonhomme
  8. Early Childcare, Child Cognitive Outcomes and Inequalities in the UK By Del Boca, Daniela; Piazzalunga, Daniela; Pronzato, Chiara D.
  9. Lifecycle Consumption Under Different Income Profiles: Experimental Evidence By John Duffy; Yue Li
  10. The Intergenerational Transmission of Human Capital and Earnings in Contemporary Russia By Borisov, Gleb V.; Pissarides, Christopher A.

  1. By: Monica Costa-Dias (Institute for Fiscal Studies)
    Abstract: We develop an equilibrium life-cycle 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 intra-household allocation of resources. Following marriage households (married or single) save, supply labor and consume private and public under uncertainty. Marriage thus has the dual role of providing public goods and offering risk sharing. The model is estimated using the British Household Panel Survey.
    Date: 2016
  2. By: Christian Dustmann (University College London and CReAM); Uta Schönberg (University College London and CReAM); Jan Stuhler (Universidad Carlos III de Madrid)
    Abstract: We classify the empirical literature on the wage impact of immigration into three groups, where studies in the first two estimate different relative effects, and the third the total effect of immigration on wages. We interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable. We then relax two key assumptions in this literature, allowing for inelastic and heterogeneous labor supply elasticities of natives and the downgrading of immigrants. We show that heterogeneous labor supply elasticities, if ignored, may complicate the interpretation of wage estimates, in particular of relative wage effects. Moreover, downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration, but not in approaches that estimate total effects. We conclude that empirical models that estimate total effects not only answer important policy questions, but are also more robust to alternative assumptions than models that estimate relative effects.
    Keywords: Immigration, impact, wage effects
    JEL: J21 J23 J24 J31 J61
    Date: 2016–10
  3. By: Bando, Rosangela (Inter-American Development Bank); López Bóo, Florencia (Inter-American Development Bank)
    Abstract: This study explores sex differences in language and socio-emotional skills on children 7 months to 6 years old in Latin-America. Females had a significant advantage in both dimensions. To our knowledge, this is the first study to document sex differences in these dimensions at a very young age. In part, we believe this is due to our uniquely large sample size. We found geographical and cultural variation across the countries under study did not affect the gap. Within countries, variation in family characteristics, parenting practices and health investments did not explain the gap. The identification of biological and environmental factors is necessary to inform whether policy should tailor inputs to ensure equality of opportunities.
    Keywords: gender gaps, sex gaps, language, social skills, emotional skills, early childhood
    JEL: I25 J13 J16 O15 Z13
    Date: 2016–10
  4. By: Nora Lustig (Stone Center for Latin American Studies, Department of Economics, Tulane University.)
    Abstract: Here, I examine the level, redistributive impact and pro-poorness of government spending on education and health for thirteen developing countries from the Commitment to Equity project. Social spending as a share of total income is high by historical standards, and it rises with income per capita and income inequality. Spending on education and health lowers inequality and its marginal contribution to the overall decline in inequality is, on average, 69 percent. There appears to be no “Robin Hood Paradox:” redistribution increases with income inequality, even if one controls for per capita income. Concentration coefficients indicate that spending on pre-school, primary and secondary education is pro-poor in twelve countries. Spending on tertiary education is regressive and unequalizing in three countries, and progressive and equalizing (but not pro-poor) in ten. Health spending is pro-poor in five countries. Of the remaining eight, health spending per capita is roughly equal across the income distribution in three, and progressive and equalizing (but not pro-poor) in five.
    Keywords: fiscal incidence, social spending, inequality, developing countries
    JEL: H22 D31 I3
    Date: 2015–03
  5. By: Jose-Victor Rios-Rull (University of Pennsylvania); Josep Pijoan-Mas (CEMFI)
    Abstract: We use a stylized model of endogenous health choices to construct compensated variation measures of inequality between individuals in different education and wealth groups at age 50, taking into account differences in consumption, differences in health, and differences in mortality between types. In doing so, we allow for the more disadvantaged types to take actions to improve their health when given some extra income. We use a simple revealed preference argument to measure the health-improving technology with information on consumption, medical expenditure, and health transitions by different types. We find that inequality in education is much more damaging in welfare terms than education in wealth due to the larger differences in life expectancy by education groups than by wealth groups. Our estimates of health technology show that only a small fraction of life expectancy differences between individuals of different education can be imputed to differential medical expenditure after age 50.
