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on Unemployment, Inequality and Poverty |
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Issue of 2018‒09‒03
eight papers chosen by |
| By: | Shyamal Chowdhury (University of Sydney, IZA Bonn); Matthias Sutter (Max Planck Institute for Research on Collective Goods); Klaus F. Zimmermann (Maastricht University, UNU-MERIT and GLO) |
| 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 D1 D90 D81 D64 J13 J24 J62 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2018_04&r=ltv |
| By: | Cahuc, Pierre (Ecole Polytechnique, Paris); Kramarz, Francis (CREST (ENSAE)); Nevoux, Sandra (CREST (ENSAE)) |
| Abstract: | Short-time work programs were revived by the Great Recession. To understand their operating mechanisms, we first provide a model showing that short-time work may save jobs in firms hit by strong negative revenue shocks, but not in less severely-hit firms, where hours worked are reduced, without saving jobs. The cost of saving jobs is low because short-time work targets those at risk of being destroyed. Using extremely detailed data on the administration of the program covering the universe of French establishments, we devise a causal identification strategy based on the geography of the program that demonstrates that short-time work saved jobs in firms faced with large drops in their revenues during the Great Recession, in particular when highly levered, but only in these firms. The measured cost per saved job is shown to be very low relative to that of other employment policies. |
| Keywords: | short-time work, unemployment, employment |
| JEL: | E24 J22 J65 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11673&r=ltv |
| By: | Benabou, Roland (Princeton University); Falk, Armin (briq, University of Bonn); Tirole, Jean (IDEI) |
| Abstract: | By downplaying externalities, magnifying the cost of moral behavior, or suggesting not being pivotal, exculpatory narratives can allow individuals to maintain a positive image when in fact acting in a morally questionable way. Conversely, responsibilizing narratives can help sustain better social norms. We investigate when narratives emerge from a principal or the actor himself, how they are interpreted and transmitted by others, and when they spread virally. We then turn to how narratives compete with imperatives (general moral rules or precepts) as alternative modes of communication to persuade agents to behave in desirable ways. |
| Keywords: | moral behavior, prosocial behavior, narratives, imperatives, justifications, rules, Kantian reasoning, deontology, consequentialism, utilitarianism, norms, organizations |
| JEL: | D62 D64 D78 D83 D85 D91 H41 K42 L14 Z13 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11665&r=ltv |
| By: | Bargain, Olivier (University of Bordeaux); Lacroix, Guy (Université Laval); Tiberti, Luca (Partnership for Economic Policy (pep)) |
| Abstract: | Recent advances in the collective model literature suggest ways to estimate the complete allocation of resources within households, using assignable goods and assuming adult preference similarity across demographic groups (or across spouses). While it makes welfare analysis at the individual level possible, the predictive power of the model is unknown. We propose the first validation of this approach, exploiting a unique dataset from Bangladesh in which the detailed expenditure on private goods by each family member is collected. Individualized expenditure allows us to test the identifying assumptions and to derive 'observed' resource sharing within families, which can be compared to the resource allocation predicted by the model. Sharing between parents and children is well predicted on average while the model detects key aspects like the extent of pro-boy discrimination. Results overall depend on the identifying good: clothing provides the best t compared to other goods as it best validates the preference-similarity assumption. The model leads to accurate measures of child and adult poverty, indicating the size and direction of the mistakes made when using the traditional approach based on per adult equivalent expenditure (i.e. ignoring within-household inequality). This assessment of existing approaches to measure individual inequality and poverty is crucial for both academic and policy circles and militates in favor of a systematic use of collective models for welfare analyses. |
| Keywords: | collective model, Engel Curves, Rothbarth Method, sharing rule |
| JEL: | D11 D12 I31 J12 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11653&r=ltv |
| By: | Ariel J. Binder; David Lam |
| Abstract: | Spousal characteristics such as age, height, and earnings are often used to infer social preferences. For example, a “male taller” norm has been inferred from the fact that fewer wives are taller than their husbands than would occur with random matching. The large proportion of husbands out-earning their wives has been cited as evidence for a “male breadwinner” norm. We show that it can be misleading to infer social preferences about an attribute from observed marital sorting on that attribute. We show that positive assortative matching on an attribute is consistent with a variety of underlying preferences. Given gender gaps in height and earnings, positive sorting implies it will be rare for women to be taller or richer than their husbands--even without an underlying preference for shorter or lower-earning wives. Simulations which sort couples positively on permanent earnings can largely replicate the observed distribution of spousal earnings differences in US Census data. Further, we show that an apparent sharp drop in the distribution function at the point where the wife out-earns the husband results from a mass of couples earning identical incomes, a mass which we argue is not evidence of a norm for higher-earning husbands. |
| JEL: | D10 J12 J16 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24907&r=ltv |
| By: | German Cubas (University of Houston); Chinhui Juhn (University of Houston); Pedro Silos (Temple University) |
| Abstract: | Married women with kids that are full time workers work less and allocate more time to home production than their men counterparts. At the same time the labor market is characterized by occupations that differ in terms of the coordination of the work schedule. Workers that work in occupations that concentrate hours at peak times of the day are paid a higher wage, but relatively lower if they are women. The higher demand for family time women face restricts their occupational choice and thus drives a gap in their earnings relative to men. We incorporate these trade offs in an occupational choice model with home production in which workers have comparative advantages to work into different occupations. In the model, labor supply, the supply of family time and the occupational choice are intimately related. The effect of differences in household care responsibilities between men and women in their occupational choice explain half of the observed gender earnings gap. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:249&r=ltv |
| By: | Gene Grossman (Princeton University); Elhanan Helpman (Harvard University); Ezra Oberfield (Princeton University); Thomas Sampson (LSE) |
| Abstract: | We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation a la Ben Porath (1967) and capital-skill complementarity a la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early postwar period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the U.S. labor share. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:169&r=ltv |
| By: | Jaime Ruiz-Tagle; Pablo Troncoso |
| Abstract: | Individuals’ labor market performance can be affected directly by their mental health through labor market participation and productivity. Moreover, poor mental health of workers limits labor mobility and hence efficiency and economic growth. Although there is some empirical evidence linking mental health and labor market performance in high-income countries, few papers provide evidence from developing countries, despite the fact that health support is typically weak. We investigate the effects of poor mental health on labor market in Chile, where depression rate reaches 17%. We build a mental health status index and control confounding effects by using a large set of individual and household socio-economic, labor and health characteristics. We address causality identification by using instrumental variables at the individual level (number of relatives that passed away, relatives diagnosed with depression), and at the municipality level (life expectancy, intra-family violence rate). Our results indicate that poor mental health could reduce labor market participation by 20%. Additionally, we find that poor mental health could reduce wages by 60% for women and 50% for men. We also find heterogeneous effects among workers due to economic sector, were private sector workers with poor mental health suffer larger impacts on wages than public sector workers. |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp468&r=ltv |