nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2019‒05‒13
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Economic inequality and subjective well-being across the world By D'Ambrosio Conchita; Clark Andrew
  2. The demand for bad policy when voters underappreciate equilibrium effects By Dal Bó, Ernesto; Dal Bó, Pedro; Eyster, Erik
  3. Wages and employment: The role of occupational skills By Esther Mirjam Girsberger; Matthias Krapf; Miriam Rinawi

  1. By: D'Ambrosio Conchita; Clark Andrew
    Abstract: We here use repeated cross-section data from the Afrobarometer, Asianbarometer Latinobarometer, and Eurobarometer to analyse the variables that are correlated with both current and future evaluations of standards of living. These are related not only to an individual’s own economic resources but also to the country distribution of resources.We consider resource comparisons (the gap in resources between richer and poorer individuals) and the normative evaluation of distribution (conditional on these gaps), given by the Gini coefficient. The ‘typical’ pattern of a negative effect of gaps on the better-off but a positive effect of gaps on the worse-off is found only in Europe: gaps for the better-off in Africa and Central and Latin America have no correlation with current life evaluations and are associated with more positive expectations of the future.Equally, there is no positive estimated coefficient for gaps to the worse-off in Asia. The Gini coefficient is negatively correlated with current life evaluation only in Asia, and is insignificant everywhere else. On the contrary, future life evaluations are more positive in more unequal countries in Africa and Central and Latin America.The relationship between the distribution of resources and measures of individual well-being over time is far from universal.
    Keywords: Relative deprivation,WIID,Baromters,Gini coefficient,Inequality,Living conditions
    Date: 2018
    URL: http://d.repec.org/n?u=RePEc:unu:wpaper:wp2018-170&r=all
  2. By: Dal Bó, Ernesto; Dal Bó, Pedro; Eyster, Erik
    Abstract: Most of the political-economy literature blames inefficient policies on institutions or politicians' motives to supply bad policy, but voters may themselves be partially responsible by demanding bad policy. In this paper, we posit that voters may systematically err when assessing potential changes in policy by underappreciating how new policies lead to new equilibrium behavior. This biases voters towards policy changes that create direct benefits - welfare would rise if behavior were held constant - even if those reforms ultimately reduce welfare because people adjust behavior. Conversely, voters are biased against policies that impose direct costs even if they induce larger indirect benefits. Using a lab experiment, we find that a majority of subjects vote against policies that, while inflicting direct costs, would help them to overcome social dilemmas and thereby increase welfare. Subjects also support policies that, while producing direct benefits, create social dilemmas and ultimately hurt welfare. Both mistakes arise because subjects fail to fully anticipate the equilibrium effects of new policies. More precisely, we establish that subjects systematically underappreciate the extent to which policy changes will affect the behavior of other people, and that these mistaken beliefs exert a causal effect on the demand for bad policy.
    Keywords: voting; reform; political failure; endogenous policy; experiment
    JEL: C9 D7
    Date: 2018–04–01
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:74455&r=all
  3. By: Esther Mirjam Girsberger (Economics Discipline Group, University of Technology Sydney); Matthias Krapf (University of Basel, Switzerland); Miriam Rinawi (Swiss National Bank, Switzerland)
    Abstract: We study how skills acquired in vocational education and training (VET) affect wages and employment dynamics in Switzerland. We present and estimate a search and matching model for workers with a VET degree who differ in their interpersonal, cognitive and manual skills. Assuming a match productivity which exhibits worker-job complementarity, we estimate how workers’ skills map into job offers, wages and unemployment. Firms value cognitive skills on average almost twice as much as interpersonal and manual skills. Moreover, they prize complementarity in cognitive and interpersonal skills. We estimate average returns to VET skills in hourly wages of 9%. Furthermore, VET improves labour market opportunities through higher job arrival rate and lower job destruction. Workers thus have large benefits from getting a VET degree.
    Keywords: Occupational training; labour market search; multidimensional skills.
    JEL: E23 J23 J24 J64
    Date: 2019–01–29
    URL: http://d.repec.org/n?u=RePEc:uts:ecowps:2019/01&r=all

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