nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2017‒12‒18
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Unhappiness and Pain in Modern America: A Review Essay, and Further Evidence, on Carol Graham’s Happiness for All? By David G. Blanchflower; Andrew Oswald
  2. Is inequality of opportunity robust to the measurement approach? By Xavier Ramos\\ Dirk Van de gaer; Dirk Van de gaer
  3. Measuring Directional Mobility: The Bartholomew and Prais-Bibby Indices Reconsidered By Satya R. Chakravarty; Nachiketa Chattopadhyay; Nora Lustig; Rodrigo Aranda Balcazar
  4. Inheritance Taxation: Redistribution and Predistribution By Frank A Cowell; Chang He; Dirk Van de gaer
  5. Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered? By Edward N. Wolff
  6. Pareto models, top incomes, and recent trends in UK income inequality By Jenkins, Stephen P.

  1. By: David G. Blanchflower; Andrew Oswald
    Abstract: In Happiness for All?, Carol Graham raises disquieting ideas about today’s United States. The challenge she puts forward is an important one. Here we review the intellectual case and offer additional evidence. We conclude broadly on the author’s side. Strikingly, Americans appear to be in greater pain than citizens of other countries, and most sub-groups of citizens have downwardly trended happiness levels. There is, however, one bright side to an otherwise dark story. The happiness of black Americans has risen strongly since the 1970s. It is now almost equal to that of white Americans.
    JEL: I3 I31
    Date: 2017–11
  2. By: Xavier Ramos\\ Dirk Van de gaer (Universitat Autonoma de Barcelona); Dirk Van de gaer (Ghent University)
    Abstract: Recent literature has suggested many ways of measuring equality of opportunity. We analyze in a systematic manner the various approaches put forth in the literature to show whether and to what extent different choices matter empirically. We use EU-SILC data for most European countries for 2005 and 2011. The choice between ex-ante and ex-post approaches is crucial and has a substantial influence on inequality of opportunity country orderings. Growth regressions also illustrate the relevance of conceptual choices. We only find significant negative effects for some direct parametric ex-ante measures.
    Keywords: Equality of opportunity, measurement, ex-ante, ex-post, direct approach, indirect approach, responsibility, effort, income, EU-SILC.
    JEL: D3 D63
    Date: 2017–11
  3. By: Satya R. Chakravarty (Economic Research Unit, Indian Statistical Institute); Nachiketa Chattopadhyay (Statistics and Mathematics Division, Indian Statistical Institute); Nora Lustig (Department of Economics, Tulane University); Rodrigo Aranda Balcazar (Department of Economics, Tulane University)
    Abstract: This paper tries to interpret the Bartholomew (1967) index of social mobility in terms of a directional mobility index based on the one-step expected states of movement corresponding to a transition matrix. A partial ordering of monotone transition matrices is proposed using the generalized Lorenz ordering of expected states which can be related to social improvement in terms of the socio-economic attribute under consideration. We also interpret the Prais(1955)-Bibby ((1975) mobility index using a Bayesian approach ,where the underlying mobility depends on the initial distribution of the states.
    Keywords: social mobility, intergenerational mobility, monotonicity, Bayesian analysis
    JEL: C11 D31 D63 J62
    Date: 2017–12
  4. By: Frank A Cowell; Chang He; Dirk Van de gaer
    Abstract: It is well known that taxes on the transfer of wealth typically raise very little revenue. However, this does not mean that they are ineffective as tools for redistribution. In this paper we show how important such taxes can be in the long-run distribution of wealth, reducing equilibrium inequality (the "predistribution" effect) by a much larger amount than what is apparent in terms of the immediate impact of the tax (the "redistribution" effect).
    Keywords: wealth distribution, inheritance, inheritance taxation
    JEL: D31 D63
    Date: 2017–12
  5. By: Edward N. Wolff
    Abstract: Asset prices plunged between 2007 and 2010 but then rebounded from 2010 to 2016. The most telling finding is that median wealth plummeted by 44 percent over years 2007 to 2010. The inequality of net worth, after almost two decades of little movement, went up sharply from 2007 to 2010, and relative indebtedness for the middle class expanded. The sharp fall in median net worth and the rise in overall wealth inequality over these years are largely traceable to the high leverage of middle class families and the high share of homes in their portfolio. Mean and median wealth rebounded from 2010 to 2016, by 17 and 28 percent, respectively. While mean wealth surpassed its previous peak in 2007, median wealth was still down by 34 percent. More than 100 percent of the recovery in both was due to a high return on wealth but this factor was offset by negative savings. Relative indebtedness continued to fall for the middle class from 2010 to 2016, and wealth inequality increased somewhat. The racial and ethnic disparity in wealth holdings widened considerably between 2007 and 2016, and the wealth of households under age 45 declined in relative terms.
    JEL: D31 J15
    Date: 2017–11
  6. By: Jenkins, Stephen P.
    Abstract: I determine UK income inequality levels and trends by combining inequality estimates from tax return data (for the ‘rich’) and household survey data (for the ‘non-rich’), taking advantage of the better coverage of top incomes in tax return data (which I demonstrate) and creating income variables in the survey data with the same definitions as in the tax data to enhance comparability. For top income recipients, I estimate inequality and mean income by fitting Pareto models to the tax data, examining specification issues in depth, notably whether to use Pareto I or Pareto II (generalised Pareto) models, and the choice of income threshold above which the Pareto models apply. The preferred specification is a Pareto II model with a threshold set at the 99th or 95th percentile (depending on year). Conclusions about aggregate UK inequality trends since the mid-1990s are robust to the way in which tax data are employed. The Gini coefficient for gross individual income rose by around 7% or 8% between 1996/97 and 2007/08, with most of the increase occurring after 2003/04. The corresponding estimate based wholly on the survey data is around –5%.
    Keywords: inequality; top incomes; Pareto distribution; generalized Pareto distribution; survey under-coverage; HBAI; SPI
    JEL: C46 C81 D31
    Date: 2017–04–01

This nep-ltv issue is ©2017 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.