nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2019‒10‒07
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Social Security Reform, Retirement and Occupational Behavior By Pedro Cavalcanti Ferreira; Rafael Parente
  2. Charity as Income Redistribution: A Model with Optimal Taxation, Status, and Social Stigma By Aronsson, Thomas; Johansson-Stenman, Olof; Wendner, Ronald
  3. What hides behind the German labor market miracle? Unemployment insurance reforms and labor market dynamics By Moritz Kuhn; Benjamin Hartung; Philip Jung
  4. Using online data for international wage comparisons By Alberto Cavallo; Andres Drenik; Javier Cravino

  1. By: Pedro Cavalcanti Ferreira (EPGE-FGV); Rafael Parente (Princeton University)
    Abstract: In most countries, the rules governing public and private pension systems are different, and so are hiring procedures and job contracts. The tenures of government employees are longer and their wages, in general, higher. This article studies, in a life-cycle economy with three sectors - formal, informal and public – and endogenous retirement, the macroeconomic and occupational impacts of social security reforms in an economy with multiple pension systems. In a model calibrated to Brazil, we simulate and assess the long-run impact of reforms being discussed and/or implemented in different economies. Among them, the unification of pension systems and the increase of minimum retirement age. These reforms are found to affect the decision to apply to a public job, savings during the life cycle and skill composition across sectors. They also lead to higher output, less informality and average welfare gains.
    Date: 2019
  2. By: Aronsson, Thomas (Department of Economics, Umeå University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, University of Gothenburg); Wendner, Ronald (Institute of Economics, University of Graz)
    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: 2019–09–25
  3. By: Moritz Kuhn (University of Bonn); Benjamin Hartung (University of Bonn); Philip Jung (TU Dortmund)
    Abstract: A key question in labor market research is how the unemployment insurance system affects unemployment rates and labor market dynamics. We revisit this old question studying the German Hartz reforms. On average, lower separation rates explain 76% of declining unemployment after the reform, a fact unexplained by existing research focusing on job finding rates. The reduction in separation rates is heterogeneous, with long-term employed, high-wage workers being most affected. We causally link our empirical findings to the reduction in long-term unemployment benefits using a heterogeneous-agent labor market search model. Absent the reform, unemployment rates would be 50% higher today.
    Date: 2019
  4. By: Alberto Cavallo (Harvard); Andres Drenik (Columbia University); Javier Cravino (University of Michigan)
    Abstract: We use a novel dataset from a large freelance website to document international wage differences for performing tasks that can be delivered online. We show large wage disparities across freelancers from different countries working on narrowly defined occupations. These wage differentials across countries cannot be explained by differences in observable worker characteristics. Instead, real exchange rate levels account for about 70 percent of the cross-country-variation in average wages, and the elasticity of relative wages with respect to the real exchange rate is about 0.4. The magnitudes of these findings are pervasive across different country groups and types of jobs.
    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.
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