nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2018‒04‒09
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Evaluating Intergenerational Persistence of Economic Preferences: A Large Scale Experiment with Families in Bangladesh By Shyamal Chowdhury; Matthias Sutter; Klaus F. Zimmermann
  2. Does upward mobility harm trust? By Rémi Suchon; Marie Claire Villeval
  3. Intergenerational Mobility and Preferences for Redistribution By Stefanie Stantcheva; Edoardo Teso; Alberto Alesina
  4. College Major Choice: Sorting and Differential Returns to Skills By Juanna Joensen; Gregory Veramendi; John Eric Humphries
  5. How Do Gender Quotas Affect Hierarchical Relationships? Complementary Evidence from a Respresentative Survey and Labor Market Experiments By Edwin Ip; Andreas Leibbrandt; Joseph Vecci
  6. Welfare Reform and the Labor Market By Marc K. Chan; Robert A. Moffitt

  1. By: Shyamal Chowdhury; Matthias Sutter; Klaus F. Zimmermann
    Abstract: Economic preferences – like time, risk and social preferences – have been shown to be very influential for real-life outcomes, such as educational achievements, labor market outcomes, or health status. We contribute to the recent literature that has examined how and when economic preferences are formed, putting particular emphasis on the role of intergenerational transmission of economic preferences within families. Our paper is the first to run incentivized experiments with fathers and mothers and their children by drawing on a unique dataset of 1,999 members of Bangladeshi families, including 911 children, aged 6-17 years, and 544 pairs of mothers and fathers. We find a large degree of intergenerational persistence as the economic preferences of mothers and fathers are significantly positively related to their children’s economic preferences. Importantly, we find that socio-economic status of a family has no explanatory power as soon as we control for parents’ economic preferences. A series of robustness checks deals with the role of older siblings, the similarity of parental preferences, and the average preferences within a child’s village.
    Keywords: intergenerational transmission of preferences, time preferences, risk preferences, social preferences, children, parents, Bangladesh, socio-economic status, experiment
    JEL: C90 D10 D90 D81 D64 J13 J24 J62
    Date: 2018
  2. By: Rémi Suchon (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: While considered as appealing for positive and normative reasons, anecdotal evidence suggests that upward social mobility may harm interpersonal interactions. We report on an experiment testing the effect of upward social mobility on interpersonal trust. Individuals are characterized both by a natural group identity and by a status awarded by means of relative performance in a task in which natural identities strongly predict performance. Upward mobility is characterized by the access to the high status of individuals belonging to the natural group associated with a lower expected performance. We find that socially mobile individuals trust less than those who are not socially mobile, especially when the trustee belongs to the same natural group. In contrast, upward mobility does not affect trustworthiness. We find no evidence that interacting with an upwardly mobile individual impacts trust or trustworthiness.
    Keywords: experiment, social identity, trustworthiness, social mobility,Trust
    Date: 2018
  3. By: Stefanie Stantcheva (Harvard University); Edoardo Teso (Harvard University); Alberto Alesina (Harvard University)
    Abstract: Using newly collected cross-country survey and experimental data, we investigate how beliefs about intergenerational mobility affect preferences for redistribution in five countries: France, Italy, Sweden, U.K., and U.S.. Americans are more optimistic than Europeans about intergenerational mobility, and too optimistic relative to actual mobility. Our randomized treatment that shows respondents pessimistic information about mobility increases support for redistribution, mostly for equality of opportunity policies. A strong political polarization exists: Left-wing respondents are more pessimistic about intergenerational mobility, their preferences for redistribution are correlated with their mobility perceptions, and they respond to pessimistic information by increasing support for redistribution. None of these apply to right-wing respondents, possibly because of their extremely negative views of government.
    Date: 2017
  4. By: Juanna Joensen (University of Chicago); Gregory Veramendi (Arizona State University); John Eric Humphries (University of Chicago)
    Abstract: Does the college major premium reflect returns to prior abilities or college education? We decompose the college major premium into labor market returns to multidimensional abilities (grit, interpersonal, and cognitive) and skills learned in college. This allows us to quantify how much of the college major premium is due to sorting on multi-dimensional abilities and how much is due to the differential labor market value of major-specific skills. We find that sorting on abilities accounts for 10-50\% of the college major premium. We also provide novel estimates of complementarities and interaction effects between abilities and skills, since the returns to abilities vary significantly across college majors. We document that 40\% of students who enter STEM degrees change major or drop out. We evaluate counterfactual policies to promote STEM degrees, accounting for the fact that many who start STEM degrees do not finish.
    Date: 2017
  5. By: Edwin Ip; Andreas Leibbrandt; Joseph Vecci
    Abstract: Gender quotas are frequently proposed to address persistent gender imbalances in managerial roles. However, it is unclear how quotas for female managers affect organizations and whether quotas improve or damage relationships between managers and their subordinates. We conduct a representative survey to study opinions on quotas for female managers and based upon design a novel set of experiments to investigate how quotas influence wage setting and effort provision. Our findings reveal that both opinions about gender quotas and workplace behavior crucially depend on the workplace environment. In our survey, we observe that approval for gender quotas is low if women are not disadvantaged in the manager selection process, regardless of whether there are gender differences in performance. Complementing this evidence, we observe in our experiments that quotas lead to lower effort levels and lower wages in such environments. By contrast, in environments in which women are disadvantaged in the selection process, we observe a higher approval of quotas as well as higher effort levels and higher wages. These findings are consistent with the concept of meritocracy and suggest that it is important to evaluate the existence of gender disadvantages in the workplace environment before implementing quotas.
    Keywords: gender quota, hierarchical relationships, fairness, meritocracy
    JEL: C92 J71 J30
    Date: 2018
  6. By: Marc K. Chan; Robert A. Moffitt
    Abstract: This paper reviews the basic theoretical models that are appropriate for analyzing different types of welfare reforms, and the related empirical literature. We first present the canonical labor supply model of a classical welfare program, and then extend this basic framework to include in-kind transfers, incomplete take-up, human capital, preference persistence, and borrowing and saving. The empirical literature on these models is presented. The negative income tax, earnings subsidies, US welfare reforms with features that differ from those in other countries, and child care reforms are then surveyed both in terms of the theoretical model and the empirical literature surrounding each.
    JEL: I3 J22
    Date: 2018–03

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