nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒11‒05
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. Identification of Random Resource Shares in Collective Households Without Preference Similarity Restrictions By Geoffrey R. Dunbar; Arthur Lewbel; Krishna Pendakur
  2. EMU and Labour Market Policy: Tensions and Solutions By Giuseppe Bertola
  3. The Labor Market Impact of Undocumented Immigrants: Job Creation vs. Job Competition By Christoph Albert
  4. Single Motherhood and the Abolition of Coverture in the United States By Hazem Alshaikhmubarak; R. Richard Geddes; Shoshana Amyra Grossbard
  5. Why Mandate Young Borrowers to Contribute to their Retirement Accounts? By Torben M. Andersen; Joydeep Bhattacharya
  6. The Effects of Youth Labor Market Reforms: Evidence from Italian Apprenticeships By Andrea Albanese; Lorenzo Cappellari; Marco Leonardi
  7. Do Economic Recessions ‘Squeeze the Middle-Class’? By Alberto Batinti; Joan Costa-i-Font
  8. Social Capital and Labor Market Networks By Brian J. Asquith; Judith K. Hellerstein; Mark J. Kutzbach; David Neumark

  1. By: Geoffrey R. Dunbar; Arthur Lewbel; Krishna Pendakur
    Abstract: Resource shares, defined as the fraction of total household spending going to each person in a household, are important for assessing individual material well-being, inequality and poverty. They are difficult to identify because consumption is measured typically at the household level, and many goods are jointly consumed, so that individual-level consumption in multi-person households is not directly observed. We consider random resource shares, which vary across observationally identical households. We provide theorems that identify the distribution of random resource shares across households, including children’s shares. We also provide a new method of identifying the level of fixed or random resource shares that does not require previously needed preference similarity restrictions or marriage market assumptions. Our results can be applied to data with or without price variation. We apply our results to households in Malawi, estimating the distributions of child and female poverty across households.
    Keywords: Domestic demand and components, Econometric and statistical methods
    JEL: D13 D11 D12 C31 I32
    Date: 2017
  2. By: Giuseppe Bertola
    Abstract: Reforms observed in EMU do not conform to commonly expressed views that international economic integration comes with labour market deregulation, and that both are beneficial. This essay examines the country-specific policy reforms evidence generated by inception of Economic and Monetary Union and by its disruption during the Great Recession and the Eurozone crisis, outlines non-technically how a distributional perspective can explain key features of those experiences, and discusses how these empirical observations and theoretical insights may bear on the sources and consequences of more general tensions between Europe’s policymaking framework and market integration process.
    JEL: F2 D33 J08
    Date: 2017–07
  3. By: Christoph Albert
    Abstract: This paper explores the labor market impact of both documented and undocumented immigration in a model featuring search frictions and non-random hiring that generates predictions consistent with novel patterns documented in data. Due to their lower earnings, a rise in the share of immigrant workers in the economy leads to the creation of additional jobs, but also more job competition for natives. As undocumented immigrants earn the lowest wages of all workers, their job creation effect is large, whereas it is small and potentially negative for documented immigrants. Model simulations show that the job creation effect of undocumented immigration dominates the competition effect, leading to gains in terms of both employment and wages for natives, which does not hold in case of documented immigration. Stricter immigration enforcement in form of a higher deportation risk for undocumented immigrants mutes job creation and raises the unemployment rate of all workers, having an even larger detrimental effect if it targets employed immigrants because this leads to a risk premium in their wages. I present empirical evidence that gives support to the qualitative predictions of the model.
