nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒01‒27
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Effect of Immigration on Depression among Older Natives in Western Europe By Escarce, José J.; Rocco, Lorenzo
  2. The Evolution of Inequality of Opportunity in Germany: A Machine Learning Approach By Paolo Brunori; Guido Neidhoefer
  3. Fundamental Utilitarianism and Intergenerational Equity with Extinction Discounting By Chichilnisky, Graciela; Hammond, Peter J.; Stern, Nicholas
  4. Immigration and the U.S. Labor Market: A Look Ahead By Holzer, Harry J.
  5. Who Demands Labour (De)Regulation in the Developing World? Insider–Outsider Theory Revisited By Ronconi, Lucas; Kanbur, Ravi; López-Cariboni, Santiago
  6. Randomization and Social Policy Evaluation Revisited By Heckman, James J.

  1. By: Escarce, José J. (University of California, Los Angeles); Rocco, Lorenzo (University of Padova)
    Abstract: To our knowledge, no study has examined the effect of immigration on the health of older natives. We use the Study of Health, Ageing and Retirement in Europe (SHARE) to investigate whether immigration affects depression among natives 65-80 years old. Immigration may increase the supply and lower the price of personal and household services, a term that refers to care services and non-care services such as cleaning, meal preparation, and domestic chores. Higher consumption of personal and household services by older natives may help maintain health through a variety of pathways including reduced loneliness, greater participation in meaningful social activities, and improved physical functioning. Using a shift-share IV, we find a beneficial effect of immigration on reducing the number of depression symptoms and the probability of clinically significant depression among older natives. We also find some evidence for the hypothesized mechanisms, although our ability to come to definitive conclusions about mechanisms is limited in our data.
    Keywords: health, immigration, aging, social determinants
    JEL: I12 I14 J61
    Date: 2019–12
  2. By: Paolo Brunori (Università degli Studi di Firenze); Guido Neidhoefer (ZEW - Leibniz Centre for European Economic Research)
    Abstract: We show that measures of inequality of opportunity fully consistent with Roemer (1998)’s inequality of opportunity theory can be straightforwardly estimated adopting a machine learning approach. Following Roemer, inequality of opportunity is generally defined as inequality between individuals exerting the same degree of effort but characterized by different exogenous circumstances. Due to difficulties of measuring effort, most empirical contributions so far identified groups of individuals sharing same circumstances, and then measured inequality of opportunity as between-group inequality, without considering the e↵ort exerted. Our approach uses regression trees to identify groups of individuals characterized by identical circumstances, and a polynomial approximation to estimate the degree of effort exerted. To apply our method, we take advantage of information contained in 25 waves of the German Socio-Economic Panel. We show that in Germany inequality of opportunity declined immediately after the reunification, surged in the first decade of the century, and slightly declined again after 2010. The level of estimated unequal opportunity is today just above the level recorded in 1992.
    Keywords: Inequality, Opportunity, SOEP, Germany
    JEL: D63 D30 D31
    Date: 2020–01
  3. By: Chichilnisky, Graciela (Columbia University); Hammond, Peter J. (University of Warwick); Stern, Nicholas (LSE)
    Abstract: Ramsey famously condemned discounting “future enjoyments” as “ethically indefensible”. Suppes enunciated an equity criterion which, when social choice is utilitarian, implies giving equal weight to all individuals’ utilities. By contrast, Arrow (1999a, b) accepted, perhaps reluctantly, what he called Koopmans’ (1960) “strong argument” implying that no equitable preference ordering exists for a sufficiently unrestricted domain of infinite utility streams. Here we derive an equitable utilitarian objective for a finite population based on a version of the Vickrey–Harsanyi original position, where there is an equal probability of becoming each person. For a potentially infinite population facing an exogenous stochastic process of extinction, an equitable extinction biased original position requires equal conditional probabilities, given that the individual’s generation survives the extinction process. Such a position is well-defined if and only if survival probabilities decline fast enough for the expected total number of individuals who can ever live to be finite. Then, provided that each individual’s utility is bounded both above and below, maximizing expected “extinction discounted” total utility — as advocated, inter alia, by the Stern Review on climate change — provides a coherent and dynamically consistent equitable objective, even when the population size of each generation can be chosen.
    Keywords: Discounting ; time perspective ; fundamental preferences ; fundamental utilitarianism ; consequentialization ; Vickrey–Harsanyi original position ; Suppes equity ; intergenerational equity ; sustainable preferences ; extinction discounting.
    JEL: D63 D70 D90 Q54 Q56
    Date: 2019
  4. By: Holzer, Harry J. (Georgetown University)
    Abstract: The U.S. labor market will be buffeted by major changes in the next few decades, such as an aging population, automation that displaces workers and requires skill adjustments, and increases in independent or informal work and "fissured" workplaces. These forces will likely raise worker productivity over time while also raising inequality, reducing labor force participation and creating worker shortages in high-demand industries. In this context, immigration will help reduce costs in key high-demand industries (like health care and elder care), raise labor force and economic growth, and contribute somewhat to the nation's fiscal balance. Highly-educated immigrants will notably contribute to economic productivity and dynamism; but less-educated immigrants may substitute for native-born non-college workers and thereby further contribute to earnings inequality. Reforms should therefore modestly increase overall immigration over time, while shifting its composition somewhat toward more-skilled and labor-market-driven migrants. These reforms should occur within the broader context of "comprehensive" reform that also raises enforcement efforts against illegal immigrant flows while establishing a path to citizenship for the currently undocumented. These changes should also be tied to a range of efforts to raise earnings among all non-college workers.
    Keywords: immigration, labor supply, labor demand, education
    JEL: J1 J2 J6
    Date: 2020–01
  5. By: Ronconi, Lucas (Centro de Investigación y Acción Social (CIAS)); Kanbur, Ravi (Cornell University); López-Cariboni, Santiago (Universidad de la República, Uruguay)
    Abstract: Contrary to the predictions of the insider–outsider model, we show that the large majority of outsiders in developing countries support, rather than oppose, protective labour regulations. This evidence holds across countries in different regions, across different types of protective labour regulations (i.e. severance payment, minimum wages, working time), and for different categories of outsiders (i.e. unemployed workers and employees without access to legally mandated labour benefits). We revise the economic and political assumptions of the insider–outsider model, discussing their empirical relevance in a developing country context.
    Keywords: informal, labour, segmentation, monopsony, fairness
    JEL: J4 J8 O17
    Date: 2019–12
  6. By: Heckman, James J. (University of Chicago)
    Abstract: This paper examines the case for randomized controlled trials in economics. I revisit my previous paper "Randomization and Social Policy Evaluation" and update its message. I present a brief summary of the history of randomization in economics. I identify two waves of enthusiasm for the method as "Two Awakenings" because of the near-religious zeal associated with each wave. The First Wave substantially contributed to the development of microeconometrics because of the awed nature of the experimental evidence. The Second Wave has improved experimental designs to avoid some of the technical statistical issues identified by econometricians in the wake of the First Wave. However, the deep conceptual issues about parameters estimated, and the economic interpretation and the policy relevance of the experimental results have not been addressed in the Second Wave.
    Keywords: field experiments, randomized control trials
    JEL: C93
    Date: 2020–01

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