nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2019‒11‒04
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Earning dynamics in Sweden: The recent evolution of permanent inequality and earnings volatility By Gustafsson, Johan; Holmberg, Johan
  2. The evolution of tax implicit value judgements, redistribution and income inequality in the UK: 1968 to 2015 By Justin van de Ven; Nicolas Hérault
  3. In brief...The long-term effects of financial distress in childhood By Marta Barazzetta; Andrew Clark; Conchita D'Ambrosio
  4. O Youth and Beauty: Children’s Looks and Children’s Cognitive Development By Daniel S. Hamermesh; Rachel A. Gordon; Robert Crosnoe
  5. Types of Institutions and Well-Being of Self-Employed and Paid Employees in Europe By Michael Fritsch; Alina Sornger; Michael Wyrwich
  6. Health Effects of Labor Market Policies: Evidence from Drug Prescriptions By Caliendo, Marco

  1. By: Gustafsson, Johan (Department of Economics, Umeå University); Holmberg, Johan (Department of Economics, Umeå University)
    Abstract: This paper analyzes the dynamics of earnings over the life-cycle, based on Swedish data, and the evolution of permanent and transitory earnings inequality for 2002-2015. We use data on earnings from administrative records gathered in the ASTRID database. We find that features of the data does not match the predictions of the heterogeneous or restricted income profile models commonly applied in the earning dynamics literature and estimate an alternative permanent- transitory (PT) error components model. Analyzing the covariance structure of both male and female earnings, controlling for educational background, we find that the upward trend in permanent earnings inequality observed in Sweden during the 1990s does not seem to continue during the 2000s, and the financial crisis of 2008 did not have any major impact on the variability of earnings. We further simulate the accumulation of income pension entitlements and find that variations in pension entitlements is smaller among college educated workers.
    Keywords: Permanent-transitory; Income pension entitlements; earning dynamics; life-cycle inequality
    JEL: D31 H55 J30
    Date: 2019–10–22
  2. By: Justin van de Ven (National Institute of Economic and Social Research (NIESR), London, UK); Nicolas Hérault (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne)
    Abstract: An issue of interest in the literature that explores the drivers of inequality is the distributional bearing of tax and transfer policy, where an important theme concerns changes in the relative treatment of alternative population subgroups. We develop an empirical approach for quantifying the value judgements implicit in the relative treatment of demographic subgroups by a tax and transfer system. We apply this approach to UK data reported at annual intervals between 1968 and 2015, documenting remarkable improvements in tax and transfer treatment enjoyed by some population subgroups – particularly families with children and age pensioners – relative to the wider population. We show that accounting for the changing value judgements implicit in tax and transfer policy provides a fresh perspective on the evolution of income inequality and redistribution; one that departs from the prevailing view that UK inequality stopped rising from the early 1990s.
    Keywords: equivalence scale, inequality, redistribution, horizontal equity
    JEL: D31 H23 I38
    Date: 2019–06
  3. By: Marta Barazzetta; Andrew Clark; Conchita D'Ambrosio
    Abstract: Is there a relationship between childhood circumstances and outcomes later in life? Andrew Clark and colleagues consider the cognitive and non-cognitive consequences for young adults whose families experienced major financial problems when they were children.
    Keywords: income, financial problems, child outcomes, subjective well-being, behaviour, education, alspac
    JEL: I31 I32 D60
    Date: 2019–11
  4. By: Daniel S. Hamermesh; Rachel A. Gordon; Robert Crosnoe
    Abstract: We use data from the 11 waves of the U.S. Study of Early Child Care and Youth Development 1991-2005, following children from ages 6 months through 15 years. Observers rated videos of them, obtaining measures of looks at each age. Given their family income, parents’ education, race/ethnicity and gender, being better-looking raised subsequent changes in measurements of objective learning outcomes. The gains imply a long-run impact on cognitive achievement of about 0.04 standard deviations per standard deviation of differences in looks. Similar estimates on changes in reading and arithmetic scores at ages 7, 11 and 16 in the U.K. National Child Development Survey 1958 cohort show larger effects. The extra gains persist when instrumenting children’s looks by their mother’s, and do not work through teachers’ differential treatment of better-looking children, any relation between looks and a child’s behavior, his/her victimization by bullies or self-confidence. Results from both data sets show that a substantial part of the economic returns to beauty result indirectly from its effects on educational attainment. A person whose looks are one standard deviation above average attains 0.4 years more schooling than an otherwise identical average-looking individual.
    JEL: I24 I26 J71
    Date: 2019–10
  5. By: Michael Fritsch (Friedrich Schiller University Jena, and Halle Institute for Economic Research (IWH), Germany); Alina Sornger (John Cabot University Rome, Italy, and Kiel Institute for the World Economy (IfW), and Institute of Labor Economics (IZA Bonn), Germany); Michael Wyrwich (University of Groningen, The Netherlands)
    Abstract: This paper analyzes the role of different types of institutions, such as entre- preneurship-facilitating entry conditions, labor market regulations, quality of government, and perception of corruption for individual well-being among self-employed and paid employed individuals. Well-being is operationalized by job and life satisfaction of individuals in 32 European countries measured by data from EU Statistics on Income and Living Conditions (EU-SILC). We find that institutions never affected both occupational groups in opposite ways. Our findings indicate that labor market institutions do not play an im- portant role well-being. The results suggest that fostering an entrepreneurial society in Europe is a welfare enhancing strategy that benefits both, the self- employed and paid employees.
    Keywords: Entrepreneurship, institutions, well-being, life satisfaction, job satisfaction
    JEL: L26 I31 D01 D91 P51
    Date: 2019–05–02
  6. By: Caliendo, Marco
    JEL: J68 I12 I18 H51
    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.