    Keywords: wage gap, migrant workers, hiring, employment
    JEL: J31 J61 J63 J64
    Date: 2017
  4. By: Hazem Alshaikhmubarak; R. Richard Geddes; Shoshana Amyra Grossbard
    Abstract: Under the common-law system of coverture in the United States, a married woman relinquished control of property and wages to her husband. Many U.S. states passed acts between 1850 and 1920 that expanded a married woman’s right to keep her market earnings and to own separate property. The former were called married women’s earnings acts (MWEAs) and the latter married women’s property acts (MWPAs). Scholarly interest in the acts’ effects is growing. Researchers have examined how the acts affected outcomes such as women's wealth-holding and educational attainment. The acts' impact on women’s non-marital birth decisions remains unexamined, however. We postulate that the acts caused women to anticipate greater benefits from having children within rather than outside of marriage. We thus expect passage of MWPAs and MWEAs to reduce the likelihood that single women become mothers of young children. We use probit regression to analyze individual data from the U.S. Census for the years 1860 to 1920. We find that the property acts in fact reduced the likelihood that single women have young children. We also find that the “de-coverture†acts’ effects were stronger for literate women, U.S.-born women, in states with higher female labor-force participation, and in more rural states, consistent with predictions.
    Keywords: property, earnings, family, law, fertility, marriage
    JEL: D10
    Date: 2017
  5. By: Torben M. Andersen; Joydeep Bhattacharya
    Abstract: Many countries, in an effort to address the problem that too many retirees have too little saved up, impose mandatory contributions into retirement accounts, that too, in an age-independent manner. This is puzzling because such funded pension schemes effectively mandate the young, who wish to borrow, to save for retirement. Further, if agents are present-biased, they disagree with the intent of such schemes and attempt to undo them by reducing their own saving or even borrowing against retirement wealth. We establish a welfare case for mandating the middle-aged and the young to contribute to their retirement accounts, even with age-independent contribution rates. We find, somewhat counterintuitively, that even though the young responds by borrowing more that too at a rate higher than offered by pension savings, their life-time utility increases.
    Keywords: present-biased preferences, mandatory pensions, pension offsets, crowding out
    JEL: H55 D91 D03 E60
    Date: 2017
  6. By: Andrea Albanese; Lorenzo Cappellari; Marco Leonardi
    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: J24 J41 C21
    Date: 2017
  7. By: Alberto Batinti; Joan Costa-i-Font
    Abstract: Economic downturns give rise to unexpected employment shocks that can reshape the distribution of population income, and hence produce a “middle-class squeeze”. However, there is limited empirical evidence testing the latter. This paper aims at testing the ‘middle-class squeeze’ hypothesis drawing from unique data from the Luxembourg Income Study (LIS) for several years, including the period of the Great Recession, and the Integrated Values Study (IVS) obtained by merging data from the World Value Survey (WVS) and the European Values Study (EVS). We examine the association between changes in unemployment in a recession drawing upon a heterogeneous set of both income and middle-class definitions as well as an extensive list of controls and different recession periods. Our findings suggest no robust evidence that recessions produce a middle-class squeeze, though they increase the share of the population regarding itself as ‘middle class’. The effect is heterogeneous to the baseline unemployment at the time of a recession, country spending on social protection and middle-class measurements and definitions. However, when we restrict our analysis to the recent Great Recession, we do find some evidence of a ‘middle-class squeeze’.
    Keywords: middle-class size, economic recessions, employment shocks, income distribution
    JEL: F22 I30 J64
    Date: 2017
  8. By: Brian J. Asquith; Judith K. Hellerstein; Mark J. Kutzbach; David Neumark
    Abstract: We explore the links between social capital and labor market networks at the neighborhood level. We harness rich data taken from multiple sources, including matched employer-employee data with which we measure the strength of labor market networks, data on behavior such as voting patterns that have previously been tied to social capital, and new data – not previously used in the study of social capital – on the number and location of non-profits at the neighborhood level. We use a machine learning algorithm to identify potential social capital measures that best predict neighborhood-level variation in labor market networks. We find evidence suggesting that smaller and less centralized schools, and schools with fewer poor students, foster social capital that builds labor market networks, as does a larger Republican vote share. The presence of establishments in a number of non-profit oriented industries are identified as predictive of strong labor market networks, likely because they either provide public goods or facilitate social contacts. These industries include, for example, churches and other religious institutions, schools, country clubs, and amateur or recreational sports teams or clubs.
    JEL: J01 J64 R23
    Date: 2017–10

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