nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2019‒09‒30
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Does Employing Older Workers Affect Workplace Performance? By Bryson, Alex; Forth, John; Gray, Helen; Stokes, Lucy
  2. A Note on the Relationship between Additive Separability and Decomposability in Measuring Income Inequality By Ben Fine
  3. Charity as Income Redistribution: A Model with Optimal Taxation, Status, and Social Stigma By Thomas Aronsson; Olof Johansson-Stenman; Ronald Wendner
  4. Deciding to Delegate: On Distributional Consequences of Endogenous Delegation By Lara Ezquerra; Praveen Kujal
  5. Heterogeneity in Talent or in Tastes? Implications for Redistributive Taxation By Ian Fillmore; Trevor Gallen

  1. By: Bryson, Alex (University College London); Forth, John (Cass Business School); Gray, Helen (Institute for Employment Studies (IES)); Stokes, Lucy (National Institute of Economic and Social Research (NIESR))
    Abstract: Focusing on private sector workplaces in Britain, we investigate whether the employment of older workers has implications for workplace performance. We find no significant association between changes in the proportion of older workers employed and changes in workplace performance. We find some evidence that workplace labour productivity falls where the proportion of 'middle-aged' workers falls, either due to a rise in the proportion of older or younger workers, but this association does not carry through to financial performance. Overall, the findings suggest that any reluctance on the part of employers to employ greater numbers of older workers may be misplaced.
    Keywords: older workers, productivity, workplace employment relations survey
    JEL: J21 J23 J24 J63 L25 M51
    Date: 2019–09
  2. By: Ben Fine (Department of Economics, SOAS University of London, UK)
    Abstract: The purpose of this note is to offer some original technical results in the theoretical measurement of inequality. Whilst most practitioners are content to work with one or other measure, with Gini for example to the fore, and discuss the empirical results that follow from the data, such pragmatism involves a certain degree of arbitrary ethical judgement over how more for one rather than another should be assessed. At a deeper level of principle, constructing measures of inequality proceeds by specifying conditions like homogeneity for which multiplying all incomes by a common factor should leave a measure unchanged. Such conditions are the starting point for this contribution, drawing upon a rich literature that already exists. More specifically, this note explicitly explores the relationships between additive separability and homotheticity of measures of welfare (closely related to derived measures of inequality), and homogeneity and decomposability in direct measures of inequality, drawing upon the previous literature along the way to make this possible. An interrogation is made of the resonances and dissonances between the classic contributions of Atkinson (1970) and Shorrocks (1980). In brief, in the presence of otherwise common assumptions, it is shown that additive separability and homotheticity of welfare are stronger combined conditions than decomposability and homogeneity of income inequality. The gap between the two, however, can be closed by adding an extra term around total income to the measure of welfare.
    Keywords: inequality measurement
    JEL: D63 D6
    Date: 2019–06
  3. By: Thomas Aronsson (Umea University, Sweden); Olof Johansson-Stenman (University of Gothenburg, Sweden); Ronald Wendner (University of Graz, Austria)
    Abstract: In light of the increasing inequality in many countries, this paper analyzes redistributive charitable giving from the rich to the poor in a model of optimal nonlinear income taxation. Our framework integrates (i) public and private redistribution, (ii) the warm glow of giving and stigma of receiving charitable donations, and (iii) status concerns emanating from social comparisons with respect to charitable donations and private consumption. Whether charity should be taxed or supported largely depends on the relative strengths of the warm glow of giving and the stigma of receiving charity, respectively, and on the positional externalities caused by charitable donations. In addition, imposing stigma on the mimicker (which relaxes the self-selection constraint) strengthens the case for subsidizing charity. We also consider a case where the government is unable to target the charitable giving through a direct tax instrument, and we examine how the optimal marginal income tax structure should be adjusted in response to charitable giving. Numerical simulations demonstrate that the quantitative effects of the aforementioned mechanisms can be substantial.
    Keywords: Conspicuous consumption; conspicuous charitable giving; social status; optimal income taxation; warm glow; stigma
    JEL: D03 D62 H21 H23
    Date: 2019–09
  4. By: Lara Ezquerra (Universitat de les Illes Balears); Praveen Kujal (Middlesex University London and Economic Science Institute, Chapman University)
    Abstract: We allow for principals to self-select into delegating (or not) the allocation decision to an agent in a modified dictator game. The standard dictator game is obtained when they choose not to delegate. Nearly half the subjects choose to be a dictator and make the allocation themselves. Dictators thus obtained transfer lower amounts to receivers, relative to when the decision making is passed to an agent (or the standard dictator game). Subjects self-selecting into the role of a dictator give less relative to those that pass the allocation decision to an agent. Finally, the distributional consequences of delegating, or not, vary with less inequality obtained when the delegation decision is delegated.
    Date: 2019
  5. By: Ian Fillmore (Washington University in St. Louis); Trevor Gallen (Purdue University)
    Abstract: Do differences in tastes for leisure play an important role in determining income inequality? Using NLSY79 data on the joint distribution of lifecycle earnings and work hours, we fit a simple lifecycle model in which workers are heterogeneous in (i) their ability to accumulate human capital (talent), (ii) their preferences over consumption vs. leisure (taste), and (iii) their initial human capital. We find that tastes play a large role: 71\% of earnings variation at age 44 is due to tastes, rather than talent or initial human capital. These findings are driven by the high standard deviation in "permanent" work hours and a large positive correlation between work hours and earnings. Intuitively, tastes matter because they affect the path of wages via their effect on human capital investment. Finally, we show that exchanging the sources of income variation between talent and tastes changes redistributive tax rates significantly, particularly when heterogeneity is due to differences in the marginal utility of consumption, rather than leisure.
    Date: 2019

This nep-ltv issue is ©2019 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.