nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒11‒12
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. Crime and Violence: Desensitization in Victims to Watching Criminal Events By Rafael Di Tella; Lucía Freira; Ramiro H. Gálvez; Ernesto Schargrodsky; Diego Shalom; Mariano Sigman
  2. Overoptimistic Entrepreneurs: Predicting Wellbeing Consequences of Self-Employment By Odermatt, Reto; Powdthavee, Nattavudh; Stutzer, Alois
  3. Correlations of Brothers' Earnings and Intergenerational Transmission By Paul Bingley; Lorenzo Cappellari
  4. Big Data Measures of Well-Being: Evidence from a Google Well-Being Index in the United States By Algan, Yann; Beasley, Elizabeth; Guyot, Florian; Higa, Kazuhito; Murtin, Fabrice; Senik, Claudia
  5. What Really Happened to British Inequality in the Early 20th Century? Evidence from National Household Expenditure Surveys 1890–1961 By Gazeley, Ian; Newell, Andrew T.; Reynolds, Kevin; Rufrancos, Hector Gutierrez
  6. The 'Healthy Worker Effect': Do Healthy People Climb the Occupational Ladder? By Joan Costa-i-Font; Martin Ljunge
  7. Field experiments on the development of time preferences By James Andreoni; Michael Kuhn; John List; Anya Samek; Charles Sprenger
  8. Does Low Skilled Immigration Cause Human Capital Polarization? Evidence from Italian Provinces By Brunello, Giorgio; Lodigiani, Elisabetta; Rocco, Lorenzo
  9. Constrained vs Unconstrained Labor Supply: The Economics of Dual Job Holding By Choe, Chung; Oaxaca, Ronald L.; Renna, Francesco
  10. Measuring success in education: the role of effort on the test itself By Uri Gneezy; John List; Jeffrey Livingston; Xiangdong Qin; Sally Sadoff; Yang Xu

  1. By: Rafael Di Tella (Harvard Business School, Business, Government and the International Economy Unit); Lucía Freira (Universidad Torcuato Di Tella); Ramiro H. Gálvez (Universidad Torcuato Di Tella); Ernesto Schargrodsky (Universidad Torcuato Di Tella); Diego Shalom (Universidad Torcuato Di Tella); Mariano Sigman (Universidad Torcuato Di Tella)
    Abstract: We study desensitization to crime in a lab experiment by showing footage of criminal acts to a group of subjects, some of whom have been previously victimized. We measure biological markers of stress and behavioral indices of cognitive control before and after treated participants watch a series of real, crime-related videos (while the control group watches non-crime-related videos). Not previously victimized participants exposed to the treatment video show significant changes in cortisol level, heart rate, and measures of cognitive control. Instead, previously victimized individuals who are exposed to the treatment video show biological markers and cognitive performance comparable to those measured in individuals exposed to the control video. These results suggest a phenomenon of desensitization or habituation of victims to crime exposure.
    Keywords: crime, biological markers, experiment, victimization, desensitization
    JEL: K42
    Date: 2017–07
  2. By: Odermatt, Reto (University of Basel); Powdthavee, Nattavudh (University of Warwick); Stutzer, Alois (University of Basel)
    Abstract: The formation of expectations is a fundamental part of the process when people decide about engaging in an entrepreneurial venture. We evaluate the accuracy of newly self-employed people's predictions of their overall future wellbeing. Based on individual panel data for Germany, we find that they are overly optimistic when we compare their predicted life satisfaction with their actual life satisfaction five years later on. This overoptimism also holds for those entrepreneurs who successfully remain in business for at least five years. A possible reason might be that they underestimate the heavy workload reflected in higher working hours than desired and the drop in leisure satisfaction.
    Keywords: adaptation, overoptimism, life satisfaction, projection bias, wellbeing, self-employed
    JEL: D83 D91 J20 I31
    Date: 2017–10
  3. By: Paul Bingley; Lorenzo Cappellari
    Abstract: Correlations between parent and child earnings reflect intergenerational mobility and, more broadly, correlations between siblings’ earnings reflect shared community and family background. These earnings relationships capture important aspects of relations in socio-economic status more generally. We estimate intergenerational transmission and sibling correlations of life-cycle earnings jointly within a unified framework that nests previous models. Using data on the Danish population of father/first-son/second-son triads we find that intergenerational effects account for on average 72 percent of sibling correlations. This share is higher than all previous studies because we allow for heterogeneous intergenerational transmission between families. Sibling correlations exhibit a U-shape over the working life, consistent with differences in human capital investments between families.
    Keywords: sibling correlations, intergenerational transmission
    JEL: D31 J62
    Date: 2017
  4. By: Algan, Yann; Beasley, Elizabeth; Guyot, Florian; Higa, Kazuhito; Murtin, Fabrice; Senik, Claudia
    Abstract: We build an indicator of individual well-being in the United States based on Google Trends. The indicator is a combination of keyword groups that are endogenously identified to fit with weekly time-series of subjective wellbeing measures collected by Gallup Analytics. We find that keywords associated with job search, financial security, family life and leisure are the strongest predictors of the variations in subjective wellbeing. The model successfully predicts the out-of-sample evolution of most subjective wellbeing measures at a one-year horizon.
