nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒05‒14
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Ageing Poorly?: Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012 By Francisco H. G. Ferreira; Sergio P. Firpo; Julián Messina
  2. Inequality and globalization: A review essay By Martin Ravallion
  3. The Fall of the Labor Share and the Rise of Superstar Firms By David Autor; David Dorn; Lawrence F. Katz; Christina Patterson; John Van Reenen
  4. Early and Late Human Capital Investments, Borrowing Constraints, and the Family By Elizabeth M. Caucutt; Lance Lochner
  5. Does Delayed Retirement Affect Youth Employment? Evidence from Italian Local Labour Markets By Bertoni, Marco; Brunello, Giorgio

  1. By: Francisco H. G. Ferreira; Sergio P. Firpo; Julián Messina
    Abstract: The Gini coefficient of labor earnings in Brazil fell by nearly a fifth between 1995 and 2012, from 0.50 to 0.41. The decline in earnings inequality was even larger by other measures, with the 90-10 percentile ratio falling by almost 40 percent. Although the conventional explanation of a falling education premium did play a role, an RIF regression-based decomposition analysis suggests that the decline in returns to potential experience was the main factor behind lower wage disparities during the period. Substantial reductions in the gender, race, informality and urbanrural wage gaps, conditional on human capital and institutional variables, also contributed to the decline. Although rising minimum wages were equalizing during 2003-2012, they had the opposite effects during 1995-2003, because of declining compliance. Over the entire period, the direct effect of minimum wages on inequality was muted.
    Keywords: Wage Gap, Household Income, Human Capital, Income Inequality, Wage Disparity, Wage Growth, Wage Premium, Informal Employment, Formal Employment, income inequality, household income, human capital, wage gaps
    JEL: J31 D31
    Date: 2017–03
    URL: http://d.repec.org/n?u=RePEc:idb:brikps:98197&r=ltv
  2. By: Martin Ravallion (Georgetown University, U.S.A.)
    Abstract: As normally measured, “global inequality” is the relative inequality of incomes found among all people in the world no matter where they live. Francois Bourguignon and Branko Milanovic have written insightful and timely books on global inequality, emphasizing the role of globalization. The books are complementary; Milanovic provides an ambitious broad-brush picture, with some intriguing hypotheses on the processes at work; Bourguignon provides a deep and suitably qualified, economic analysis. The paper questions the thesis of both books that globalization has been a major driving force of inequality between or within countries. The paper also questions the robustness of the evidence for declining global inequality, and notes some conceptual limitations of standard measures in capturing the concerns of many observers in the ongoing debates about globalization and the policy responses.
    Date: 2017–04
    URL: http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2017-435&r=ltv
  3. By: David Autor; David Dorn; Lawrence F. Katz; Christina Patterson; John Van Reenen
    Abstract: The fall of labor's share of GDP in the United States and many other countries in recent decades is well documented but its causes remain uncertain. Existing empirical assessments of trends in labor's share typically have relied on industry or macro data, obscuring heterogeneity among firms. In this paper, we analyze micro panel data from the U.S. Economic Census since 1982 and international sources and document empirical patterns to assess a new interpretation of the fall in the labor share based on the rise of \superstar firms." If globalization or technological changes advantage the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms with high profits and a low share of labor in firm value-added and sales. As the importance of superstar firms increases, the aggregate labor share will tend to fall. Our hypothesis offers several testable predictions: industry sales will increasingly concentrate in a small number of firms; industries where concentration rises most will have the largest declines in the labor share; the fall in the labor share will be driven largely by between-firm reallocation rather than (primarily) a fall in the unweighted mean labor share within firms; the between-firm reallocation component of the fall in the labor share will be greatest in the sectors with the largest increases in market concentration; and finally, such patterns will be observed not only in U.S. firms, but also internationally. We find support for all of these predictions.
    Keywords: labour share, concentration, superstar firms
    JEL: J3
    Date: 2017–05
    URL: http://d.repec.org/n?u=RePEc:cep:cepdps:dp1482&r=ltv
  4. By: Elizabeth M. Caucutt (University of Western Ontario); Lance Lochner (University of Western Ontario)
    Abstract: We develop a dynastic human capital investment framework to study the importance of potential market failures -- family borrowing constraints and uninsured labor market risk -- as well as the process of inter- generational ability transmission in determining human capital investments in children at different ages. We explore the extent to which policies targeted to different ages can address these market failures, potentially improving economic efficiency and equity. We show that dynamic complementarity in investment and the timing of borrowing constraints are critical for the qualitative nature of investment responses to income and policy changes. Based on these analytical results, we use data from the Children of the NLSY (CNLSY) to establish that borrowing constraints bind for at least some families with young and old children. Calibrating our model to fit data from the CNLSY, we find a moderate degree of dynamic complementarity in investment and that 12% of young and 14% of old parents borrow up to their limits. While the effects of relaxing any borrowing limit at a single stage of development are modest, completely eliminating all lifecycle borrowing limits dramatically increases investments, earnings, and intergenerational mobility. Additionally, the impacts of policy or family income changes at college-going ages are substantially greater when anticipated earlier, allowing early investments to adjust. Finally, we show that shifting the emphasis of investment subsidies from college-going ages to earlier ages increases aggregate welfare and human capital.
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:uwo:hcuwoc:20173&r=ltv
  5. By: Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova)
    Abstract: Pension reforms that raise minimum retirement age increase the pool of senior individuals aged 50+ who are not eligible to retire from the labour market. Using data from Italian provinces and regions and an instrumental variable strategy, we estimate the effects of local changes in the supply of workers aged between 50 and minimum retirement age on youth, prime age and senior employment. Results based on provincial data from 2004 to 2015, a period characterized by declining real GDP, indicate that adding one thousand additional senior individuals to the local labour supply reduces employment in the age group 16-34 by 189 units. Estimates based on longer regional data covering the period 1996 to 2015, that includes also a period of growing real GDP, show smaller negative effects for young workers, suggesting that the employment costs of pension reforms may be lower when the economy is growing.
    Keywords: pension reforms, lump of labour, youth employment, local labour markets
    JEL: J26 H55 J21 J14 J11
    Date: 2017–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp10733&r=ltv

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