nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2018‒01‒22
eight 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 Blanchflower, David G.; Oswald, Andrew J.
  2. Early-Life Correlates of Later-Life Well-Being: Evidence from the Wisconsin Longitudinal Study By Clark, Andrew E.; Lee, Tom
  3. Is Inequality of Opportunity Robust to the Measurement Approach? By Ramos, Xavier; Van de gaer, Dirk
  4. Job Search and the Gender Wage Gap By Giorgio Topa; Aysegul Sahin; Andreas Mueller; Jason Faberman
  5. Global Inequality when Unequal Countries Create Unequal People By Martin Ravallion
  6. Income inequality and the labour market in Britain and the US By Richard Blundell; Robert Joyce; Agnes Norris Keiller; James P. Ziliak
  7. The Long-Run Effects of the Earned Income Tax Credit on Women’s Earnings By David Neumark; Peter Shirley
  8. Consumption Risk and Human Capital Accumulation in India By Andrew D. Foster; Esther Gehrke

  1. By: Blanchflower, David G. (Dartmouth College); Oswald, Andrew J. (University of Warwick)
    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.
    Keywords: depression, mental-health, GHQ, well-being, happiness, life-course
    JEL: I3 I31
    Date: 2017–11
  2. By: Clark, Andrew E. (Paris School of Economics); Lee, Tom (Institute for Fiscal Studies, London)
    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: health, eudaimonia, well-being, life-course, happiness
    JEL: I31 I38
    Date: 2017–11
  3. By: Ramos, Xavier (Universitat Autònoma de Barcelona); Van de gaer, Dirk (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
  4. By: Giorgio Topa (Federal Reserve Bank of New York); Aysegul Sahin (Federal Reserve Bank of New York); Andreas Mueller (Columbia University); Jason Faberman (Federal Reserve Bank of Chicago)
    Abstract: A recent body of literature argues that at least some part of the gender wage gap may be due to differences in the bargaining and negotiation behavior of men and women. If women are less likely to bargain over wages, they will take home a lower fraction of their match surplus. This would contribute to the gender wage differentials observed in the data. Alternatively, wage differentials could be due to differences in sorting into different types of jobs or firms. A well-established literature finds that a considerable fraction of the gender wage gap is due to the occupational choices of men and women (see, for example, Groshen, 1991; Blau and Kahn, 2000, among others). Song, Price, Guvenen, Bloom, von Watcher (2015) find that pay differences between firms are an important source of earnings inequality. Both lines of research suggest that systematic differences in sorting by gender can lead to a gender wage gap. Recently, Card, Cartoso, Heiningand, and Klein (2013) quantified these two separate channels in the Portuguese data: the first one is the sorting channel—the possibility that women are less likely to work for higher-wage firms. The other is the bargaining channel—the possibility that women are less aggressive in bargaining than men. The sorting channel can work through occupational choice as well. Similarly, bargaining is only one aspect of the search process. More broadly, differences in search behavior between men and women, including differences in bargaining, search effort, and search efficiency, may be a key contributor to the gender wage gap. Both the sorting channel and the job search process are closely linked to a worker’s ability to change jobs. In this paper, we focus on gender differences in the job search and job-finding process. Using a unique new household survey, we study the relationship between job search behavior and outcomes by gender. We document new facts on their differences and quantify their effects on the gender wage gap. We find that a large gap in the wages of men and women exist not only in their current wages, but also in their wages at the time of their hiring and the wages of both recently-offered and recently accepted jobs. Gender differences observable characteristics, including demographics, the occupation of the job in question, and firm characteristics, can account for about half of the wage gap of the current job and about two-thirds of the pay gap of job offers. Accounting the differences in prior work history accounts for much of the remaining gap. An important caveat to these findings is that women pay a somewhat larger penalty than men for receiving or accepting an offer from non-employment, even after controlling for observables and work history. Our evidence on job search behavior suggests why differences in in work history may play an important role. We find that women tend to search more while employed and tend to search more intensely, but that they tend to fare slightly worse than men in generating job offers. A key reason for this difference is that men tend to have stronger informal recruiting channels. They generate more unsolicited offers and are more likely to have an employer contact through a referral. The stronger informal networks among men may reflect stronger ties to the labor market. Both may work together to contribute to the gender wage gap. We find that men are more likely to engage in bargaining than women, but only slightly more so. Overall, our results thus far suggest that gender differences in job search behavior and outcomes affect the gender wage gap through their effects on the work histories of men and women.
