nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒02‒03
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Is Happiness U-shaped Everywhere? Age and Subjective Well-being in 132 Countries By David G. Blanchflower
  2. Unhappiness and age By David G. Blanchflower
  3. Extreme values, means, and inequality measurement By Walter Bossert; Conchita D fAmbrosio; Kohei Kamaga
  4. Other-regarding preferences and redistributive politics By Epper Thomas; Fehr Ernst; Senn Julien
  5. A Market for Work Permits By Michael Lokshin; Martin Ravallion
  6. Machine Labor By Joshua Angrist; Brigham Frandsen

  1. By: David G. Blanchflower
    Abstract: I draw systematic comparisons across 109 data files and 132 countries of the relationship between well-being, variously defined, and age. I produce 444 significant country estimates with controls, so these are ceteris paribus effects, and find evidence of a well-being U-shape in age in one hundred and thirty-two countries, including ninety-five developing countries, controlling for education, marital and labor force status. I also frequently find it without any controls at all. There is additional evidence from an array of attitudinal questions that were worded slightly differently than standard happiness or life satisfaction questions such as satisfaction with an individual's financial situation. Averaging across the 257 individual country estimates from developing countries gives an age minimum of 48.2 for well-being and doing the same across the 187 country estimates for advanced countries gives a similar minimum of 47.2. The happiness curve is everywhere.
    JEL: I31 J01
    Date: 2020–01
  2. By: David G. Blanchflower
    Abstract: I examine the relationship between unhappiness and age using data from six well-being data files on nearly ten million respondents across forty European countries and the United States. I use fifteen different individual characterizations of unhappiness including despair; anxiety; loneliness; sadness; strain, depression and bad nerves; phobias and panic; being downhearted; having restless sleep; losing confidence in oneself; not being able to overcome difficulties; being under strain; feeling a failure; feeling left out; feeling tense; and thinking of yourself as a worthless person. I also analyze responses to two more general attitudinal measures regarding the situation in the respondent's country as well as on the future of the world. Responses to all these unhappiness questions show a, ceteris paribus, inverted U-shape in age, with controls and many also do so without them. The resiliency of communities left behind by globalization was diminished by the Great Recession which made it especially hard for the vulnerable undergoing a midlife crisis with few resources, to withstand the shock. Unhappiness is hill-shaped in age. There is an unhappiness curve.
    JEL: I31 P51
    Date: 2020–01
  3. By: Walter Bossert; Conchita D fAmbrosio; Kohei Kamaga
    Abstract: We examine some ordinal measures of inequality that are familiar from the literature. These measures have a quite simple structure in that their values are determined by combinations of specific summary statistics such as the extreme values and the arithmetic mean of a distribution. In spite of their common appearance, there seem to be no axiomatizations available so far, and this paper is intended to fill that gap. In particular, we consider the absolute and relative variants of the range; the max-mean and the mean-min orderings; and quantile-based measures. In addition, we provide some empirical observations that are intended to illustrate that, although these orderings are straightforward to define, some of them display a surprisingly high correlation with alternative (more complex) measures. Journal of Economic Literature Classification Nos.: H24, I31.
    Date: 2020–01
  4. By: Epper Thomas; Fehr Ernst; Senn Julien
    Abstract: Increasing inequality and associated egalitarian sentiments have again put redistribution on the political agenda. Support for redistribution may also be affected by altruistic and egalitarian preferences, but knowledge about the distribution of these preferences in the broader population and how they relate to political support for redistributive policies is still scarce. In this paper, we take advantage of Swiss direct democracy, where people voted several times in national plebiscites on strongly redistributive policies, to study the link between other-regarding preferences and support for redistribution in a broad sample of the Swiss population. Based on a recently developed non-parametric clustering procedure, we identify three disjunct groups of individuals with fundamentally different other-regarding preferences: (i) a large share of inequality averse people, (ii) a somewhat smaller yet still large share of people with an altruistic concern for social welfare and the worse off, and (iii) a considerable minority of primarily selfish individuals. Controlling for a large number of determinants of support for redistribution, we document that inequality aversion and altruistic concerns play an important role for redistributive voting that is particularly pronounced for above-median income earners. However, the role of these motives differs depending on the nature of redistributive proposals. Inequality aversion has large and robust effects in plebiscites that demand income reductions for the rich, while altruistic concerns play no significant role in these plebiscites.
    Keywords: Social preferences, altruism, inequality aversion, preference heterogeneity, demand for redistribution
    JEL: D31 D72 H23 H24
    Date: 2020–01
  5. By: Michael Lokshin; Martin Ravallion
    Abstract: It will be politically difficult to liberalize international migration without protecting host-country workers. The paper explores the scope for efficiently managing migration using a competitive market for work permits. Host-county workers would have the option of renting out their citizenship work permit for a period of their choice, while foreigners purchase time-bound work permits. Aggregate labor supply need not rise in the host country. However, total output would rise and workers would see enhanced social protection. Simulations for the US and Mexico suggest that the new market would attract many skilled migrants, boosting GDP and reducing poverty in the US.
    JEL: F22 J61
    Date: 2019–12
  6. By: Joshua Angrist; Brigham Frandsen
    Abstract: Machine learning (ML) is mostly a predictive enterprise, while the questions of interest to labor economists are mostly causal. In pursuit of causal effects, however, ML may be useful for automated selection of ordinary least squares (OLS) control variables. We illustrate the utility of ML for regression-based causal inference by using lasso to select control variables for estimates of effects of college characteristics on wages. ML also seems relevant for an instrumental variables (IV) first stage, since the bias of two-stage least squares can be said to be due to over-fitting. Our investigation shows, however, that while ML-based instrument selection can improve on conventional 2SLS estimates, split-sample IV and LIML estimators do better. In some scenarios, the performance of ML-augmented IV estimators is degraded by pretest bias. In others, nonlinear ML for covariate control creates artificial exclusion restrictions that generate spurious findings. ML does better at choosing control variables for models identified by conditional independence assumptions than at choosing instrumental variables for models identified by exclusion restrictions.
    JEL: C21 C26 C52 C55 J01 J08
    Date: 2019–12

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