nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2018‒07‒16
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Marriage, labour supply and the dynamics of the social safety net By Hamish Low; Costas Meghir; Luigi Pistaferri; Alessandra Voena
  2. Keeping up with the e-Joneses: Do online social networks raise social comparisons? By Sabatini, Fabio; Sarracino, Francesco
  3. Shared Prosperity: Concepts, Data, and Some Policy Examples By Ferreira, Francisco H. G.; Galasso, Emanuela; Negre, Mario
  4. Inequality Measurement and the Rich: Why inequality increased more than we thought By Frank A Cowell; Emmanuel Flachaire
  5. Social Preferences and Social Curiosity By Weiwei Tasch; Daniel Houser

  1. By: Hamish Low (Institute for Fiscal Studies and Trinity College, Cambridge); Costas Meghir (Institute for Fiscal Studies and Yale University); Luigi Pistaferri (Institute for Fiscal Studies and Stanford University); Alessandra Voena (Institute for Fiscal Studies and University of Chicago)
    Abstract: The 1996 PRWORA reform introduced time limits on the receipt of welfare in the United States. We use variation by state and across demographic groups to provide reduced form evidence showing that such limits led to a fall in welfare claims (partly due to "banking" benefi ts for future use), a rise in employment, and a decline in divorce rates. We then specify and estimate a life-cycle model of marriage, labor supply and divorce under limited commitment to better understand the mechanisms behind these behavioral responses, carry out counterfactual analysis with longer run impacts and evaluate the welfare effects of the program. Based on the model, which reproduces the reduced form estimates, we show that among low educated women, instead of relying on TANF, single mothers work more, more mothers remain married, some move to relying only on food stamps and, in ex-ante welfare terms, women are worse off.
    Keywords: time limits, welfare reform, life-cycle, marriage and divorce
    JEL: D91 H53 J12 J21
    Date: 2018–02–19
  2. By: Sabatini, Fabio; Sarracino, Francesco
    Abstract: Online social networks, such as Facebook, amplify the occasions for social comparisons which are detrimental to well-being. The authors test the hypothesis that the use of social networking sites (SNS) increases social comparisons using Italian data from the Multipurpose Household Survey, and European data from Eurobarometer. The results suggest that SNS users have a higher probability to compare their achievements with those of others. This evidence is robust to endogeneity concerns. The authors conclude that, by increasing the opportunities for social comparisons, SNS can be an engine of income dissatisfaction for their users.
    Keywords: social networks,social networking sites,social comparisons,satisfaction with income,relative deprivation
    JEL: D83 I31 O33 Z1 Z13
    Date: 2018
  3. By: Ferreira, Francisco H. G. (World Bank); Galasso, Emanuela (World Bank); Negre, Mario (German Development Institute)
    Abstract: "Shared prosperity" has become a common phrase in the development policy discourse. This short paper provides its most widely used operational definition – the growth rate in the average income of the poorest 40 percent of a country's population – and describes its origins. The paper discusses how this notion relates to well-established concepts and social indicators, including social welfare, poverty, inequality, and mobility, and reviews some of its design shortcomings. The paper then looks at household survey data to assess recent progress in this indicator globally. The analysis finds that during 2008–13, mean incomes for the poorest 40 percent rose in 60 of 83 countries. In 49 of them, accounting for 65 percent of the sampled population, it rose faster than overall average incomes. Finally, the paper briefly reviews a (non-exhaustive) range of 'pre-distribution' and 'redistribution' policies with a sound empirical track record of raising productivity and well-being among the poor, thus contributing to shared prosperity.
    Keywords: shared prosperity, poverty, inequality
    JEL: D30 D63 I30
    Date: 2018–05
  4. By: Frank A Cowell; Emmanuel Flachaire
    Abstract: Many standard inequality measures can be written as ratios with the mean in the denominator. When one income moves away from equality, both the numerator and the denominator may vary in the same direction and such indices may decrease. This anomalous behaviour is not shared by median-normalised inequality measures developed in this paper, where the mean at the denominator is replaced by the median. However, median-normalised inequality measures do not respect the principle of transfers. We show that the absolute Gini and the mean logarithmic deviation, or second Theil index, are the only measures that both avoid anomalous behaviour when one income is varied and also satisfy the principle of transfers. An application shows that the increase in inequality in the United States over recent decades is understated by the Gini index and that the mean logarithmic deviation index should be preferred in practice.
    JEL: D63
    Date: 2018–06
  5. By: Weiwei Tasch (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University)
    Abstract: Over the last two decades social preferences have been implicated in a wide variety of key economic behaviors. Here we investigate connections between social preferences and the demand for information about others’ economic decisions and outcomes, which we denote “social curiosity.†Our analysis is within the context of the inequality aversion model of Fehr and Schmidt (1999). Using data from laboratory experiments with sequential public goods games, we estimate social preferences at the individual level, and then correlate social preferences with one’s willingness to pay to make visible others’ contribution decisions. Our investigation enables us to shed light on how costs to knowing others’ economic decisions and outcomes impact decisions among people with different social preferences, and in particular the extent to which such costs impact the willingness for groups to cooperate.
    Keywords: Laboratory Experiment, Inequality Aversion, Social Curiosity, Information, Sequential Public Goods Game
    JEL: C91 D83 D91 H41
    Date: 2018–07

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