nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2018‒01‒08
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Mobility Assistance Programmes for Unemployed Workers, Job Search Behaviour and Labour Market Outcomes By Caliendo, Marco; Künn, Steffen; Mahlstedt, Robert
  2. Family, Community and Life-Cycle Earnings: Evidence from Siblings and Youth Peers By Paul Bingley; Lorenzo Cappellari; Konstantinos Tatsiramos
  3. The Impact of Parenthood on the Gender Wage Gap – a Comparative Analysis of 26 European Countries By Ewa Cukrowska-Torzewska; Anna Lovasz
  4. Labor Market Search, Informality and Schooling Investments By Bobba, Matteo; Flabbi, Luca; Levy Algazi, Santiago
  5. Behavioral Inattention By Xavier Gabaix
  6. Older People in Sweden Without Means: On the Importance of Age at Immigration for Being 'Twice Poor' By Gustafsson, Björn Anders; Mac Innes, Hanna; Österberg, Torun
  7. Minimum Age Regulation and Child Labor: New Evidence from Brazil By Olivier Bargain; Delphine Boutin
  8. Why have only humans and social insects evolved a complex division of labor By Ugo Pagano
  9. From Cashews to Nudges: The Evolution of Behavioral Economics By Thaler, Richard H.

  1. By: Caliendo, Marco (University of Potsdam); Künn, Steffen (Maastricht University); Mahlstedt, Robert (University of Copenhagen)
    Abstract: The appealing idea of geographically relocating unemployed job seekers from depressed to prosperous regions and hence reducing unemployment leads to industrialised countries offering financial support to unemployed job seekers when searching for and/or accepting jobs in distant regions. In this paper, we investigate the impact of the existence of these mobility assistance programmes (MAPs) on the job search behaviour of unemployed workers and how this affects their labour market outcomes. While job search theory predicts a shift in individuals' search effort from local to distant labour markets, consequences for other dimensions of the search behaviour, e.g. reservation wages or the overall search effort, and job-finding probabilities remain theoretically ambiguous. We use survey data on German unemployed job seekers and apply an instrumental variable approach to empirically identify the causal impact of an increased search radius, due to the availability of MAPs, on job search strategies and subsequent labour market outcomes. The results show that the existence of MAPs shifts individuals' search effort from local to distant regions without affecting the total number of job applications. The increase in search radius causes a higher geographical mobility and hence higher employment probabilities and wages.
    Keywords: job search, active labour market policy, labour market mobility, instrumental variable approach
    JEL: J61 J68 D04 C21
    Date: 2017–11
  2. By: Paul Bingley; Lorenzo Cappellari; Konstantinos Tatsiramos
    Abstract: Using longitudinal data based on administrative registers for the population of Danish men we develop a model which accounts for the joint earnings dynamics of siblings and youth community peers. We are the first to decompose the sibling correlation of permanent earnings into family and community effects allowing for life-cycle dynamics; finding that family is the most important factor influencing earnings inequality over the life cycle. Community background explains a substantial share of the sibling correlation of earnings early in the working life, but its importance diminishes over time and becomes negligible after age 30.
    Keywords: sibling correlation, neighborhoods, schools, long-term inequality
    JEL: D31 J62
    Date: 2017
  3. By: Ewa Cukrowska-Torzewska (Faculty of Economic Sciences, University of Warsaw); Anna Lovasz (Institute of Economics, Centre for Economic and Regional Studies of the Hungarian Academy of Sciences)
    Abstract: We use cross-national data on 26 EU countries to assess how much children and the responsibilities related to them contribute to the gender wage gap, and how institutional elements - especially family policies - affect this relationship. Our analysis is based on a decomposition that reveals what portion of the gender wage gap may be attributed to: (1) the motherhood wage penalty, (2) the fatherhood wage premium, and (3) the gender wage gap among childless individuals. Our findings suggest that the variability in the magnitude of the gaps is closely related to the institutional context, pointing to different reasons behind the gender wage gap and policy implications. Southern EU countries have low gender wage gaps and low motherhood penalties or even premiums. Short leaves, low childcare coverage, and traditional norms do not support maternal labor supply, but mothers who work do not face a wage penalty. Western EU countries with higher childcare coverage, moderate length leaves, supportive norms, and flexible jobs have relatively high maternal employment and mothers are not faced with significant wage penalties. The highest motherhood penalties are found in CEE countries, where long leaves, low childcare availability under age 3, and preferences for within-family care lead to long absences from the labor market. In all countries, irrespective of cultural norms and policies, we find high positive family gaps among men, which drive men’s average wages up, and lead to gender wage inequality.
