nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒09‒17
four papers chosen by
Maximo Rossi
Universidad de la República

  1. (Mis-)Predicted Subjective Well-Being Following Life Events By Reto Odermatt; Alois Stutzer
  2. Satisfaction and Self-Employment: Do Women Benefit More from Being Their Own Boss? By Karen Maguire; John V. Winters
  3. Equality of Opportunity for Well-Being By Daniel Gerszon Mahler; Xavier Ramos
  4. Disability benefits, consumption insurance, and household labor supply By David Autor; Andreas Ravndal Kostøl; Magne Mogstad; Bradley Setzler

  1. By: Reto Odermatt; Alois Stutzer
    Abstract: The correct prediction of how alternative states of the world affect our lives is a cornerstone of economics. We study how accurate people are in predicting their future well-being after facing major life events. Based on individual panel data, we compare people's life satisfaction forecasts reported in the first interview after a major life event with their actual evaluations five years later on. This is done after the individuals experience widowhood, unemployment, disability, marriage, separation or divorce. We find systematic prediction errors that seem at least partly driven by unforeseen adaptation after the first four of these events.
    Keywords: Adaptation; life satisfaction; life events; projection-bias; subjective well-being; utility prediction; unemployement
    JEL: D03 D12 D60 I31
    Date: 2017–09
    URL: http://d.repec.org/n?u=RePEc:cra:wpaper:2017-12&r=ltv
  2. By: Karen Maguire (Oklahoma State University); John V. Winters (Oklahoma State University)
    Abstract: This paper uses individual self-reported life satisfaction data to analyze the relationship between self-employment and subjective well-being by gender and race. We document substantial heterogeneity, with women appearing to benefit the most from self-employment. Self-employed women have significantly higher rates of being very satisfied relative to both traditionally employed women and self-employed men. We also find that the self-employed have higher rates of dissatisfaction, and this adverse relationship with self-employment is most pronounced for minorities. These nuanced findings broaden our understanding of the relationship between self-employment and subjective well-being and have important implications for both researchers and policymakers.
    Keywords: Well-being, Entrepreneurship, Self-Employment, Gender, Race
    JEL: I10 I31 J2
    Date: 2017–08
    URL: http://d.repec.org/n?u=RePEc:okl:wpaper:1713&r=ltv
  3. By: Daniel Gerszon Mahler; Xavier Ramos
    Abstract: A growing literature has tried to measure the extent to which individuals have equal opportunities to acquire income. At the same time, policy makers have doubled down on efforts to go beyond income when measuring well-being. We attempt to bridge these two areas by measuring the extent to which individuals have equal opportunities to achieve a high level of well-being. We use the German Socio-Economic Panel to measure well-being in four different ways including incomes. This makes it possible to determine if the way well-being is measured matters for identifying who the opportunity-deprived are and for tracking inequality of opportunity over time. We find that, regardless of how well-being is measured, the same people are opportunity-deprived and equality of opportunity has improved over the past 20 years. This suggests that going beyond income has little relevance if the objective is to provide equal opportunities.
    Keywords: Equality of opportunity, measurement, responsibility, effort, well-being
    JEL: D3 D63 I31
    Date: 2017
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp927&r=ltv
  4. By: David Autor (MIT Department of Economics and NBER); Andreas Ravndal Kostøl (Norges Bank (Central Bank of Norway)); Magne Mogstad (University of Chicago and Statistics Norway and NBER); Bradley Setzler (University of Chicago)
    Abstract: While a mature literature finds that Disability Insurance (DI) receipt discourages work, the welfare implications of these findings depend on two rarely studied economic quantities: the full cost of DI allowances to taxpayers, summing over DI transfer payments, benefit substitution to or from other transfer programs, and induced changes in tax receipts; and the value that individuals and families place on receiving benefits in the event of disability. We comprehensively assess these missing margins in the context of Norway's DI system, drawing on two strengths of the Norwegian environment. First, Norwegian register data allow us to characterize the household impacts and fiscal costs of disability receipt by linking employment, taxation, benefits receipt, and assets at the person and household level. Second, random assignment of DI applicants to Norwegian judges who differ systematically in their leniency allows us to recover the causal effects of DI allowance on individuals at the margin of program entry. Accounting for the total effect of DI allowances on both household labor supply and net payments across all public transfer programs substantially alters our picture of the consumption benefits and fiscal costs of disability receipt. While DI denial causes a significant drop in household income and consumption on average, it has little impact on income or consumption of married applicants; spousal earnings and benefit substitution entirely offset the loss in DI benefit payments. To develop the welfare implications of these findings, we estimate a dynamic model of household behavior that translates employment, reapplication and savings decisions into revealed preferences for leisure and consumption. We find that household valuation of receipt of DI benefits is considerably greater for single and unmarried individuals than for married couples because spousal labor supply substantially buffers household income and consumption in the event of DI denial.
    Keywords: disability insurance, consumption insurance, household labor supply, added worker
    JEL: I38 J62 H53
    Date: 2017–09–06
    URL: http://d.repec.org/n?u=RePEc:bno:worpap:2017_16&r=ltv

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