nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒02‒26
five papers chosen by
Maximo Rossi
Universidad de la República

  1. The Life-cycle Benefits of an Influential Early Childhood Program By García, Jorge Luis; Heckman, James J.; Leaf, Duncan Ermini; Prados, Maria José
  2. Knowledge Capital and Aggregate Income Differences: Development Accounting for U.S. States By Ruhose, Jens; Hanushek, Eric A.; Woessmann, Ludger
  3. Wage Risk, Employment Risk and the Rise in Wage Inequality By Mecikovsky, Ariel; Wellschmied, Felix
  4. Determinants of Governmental Redistribution: Income Distribution, Development Levels, and the Role of Perceptions By Köllner, Sebastian; Gründler, Klaus
  5. When Work Disappears: Manufacturing Decline and the Falling Marriage-Market Value of Men By David Autor; David Dorn; Gordon Hanson

  1. By: García, Jorge Luis (University of Chicago); Heckman, James J. (University of Chicago); Leaf, Duncan Ermini (University of Southern California); Prados, Maria José (University of Southern California)
    Abstract: This paper estimates the long-term benefits from an influential early childhood program targeting disadvantaged families. The program was evaluated by random assignment and followed participants through their mid-30s. It has substantial beneficial impacts on health, children's future labor incomes, crime, education, and mothers' labor incomes, with greater monetized benefits for males. Lifetime returns are estimated by pooling multiple data sets using testable economic models. The overall rate of return is 13.7% per annum, and the benefit/cost ratio is 7.3. These estimates are robust to numerous sensitivity analyses.
    Keywords: childcare, early childhood education, long-term predictions, gender differences in responses to programs, health, quality of life, randomized trials, substitution bias
    JEL: J13 I28 C93
    Date: 2016–12
  2. By: Ruhose, Jens; Hanushek, Eric A.; Woessmann, Ludger
    Abstract: Although many U.S. state policies presume that human capital is important for state economic development, there is little research linking better education to state incomes. We develop detailed measures of skills of workers in each state based on school attainment from census micro data and on cognitive skills from state- and country-of-origin achievement tests. These new measures of knowledge capital permit development accounting analyses calibrated with standard production parameters. We find that differences in knowledge capital account for 20-35 percent of the current variation in per-capita GDP among states, with roughly even contributions by school attainment and cognitive skills. Similar results emerge from growth accounting analyses, emphasizing the importance of appropriately measuring worker skills. These estimates support emphasis on school improvement as a strategy for state economic development.
    JEL: O47 I25 J24
    Date: 2016
  3. By: Mecikovsky, Ariel (University of Bonn); Wellschmied, Felix (Universidad Carlos III de Madrid)
    Abstract: We estimate the changes in US male labor market risk over the last three decades in a model of endogenous labor supply and job mobility. Across education groups permanent shocks to productivity have become more dispersed. Moreover, heterogeneity in pay across offered jobs has increased for workers with at least some college education. Simulating these changes in a life-cycle model with search frictions, we show that the estimated changes in risk can account for 85 percent of the increase in within group wage inequality. The welfare costs of rising risk are small.
    Keywords: wage risk, secular trends, insurance
    JEL: D91 J11 J22 J31 J64
    Date: 2016–12
  4. By: Köllner, Sebastian; Gründler, Klaus
    Abstract: We empirically investigate the relationship between income inequality and redistribution, accounting for the shape of the income distribution, different development levels, and subjective perceptions. Cross-national inequality datasets that have become available only recently allow for the assessment of the link for various sample compositions and several model specifications. Our results confirm the Meltzer-Richard hypothesis, but suggest that the relation between market inequality and redistribution is even stronger when using perceived inequality measures. The findings emphasize a decisive role of the middle class, though also approving a negative impact of top incomes. The Meltzer-Richard effect is less pronounced in developing economies with less sophisticated political rights, illustrating that it is the political channel through which higher inequality translates into more redistribution.
    JEL: C23 D31 H11
    Date: 2016
  5. By: David Autor; David Dorn; Gordon Hanson
    Abstract: The structure of marriage and child-rearing in U.S. households has undergone two marked shifts in the last three decades: a steep decline in the prevalence of marriage among young adults, and a sharp rise in the fraction of children born to unmarried mothers or living in single-headed households. A potential contributor to both phenomena is the declining labor-market opportunities faced by males, which make them less valuable as marital partners. We exploit large scale, plausibly exogenous labor-demand shocks stemming from rising international manufacturing competition to test how shifts in the supply of young ‘marriageable’ males affect marriage, fertility and children's living circumstances. Trade shocks to manufacturing industries have differentially negative impacts on the labor market prospects of men and degrade their marriage-market value along multiple dimensions: diminishing their relative earnings—particularly at the lower segment of the distribution—reducing their physical availability in trade-impacted labor markets, and increasing their participation in risky and damaging behaviors. As predicted by a simple model of marital decision-making under uncertainty, we document that adverse shocks to the supply of `marriageable' men reduce the prevalence of marriage and lower fertility but raise the fraction of children born to young and unwed mothers and living in in poor single-parent households. The falling marriage-market value of young men appears to be a quantitatively important contributor to the rising rate of out-of-wedlock childbearing and single-headed childrearing in the United States.
    JEL: F16 J12 J13 J21 J23
    Date: 2017–02

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