nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒11‒26
twelve papers chosen by
Maximo Rossi
Universidad de la República

  1. Tony Atkinson and his legacy By Aaberge, Rolf; Bourguignon, François; Brandolini, Andrea; Ferreira, Francisco H. G.; Gornick, Janet C.; Hills, John; Jäntti, Markus; Jenkins, Stephen P.; Micklewright, John; Marlier, Eric; Nolan, Brian; Picketty, Thomas; Radermacher, Walter J.; Smeeding, Timothy M.; Stern, Nicholas; Stiglitz, Joseph; Sutherland, Holly
  2. Children, Time Allocation and Consumption Insurance By Richard Blundell; Luigi Pistaferri; Itay Saporta-Eksten
  3. International Inequality in Subjective Well-Being: An exploration with the Gallup World Poll By Pablo Gluzmann; Leonardo Gasparini
  4. People versus machines: the impact of minimum wages on automatable By Lordan, Grace; Neumark, David
  5. Educational Inequality and Intergenerational Mobility in Latin America: A New Database By Guido Neidhöfer; Joaquín Serrano; Leonardo Gasparini
  6. The fall of the Labor share and the rise of superstar firms By Autor, David; Dorn, David; Katz, Lawrence F.; Patterson, Christina; Van Reenen, John
  7. Concentrating on the fall of the labor share By Autor, David; Dorn, David; Katz, Lawrence F.; Patterson, Christina; Van Reenen, John
  8. Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework By Sebastian Galiani; Guillermo Cruces; Pablo Acosta; Leonardo C. Gasparini
  9. Occupational Match Quality and Gender over Two Cohorts By Addison, John T.; Chen, Liwen; Ozturk, Orgul Demet
  10. Survey under-coverage of top incomes and estimation of inequality: what is the role of the UK’s SPI adjustment? By Burkhauser, Richard V.; Hérault, Nicolas; Jenkins, Stephen P.; Wilkins, Roger
  11. Subjective Well-Being and Public Policy By Odermatt, Reto; Stutzer, Alois
  12. Early-life correlates of later-life well-being: Evidence from the Wisconsin Longitudinal Study By Clark, Andrew E.; Lee, Tom

