nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒04‒02
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. The effects of productivity and benefits on unemployment: Breaking the link By Brown, Alessio J. G.; Kohlbrecher, Britta; Merkl, Christian; Snower, Dennis J.
  2. The Workforce of Pioneer Plants By Ricardo Hausmann; Franke Neffke
  3. Americans’ Responses to Terrorism and Mass-Shooting: Evidence from the American Time Use Survey and Well-Being Module By Clark, Andrew; Stancanelli, Elena
  4. Changes in Bargaining Status and Intra-Plant Wage Dispersion in Germany. Much Ado about Nothing? By Addison, John T.; Teixeira, Paulino; Evers, Katalin; Kölling, Arnd
  5. Inequality, redistribution and cultural integration in the Welfare State By Bisin, Alberto; Verdier, Thierry
  6. Revisiting personal income tax in Latin America: Evolution and impact By Alberto Barreix; Juan Carlos Benítez; Miguel Pecho
  7. A Sustainable Immigration Policy for the EU By Ritzen, Jo; Kahanec, Martin
  8. Estimating Labor Supply Disincentives of a Negative Income Tax: Some Results and Lessons from the Experiments By Robert Moffitt; Kenneth Kehrer

  1. By: Brown, Alessio J. G.; Kohlbrecher, Britta; Merkl, Christian; Snower, Dennis J.
    Abstract: In the standard macroeconomic search and matching model of the labor market, there is a tight link between the quantitative effects of (i) aggregate productivity shocks on unemployment and (ii) unemployment benefits on unemployment. This tight link is at odds with the empirical literature. We show that a two-sided model of labor market search where the household and firm decisions are decomposed into job offers, job acceptances, firing, and quits can break this link. In such a model, unemployment benefits affect households' behavior directly, without having to run via the bargained wage. A calibration of the model based on U.S. JOLTS data generates both a solid amplification of productivity shocks and a moderate effect of benefits on unemployment. Our analysis shows the importance of investigating the effects of policies on the households' work incentives and the firms' employment incentives within the search process.
    Keywords: unemployment benefits,search and matching,aggregate shocks,macro models of the labor market
    JEL: E24 E32 J63 J64
    Date: 2017
  2. By: Ricardo Hausmann (Center for International Development at Harvard University); Franke Neffke (Center for International Development at Harvard University)
    Abstract: Is labor mobility important in technological diffusion? We address this question by asking how plants assemble their workforce if they are industry pioneers in a location. By definition, these plants cannot hire local workers with industry experience. Using German social-security data, we find that such plants recruit workers from related industries from more distant regions and local workers from less-related industries. We also show that pioneers leverage a low-cost advantage in unskilled labor to compete with plants that are located in areas where the industry is more prevalent. Finally, whereas research on German reunification has often focused on the effects of east-west migration, we show that the opposite migration facilitated the industrial diversification of eastern Germany by giving access to experienced workers from western Germany.
    Date: 2016–01
  3. By: Clark, Andrew; Stancanelli, Elena
    Abstract: A small but significant literature concludes that terrorism impacts the economy, although the impact of mass-shooting has not yet been addressed by economists. We compare the economic effects of two tragedies: the 2013 Boston Marathon Bombing and the 2012 Sandy Hook School Shooting. Fatal attacks are rare on any given day, and to estimate their effects we combine RDD with differences-in-differences. Using diaries of daily activities for a representative, random sample of Americans, we find a decline of over half an hour per day in average hours worked, while time spent accessing the media increased slightly. Active leisure fell after the BMB but increased after the SHSS. Daily data on emotional feelings reveal that subjective well-being fell dramatically after the BMB, and especially so for women, who are likely more averse to risk; but the findings are mixed for the SHSS. The latter induced a significant increase in meaningfulness, which was greatest for respondents with college education. We discuss these differences against economic, a priori, and drive conclusions that may be relevant for policy.
    Keywords: Well-being,Time Use,Terrorism
    JEL: I31 J21 J22 F52
    Date: 2017
  4. By: Addison, John T.; Teixeira, Paulino; Evers, Katalin; Kölling, Arnd
    Abstract: A number of studies have reported that union decline is associated with rising overall wage inequality, not least in Germany where the phenomenon has been linked to economic resurgence. The present paper takes an unconventional approach to this potential source of rising inequality by examining intra-plant wage dispersion in the wake of establishments exiting from or entering into collective bargaining. Our estimation strategy hinges upon the identification of comparable groups of establishments and on both short-run and medium- to long-term changes in the wage structure. Using two main empirical strategies, we report at most a modest widening effect on dispersion for plants abandoning collective agreements. The converse does not apply for those establishments joining collective agreements. These two effects cast doubt on some of the more exaggerated claims as to the importance of deunionization to wage inequality.