    Date: 2016
  6. By: Grossbard, Shoshana (San Diego State University)
    Abstract: This paper reviews models of marriage, with special emphasis on how the sex ratio (the ratio of marriageable men to women) can help explain measurable outcomes such as marriage formation, intra-marriage distribution of consumption goods, savings, labor supply, leisure, type of relationship, divorce, and intermarriage. Predictions are based on Demand and Supply analyses by Becker and the author. Evidence in support of the predictions is reported, most of it based on recent literature.
    Keywords: marriage, marriage markets, sex ratio, savings, consumption, labor supply, cohort
    JEL: E2 J11 J12 J16 J22 O15 R2
    Date: 2016–10
  7. By: Manuel Arellano (Centro de Estudios Monetarios y Financieros); Richard Blundell (University College London); Stéphane Bonhomme (University of Chicago)
    Abstract: We develop a new quantile-based panel data framework to study the nature of income persistence and the transmission of income shocks to consumption. Log-earnings are the sum of a general Markovian persistent component and a transitory innovation. The persistence of past shocks to earnings is allowed to vary according to the size and sign of the current shock. Consumption is modeled as an age-dependent nonlinear function of assets, unobservable tastes and the two earnings components. We establish the nonparametric identification of the nonlinear earnings process and of the consumption policy rule. Exploiting the enhanced consumption and asset data in recent waves of the Panel Study of Income Dynamics, we find that the earnings process features nonlinear persistence and conditional skewness. We confirm these results using population register data from Norway. We then show that the impact of earnings shocks varies substantially across earnings histories, and that this nonlinearity drives heterogeous consumption responses. The framework provides new empirical measures of partial insurance in which the transmission of income shocks to consumption varies systematically with assets, the level of the shock and the history of past shocks.
    Keywords: earnings dynamics, Consumption, partial insurance, panel data, quantile regression, latent variables
    JEL: C23 D31 D91
    Date: 2016
  8. By: Del Boca, Daniela (University of Turin); Piazzalunga, Daniela (IRVAPP); Pronzato, Chiara D. (University of Turin)
    Abstract: The objective of this research is to explore the impact of early childcare on child cognitive outcomes. We utilize the Millennium Cohort Survey (MCS) for the United Kingdom, which provides very detailed information about several modalities of childcare as well as several child outcomes. In our empirical analysis, we estimate the association between formal childcare and child cognitive outcomes, allowing the effect of formal childcare to be different for children from different family backgrounds, controlling for a large number of variables (regarding the child, the mother, the father, the household). In a second step, we simulate how an increase in formal childcare attendance can affect inequalities across children. Our results show that childcare attendance has a positive impact on child cognitive outcomes, which are stronger for children from low socio–economic background.
    Keywords: child care, child outcomes, inequalities
    JEL: J13 H75
    Date: 2016–10
  9. By: John Duffy (Department of Economics, University of California-Irvine); Yue Li (SUNY-Albany)
    Abstract: We report on a series of economic decision-making experiments exploring how individuals make lifecycle consumption and saving plans when they face different income profiles. We find that for every income profile we consider, subjects on average over- consume in the early periods of life and under-consume in later periods of life relative to the conditional optimum and any sudden drop in income reduces their lifetime utility. We conduct a specification search for a model to explain our data and find that a two-type model with one type consuming the conditional optimum and the other type consuming endowments best fits our data.
    Keywords: Bond markets; Lifecycle model; Consumption and savings; Retirement planning; Behavioral and experimental economics
    JEL: C92 C91 D91 E21 H55
    Date: 2016–10
  10. By: Borisov, Gleb V. (St. Petersburg State University); Pissarides, Christopher A. (London School of Economics)
    Abstract: We make use of longitudinal data for the Russian economy over 1994-2013 to obtain earnings and education information about parents and children. We estimate the intergenerational transmission of educational attainment and earning capacity and find high intergenerational correlation of earnings for both sons and daughters independently of educational qualifications. We attribute them to the impact of informal networks. We also find high correlation of educational qualifications but with critical variations due to labour market conditions. At the time of transition around 1990 children's educational attainment fell well below parents but recovered a decade later when the economy was booming.
    Keywords: human capital, intergenerational education mobility, intergenerational earnings elasticity, Russia
    JEL: J21 J23 J24 J62 O15
    Date: 2016–10

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