  1. By: Aaberge, Rolf; Bourguignon, François; Brandolini, Andrea; Ferreira, Francisco H. G.; Gornick, Janet C.; Hills, John; Jäntti, Markus; Jenkins, Stephen P.; Micklewright, John; Marlier, Eric; Nolan, Brian; Picketty, Thomas; Radermacher, Walter J.; Smeeding, Timothy M.; Stern, Nicholas; Stiglitz, Joseph; Sutherland, Holly
    Abstract: Tony Atkinson is universally celebrated for his outstanding contributions to the measurement and analysis of inequality, but he never saw the study of inequality as a separate branch of economics. He was an economist in the classical sense, rejecting any sub-field labelling of his interests and expertise, and he made contributions right across economics. His death on 1 January 2017 deprived the world of both an intellectual giant and a deeply committed public servant in the broadest sense of the term. This collective tribute highlights the range, depth and importance of Tony’s enormous legacy, the product of over fifty years’ work.
    Keywords: Anthony B. Atkinson; inequality; poverty; public economics
    JEL: N0 E6
    Date: 2017–08–25
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:83658&r=ltv
  2. By: Richard Blundell; Luigi Pistaferri; Itay Saporta-Eksten
    Abstract: We consider the life cycle choices of a household that in each period decides how much to consume and how to allocate spouses' time to work, leisure, and childcare. In an environment with uncertainty, the allocation of goods and time over the life cycle also serves the purpose of smoothing marginal utility in response to shocks. We combine data on consumption, spouses' wages, hours of work, and time spent with children to estimate the sensitivity of consumption and time allocation to transitory and permanent wage shocks. These structural parameters describe the ability of household to self-insure in response to shocks. We find that behavioral responses to wage shocks depend on the presence of young children. We also find that labor supply cross-responses depend on three counteracting forces: complementarity of leisure time, substitutability of time in the production of child services, and added worker effects.
    JEL: J13 J22
    Date: 2017–11
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:24006&r=ltv
  3. By: Pablo Gluzmann (CEDLAS-FCE-UNLP & CONICET); Leonardo Gasparini (CEDLAS-FCE-UNLP & CONICET)
    Abstract: In this paper we compute inequality measures over the distribution of a subjective well-being variable constructed from a life satisfaction question included in the Gallup World Poll in almost all countries in the world. We argue that inequality in subjective well-being may be a better proxy for the degree of unfairness in a society than income inequality. We find evidence that inequality in subjective well-being has an inverse-U relationship with per capita GDP, but it is monotonically decreasing with respect to mean subjective well-being. We argue that this difference might be associated to inequality aversion in the space of utility.
    JEL: I31 D31 D39 D63
    Date: 2017–09
    URL: http://d.repec.org/n?u=RePEc:dls:wpaper:0216&r=ltv
  4. By: Lordan, Grace; Neumark, David
    Abstract: We study the effect of minimum wage increases on employment in automatable jobs – jobs in which employers may find it easier to substitute machines for people – focusing on low-skilled workers from whom such substitution may be spurred by minimum wage increases. Based on CPS data from 1980-2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become unemployed. The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing. The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase.
    JEL: R14 J01
    Date: 2017–08
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:84060&r=ltv
  5. By: Guido Neidhöfer (Freie Universität Berlin); Joaquín Serrano (CEDLAS-FCE-UNLP & CONICET); Leonardo Gasparini (CEDLAS-FCE-UNLP & CONICET)
    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.
    JEL: D63 I24 J62 O15
    Date: 2017–08
    URL: http://d.repec.org/n?u=RePEc:dls:wpaper:0215&r=ltv
  6. By: Autor, David; Dorn, David; Katz, Lawrence F.; Patterson, Christina; Van Reenen, John
    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: R14 J01
    Date: 2017–05
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:83616&r=ltv
  7. By: Autor, David; Dorn, David; Katz, Lawrence F.; Patterson, Christina; Van Reenen, John
    Abstract: In this paper, we discuss an explanation for the fall in share of labour in GDP 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 profit margins and a low share of labor in firm value-added and sales. As the importance of superstar firms increases, the aggregate labour share will fall. This hypothesis suggeststhat sales will increasingly concentrate in a small number of firms and that industries where concentration rises most will have the largest declines in the labour share. We find support for these predictions aggregating up micro-data from the US Census 1982-2012.
    Keywords: labour share; concentration; superstar firms
    JEL: R14 J01
    Date: 2017–04
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:83607&r=ltv
  8. By: Sebastian Galiani; Guillermo Cruces; Pablo Acosta; Leonardo C. Gasparini
    Abstract: This paper documents the evolution of wage differentials and the supply of workers by educational level for sixteen Latin American countries over the period 1991-2013. We find a pattern of rather constant rise in the relative supply of skilled and semi-skilled workers over the period. Whereas the returns to secondary education fell over time, in contrast, the returns to tertiary education display a remarkable changing pattern common to almost all economies: significant increase in the 1990s, strong fall in the 2000s and a deceleration of that fall in the 2010s. We conclude that supply-side factors seem to have limited explanatory power relative to demand-side factors in accounting for changes in the wage gap between workers with tertiary education and the rest.
    JEL: J01
    Date: 2017–11
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:24015&r=ltv
  9. By: Addison, John T. (University of South Carolina); Chen, Liwen (University of South Carolina); Ozturk, Orgul Demet (University of South Carolina)
    Abstract: Job mobility, especially early in a career, is an important source of wage growth. This effect is typically attributed to heterogeneity in the quality of employee-employer matches, with individuals learning of their abilities and discovering the tasks at which they are most productive through job search. That is, job mobility enables better matches, and individuals move to better their labor market prospects and settle once they find a satisfactory match. In this paper, we show that there are gender differences in match quality and changes in match quality over the course of careers. In particular, we find that females are mismatched more than males. This is true even for females with the best early-career matches. However, the direction of the gender effect differs significantly by education. Only females among the college educated are more mismatched and are more likely to be over-qualified then their male counterparts. These results are seemingly driven by life events, such as child birth. For their part, college-educated males of the younger cohort are worse off in terms of match quality compared to the older cohort, while the new generation of women is doing better on average.
    Keywords: multidimensional skills, occupational mismatch, match quality, wages, gender wage gap, fertility, fertility timing
    JEL: J3 J16 J22 J24 J31 J33 N3
    Date: 2017–10
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp11114&r=ltv
  10. By: Burkhauser, Richard V.; Hérault, Nicolas; Jenkins, Stephen P.; Wilkins, Roger
    Abstract: Survey under-coverage of top incomes leads to bias in survey-based estimates of overall income inequality. Using income tax record data in combination with survey data is a potential approach to address the problem; we consider here the UK’s pioneering ‘SPI adjustment’ method that implements this idea. Since 1992, the principal income distribution series (reported annually in Households Below Average Income) has been based on household survey data in which the incomes of a small number of ‘very rich’ individuals are adjusted using information from ‘very rich’ individuals in personal income tax return data. We explain what the procedure involves, reveal the extent to which it addresses survey under-coverage of top incomes, and show how it affects estimates of overall income inequality. More generally, we assess whether the SPI adjustment is fit for purpose and consider whether variants of it could be employed by other countries.
    Keywords: inequality; income inequality; survey under-coverage; SPI adjustment; top incomes; tax return data; survey data
    JEL: F3 G3
    Date: 2017–08–04
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:84038&r=ltv
  11. By: Odermatt, Reto (University of Basel); Stutzer, Alois (University of Basel)
    Abstract: Measures of subjective well-being have gained substantial attention in economics as quantitative approximations of individual welfare. They allow researchers to study relevant determinants of welfare on an individual as well as on a societal level. These determinants might not to be easily detectable in observable behavior. By referring to the recent well-being literature, we provide a selection of determinants of well-being that are important for public policy and show how the analysis of subjective well-being is applied as a complementary analytical tool for policy evaluation. We highlight the use of these measures for guiding public policy in areas that might involve suboptimal behavior. We also discuss some challenges for future research that are associated with the choice of evaluation metrics, the role of aspiration and adaption in evaluations, and utility misprediction.
    Keywords: subjective well-being, determinants of welfare, policy evaluation, bounded rationality
    JEL: D61 D91 H4 I31
    Date: 2017–10
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp11102&r=ltv
  12. By: Clark, Andrew E.; Lee, Tom
    Abstract: We here use data from the Wisconsin Longitudinal Study (WLS) to provide one of the first analyses of the distal (early-life) and proximal (later-life) correlates of older-life subjective well-being. Unusually, we have two distinct measures of the latter: happiness and eudaimonia. Even after controlling for proximal covariates, outcomes at age 18 (IQ score, parental income and parental education) remain good predictors of well-being over 50 years later. In terms of the proximal covariates, mental health and social participation are the strongest predictors of both measures of well-being in older age. However, there are notable differences in the other correlates of happiness and eudaimonia. As such, well-being policy will depend to an extent on which measure is preferred.
    Keywords: Life-course, well-being, eudaimonia, health, happiness
    Date: 2017–11
    URL: http://d.repec.org/n?u=RePEc:cpm:docweb:1706&r=ltv

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