nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒02‒12
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries By Nora Lustig
  2. Labor market imperfections and the firm’s wage setting policy By Sónia Félix; Pedro Portugal
  3. Is Global Equality the Enemy of National Equality? By Rodrik, Dani
  4. Fairness and well-being measurement By FLEURBAEY, Marc; MANIQUET, François
  5. Occupational Choice and Matching in the Labor Market By Eric Mak; Aloysius Siow

  1. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: Current policy discussion focuses primarily on the power of fiscal policy to reduce inequality. Yet, comparable fiscal incidence analysis for twenty-eight low and middle income countries reveals that, although fiscal systems are always equalizing, that is not always true for poverty. In Ethiopia, Tanzania, Ghana, Nicaragua, and Guatemala the extreme poverty headcount ratio is higher after taxes and transfers (excluding in-kind transfers) than before. In addition, to varying degrees, in all countries a portion of the poor are net payers into the fiscal system and are thus impoverished by the fiscal system. Consumption taxes are the main culprits of fiscally-induced impoverishment. Net direct taxes are always equalizing and indirect taxes net of subsidies are equalizing in nineteen countries of the twenty-eight. 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 but not always pro-poor. More unequal countries devote more resources to redistributive spending and appear to redistribute more. The latter, however, is not a robust result across specifications.
    Keywords: fiscal incidence, social spending, inequality, poverty, developing countries
    JEL: H22 H5 D31 I3
    Date: 2017–01
    URL: http://d.repec.org/n?u=RePEc:tul:wpaper:1701&r=ltv
  2. By: Sónia Félix; Pedro Portugal
    Abstract: We use matched employer-employee data and firm balance sheet data to investigate the importance of firm productivity and firm labor market power in explaining firm heterogeneity in wage formation. We use a linear regression model with one interacted high dimensional fixed effect to estimate 5-digit sector-specific elasticity of output with respect to input factors directly from the production function. This allows us to derive firm specific price-cost mark-up and elasticity of labor supply. The results show that firms possess a considerable degree of product and labor market power. Furthermore, we find evidence that a firm’s monopsony power negatively affects the earnings of its workers, and firm’s total factor productivity is closely associated with higher earnings, ceteris paribus. We also find that firms use monopsony power for wage differentiation between male and female workers.
    JEL: J31 J20 J42
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:ptu:wpaper:w201704&r=ltv
  3. By: Rodrik, Dani
    Abstract: The bulk of global inequality is accounted for by income differences across countries rather than within countries. Expanding trade with China has aggravated inequality in some advanced economies, while ameliorating global inequality. But the 'China shock' is receding and other low-income countries are unlikely to replicate China's export-oriented industrialization experience. Relaxing restrictions on cross-border labor mobility might have an even stronger positive effect on global inequality. However it also raises a similar tension. While there would likely be adverse effects on low-skill workers in the advanced economies, international labor mobility has some advantages compared to further liberalizing international trade in goods. I argue that none of the contending perspectives -- national-egalitarian, cosmopolitan, utilitarian -- provides on its own an adequate frame for evaluating the consequences.
    Date: 2017–01
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:11812&r=ltv
  4. By: FLEURBAEY, Marc (Princeton University); MANIQUET, François (Université catholique de Louvain, CORE, Belgium)
    Abstract: We assume that economic justice requires resources to be allocated fairly, and we construct individual well-being measures that embody fairness principles in interpersonal comparisons. These measures are required to respect agents’ preferences. Across preferences well-being comparisons are required to depend on comparisons of the bundles of resources consumed by agents. We axiomatically justify two main families of well-being measures reminiscent to the ray utility and money-metric utility functions.
    Keywords: fairness, well-being measure, preferences
    JEL: D63 I32
    Date: 2016–11–22
    URL: http://d.repec.org/n?u=RePEc:cor:louvco:2016040&r=ltv
  5. By: Eric Mak; Aloysius Siow
    Abstract: Integrating Roy with Becker, this paper studies occupational choice and matching in the labor market. Our model generates occupation earnings distributions which are right skewed, have firm fixed effects, and large changes in aggregate earnings inequality without significant changes in within firm inequality. The estimated model fits the earnings distribution both across and within firms in Brazil in 1999. It shows that the recent decrease in aggregate Brazilian earnings inequality is largely due to the increase in her educational attainment over the same years. A simulation of skilled biased technical change in the model also qualitatively fit the recent changes in earnings inequality in the United States.
    Keywords: occupational choice, matching, earnings distribution, inequality
    JEL: J J31
    Date: 2017–02–03
    URL: http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-577&r=ltv

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