nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒02‒17
three papers chosen by

  1. The cost of being too patient By Paola Giuliano; Paola Sapienza
  2. The Effect of Unfair Chances and Gender Discrimination on Labor Supply By Gagnon, Nickolas; Bosmans, Kristof; Riedl, Arno
  3. Decline in Wage Inequality in Brazil : A Survey By Firpo,Sergio; Portella,Alysson

  1. By: Paola Giuliano; Paola Sapienza
    Abstract: We study the cost of being too patient on happiness. We find that the relationship between patience and various measures of subjective well-being is hump-shaped: it exists an optimal amount of patience that maximizes happiness. Beyond this optimal level, higher levels of patience have a negative impact on well-being.
    JEL: A0 D01 D9 Z1
    Date: 2020–01
  2. By: Gagnon, Nickolas (Maastricht University); Bosmans, Kristof (Maastricht University); Riedl, Arno (Maastricht University)
    Abstract: Labor market opportunities and wages may be unfair for various reasons, and how workers respond to different types of unfairness can have major economic consequences. Using an online labor platform, where workers engage in an individual task for a piece-rate wage, we investigate the causal effect of neutral and gender-discriminatory unfair chances on labor supply. We randomize workers into treatments where we control relative pay and chances to receive a low or a high wage. Chances can be fair, unfair based on an unspecified source, or unfair based on gender discrimination. Unequal pay reduces labor supply of low-wage workers, irrespective of whether the low wage is the result of fair or unfair chances. Importantly, the source of unfair chances matters. When a low wage is the result of gender-discriminatory chances, workers matched with a high-wage worker substantially reduce their labor supply compared to the case of equal low wages (–22%). This decrease is twice as large as those induced by low wages due to fair chances or unfair chances coming from an unspecified source. In addition, exploratory analysis suggests that in response to unequal pay, low-wage male workers reduce labor supply irrespective of the source of inequality, whereas low-wage female workers reduce labor supply only if unequal pay is due to gender-discriminatory chances. Our results concerning gender discrimination indicate a new reason for the lower labor supply of women, which is a prominent explanation for the gender gap in earnings.
    Keywords: labor supply, wage inequality, procedural fairness, gender discrimination
    JEL: D90 E24 J22 J31 J71 M5
    Date: 2020–01
  3. By: Firpo,Sergio; Portella,Alysson
    Abstract: In the last decades, Brazil experienced a historical decline in its wage inequality level, particularly in the first decade of the 21st century. This paper reviews the literature that attempted to explain the observed pattern. It considers mechanisms related to the supply and demand for labor, as well as institutional factors. The paper argues that the favorable economic environment in the period, combined with increases in the minimum wage, higher formalization, and a larger supply of skilled workers led to a compression in wages. However, some aspects of the decline in wage inequality are still unanswered, such as the causes behind a reduction in the experience premium and interfirm payment heterogeneity, as well as the exact role of technological changes. The paper concludes by discussing future trends in wage inequality in Brazil.
    Date: 2019–12–19

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