nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒04‒30
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. Is Global Equality the Enemy of National Equality? By Rodrik, Dani
  2. Structural inequality: The case of Sweden By Olof Robling; Jon Kristian Pareliussen
  3. Matching, Sorting, and Wages By Jeremy Lise; Costas Meghir; Jean-Marc Robin
  4. Fiscal policy, income redistribution and poverty reduction in low and middle income countries By Nora Lustig
  5. The Happiness Function in Italian Cities By Cristina Bernini; Alessandro Tampieri
  6. Welcome Home in a Crisis: Effects of Return Migration on the Non-Migrants’ Wages and Employment By Hausmann, Ricardo; Nedelkoska, Ljubica
  7. From Proof of Concept to Scalable Policies: Challenges and Solutions, with an Application By Banerjee, Abhijit V.; Banerji, Rukmini; Berry, James; Duflo, Esther; Kannan, Harini; Mukerji, Shobhini; Shotland, Marc; Walton, Michael
  8. Living Up to Expectations: How Job Training Made Women Better Off and Men Worse Off By Paloma Acevedo; Guillermo Cruces; Paul Gertler; Sebastian Martinez

  1. By: Rodrik, Dani (University of Chicago)
    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--rovides on its own an adequate frame for evaluating the consequences.
    Date: 2017–01
  2. By: Olof Robling; Jon Kristian Pareliussen (OECD)
    Abstract: Structural trends not directly related to labour market functioning and redistribution have made a sizeable contribution to inequality and poverty in Sweden, but occupy only limited space in the income inequality debate. To fill this gap, we put a quarter of a century of rising inequality in Sweden in a new perspective by quantifying the effect of changing household composition, age structure, industry structure, educational attainment and immigration on inequality. The influence of structural changes on inequality is derived from micro-data from Statistics Sweden. We re-weigh subgroups of the population with certain characteristics by their population shares in 1987 to construct counterfactual income distributions for 2013 and derive inequality measures that we compare to their actual 2013 values. We find that almost half of the inequality increase between 1987 and 2013 can be mechanically ascribed to these factors.
    Keywords: demographics, immigration, Income distribution, poverty, structural trends
    JEL: D31 I24 I32 J11 J12 J14 J15 L16
    Date: 2017–04–22
  3. By: Jeremy Lise (University College of London); Costas Meghir (Economics department); Jean-Marc Robin (Département d'économie)
    Abstract: We develop an empirical search-matching model which is suitable for analyzing the wage, employment and welfare impact of regulation in a labor market with heterogeneous workers and jobs. To achieve this we develop an equilibrium model of wage determination and employment which extends the current literature on equilibrium wage determination with matching and provides a bridge between some of the most prominent macro models and microeconometric research. The model incorporates productivity shocks, long-term contracts, on-the-job search and counter-offers. Importantly, the model allows for the possibility of assortative matching between workers and jobs due to complementarities between worker and job characteristics. We use the model to estimate the potential gain from optimal regulation and we consider the potential gains and redistributive impacts from optimal unemployment benefit policy. Here optimal policy is defined as that which maximizes total output and home production, accounting for the various constraints that arise from search frictions. The model is estimated on the NLSY using the method of moments.
    Keywords: Sorting; Mismatch; Search-matching; Wage dynamics
    JEL: J3 J64 J65
    Date: 2016–01
  4. By: Nora Lustig (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: 2017–02
  5. By: Cristina Bernini (University of Bologna); Alessandro Tampieri (University of Bologna and CREA, Université du Luxembourg)
    Abstract: We investigate how the city of residence influences subjective well-being. We build up a happiness function that considers city characteristics as determinants of well-being, and we combine individual and city level data through a multi-level analysis. We exploit the dataset HADL on Italian metropolitan area over the period 2010 to 2013. We find a strong variability across cities of the aspects of life that explain subjective well-being. Even accounting for a rich set of individual level variables, the location retains a role in shaping life satisfaction. Surprisingly, economic and familiar aspects explain happiness more at city level than at individual level.
    Keywords: Subjective well-being; happiness function; metropolitan area; multilevel models; city amenities.
    JEL: I31 R10
    Date: 2017
  6. By: Hausmann, Ricardo (Harvard University); Nedelkoska, Ljubica (Harvard University)
    Abstract: Albanian migrants in Greece were particularly affected by the Greek crisis, which spurred a wave of return migration that increased Albania's labor force by 5% between 2011 and 2014 alone. We study how this return migration affected the employment chances and earnings of Albanians who never migrated. We find positive effects on the wages of low-skilled non-migrants and overall positive effects on employment. The gains partially offset the sharp drop in remittances in the observed period. The employment gains are concentrated in the agricultural sector, where most return migrants engage in self-employment and entrepreneurship. Businesses run by return migrants seem to pull Albanians from non-participation, self employment and subsistence agriculture into commercial agriculture.
    JEL: J21 J23 J24 J31 J61
    Date: 2017–01
  7. By: Banerjee, Abhijit V. (MIT and BREAD, Duke U); Banerji, Rukmini (ASER Centre, Pratham); Berry, James (Cornell University); Duflo, Esther (MIT and BREAD, Duke U); Kannan, Harini (J-PAL, MIT); Mukerji, Shobhini (J-PAL, MIT); Shotland, Marc (J-PAL, MIT); Walton, Michael (Harvard University)
    Abstract: The promise of randomized controlled trials (RCTs) is that evidence gathered through the evaluation of a specific program helps us--possibly after several rounds of fine-tuning and multiple replications in different contexts--to inform policy. However, critics have pointed out that a potential constraint in this agenda is that results from small, NGO-run "proof-of-concept" studies may not apply to policies that can be implemented by governments on a large scale. After discussing the potential issues, this paper describes the journey from the original concept to the design and evaluation of scalable policy. We do so by evaluating a series of strategies that aim to integrate the NGO Pratham's "Teaching at the Right Level" methodology into elementary schools in India. The methodology consists of re-organizing instruction based on children's actual learning levels, rather than on a prescribed syllabus, and has previously been shown to be very effective when properly implemented. We present RCT evidence on the designs that failed to produce impacts within the regular schooling system but helped shape subsequent versions of the program. As a result of this process, two versions of the programs were developed that successfully raised children's learning levels using scalable models in government schools.
    Date: 2016–09
  8. By: Paloma Acevedo; Guillermo Cruces; Paul Gertler; Sebastian Martinez
    Abstract: We study the interaction between job and soft skills training on expectations and labor market outcomes in the context of a youth training program in the Dominican Republic. Program applicants were randomly assigned to one of 3 modalities: a full treatment consisting of hard and soft skills training plus an internship, a partial treatment consisting of soft skills training plus an internship, or a control group. We find strong and lasting effects of the program on personal skills acquisition and expectations, but these results are markedly different for young men and young women. Shortly after completing the program, both male and female participants report increased expectations for improved employment and livelihoods. This result is reversed for male participants in the long run, a result that can be attributed to the program’s negative short-run effects on labor market outcomes for males. While these effects seem to dissipate in the long run, employed men are substantially more likely to be searching for another job. On the other hand, women experience improved labor market outcomes in the short run and exhibit substantially higher levels of personal skills in the long run. These results translate into women being more optimistic, having higher self-esteem and lower fertility in the long run. Our results suggest that job-training programs of this type can be transformative – for women, life skills mattered and made a difference, but they can also have a downside if, like in this case for men, training creates expectations that are not met.
    JEL: J08 J24 J31 J68
    Date: 2017–03

This nep-ltv issue is ©2017 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.