    Keywords: Germany,sectoral collective bargaining,deunionization,intra-plant wage inequality,changes in bargaining status
    JEL: J31 J51 J53
    Date: 2017
  5. By: Bisin, Alberto; Verdier, Thierry
    Abstract: This paper constructs a simple theoretical political economy model to analyze the dynamic interactions between redistribution, public good provision and cultural integration of minority groups. Cultural differentiation erodes the support for general public good provision and vertical redistribution, reducing in turn the attractiveness of adoption of the mainstream culture by the minority groups. Our model shows the possibility for multiple politico-cultural steady state trajectories depending strongly on the initial degree of cultural differentiation in the society. An exogenous increase in income inequality is shown to increase the likelihood of multiple steady state trajectories. In a context with multiple minority groups, culltural fragmentation favors integration into the mainstream culture.
    Keywords: cultural integration; inequality; political economy; redistribution
    JEL: J13 J15 Z10
    Date: 2017–03
  6. By: Alberto Barreix (Inter-American Development Bank); Juan Carlos Benítez (OECD Development Centre); Miguel Pecho (Inter-American Center of Tax Administrations)
    Abstract: This study documents the process through which standard tax reliefs and tax allowances reduce the taxable base of the Personal Income Tax (PIT) in Latin American countries by using the models developed in Taxing Wages in Latin America and the Caribbean 2016. The theoretical estimations on the personal income tax are complemented with data from the tax administrations. The study finds that the PIT is progressive, but only paid by a small proportion of formal high-wage earning individuals. On average, more than 80% of the PIT is paid by the richest ten per cent of the population but at average effective rates below the region’s average statutory minimum tax schedule rate. The combination of these factors results in the PIT having a scant revenue-raising capacity and a meagre impact on income redistribution.
    Keywords: Personal income tax, tax deductions, tax exemptions, tax system, wage distribution
    JEL: D31 H24
    Date: 2017–03–30
  7. By: Ritzen, Jo (IZA and Maastricht University); Kahanec, Martin (Central European University)
    Abstract: A sustainable EU Immigration Policy aims to contribute to a vibrant European society through more effectively and selectively managed immigration from outside the EU, more attention to integration of immigrants, more rooting out of discrimination, more asylum centres close to areas of conflict, and more attention to education and training in areas where refugees have settled. Immigration from outside the EU is often opposed, mainly because of sluggish integration combined with tensions in actual and perceived values between immigrants and native populations. These divisions affect not only the first generation of immigrants, but also those that follow. We propose a sustainable, win-win policy fostering the benefits of immigration and in line with the preferences of EU citizens holding not only positive but also more sceptical views on immigration while relying on adherence to human rights. The proposed policy is directed towards more effectively and selectively managed immigration based on the employability potential of the immigrant, combined with more attention to integration and stricter measures to fight discrimination. We also acknowledge the need for a robust policy framework to cope with asylum and abrupt large-scale waves of refugees wanting to enter the EU, resulting from conflicts, natural catastrophes, and other sudden or violent events. We propose screening of asylum-seekers close to for refugee camps surrounding countries they have fled to determine migrants' refugee status, channelling them either as economic migrants, selected on their employability, or through a humanitarian scheme that respects the EU's multilateral and bilateral commitments. Such a humanitarian scheme would be embedded into education-cooperation policies, to provide better opportunities to qualify for admission and substantially greater support for refugees.
    Keywords: migration, EU, migration policy, humanitarian migration, refugees, economic migrants, immigrant integration, asylum policy
    JEL: F22 J15 J61 J68
    Date: 2017–03
  8. By: Robert Moffitt; Kenneth Kehrer
    Abstract: Reviews the basic findings of the negative income tax experiments and discusses the modeling differences encountered in estimating the labor supply response to tax rates.
    Keywords: Negative Income Tax, National basic income, Graduated work incentive, Graduated tax.
    JEL: J I

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