nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2016‒11‒27
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Search, Matching and Training By Christopher Flinn; Ahu Gemici; Steven Laufer
  2. Individual Well-Being and the Allocation of Time Before and After the Boston Marathon Terrorist Bombing By Andrew Clark; Elena Stancanelli
  3. Firms and Labor Market Inequality: Evidence and Some Theory By David Card; Ana Rute Cardoso; Jörg Heining; Patrick Kline
  4. What is Different about Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States By Juan Pablo Chauvin; Edward Glaeser; Kristina Tobio
  5. Is a Minimum Wage an Appropriate Instrument for Redistribution? By Aart Gerritsen; Bas Jacobs
  6. What's the good of education on our overall quality of life?: a simultaneous equation model of education and life satisfaction for Australia By Nattavudh Powdthavee; Warn N. Lekfuangfu; Mark Wooden
  7. An Analysis of the Labor Market for Uber’s Driver-Partners in the United States By Jonathan V. Hall; Alan B. Krueger

  1. By: Christopher Flinn (New York University); Ahu Gemici (Royal Holloway, University of London); Steven Laufer (Federal Reserve Board)
    Abstract: We estimate a partial and general equilibrium search model in which firms and workers choose how much time to invest in both general and match-specific human capital. To help identify the model parameters, we use NLSY data on worker training and we match moments that relate the incidence and timing of observed training episodes to outcomes such as wage growth and job-to-job transitions. We use our model to offer a novel interpretation of standard Mincer wage regressions in terms of search frictions and returns to training. Finally, we show how a minimum wage can reduce training opportunities and decrease the amount of human capital in the economy.
    Keywords: wage regression, Mincer, minimum wage, training
    JEL: J24 D58 D83
    Date: 2016–11
  2. By: Andrew Clark (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Elena Stancanelli (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: There is a small literature on the economic costs of terrorism. We consider the effects of the Boston marathon bombing on Americans’ well-being and time allocation. We exploit data from the American Time Use Survey and Well-Being Module in the days around the terrorist attack to implement a regression-discontinuity design. The bombing led to a significant and large drop of about 1.5 points in well-being, on a scale of one to six, for residents of the States close to Boston. The happiness of American women also dropped significantly, by almost a point, regardless of the State of residence. Labor supply and other time use were not significantly affected. We find no well-being effect of the Sandy Hook shootings, suggesting that terrorism is different in nature from other violent deaths.
    Keywords: Well-being,Time Use,Terrorism
    Date: 2016–04
  3. By: David Card; Ana Rute Cardoso; Jörg Heining; Patrick Kline
    Abstract: We survey two growing bodies of research on firm-level drivers of labor market inequality. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks and control for the non-random sorting of workers to firms typically find that a 10% increase in value-added per worker leads to somewhere between a 0.5% and 1.5% increase in wages. Given the wide variation in firm-specific productivity, elasticities of this size suggest that a significant fraction of wage inequality is tied to firm performance. A second literature estimates two-way fixed effects models that rely on the wage changes of people who move between firms to identify firm-specific wage premiums. This literature also concludes that firm pay setting is important for wage inequality, with many studies finding that firm wage effects contribute approximately 20% of the overall variance of wages. To interpret these findings, we develop a model of firm wage setting in which workers have idiosyncratic tastes for different workplaces. We show that simple versions of this model can rationalize the standard two-way fixed effects specification proposed by Abowd, Kramarz and Margolis (1999), and can also match the typical “rent-sharing” elasticities estimated in the literature. Extended versions of the model can potentially explain differences in the wage premiums paid by a given employer to different subgroups of workers.
    JEL: D24 J31 J42
    Date: 2016–11
  4. By: Juan Pablo Chauvin (Harvard University); Edward Glaeser (Harvard University and NBERAuthor-Name: Yueran Ma; Harvard University); Kristina Tobio (Harvard University)
    Abstract: Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with analogous geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is more modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop.
    Keywords: Urbanization; developing countries; spatial equilibrium; agglomeration economies; human capital externalities
    JEL: O15 O18 R12 R23
    Date: 2016
  5. By: Aart Gerritsen (Max Planck Institute for Tax Law and Public Finance, Germany); Bas Jacobs (Erasmus University Rotterdam, The Netherlands)
    Abstract: We analyze the redistributional (dis)advantages of a minimum wage over income taxation in competitive labor markets, without imposing assumptions on the (in)efficiency of labor rationing. Compared to a distributionally equivalent tax change, a minimum-wage increase raises involuntary unemployment, but also raises skill formation as some individuals avoid unemployment. A minimum wage is an appropriate instrument for redistribution if and only if the public revenue gains from additional skill formation outweigh both the public revenue losses from additional unemployment and the utility losses of inefficient labor rationing. We show that this critically depends on how labor rationing is distributed among workers. A necessary condition for the desirability of a minimum-wage increase is that the public revenue gains from higher skill formation outweigh the revenue losses from higher unemployment. We write this condition in terms of measurable sufficient statistics. Our empirical analysis suggests that a minimum-wage increase is undesirable in nearly all OECD countries. A reduction in the minimum wage, along with tax adjustments that keep net incomes constant, would yield a Pareto improvement.
    Keywords: minimum wage; optimal redistribution; unemployment; skill formation
    JEL: D61 H21 J21 J24 J38
    Date: 2016–11–17
  6. By: Nattavudh Powdthavee; Warn N. Lekfuangfu; Mark Wooden
    Abstract: Many economists and educators favour public support for education on the premise that education improves the overall quality of life of citizens. However, little is known about the different pathways through which education shapes people's satisfaction with life overall. One reason for this is because previous studies have traditionally analysed the effect of education on life satisfaction using single-equation models that ignore interrelationships between different theoretical explanatory variables. In order to advance our understanding of how education may be related to overall quality of life, the current study estimates a structural equation model using nationally representative data for Australia to obtain the direct and indirect associations between education and life satisfaction through five different adult outcomes: income, employment, marriage, children, and health. Although we find the estimated direct (or net) effect of education on life satisfaction to be negative and statistically significant in Australia, the total indirect effect is positive, sizeable and statistically significant for both men and women. This implies that misleading conclusions regarding the influence of education on life satisfaction might be obtained if only single-equation models were used in the analysis.
    Keywords: Australia; indirect effect; education; structural equation model; life satisfaction; HILDA
    JEL: I20 I32
    Date: 2015–02
  7. By: Jonathan V. Hall; Alan B. Krueger
    Abstract: Uber, the ride-sharing company launched in 2010, has grown at an exponential rate. This paper provides the first comprehensive analysis of the labor market for Uber’s driver-partners, based on both survey and administrative data. Drivers who partner with Uber appear to be attracted to the platform largely because of the flexibility it offers, the level of compensation, and the fact that earnings per hour do not vary much with the number of hours worked. Uber’s driver-partners are more similar in terms of their age and education to the general workforce than to taxi drivers and chauffeurs. Most of Uber’s driver-partners had full- or part-time employment prior to joining Uber, and many continued in those positions after starting to drive with the Uber platform, which makes the flexibility to set their own hours all the more valuable. Uber’s driver-partners also often cited the desire to smooth fluctuations in their income as a reason for partnering with Uber.
    JEL: J01
    Date: 2016–11

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