nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒01‒08
six papers chosen by

  1. Globalization and Wage Inequality By Elhanan Helpman
  2. Occupational Achievements by Sexual Orientation in the U.S.: Are There Differences Among Races? By Coral del Río; Olga Alonso-Villar
  3. Distributional National Accounts: Methods and Estimates for the United States By Thomas Piketty; Emmanuel Saez; Gabriel Zucman
  4. Inequality in Human Capital and Endogenous Credit Constraints By Rong Hai; James J. Heckman
  5. Intergenerational Mobility and Preferences for Redistribution By Alberto Alesina; Stefanie Stantcheva; Edoardo Teso
  6. Locus of Control and Investment in Training By Caliendo, Marco; Cobb-Clark, Deborah A.; Seitz, Helke; Uhlendorff, Arne

  1. By: Elhanan Helpman
    Abstract: Globalization has been blamed for rising inequality in rich and poor countries. Yet the views of many protagonists in this debate are not based on evidence. To help form an evidence-based opinion, I review in this paper the theoretical and empirical literature on the relationship between globalization and wage inequality. While the initial analysis that started in the early 1990s focused on a particular mechanism that links trade to wages, subsequent studies have considered several other channels, and the quantitative assessment of the size of these influences has been carried out in multiple studies. Building on this research, I conclude that trade played an appreciable role in increasing wage inequality, but that its cumulative effect has been modest, and that globalization does not explain the preponderance of the rise in wage inequality within countries.
    JEL: F10 F61 F66
    Date: 2016–12
  2. By: Coral del Río; Olga Alonso-Villar
    Abstract: This paper shows that the occupational sorting of racial-gender groups varies by sexual orientation. Except for Asians, women in same-sex couples are more evenly distributed across occupations than women in different-sex couples. Black and Hispanic men in same-sex couples are also less concentrated in occupations than their straight counterparts, while the pattern for Asian and white men is less conclusive. In addition, the analysis reveals that, except for black women (whose monetary losses associated with their sorting do not seem to be affected by sexual orientation), for the remaining female groups, the occupational achievements of lesbians are higher than those of their straight counterparts. The occupational attainments of gay men are also higher than those of straight men of the same race/ethnicity. However, when comparing workers having bachelor’s degrees with their peers in education, the gains of Asian lesbian and straight women associated with their occupational sorting almost disappear and white lesbian women no longer have gains. Asian and white gay men still have gains associated with their sorting, although lower than those of their straight counterparts. Black and Hispanic gay men do remain better off than their straight counterparts, although they have losses associated with their sorting. When comparing workers with a low educational level with their peers in education, the only groups with gains associated with their sorting are white straight and gay men, especially the former. Gay men are worse off than straight men of the same race/ethnicity, while lesbian women tend to have lower losses than their straight counterparts.
    Keywords: Sexual orientation; gender; race; occupational segregation; wages; wellbeing
    JEL: D63 I31 J15 J16
    Date: 2016–12
  3. By: Thomas Piketty; Emmanuel Saez; Gabriel Zucman
    Abstract: This paper combines tax, survey, and national accounts data to estimate the distribution of national income in the United States since 1913. Our distributional national accounts capture 100% of national income, allowing us to compute growth rates for each quantile of the income distribution consistent with macroeconomic growth. We estimate the distribution of both pre-tax and post-tax income, making it possible to provide a comprehensive view of how government redistribution affects inequality. Average pre-tax national income per adult has increased 60% since 1980, but we find that it has stagnated for the bottom 50% of the distribution at about $16,000 a year. The pre-tax income of the middle class—adults between the median and the 90th percentile—has grown 40% since 1980, faster than what tax and survey data suggest, due in particular to the rise of tax-exempt fringe benefits. Income has boomed at the top: in 1980, top 1% adults earned on average 27 times more than bottom 50% adults, while they earn 81 times more today. The upsurge of top incomes was first a labor income phenomenon but has mostly been a capital income phenomenon since 2000. The government has offset only a small fraction of the increase in inequality. The reduction of the gender gap in earnings has mitigated the increase in inequality among adults. The share of women, however, falls steeply as one moves up the labor income distribution, and is only 11% in the top 0.1% today.
