nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2018‒12‒10
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Is Envy Harmful to a Society's Psychological Health and Wellbeing? A Longitudinal Study of 18,000 Adults By Mujcic, Redzo; Oswald, Andrew J.
  2. Inequality and relative saving rates at the top By Lieberknecht, Philipp; Vermeulen, Philip
  3. France: Social protection for the self-employed By Pierre Cahuc
  4. Financial Inclusion, Shocks and Poverty: Evidence from the Expansion of Mobile Money in Tanzania By Abiona, Olukorede; Foureaux Koppensteiner, Martin
  5. Assortative Matching or Exclusionary Hiring? The Impact of Firm Policies on Racial Wage Differences in Brazil By Gerard, Francois; Lagos, Lorenzo; Severnini, Edson R.; Card, David
  6. The origins of cognitive skills and personality: the effect of in-utero climate shocks on children?s future life outcomes By Grace Chang; Marta Favara; Rafael Novella

  1. By: Mujcic, Redzo (University of Queensland); Oswald, Andrew J. (University of Warwick)
    Abstract: Nearly 100 years ago, the philosopher and mathematician Bertrand Russell warned of the social dangers of widespread envy. One view of modern society is that it is systematically developing a set of institutions - such as social media and new forms of advertising - that make people feel inadequate and envious of others. If so, how might that be influencing the psychological health of our citizens? This paper reports the first large-scale longitudinal research into envy and its possible repercussions. The paper studies 18,000 randomly selected individuals over the years 2005, 2009, and 2013. Using measures of SF-36 mental health and psychological well-being, four main conclusions emerge. First, the young are especially susceptible. Levels of envy fall as people grow older. This longitudinal finding is consistent with a cross-sectional pattern noted recently by Nicole E. Henniger and Christine R. Harris, and with the theory of socioemotional regulation suggested by scholars such as Laura L. Carstensen. Second, using fixed-effects equations and prospective analysis, the analysis reveals that envy today is a powerful predictor of worse SF-36 mental health and well-being in the future. A change from the lowest to the highest level of envy, for example, is associated with a worsening of SF-36 mental health by approximately half a standard deviation (p
    Keywords: envy, age, SF-36, mental health, well-being, life satisfaction, longitudinal data
    JEL: I18 I31
    Date: 2018–10
  2. By: Lieberknecht, Philipp; Vermeulen, Philip
    Abstract: We estimate the long- and short-run relationship between top income and wealth shares for France and the US since 1913. We find strong evidence for a long-run cointegration relationship governed by relative saving rates at the top. For both countries, we estimate a decline in the relative saving rates at the top – after 1968 in France and 1983 in the US, equivalent to a reduction of the long-run gap between wealth and income inequality compared to the period before. In the short-run, income inequality drives wealth inequality, while the converse link is weaker and slower. Using counterfactual simulations, we find that the recent rise in wealth inequality in the US is largely attributable to the contemporary increase in income inequality. Modest income concentration dynamics and a stronger decline in relative saving rates at the top than in the US contributed to a more subdued rise in wealth inequality in France. JEL Classification: D31, E21, E25, N32, N34
    Keywords: cointegration, income inequality, top shares, VECM, wealth inequality
    Date: 2018–11
  3. By: Pierre Cahuc (Département d'économie)
    Abstract: This chapter discusses the ongoing efforts to integrate the social protection of self-employed workers into the general social protection system in France. Several autonomous schemes and a complex system of contribution rates and entitlements obscure the relationship between gross and net wages and hinder the mobility of workers across jobs and occupations. While there have been efforts to harmonise the social protection of self-employed workers and employees, differences in coverage and contribution rates remain. The social protection of employees and self-employed workers is also managed by diverse institutions which are imperfectly coordinated. This paper describes the contribution rates and the social protection of various forms of employment in France. It provides information about the different components of the social protection of self-employed people (the organisation of schemes and their financial architecture, membership of the schemes, contributions and benefits) and compares the situation of different kinds of self-employed workers with that of employees. The chapter also discusses a special unemployment scheme for performing artists and related occupations, the Intermittents du spectacle.