    Keywords: Subjective Well-Being; Big Data; Bayesian Statistics
    Date: 2016–06
  5. By: Gazeley, Ian (University of Sussex); Newell, Andrew T. (University of Sussex); Reynolds, Kevin (University of Sussex); Rufrancos, Hector Gutierrez (University of Sussex)
    Abstract: We estimate income/expenditure inequality in Britain, exploiting five household surveys, spanning the years 1890 to 1961, some of which we recovered and digitised. After adjusting for differences in scope and sampling, we find little change in inequality among worker households over the period and that the three decades after World War 2 were probably the low point of survey-based inequality measures in the eight decades since the late 1930s. Our findings are consistent with the evidence from wage censuses on the overall variance of earnings, which only falls marginally over the period. We argue this relative steadiness was the result of opposing proximate forces, one being the decline in manual skill differentials due largely to changing wage-setting institutions. On the other side was growth in the employment share of non-manuals, with their higher skill and wage variance. We also argue that two demographic factors also played their parts. The sharp decline in fertility in the early part of the century reduced inequality, while the emergence of pensioner households in the 1950s tended to increase inequality in the lower end of the distribution. Lastly, our work suggests a substantial downward revision in the estimated size of the fall in inequality through World War Two. We find a fall of between one and two Gini percentage points between 1937/8 and 1953/4, compared with the often-quoted Blue Book estimate of almost seven Gini percentage points.
    Keywords: United Kingdom, inequality, wage differentials
    JEL: D31 J31 N14
    Date: 2017–10
  6. By: Joan Costa-i-Font; Martin Ljunge
    Abstract: The association between occupational status and health has been taken to reveal the presence of health inequalities shaped by occupational status. However, that interpretation assumes no influence of health status in explaining occupational standing. This paper documents evidence of non-negligible returns to occupation status on health (which we refer as ‘healthy worker effect’). We use a unique empirical strategy that addressed reverse causality, namely an instrumental variable strategy using the variation in average health in the migrant’s country of origin, a health measure plausibly not determined by the migrant’s occupational status. Our findings suggest that health status exerts significant effects on occupational status in several dimensions; having a supervising role, worker autonomy, and worker influence. The effect size of health is larger than that of an upper secondary education.
    Keywords: occupational status, self-reported health, immigrants, work autonomy, supervising role
    JEL: J50 I18
    Date: 2017
  7. By: James Andreoni; Michael Kuhn; John List; Anya Samek; Charles Sprenger
    Abstract: Time preferences have been correlated with a range of life outcomes, yet little is known about their early development. We conduct a field experiment to elicit time preferences of nearly 1,000 children ages 3-12, who make several inter temporal decisions. To shed light on how such primitives form, we explore various channels that might affect time preferences, from background characteristics to the causal impact of an early schooling program that we developed and operated. Our results suggest that time preferences evolve substantially during this period with younger children displaying more impatience than older children. We also find a strong association with race: black children, relative to white or Hispanic children, are more impatient. Interestingly, parents of black children are also much more impatient than parents of white and Hispanic children. Finally, assignment to different schooling opportunities is not significantly associated with child time preferences.
    Date: 2017
  8. By: Brunello, Giorgio (University of Padova); Lodigiani, Elisabetta (University of Padova); Rocco, Lorenzo (University of Padova)
    Abstract: While there is a vast literature considering the labour market effects of immigration, less has been done to investigate how immigration affects the educational choices of young natives. Using Italian provincial data and an instrumental variables strategy, we show that the recent increase in the immigration of low skilled labour has produced human capital polarization, i.e. the contemporaneous increase in the share of natives with less than high school and not enrolled in school and in the share with a college degree or enrolled in college. This evidence is stronger for males than for females. We adapt the standard Card's model of educational choice and spell out under what conditions human capital polarization occurs. We estimate wage equations by gender and find that these conditions are satisfied, especially for Italian males.
    Keywords: low skilled, immigration, human capital, Italy
    JEL: J26 H55 J21 J14 J11
    Date: 2017–10
  9. By: Choe, Chung; Oaxaca, Ronald L.; Renna, Francesco
    Abstract: This paper develops a unified model of dual and unitary job holding based on a Stone-Geary utility function. The model incorporates both constrained and unconstrained labor supply. Panel data methods are adapted to accommodate unobserved heterogeneity and multinomial selection into 6 mutually exclusive labor supply regimes. We estimate the wage and income elasticities arising from selection and unobserved heterogeneity as well as from the Stone-Geary Slutsky equations. The labor supply model is estimated with data from the British Household Panel Survey 1991- 2008. Among dual job holders, our study finds that the Stone-Geary income and wage elasticities are much larger for labor supply to the second job compared with the main job. When the effects of selection and unobserved heterogeneity are taken account of, the magnitudes of these elasticities on the second job tend to be significantly reduced.
    Keywords: dual job,labor supply,Stone-Geary,hours constraint
    JEL: J01 J22 J49
    Date: 2017
  10. By: Uri Gneezy; John List; Jeffrey Livingston; Xiangdong Qin; Sally Sadoff; Yang Xu
    Abstract: Tests measuring and comparing educational achievement are an important policy tool. We experimentally show that offering students extrinsic incentives to put forth effort on such achievement tests has differential effects across cultures. Offering incentives to U.S. students, who generally perform poorly on assessments, improved performance substantially. In contrast, Shanghai students, who are top performers on assessments, were not affected by incentives. Our findings suggest that in the absence of extrinsic incentives, ranking countries based on low-stakes assessments is problematic because test scores reflect differences in intrinsic motivation to perform well on the test itself, and not just differences in ability.
    Date: 2017

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