    Date: 2017
  5. By: Martin Ravallion
    Abstract: Current global inequality measures assume that national-mean income does not matter to economic welfare at given household income, as measured in surveys. The paper questions that assumption on theoretical and empirical grounds and finds that prominent stylized facts about global inequality are not robust. At one extreme, theories of relative deprivation yield a nationalistic measure whereby global inequality is average within-country inequality, which is rising. Other theories and evidence point instead to an intrinsic value to living in a richer country. Then parameter values consistent with subjective wellbeing imply far higher global inequality than prevailing measures, though falling since 1990.
    JEL: D3 D6 I3 O15
    Date: 2017–12
  6. By: Richard Blundell (Institute for Fiscal Studies and IFS and UCL); Robert Joyce (Institute for Fiscal Studies and Institute for Fiscal Studies); Agnes Norris Keiller (Institute for Fiscal Studies and Institute for Fiscal Studies); James P. Ziliak (Institute for Fiscal Studies and University of Kentucky)
    Abstract: We study household income inequality in both Great Britain and the United States and the interplay between labour market earnings and the tax system. While both Britain and the US have witnessed secular increases in 90/10 male earnings inequality over the last three decades, this measure of inequality in net family has declined in Britain while it has risen in the US. We examine the interaction between labour market earnings in the family, assortative mating, the tax and benefit system and household income inequality. We find that both countries have witnessed sizeable changes in employment which have primarily occurred on the extensive margin in the US and on the intensive margin in Britain. Increases in the generosity of the welfare system in Britain played a key role in equalizing net income growth across the wage distribution whereas the relatively weak safety net available to non-workers in the US mean this growing group has seen particularly adverse developments in their net incomes.
    Keywords: inequality, labour market, earnings, tax
    Date: 2017–11–01
  7. By: David Neumark; Peter Shirley
    Abstract: We use longitudinal data on marriage and children from the Panel Study of Income Dynamics to characterize women’s exposure to the federal and state Earned Income Tax Credit (EITC) during their first two decades of adulthood. We then use measures of this exposure to estimate the long-run effects of the EITC on women’s earnings as mature adults. We find some evidence indicating that exposure to a more generous EITC when women were unmarried and had young (pre-school) children leads to higher earnings and hours, and perhaps wages, in the longer run. We also find some evidence that exposure to a more generous EITC when women had young children but were married leads to lower earnings and hours in the longer run. These longer-run effects are to some extent consistent with what we would expect if the short-run effects of the EITC on employment that are documented in other work, and predicted by theory, are reflected in effects of the EITC on cumulative labor market experience (and other consequences of labor market attachment) that influence earnings.
    JEL: H24 H71 J18 J22 J24
    Date: 2017–12
  8. By: Andrew D. Foster; Esther Gehrke
    Abstract: We study the consequences of dynamic complementarities in the production of child human capital for the relationship between risk and schooling investment in a low income setting. In contrast to previous literature, we explore the ex ante response of schooling to risk. We develop a model that incorporates, dynamic complementarity in the education production function, ex-post labor market responses by mothers to income shocks, and substitutability between maternal and child work in the household. We test the model using data from rural India, focusing particularly on the schooling of girls. We find that risk substantially reduces the probability that girls attend school. We then simulate the effects of an implicit social insurance program, modeled after the National Rural Employment Guarantee Scheme (NREGS). Our results suggest that the risk-reducing effect of the NREGS may offset adverse effects on child education that were evident during the NREGS phase-in due to rising wages.
    JEL: I25 O13 O15
    Date: 2017–11

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