nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒04‒16
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Euler Equations, Subjective Expectations and Income Shocks. By Attanasio, Orazio; Kovacs, Agnes; Molnar, Krisztina
  2. The Effects of Productivity and Benefits on Unemployment: Breaking the Link By Brown, Alessio J. G.; Kohlbrecher, Britta; Merkl, Christian; Snower, Dennis J.
  3. Report No. 74: People to Jobs, Jobs to People: Global Mobility and Labor Migration By Eichhorst, Werner; Colussi, Tommaso; Guzi, Martin; Kahanec, Martin; Lichter, Andreas; Nikolova, Milena; Sommer, Eric
  4. The Bilateral Relationship between Depressive Symptoms and Employment Status By Melisa Bubonya; Deborah A. Cobb-Clark; David C. Ribar
  5. Concentrating on the Fall of the Labor Share By David H. Autor
  6. Education quality and returns to schooling: evidence from migrants in Brazil By Brotherhood, Luiz Mário; Ferreira, Pedro Cavalcanti; Santos, Cézar Augusto Ramos

  1. By: Attanasio, Orazio (UCL); Kovacs, Agnes (University of Oxford); Molnar, Krisztina (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: In this paper, we make three substantive contributions: first, we use elicited subjective income expectations to identify the levels of permanent and transitory income shocks in a life-cycle framework; second, we use these shocks to assess whether households' consumption is insulated from them; third, we use the shock data to estimate an Euler equation for consumption. We find that households are able to smooth transitory shocks, but adjust their consumption in response to permanent shocks, albeit not fully. The estimates of the Euler equation parameters with and without expectational errors are similar, which is consistent with rational expectations. We break new ground by combining data on subjective expectations about future income from the Michigan Survey with micro data on actual Income from the Consumer Expenditure Survey.
    Keywords: life cycle models; estimating Euler Equations; survey expectations
    JEL: C13 D12 D84 D91 E21
    Date: 2017–01–12
  2. 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
  3. By: Eichhorst, Werner (IZA); Colussi, Tommaso (IZA); Guzi, Martin (Masaryk University); Kahanec, Martin (Central European University); Lichter, Andreas (IZA); Nikolova, Milena (IZA); Sommer, Eric (IZA)
    Abstract: Report commissioned by Randstad, Bonn 2017 (100 pages)
    Date: 2017–03–30
  4. By: Melisa Bubonya (Melbourne Institute of Applied Economic and Social Research, the University of Melbourne); Deborah A. Cobb-Clark (School of Economics, The University of Sydney; Institute for the Study of Labor (IZA); and ARC Centre of Excellence for Children and Families over the Life Course); David C. Ribar (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Institute for the Study of Labor (IZA); and ARC Centre of Excellence for Children and Families over the Life Course)
    Abstract: This paper analyzes the bilateral relationship between depressive symptoms and employment status. We find that severe depressive symptoms are partially a consequence of economic inactivity. The incidence of depressive symptoms is higher if individuals have been out of a job for an extended period. Men’s mental health falls as they exit the labor force, while women’s worsens only after they have been out of the labor force for a period of time. Entering unemployment is also associated with a substantial deterioration in mental health, particularly for men. We also find that severe depressive symptoms, in turn, lead to economic inactivity. Individuals are less likely to be labor force participants or employed if they experience severe depressive symptoms. Men’s probability of being unemployed rises dramatically with the onset of depressive symptoms; women’s unemployment is increased by protracted depressive symptoms.
    Keywords: Mental health, unemployment, labor market status, HILDA survey, depressive symptoms, depression
    JEL: J01 J64 I14
    Date: 2017–03
  5. By: David H. Autor
    Date: 2017–04
  6. By: Brotherhood, Luiz Mário; Ferreira, Pedro Cavalcanti; Santos, Cézar Augusto Ramos
    Abstract: We provide a new education quality index for states within a developing country using 2010 Brazilian data. This measure is constructed based on the notion that the financial returns obtained from an additional year of schooling can be seen as being derived from the value that market forces assign to this education. We use migrant data to estimate returns to schooling of individuals who studied in different states but who work in the same labor market. We find very heterogeneous educational qualities across states: the poorest Brazilian region presents education quality levels that are approximately equal to one-third of the average of all other regions, a gap three times larger than the one suggested by standardized test scores. We compare our index with standardized test scores, educational outcome variables, and public expenditure per schooling stage at the state level, producing new evidence related to education in a large developing country. We conduct an education quality-adjusted development accounting exercise for Brazilian states and find that human capital accounts for 26%-31% of output per worker differences. Adjusting for quality increases human capital’s explanatory power by 60%.
    Date: 2017–02–08

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