nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒10‒01
twelve papers chosen by
Maximo Rossi
Universidad de la República

  1. Equality of opportunity for well-being By Daniel Gerszon Mahler; Xavier Ramos
  2. Allocating Effort and Talent in Professional Labor Markets By Gadi Barlevy; Derek Neal
  3. ducational inequality and intergenerational mobility in Latin America: A new database By Guido Neidhöfer; Joaquín Serrano; Leonardo Gasparini
  4. Inefficient Short-Time Work By Cahuc, Pierre; Nevoux, Sandra
  5. Sibling Gender Composition and Women's Wages By Cools, Angela; Patacchini, Eleonora
  6. The Non-Market Benefits of Education and Ability By James J. Heckman; John Eric Humphries; Gregory Veramendi
  7. Robot Arithmetic: Can New Technology Harm All Workers or the Average Worker? By Francesco Caselli; Alan Manning
  8. Labour Supply and Informal Care Supply: The Impacts of Financial Support for Long-Term Elderly Care By Hollingsworth, Bruce; Ohinata, Asako; Picchio, Matteo; Walker, Ian
  9. The Effects of Youth Labor Market Reforms: Evidence from Italian Apprenticeships By ALBANESE Andrea; CAPPELLARI Lorenzo; LEONARDI Marco
  10. Is There Still Son Preference in the United States? By Francine D. Blau; Lawrence M. Kahn; Peter Brummund; Jason Cook; Miriam Larson-Koester
  11. The Productivity Slowdown and the Declining Labor Share: A Neoclassical Exploration By Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
  12. Longitudinal Determinants of End-of-Life Wealth Inequality By James M. Poterba; Steven F. Venti; David A. Wise

