nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2019‒02‒11
twelve papers chosen by
Maximo Rossi
Universidad de la República

  1. Labor Market Search, Informality, and On-The-Job Human Capital Accumulation By Bobba, Matteo; Flabbi, Luca; Levy, Santiago; Tejada, Mauricio
  2. When do populations polarize? An explanation By Jean-Pierre Benoît; Juan Dubra
  3. New ways to measure well-being? A first joint analysis of subjective and objective measures By Andrén, Daniela; Clark, Andrew E.; D’Ambrosio, Conchita; Karlsson, Sune; Pettersson, Nicklas
  4. The Effects of Status Mobility and Group Identity on Trust By Suchon, Rémi; Villeval, Marie Claire
  5. Do Economic Recessions ‘Squeeze the Middle-Class’? By Alberto Batinti; Joan Costa-Font
  6. The rising return to non-cognitive skill By Edin, Per-Anders; Fredriksson, Peter; Nybom, Martin; Öckert, Björn
  7. Incorporating Inequality Aversion in Health-Care Priority Setting By Costa-Font, J.;; Cowell, F.;
  8. Overtime work a review of literature and initial empirical analysis By Anxo, Dominique.; Karlsson, Mattias.
  10. Parental Beliefs about Returns to Different Types of Investments in School Children By Orazio Attanasio; Teodora Boneva; Christopher Rauh
  11. Which firms employ older workers? By Andrén, Daniela; Mudenda, Lackson Daniel; Pettersson, Nicklas
  12. Unequal Hopes, Lives, and Lifespans in the USA: Lessons from the New Science of Well-Being By Carol Graham