    Date: 2018–11
  4. By: Abiona, Olukorede (University of Leicester); Foureaux Koppensteiner, Martin (University of Leicester)
    Abstract: We estimate the effect of mobile money adoption on consumption smoothing, poverty and human capital investments in Tanzania. We exploit the rapid expansion of the mobile money agent network between 2010 and 2012 and combine this with idiosyncratic shocks from variation in rainfall over time and across space in an instrumented DiD methodology. We find that adopter households are able to smooth consumption during periods of shocks and maintain their investments in human capital. Results on time use of children and labor force participation complement the findings on the important role of mobile money for the intergenerational transmission of poverty.
    Keywords: mobile money, household shocks, rainfall, poverty, human capital accumulation, Tanzania
    JEL: G23 H31 I31 I32
    Date: 2018–10
  5. By: Gerard, Francois (Columbia University); Lagos, Lorenzo (Columbia University); Severnini, Edson R. (Carnegie Mellon University); Card, David (University of California, Berkeley)
    Abstract: A growing body of research shows that firms' employment and wage-setting policies contribute to wage inequality and pay disparities between groups. We measure the effects of these policies on racial pay differences in Brazil. We find that nonwhites are less likely to work at establishments that pay more to all race groups, a pattern that explains about 20% of the white-nonwhite wage gap for both genders. The pay premiums offered by different employers are also compressed for nonwhites relative to whites, contributing another 5% of the overall gap. We then ask how much of the under-representation of nonwhites at higher-paying workplaces is due to the selective skill mix at these establishments. Using a counterfactual based on the observed skill distribution at each establishment and the nonwhite shares in different skill groups in the local labor market, we conclude that assortative matching accounts for about two-thirds of the under-representation gap for both men and women. The remainder reflects an unexplained preference for white workers at higher-paying establishments. The wage losses associated with unexplained sorting and differential wage setting are largest for nonwhites with the highest levels of general skills, suggesting that the allocative costs of race-based preferences may be relatively large in Brazil.
    Keywords: assortative matching, discrimination, firm policies, racial wage differences, Brazil
    JEL: E24 J15 J31
    Date: 2018–10
  6. By: Grace Chang (Young Lives, University of Oxford); Marta Favara (Young Lives, University of Oxford); Rafael Novella (Inter-American Development Bank)
    Abstract: A large literature stemming from the Fetal Origins Hypothesis (Barker, 1990) discuss the importance on the in-utero period as critical in shaping a person?s future development. More recently, economists have further tested this theory by investigating how fetal experiences are related to a variety of future economic outcomes. This paper investigates the effect of in utero exposure to rainfall shocks in India on future accumulation of human capital. For this analysis, we match the Young Lives data, following a cohort of children born between the years 2000 and 2001 up to age 15, and climate data from the University of Delaware. We estimate the impact of in utero exposure to rainfall shocks on children?s cognitive (mathematics and vocabulary) and non-cognitive skills (core self-evaluation) at age 15 by using a community fixed effects model to control for any unobservable correlates of weather patterns and local levels of human capital formation. Furthermore, we investigate the effects of rainfall deviations that occur during the first, second and/or third trimesters of pregnancy. We argue that timing of the exposure to shocks might be important to cognitive and non-cognitive skills formation considering that the critical window for the fetus? brain development is between the 24th and 42nd week of gestation. Our results show significant and negative effects of exposure to anomalous rainfall deviations from the historical mean on children?s cognitive scores at age 15, particularly when affected by a negative one standard deviation shock. We also find a significant and negative impact on children?s core self-evaluation from a two standard deviation shock. The second trimester appears to be the critical window of exposure on cognitive outcomes, while the first trimester seems to be important to the non-cognitive outcome. Hence, our results point to the persistent effects of exposure to rainfall deviations during pregnancy on future human capital development. This highlights the need for policies to think more about individual life-course and intergenerational mobility, where focusing on mothers can help children?s development outcomes in the future.
    Keywords: human capital development, fetal origins hypothesis, non-cognitive skills, cognitive skills, climate
    Date: 2018–10

This nep-ltv issue is ©2018 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.