nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒03‒09
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Long-run Trends in the U.S. SES-Achievement Gap By Eric A. Hanushek; Paul E. Peterson; Laura M. Talpey; Ludger Woessmann
  2. The innovation premium to soft skills in low-skilled occupations By Aghion, Philippe; Bergeaud, Antonin; Blundell, Richard; Griffith, Rachel
  3. Income Distribution and the Fear of Crime: Evidence from Germany By Michelle Acampora; Conchita D'Ambrosio; Markus M. Grabka
  4. Globotics and Development: When Manufacturing is Jobless and Services are Tradable By Richard Baldwin; Rikard Forslid
  5. The Effect of Unfair Chances and Gender Discrimination on Labor Supply By Nickolas Gagnon; Kristof Bosmans; Arno Riedl
  6. Was falling inequality in all Latin American countries a data-driven illusion? Income distribution and mobility patterns in Uruguay 2009-2016 By Gabriel Burdín; Mauricio de Rosa; Andrea Vigorito; Joan Vilá Author-X-Name-First. Joan

  1. By: Eric A. Hanushek; Paul E. Peterson; Laura M. Talpey; Ludger Woessmann
    Abstract: Rising inequality in the United States has raised concerns about potentially widening gaps in educational achievement by socio-economic status (SES). Using assessments from LTT-NAEP, Main-NAEP, TIMSS, and PISA that are psychometrically linked over time, we trace trends in achievement for U.S. student cohorts born between 1954 and 2001. Achievement gaps between the top and bottom quartiles of the SES distribution have been large and remarkably constant for a near half century. These unwavering gaps have not been offset by improved achievement levels, which have risen at age 14 but have remained unchanged at age 17 for the past quarter century.
    JEL: H52 I2 J62
    Date: 2020–02
  2. By: Aghion, Philippe; Bergeaud, Antonin; Blundell, Richard; Griffith, Rachel
    Abstract: Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm’s innovativeness is reflected in the degree of complementarity between workers in low-skill and highskilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data.
    Keywords: innovation; skill-based technological change; wage; complementarity
    JEL: O33 L23 J31
    Date: 2019–12
  3. By: Michelle Acampora; Conchita D'Ambrosio; Markus M. Grabka
    Abstract: We here explore the link between individual concerns about crime and the distribution of income in Germany. We make use of 1995-2017 microdata from the German Socio-Economic Panel (SOEP) to show that both individual polarization and relative deprivation have statistically-significant effects on reported concerns about crime, while relative satisfaction plays no role. At the aggregate level, the main driver is equally income polarization, whereas the standard measure of inequality, the Gini index, plays no significant role.
    Keywords: Concerns about crime, deprivation, inequality, polarization, SOEP
    JEL: I31 I32 D60
    Date: 2020
  4. By: Richard Baldwin; Rikard Forslid
    Abstract: Globalization and robotics (globotics) are transforming the world economy at an explosive pace. While much of the literature has focused on rich nations, the changes are quite likely to affect developing nations in important ways. The premise of the paper - which should be regarded as a thought-piece - is based on an extreme thought experiment. What does development look like when digitech has rendered manufacturing jobless and many services freely traded? Our conclusion is that the service-led development path may become the norm rather than the exception; think India, not China. Since success in the service sector is based on quite different factors than success in manufacturing, development strategies and mindsets may have to change. This is an optimistic conclusion since it suggests that developing nations can directly export the source of their comparative advantage - low-cost labor - without having first to make goods with that labor.
    JEL: F6 F63 O1
    Date: 2020–02
  5. By: Nickolas Gagnon; Kristof Bosmans; Arno Riedl
    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 M50
    Date: 2020
  6. By: Gabriel Burdín (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Mauricio de Rosa (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Andrea Vigorito (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Joan Vilá Author-X-Name-First. Joan (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Although many studies based on household surveys indicate that over the last two decades income inequality decreased in most Latin American countries, income tax records estimations for specific countries suggest that top incomes shares remained steady or even increased. To contribute to the current debate, we provide evidence for Uruguay on primary income distribution among income receivers in the time-span 2009-2016 and assess income dynamics along the income distribution. Our research is based on household surveys micro-data and a unique array of longitudinal matched personal-firm income tax micro-data that covers around 75% of the adult population. Our findings suggest that inequality trends are sensitive to the data source and inequality measure. Pre and post-tax Gini and Theil indices decreased, with a milder fall in tax records than in harmonized household surveys. However, reduction patterns were different the two data-sets: whereas in tax records synthetic indices fell within the bottom 99% offsetting increased concentration at the top, household survey estimations indicate that the largest inequality reduction occurred at the top. In turn, while falling in harmonized household surveys throughout the whole period, tax records based estimates of top 1% income share remained steady around 15% in 2009-2014 and grew afterwards. We also investigate income dynamics, showing that positions were very stable with average persistence rates at the top 1% close to 80%. Interestingly, persistence rates were slightly lower in the period of decreasing inequality. Finally, we highlight that, in the time-span considered, income mobility had a very modest equalizing effect.
    Keywords: top incomes, income inequality, mobility, personal income taxation, tax records, Uruguay
    JEL: D31 H24 O54
    Date: 2019–12

This nep-ltv issue is ©2020 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.