nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2019‒03‒11
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Revealing Stereotypes: Evidence from Immigrants in Schools By Alesina, Alberto F; Carlana, Michela; La Ferrara, Eliana; Pinotti, Paolo
  2. The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment By Ricardo Perez-Truglia
  3. The Minimum Income Scheme as a poverty reduction mechanism: the case of the Basque Country By Lucía Gorjón García; Antonio Villar
  4. Perceptions of Inequality and Redistribution: A Note By Roberto Iacono; Marco Ranaldi
  5. Works Councils and Workplace Health Promotion in Germany By Stephen Smith; Uwe Jirjahn; Jens Mohrenweiser
  6. Understanding Intergenerational Mobility: The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviors By Black, Sandra; Devereux, Paul J.; Lundborg, Petter; Majlesi, Kaveh
  7. Personality and Positionality By Akay, Alpaslan
  8. Narratives About Technology-Induced Job Degradation Then and Now By Robert J. Shiller
  9. The Intergenerational Transmission of Health in the United States: A Latent Variables Analysis By Ashley Wong; Bhashkar Mazumder; Timothy J Halliday

  1. By: Alesina, Alberto F; Carlana, Michela; La Ferrara, Eliana; Pinotti, Paolo
    Abstract: If individuals become aware of their stereotypes, do they change their behavior? We study this question in the context of teachers' bias in grading immigrants and native children in middle schools. Teachers give lower grades to immigrant students compared to natives who have the same performance on standardized, blindly-graded tests. We then relate differences in grading to teachers' stereotypes, elicited through an Implicit Association Test (IAT). We find that math teachers with stronger stereotypes give lower grades to immigrants compared to natives with the same performance. Literature teachers do not differentially grade immigrants based on their own stereotypes. Finally, we share teachers' own IAT score with them, randomizing the timing of disclosure around the date on which they assign term grades. All teachers informed of their stereotypes before term grading increase grades assigned to immigrants. Revealing stereotypes may be a powerful intervention to decrease discrimination, but it may also induce a reaction from individuals who were not acting in a biased way.
    Keywords: bias in grading; IAT; immigrants; implicit stereotypes; teachers
    JEL: I24 J15
    Date: 2019–02
  2. By: Ricardo Perez-Truglia
    Abstract: In 2001, Norwegian tax records became easily accessible online, allowing everyone in the country to observe the incomes of everyone else. According to the income comparisons model, this change in transparency can widen the gap in well-being between richer and poorer individuals. We test this hypothesis using survey data from 1985–2013. Using multiple identification strategies, we show that the higher transparency increased the gap in happiness between richer and poorer individuals by 29%, and it increased the life satisfaction gap by 21%. We provide suggestive evidence that some, although probably not all, of this effect relates to changes in self-perceptions of relative income. We provide back-of-the-envelope estimates of the importance of income comparisons, and discuss implications for the ongoing debate on transparency policies.
    JEL: D03 D31 D60 D83 I31 Z10
    Date: 2019–02
  3. By: Lucía Gorjón García (ISEAK and FEDEA); Antonio Villar (Universidad Pablo de Olavide & IVIE)
    Abstract: This paper analyses the impact of a Minimum Income Scheme (MIS), which operates in the Basque Country, one of the 17 Spanish Autonomous Regions, by assessing its efficacy in fighting poverty. We evaluate the effect or the MIS with respect to two different poverty measures. The first one is that defined by the administrative criteria of eligibility. The second one corresponds to Sen’s poverty measure that permits a simple decomposition of poverty into three different components, incidence, intensity and inequality. The results show that the MIS has reduced substantially all dimensions of poverty, even though there is scope for improvement both in coverage and efficiency.
    Keywords: minimum income schemes, poverty, inequality, efficiency and effectiveness.
    JEL: I32 I38 D61
    Date: 2019–03
  4. By: Roberto Iacono (NTNU - Norwegian University of Science and Technology [Trondheim]); Marco Ranaldi (UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics)
    Abstract: This paper shows that perceptions of inequality are a key factor in the formation of preferences for redistribution and thereby in the determination of the equilibrium redistribution level. We build on the novel stylized facts provided by the recent empirical and experimental literature on perceptions of income inequality. In brief, the emerging consensus is that agents incorrectly estimate the shape of the income distribution because of limited information. Agents with income above the mean believe they are poorer than they actually are, and agents with income below the mean believe themselves to be richer. We revisit the standard framework on the political economy of redistribution and extend it in two ways. First, we assume a more general two-sided inequality aversion. Second, we incorporate perceptions of income inequality in the model. We show analytically that the equilibrium redistribution level is crucially determined by the interplay between the information treatment correcting the bias in perceptions of inequality and fairness considerations specified by the degree of inequality aversion. By doing this, we add (biased) perceptions of inequality to the list of potential factors explaining why, notwithstanding high levels of inequality, in many countries, an increase in the desire for redistribution has not been observed.