    Keywords: Family Gap, Gender Wage Gap, Family Policies
    JEL: J13 J22
    Date: 2017
  4. By: Bobba, Matteo (Toulouse School of Economics); Flabbi, Luca (University of North Carolina, Chapel Hill); Levy Algazi, Santiago (Inter-American Development Bank)
    Abstract: We develop a search and matching model where firms and workers are allowed to form matches (jobs) that can be formal or informal. Workers optimally choose the level of schooling acquired before entering the labor market and whether searching for a job as unemployed or as self-employed. Firms optimally decide the formality status of the job and bargain with workers over wages. The resulting equilibrium size of the informal sector is an endogenous function of labor market parameters and institutions. We focus on an increasingly important institution: a "dual" social protection system whereby contributory benefits in the formal sector coexist with non-contributory benefits in the informal sector. We estimate preferences for the system – together with all the other structural parameters of the labor market – using labor force survey data from Mexico and the time-staggered entry across municipalities of a non-contributory social program. Policy experiments show that informality may be reduced by either increasing or decreasing the payroll tax rate in the formal sector. They also show that a universal social security benefit system would decrease informality, incentivize schooling, and increase productivity at a relative fiscal cost that is similar to the one generated by the current system.
    Keywords: labor market frictions, search and matching, Nash bargaining, informality, returns to schooling
    JEL: J24 J3 J64 O17
    Date: 2017–11
  5. By: Xavier Gabaix
    Abstract: Inattention is a central, unifying theme for much of behavioral economics. It permeates such disparate fields as microeconomics, macroeconomics, finance, public economics, and industrial organization. It enables us to think in a rather consistent way about behavioral biases, speculate about their origins, and trace out their implications for market outcomes. This survey first discusses the most basic models of attention, using a fairly unified framework. Then, it discusses the methods used to measure attention, which present a number of challenges on which much progress has been done. It then examines the various theories of attention, both behavioral and more Bayesian. It finally discusses some applications. For instance, inattention offers a way to write a behavioral version of basic microeconomics, as in consumer theory, producer theory, and Arrow-Debreu. A last section is devoted to open questions in the attention literature. This chapter is a pedagogical guide to the literature on attention. Derivations are self-contained.
    JEL: D03 D11 D51 G02 H2
    Date: 2017–12
  6. By: Gustafsson, Björn Anders (University of Gothenburg); Mac Innes, Hanna (University of Gothenburg); Österberg, Torun (University of Gothenburg)
    Abstract: This paper examines immigrant poverty at an older age in Sweden with an emphasis on late-in-life immigrants. We analyse tax data for the entire Swedish-born and non-Swedish-born population. The poverty status of a household is assessed using two criteria. First, the disposable income of the household in which the person lived in 2007 must be below 60 per cent of the median equivalent in-come in Sweden as a whole. Second, to be classified as 'twice poor' a household net assets must be below SEK 10,000. The results indicate that three out of four Swedish-born older persons were not classified as poor by either of the criteria, and only one per cent by both criteria. In contrast, among older persons born in low-income countries almost three out of four were classified as poor according to one of the criteria and not fewer than one in three according to both. Results of estimating logistic models indicate that the risk of being considered poor according to both criteria is strongly positively related to one's age at immigration. Our results indicate that it is crucial that migrants, particularly those who arrive after age 40, be better integrated into the Swedish labour market. To alleviate pov-erty among those migrants who are already of older age, increased transfers are probably the only possible alternative.
    Keywords: older people, poverty, immigrants, Sweden
    JEL: I32 J14 J15
    Date: 2017–11
  7. By: Olivier Bargain (Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux 4); Delphine Boutin (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Date: 2017–11–07
  8. By: Ugo Pagano
    Abstract: Social species, those that have a complex division of labor, comprise about two thirds of the earth’s biomass. These social species – humans and social insects – are located at extreme points of the set of possible evolutionary paths. The queens of small social insects produce thousands of small larvae, whereas human females invest heavily in their children, who are born already with a very large brain. In spite of these and many other evident differences, social insects and humans have conquered the earth because they share two characteristics: a highly developed system of social cooperation, and a complex division of labor. These observations prompt two questions: If there are evident evolutionary advantages of cooperation and specialization, why have only few species been able to increase their fitness in this way? Why have these characteristics emerged as such extremely different forms of life? In order to answer these two questions, we will focus on possible “transition societies” in the evolutionary paths towards social species. We will argue that, in both the human and social insect cases, sexual selection had a crucial role in the development of the division of labor and entailed that the division of labor required either minimum or maximum unitary investments in the offspring. The species located in between these two extremes could not exploit the advantages of specialization.
    Keywords: division of labor, evolution, social insects, human capabilities
    JEL: N10 B00 Z13 D83 D87
    Date: 2017–12
  9. By: Thaler, Richard H. (University of Chicago)
    Abstract: Richard H. Thaler delivered his Prize Lecture on 8 December 20167 at the Aula Magna, Stockholm University.
    Keywords: Behavioral economics;
    JEL: D03 D90 G02
    Date: 2017–12–08

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