    JEL: E01 H2 H5 J3
    Date: 2016–12
  4. By: Rong Hai; James J. Heckman
    Abstract: This paper investigates the determinants of inequality in human capital with an emphasis on the role of the credit constraints. We develop and estimate a model in which individuals face uninsured human capital risks and invest in education, acquire work experience, accumulate assets and smooth consumption. Agents can borrow from the private lending market and from government student loan programs. The private market credit limit is explicitly derived by extending the natural borrowing limit of Aiyagari (1994) to incorporate endogenous labor supply, human capital accumulation, psychic costs of working, and age. We quantify the effects of cognitive ability, noncognitive ability, parental education, and parental wealth on educational attainment, wages, and consumption. We conduct counterfactual experiments with respect to tuition subsidies and enhanced student loan limits and evaluate their effects on educational attainment and inequality. We compare the performance of our model with an influential ad hoc model in the literature with education-specific fixed loan limits. We find evidence of substantial life cycle credit constraints that affect human capital accumulation and inequality. The constrained fall into two groups: those who are permanently poor over their lifetimes and a group of well-endowed individuals with rising high levels of acquired skills who are constrained early in their life cycles. Equalizing cognitive and noncognitive ability has dramatic effects on inequality. Equalizing parental backgrounds has much weaker effects. Tuition costs have weak effects on inequality.
    JEL: I2 J2
    Date: 2016–12
  5. By: Alberto Alesina (Harvard University); Stefanie Stantcheva (Harvard University); Edoardo Teso (Harvard University)
    Abstract: Using newly collected cross-country survey and experimental data, we investigate how beliefs about intergenerational mobility affect preferences for redistribution in five countries: France, Italy, Sweden, U.K., and U.S. Americans are more optimistic than Europeans about intergenerational mobility, and too optimistic relative to actual mobility. Our randomized treatment that shows respondents pessimistic information about mobility increases support for redistribution, mostly for equality of opportunity policies. A strong political polarization exists: Left-wing respondents are more pessimistic about intergenerational mobility, their preferences for redistribution are correlated with their mobility perceptions, and they respond to pessimistic information by increasing support for redistribution. None of these apply to right-wing respondents, possibly because of their negative views of government.
    Keywords: redistribution, intergenerational mobility, taxation, online experiment, fairness
    JEL: D31 D72 H21 H23 H24 H41
    Date: 2016–12
  6. By: Caliendo, Marco (University of Potsdam); Cobb-Clark, Deborah A. (University of Sydney); Seitz, Helke (University of Potsdam); Uhlendorff, Arne (CREST)
    Abstract: This paper extends standard models of work-related training by explicitly incorporating workers' locus of control into the investment decision. Our model both differentiates between general and specific training and accounts for the role of workers and firms in training decisions. Workers with an internal locus of control are predicted to engage in more general training than are their external co-workers because their subjective expected investment returns are higher. In contrast, we expect little relationship between specific training and locus of control because training returns largely accrue to firms rather than workers. We then empirically test the predictions of our model using data from the German Socioeconomic Panel (SOEP). We find that, consistent with our model, locus of control is related to participation in general but not specific training. Moreover, we provide evidence that locus of control influences participation in general training through its effect on workers' expectations about future wage increases. Specifically, general training is associated with a much larger increase in the expected likelihood of receiving a future pay raise for those with an internal rather than external locus of control, while we do not find any relationship in the case of specific training. Actual post-training wages for those who receive general or specific training do not depend on locus of control.
    Keywords: human capital investment, on-the-job training, locus of control, wage expectations
    JEL: J24 C23 D84
    Date: 2016–12

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