    Keywords: Meltzer-Richard Model,Perceived Inequality,Inequality Aversion,Redistributive Preferences
    Date: 2019–01
  5. By: Stephen Smith (George Washington University); Uwe Jirjahn (University of Trier, GLO, and IZA); Jens Mohrenweiser (Bournemouth University)
    Abstract: From a theoretical viewpoint, there can be market failures resulting in an underprovision of occupational health and safety. Works councils may help mitigate these failures. Using establishment data from Germany, our empirical analysis confirms that the incidence of a works council is significantly associated with an increased likelihood that the establishment provides more workplace health promotion than required by law. This result also holds in a recursive bivariate probit regression accounting for the possible endogeneity of works council incidence. Furthermore, analyzing potentially moderating factors such as collective bargaining coverage, industry, type of ownership, multi-establishment status and product market competition, we find a positive association between works councils and workplace health promotion for the various types of establishments examined. Finally, we go beyond the mere incidence of workplace health promotion and show that works councils are positively associated with a series of different measures of workplace health promotion.
    Keywords: Non-union employee representation, works council, codetermination, worker voice, occupational health and safety, workplace health promotion
    JEL: I18 J28 J50 J81
    Date: 2019–01
  6. By: Black, Sandra; Devereux, Paul J.; Lundborg, Petter; Majlesi, Kaveh
    Abstract: Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for pre-birth factors and we find little evidence that nature/nurture interactions are important. When bequests are taken into account, the role of adoptive parental wealth becomes much stronger. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth. We further build on the existing literature by providing a more comprehensive view of the role of nature and nurture on intergenerational mobility, looking at a wide range of different outcomes using a common sample and method. We find that environmental influences are relatively more important for wealth-related variables such as savings and investment decisions than for human capital. We conclude by studying consumption as an overall measure of welfare and find that, like wealth, it is more determined by environment than by biology.
    Keywords: intergenerational mobility; Wealth Inequality
    JEL: J00
    Date: 2019–02
  7. By: Akay, Alpaslan (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper employs survey experiments to examine the relationship between personality characteristics and positional concerns across a wide range of “goods,” e.g., income and market value of a car, and “bads,” e.g., infant mortality and poverty rates. Personality characteristics are measured using the five-factor model (Big-5), the locus of control, and the reciprocity. We demonstrate that there are significant relationships between personality types and positional concerns, which differ both by the type of personality and by the nature of a good. The results are highly consistent with the predictions presented in the field of personality psychology. That is, while agreeableness is negatively associated, conscientiousness, neuroticism, and external locus of control are positively associated with positional concerns for most goods. Importantly, there is also a substantial heterogeneity in the mean degree of positional concerns across the low and high values of most personality characteristics and goods.
    Keywords: Personality Characteristics; Survey Experiments; Positional Concerns
    JEL: C90 D63
    Date: 2019–03
  8. By: Robert J. Shiller (Cowles Foundation, Yale University)
    Abstract: Concerns that technological progress degrades job opportunities have been expressed over much of the last two centuries by both professional economists and the general public. These concerns can be seen in narratives both in scholarly publications and in the news media. Part of the expressed concern about jobs has been about the potential for increased economic inequality. But another part of the concern has been about a perceived decline in job quality in terms of its effects on monotony vs creativity of work, individual sense of identity, power to act independently, and meaning of life. Public policy should take account of both of these concerns, inequality and job quality.
    Keywords: Labor-saving machines, Artificial intelligence, History of thought, Division of labor, Unemployment, Automation, Robotics
    JEL: N3 J0 B0 E2
    Date: 2019–02
  9. By: Ashley Wong (Northwestern University); Bhashkar Mazumder (Federal Reserve Bank of Chicago); Timothy J Halliday (University of Hawaii at Manoa)
    Abstract: Social scientists have long documented that many components of socioeconomic status such as income and education have strong ties across generations. However, health status, arguably a more critical component of welfare, has largely been ignored. We fill this void by providing the first estimates of the Intergenerational Health Association (IHA) that are explicitly based on a non-linear latent variable model. Adjusting for only age and gender, we estimate an IHA of 0.3 indicating that about one third of a parent's health status gets transmitted to their children. Once we add additional mediators to the model, we show that education, and particularly children's education, is an important transmission channel in that it reduces the IHA by one third. Finally, we show that estimates of the IHA from non-linear models are only moderately higher than those from linear models, while rank-based mobility estimates are identical.
    Keywords: Health, Mobility, Latent Variable, Inequality
    JEL: I1 I14
    Date: 2019–02

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