  1. By: Bobba, Matteo; Flabbi, Luca; Levy, Santiago; Tejada, Mauricio
    Abstract: We develop a search and matching model where firms and workers produce output that depends both on match-specific productivity and on worker-specific human capital. The human capital is accumulated while working but depreciates while searching for a job. Jobs can be formal or informal and firms post the formality status. The equilibrium is characterized by an endogenous steady state distribution of human capital and by an endogenous formality rate. The model is estimated on longitudinal labor market data for Mexico. Human capital accumulation on-the-job is responsible for more than half of the overall value of production and upgrades more quickly while working formally than informally. Policy experiments reveal that the dynamics of human capital accumulation magnifies the negative impact on productivity of the labor market institutions that give raise to informality.
    Keywords: Labor market frictions; Search and matching; Nash bargaining; Informality; On-the-Job human capital accumulation
    JEL: J24 J3 J64 O17
    Date: 2019–01
  2. By: Jean-Pierre Benoît; Juan Dubra
    Abstract: Numerous experiments demonstrate attitude polarization. For instance, Lord, Ross & Lepper presented subjects with the same mixed evidence on the deterrent effect of the death penalty. Both believers and skeptics of its deterrent effect became more convinced of their views; that is, the population polarized. However, not all experiments find this attitude polarization. We propose a theory of rational updating that accounts for both the positive and negative experimental findings. This is in contrast to existing theories, which predict either too much or too little polarization
    Keywords: Attitude Polarization; Confirmation Bias; Bayesian Decision Making
    JEL: D11 D12 D81 D82 D83
    Date: 2018
  3. By: Andrén, Daniela (Örebro University School of Business); Clark, Andrew E. (Paris School of Economics); D’Ambrosio, Conchita (Université du Luxembourg); Karlsson, Sune (Örebro University School of Business); Pettersson, Nicklas (Örebro University School of Business)
    Abstract: Our study is, to our knowledge, the first joint analysis of subjective and objective measures of well-being. Using a rich longitudinal data from the mothers pregnancy until adulthood for a birth cohort of children who attended school in Örebro during the 1960s, we analyse in a first step how subjective (self-assessed) and objective (cortisol-based) measures of well-being are related to each other. In a second step, life-course models for these two measures are estimated and compared with each other. Despite the fact that our analysis is largely exploratory, our results suggest interesting possibilities to use objective measures to measure well-being, even though this may imply a greater degree of complexity.
    Keywords: subjective and objective well-being; general life satisfaction; cortisol; birth-cohort data; adult; child and birth outcomes; multivariate imputation
    JEL: A12 D60 I31
    Date: 2019–01–27
  4. By: Suchon, Rémi (University of Lyon 2); Villeval, Marie Claire (CNRS, GATE)
    Abstract: In a laboratory experiment we test the interaction effects of status and group identity on interpersonal trust. Natural group identity is generated by school affiliation. Status (expert or agent) is awarded based on relative performance in a math quiz that is ex ante less favorable to the subjects from one group. We find that "promoted" trustors (individuals from the disadvantaged group that nevertheless achieve the status of expert) trust less both in-group and out-group trustees, compared to the other members of their group. Rather than playing against the effects of natural group identity, status promotion singles-out individuals. In contrast, trustworthiness is not affected by status and there is no evidence that interacting with promoted individuals impacts trust or trustworthiness.
    Keywords: trust, status, group identity, social mobility, experiment
    JEL: C92 D91 J62
    Date: 2019–01
  5. By: Alberto Batinti; Joan Costa-Font
    Abstract: We examine whether economic downturns reshape the distribution of population income giving rise to a “middle-class squeeze.” We test this hypothesis using alternative definitions of middle-class, such as income-based measures from the Luxembourg Income Study (LIS), and perceived measures from the Integrated Values Study (IVS). Our findings suggest that, although recessions do not produce a middle-class squeeze overall, the unanticipated shocks resulting from the Great Recession did. Furthermore, we find that recessions increase the share of the population that regards itself as ‘middle-class.’ Estimates are heterogeneous to the baseline unemployment at the time of a recession, country spending on social protection, to middle-class measures and definitions.
    JEL: F22 I30 J64
    Date: 2019–01
  6. By: Edin, Per-Anders (Uppsala University); Fredriksson, Peter (Uppsala University); Nybom, Martin (IFAU - Institute for Evaluation of Labour Market and Education Policy); Öckert, Björn (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: We examine the changes in the rewards to cognitive and non-cognitive skill during the time period 1992-2013. Using unique administrative data for Sweden, we document a secular increase in the returns to non-cognitive skill. This increase is particularly pronounced in the private sector, at the upper-end of the wage distribution, and relative to the evolution of the return to cognitive skill. Sorting across occupations responded to changes in the returns to skills. Workers with an abundance of non-cognitive skill were increasingly sorted into abstract and nonroutine occupations, for example. Such occupations also saw greater increases in the relative return to non-cognitive skill. This suggests that the optimal skill mixes of jobs have changed over time, that there is sorting on comparative advantage, and that demand-side factors are primarily driving the evolution of the return to non-cognitive skill. Consistent with this, we also show that hikes in o shoring and IT-investments increase the relative reward to non-cognitive skill and the relative intensity of non-cognitive skill usage.
    Keywords: Wage inequality; sorting; skill returns; cognitive/non-cognitive skill
    JEL: J24 J31
    Date: 2018–11–16
  7. By: Costa-Font, J.;; Cowell, F.;
    Abstract: Although measures of sensitivity to inequality are important in judging the welfare effects of health-care programmes, it is far from straightforward how to elicit them and apply them in health-care decision making. This paper provides an overview of the literature on the measurement of inequality aversion, examines some of the features specific of the health domain that depart from the income domain, and discusses its implementation in health system priority-setting decisions. We find evidence that individuals exhibit a preference for more equitable health distribution, but inequality aversion estimates from the literature are unclear. Unlike the income-inequality literature, standard approaches in the health-economics do not follow a ‘veil-of-ignorance’ approach and elicit mostly bivariate (income-related health) inequality aversion estimates. We suggest some ideas to reduce the disconnect between the income-inequality and health-economics literatures.
    Keywords: attitudes to inequality; inequality aversion; health; income; survey data; priority setting;
    JEL: I19
    Date: 2019–02
  8. By: Anxo, Dominique.; Karlsson, Mattias.
    Abstract: Overtime is normally defined as working hours that are done in addition to normal (legislated) working hours during a day or a week. In many countries it may be compensated by overtime premium pay, which can play a role in worker remuneration. Overtime working hours can have important benefits for worker compensation if a premium is paid for each overtime hour worked, but can pose health and well-being concerns for workers if they work too many hours. Working conditions in general, and overtime in particular, are crucially dependent of the prevailing institutional set-up at the national and supranational level. Furthermore, the behaviour of governments, employers and trade-union organisations is important for understanding a country’s working time regime, and in turn how they address overtime. This paper reviews some of the evidence, mainly from labour economics, industrial relations and sociology, to provide an inter-disciplinary overview on how overtime issues are addressed by different academic disciplines. It also examines the incidence of overtime work within the context of several distinct national employment regimes and industrial relations systems, which provides a useful framework to enhance our understanding of overtime in theory and in practice.
    Date: 2019
  9. By: John List
    Date: 2019
  10. By: Orazio Attanasio; Teodora Boneva; Christopher Rauh
    Abstract: Parental investments as well as school quality are important determinants of children’s later-life outcomes. In this paper, we shed light on what determines parental investments and study how parents perceive the returns to parental time investments, material investments and school quality, as well as the complementarity/substitutability between the different inputs. Using a representative sample of 1,962 parents in England, we document that parents perceive the returns to 3 hours of weekly parental time investments or £30 of weekly material investments to matter more than moving a child to a better school. Parents perceive the returns to time and material investments to be diminishing and perceive material investments as more productive if children attend higher quality schools. Perceived returns do not differ with the child’s initial human capital or gender and, surprisingly, we find no differences in perceived returns by the parents’ socioeconomic background. Consistent with parental beliefs playing an important role in parental investment decisions, perceived returns are found to be highly correlated with actual investment decisions.
    JEL: I24 J13 J24 J62
    Date: 2019–01
  11. By: Andrén, Daniela (Örebro University School of Business); Mudenda, Lackson Daniel (Örebro University School of Business); Pettersson, Nicklas (Örebro University School of Business)
    Abstract: There is an increasing emphasizes on the importance of allowing people as they grow older to continue to work according to their work capacity and preferences. This paper builds on earlier literature that shows that firms employ older workers, but they tend not to hire them, and provides an explorative analysis of the establishments that employ older workers. A special focus is on how sensitive are the findings when the definition of older workers become more restrictive. Using employer-employee data from Swedish administrative registers, we found that the difference in establishments’ employment is large enough to explain some of the observed difference across definitions. The retirement age in the guaranteed pension scheme, i.e., 65 years, seems to be one the institutional settings that affect both the employees and employers’ decision for work after 65, but also the establishment’s size, age and ownership.
    Keywords: active aging; older workers; establishments; firms
    JEL: J21 J22 J23 J24 J26
    Date: 2019–01–29
  12. By: Carol Graham (Brookings Institution)
    Date: 2018–09

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