  1. By: Daniel Gerszon Mahler (University of Copenhagen, Denmark); Xavier Ramos (Universitat Autonoma de Barcelona, Spain)
    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: 2017–08
  2. By: Gadi Barlevy; Derek Neal
    Abstract: In many professional service firms, new associates work long hours while competing in up-or-out promotion contests. Our model explores why these firms require young professionals to take on heavy workloads while simultaneously facing significant risks of dismissal. We argue that the productivity of skilled partners in professional service firms (e.g. law, consulting, investment banking, and public accounting) is quite large relative to the productivity of their peers who are competent and experienced but not well-suited to the partner role. Therefore, these firms adopt personnel policies that facilitate the identification of new partners. In our model, both heavy workloads and up-or-out rules serve this purpose. Firms are able to identify more professionals who can function effectively as partners when they require new associates to perform more tasks. Further, when firms replace experienced associates with new workers, they gain the opportunity to identify talented professionals who will have long careers as partners. Both of these personnel practices are costly. However, when the gains from increasing the number of talented partners exceed these costs, firms employ both practices in tandem. We present evidence on life-cycle patterns of hours and earnings among lawyers that supports our claim that both heavy workloads and up-or-out rules are screening mechanisms.
    JEL: J01 J22 J44 M51
    Date: 2017–09
  3. By: Guido Neidhöfer (Freie Universität Berlin, Germany); Joaquín Serrano (CEDLAS Universidad Nacional de La Plata and CONICET, Argentina); Leonardo Gasparini (CEDLAS Universidad Nacional de La Plata and CONICET, Argentina)
    Abstract: The causes and consequences of the intergenerational persistence of inequality are a topic of great interest among various fields in economics. However, until now, issues of data availability have restricted a broader and cross-national perspective on the topic. Based on rich sets of harmonized household survey data, we contribute to filling this gap computing time series for several indexes of relative and absolute intergenerational education mobility for 18 Latin American countries over 50 years, and making them publicly available. We find that intergenerational mobility has been rising in Latin America, on average. This pattern seems to be driven by the high upward mobility of children from low-educated families; at the same time, there is substantial immobility at the top of the distribution. Significant cross-country differences are observed and are associated with income inequality, poverty, economic growth, public educational expenditures and assortative mating.
    Keywords: Inequality, Intergenerational Mobility, Equality of Opportunity, Transition Probabilities, Assortative Mating, Education, Human Capital, Latin America.
    JEL: D63 I24 J62 O15
    Date: 2017–08
  4. By: Cahuc, Pierre (Ecole Polytechnique, Paris); Nevoux, Sandra (CREST (ENSAE))
    Abstract: This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers' contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.
    Keywords: short-time work, unemployment insurance, experience rating
    JEL: J63 J65
    Date: 2017–09
  5. By: Cools, Angela (Cornell University); Patacchini, Eleonora (Cornell University)
    Abstract: We examine the impact of sibling gender composition on women's adult earnings. Using data from Add Health, we find that women with any brothers earn roughly 10 percent less than women with no brothers in their late 20s and early 30s. This effect is primarily due to lower earnings within broadly defined education and occupation groups. We then explore mechanisms that may explain this result. We do not find strong evidence that differences in parental investment, cognitive ability, self-reported personality traits, or parental expectations drive our results. However, we find that more family-centered behavior (including family responsibilities, being in a committed relationship, and intention to have children) among those with brothers partially explains the result. We then confirm our results with data from the NLSY-CYA.
    Keywords: sibling sex composition, gender gap, gender roles, earnings
    JEL: J12 J13 J16 J31
    Date: 2017–09
  6. By: James J. Heckman (The University of Chicago); John Eric Humphries (Yale University); Gregory Veramendi (W.P. Carey School of Business, Arizona State University)
    Abstract: This paper analyzes the non-market benefits of education and ability. Using a dynamic model of educational choice we estimate returns to education that account for selection bias and sorting on gains. We investigate a range of non-market outcomes including incarceration, mental health, voter participation, trust, and participation in welfare. We find distinct patterns of returns that depend on the levels of schooling and ability. Unlike the monetary benefits of education, the benefits to education for many non-market outcomes are greater for low-ability persons. College graduation decreases welfare use, lowers depression, and raises self-esteem more for less-able individuals.
    Keywords: education, Inequality, returns to education, government policy, health inequality, household behavior, family economics
    JEL: I14 I24 I28 D10
    Date: 2017–09
  7. By: Francesco Caselli; Alan Manning
    Abstract: It is well-established that new technology can cause large changes in relative wages and inequality. But there are also claims, based largely on verbal expositions, that new technology will harm workers on average or even all workers. Using formal models (which impose logical consistency and clear links between assumptions and conclusions) we show - under plausible assumptions - that new technology will cause average wages to rise if the prices of investment goods fall relative to consumer goods (a condition supported by the data) and if the new technologies do not lead to a fall in market competition. Some groups of workers must gain but others may be harmed. However, if workers can freely choose their occupation, or redistribution among workers is possible, all workers can gain.
    Keywords: technology, wages
    JEL: J31 O33
    Date: 2017–09
  8. By: Hollingsworth, Bruce (Lancaster University); Ohinata, Asako (University of Leicester); Picchio, Matteo (Università Politecnica delle Marche, Ancona); Walker, Ian (Lancaster University)
    Abstract: We investigate the impact of a policy reform, which introduced free formal personal care for all those aged 65 and above, on caregiving behaviour. Using a difference-in-differences estimator, we estimate that the free formal care reduced the probability of co-residential informal caregiving by 12.9%. Conditional on giving co-residential care, the mean reduction in the number of informal care hours is estimated to be 1.2 hours per week. The effect is particularly strong among older and less educated caregivers. In contrast to co-residential informal care, we find no change in extraresidential caregiving behaviour. We also observe that the average labour market participation and the number of hours worked increased in response to the policy introduction.
    Keywords: long-term elderly care, ageing, financial support, informal caregiving, difference-in-differences
    JEL: C21 D14 I18 J14
    Date: 2017–09
  9. By: ALBANESE Andrea; CAPPELLARI Lorenzo; LEONARDI Marco
    Abstract: This paper estimates the causal effects of the 2003 reform of the Italian apprenticeship contract which aimed at introducing the ?dual system? in Italy by allowing on-the-job training. The reform also increased the age eligibility of the apprenticeship contract and introduced a minimum floor to apprentices? wages. Using administrative data and balancing techniques we find that five years after hiring, the new contract improves the chances of moving to a permanent job in the same firm, yet this happens mostly in large firms. There are also sizeable long-run wage effects of the reform, well beyond the legal duration of apprenticeships, compatible with increased human capital accumulation probably due to the training provisions of the reform.
    Keywords: Apprenticeship; Permanent Work; Youth Employment; Covariate Balancing Propensity Score
    JEL: C21 J24 J41
    Date: 2017–09
  10. By: Francine D. Blau; Lawrence M. Kahn; Peter Brummund; Jason Cook; Miriam Larson-Koester
    Abstract: In this paper, we use 2008-2013 American Community Survey data to update and further probe Dahl and Moretti’s (2008) son preference results, which found evidence that having a female first child increased the probability of single female headship and raised fertility. In light of the substantial increase in immigration, we examine this question separately for immigrants and natives. Among the population in the aggregate, as well as among the native-born separately, consistent with Dahl and Moretti (2008), we find that having a female first child raises the likelihood that the mother is a single parent. However, in sharp contrast to Dahl and Moretti (2008), we find that having a female first child is actually associated with lower fertility. Thus, by the 2008-2013 period, any apparent son preference among natives in their fertility decisions appears to be outweighed by factors such as cost concerns in raising girls. This change may be plausible in light of the reversal of the gender gap in college attendance beginning in the 1980s (Goldin, Katz and Kuziemko 2006), making girls more costly. For immigrants, we also find evidence that having a female first child contributes to female headship, with an effect that has the same magnitude as that for natives although is not statistically significant. However, in contrast to natives, we do find a positive fertility effect, suggesting son preference in fertility among this group. This interpretation is further supported by evidence that, for both first and second generation immigrants (second generation immigrants were examined using the Current Population Surveys) having a girl has a more positive effect on fertility for those whose source countries have lower values of the World Economic Forum’s Gender Equity Index, or lower female labor force participation rates and higher sex (boy-to-girl) ratios among births. We also examine sex selection and find no evidence that sex selection has spread beyond the race groups identified in previous work (e.g., Almond and Edlund 2008).
    JEL: J1 J11 J12 J13 J15 J16
    Date: 2017–09
  11. By: Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
    Abstract: We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation a la Ben Porath (1967) and capital-skill complementarity a la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early postwar period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the U.S. labor share.
    JEL: E13 E25 J24 O41
    Date: 2017–09
  12. By: James M. Poterba; Steven F. Venti; David A. Wise
    Abstract: This paper examines inequality in end-of-life wealth and the factors that contribute to individuals reaching this life stage with few financial resources. It analyzes repeated cross-sections of the Health and Retirement Study, as well as a small longitudinal sample of individuals observed both at age 65 and shortly before death. Most of those who die with little wealth had little wealth at retirement. There is strong persistence over time in the bottom tail of the wealth distribution, but the probability of having low wealth increases slowly with age after age 65. Those with low lifetime earnings are much more likely to report low wealth at retirement, and to die with little wealth, than their higher-earning contemporaries. The onset of a major medical condition and the loss of a spouse increase in the probability of falling into the low wealth category at advanced ages, although these factors appear to contribute to wealth decline for only a small fraction of those who had modest wealth at age 65 but low wealth at the time of death.
    JEL: E21 H55 J14
    Date: 2017–09

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