nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒05‒25
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Employer Policies and the Immigrant-Native Earnings Gap By Benoit Dostie; Jiang Li; David Card; Daniel Parent
  2. Inequality in the Impact of the Coronavirus Shock: Evidence from Real Time Surveys By Abi Adams-Prassl; Teodora Boneva; Marta Golin; Christopher Rauh
  3. Feeling good or feeling better? By Alberto Prati; Claudia Senik
  4. The impact of demographic change on transfers of care and associated well-being By Denys Dukhovnov; Joan Ryan; Emilio Zagheni
  5. Cash Transfer Programs and Household Labor Supply By Daniela Del Boca; Chiara Pronzato; Giuseppe Sorrenti
  6. When to release the lockdown: a wellbeing framework for analysing costs and benefits By Layard, Richard; Clark, Andrew E.; De Neve, Jan-Emmanuel; Krekel, Christian; Fancourt, Daisy; Hey, Nancy; O'Donnell, Gus
  7. The Effect of Changes in Alcohol Tax Differentials on Alcohol Consumption By Markus Gehrsitz; Henry Saffer; Michael Grossman

  1. By: Benoit Dostie; Jiang Li; David Card; Daniel Parent
    Abstract: We use longitudinal data from the income tax system to study the impacts of firms’ employment and wage-setting policies on the level and change in immigrant-native wage differences in Canada. We focus on immigrants who arrived in the early 2000s, distinguishing between those with and without a college degree from two broad groups of countries – the U.S., the U.K. and Northern Europe, and the rest of the world. Consistent with a growing literature based on the two-way fixed effects model of Abowd, Kramarz, and Margolis (1999), we find that firm-specific wage premiums explain a significant share of earnings inequality in Canada and contribute to the average earnings gap between immigrants and natives. In the decade after receiving permanent status, earnings of immigrants rise relative to those of natives. Compositional effects due to selective outmigration and changing participation play no role in this gain. About one-sixth is attributable to movements up the job ladder to employers that offer higher pay premiums for all groups, with particularly large gains for immigrants from the “rest of the world” countries.
    JEL: J15 J31 J62
    Date: 2020–05
  2. By: Abi Adams-Prassl; Teodora Boneva; Marta Golin; Christopher Rauh
    Abstract: We present real time survey evidence from the UK, US and Germany showing that the labor market impacts of COVID-19 differ considerably across countries. Employees in Germany, which has a well-established short-time work scheme, are substantially less likely to be affected by the crisis. Within countries, the impacts are highly unequal and exacerbate existing inequalities. Workers in alternative work arrangements and in occupations in which only a small share of tasks can be done from home are more likely to have reduced their hours, lost their jobs and suffered falls in earnings. Less educated workers and women are more affected by the crisis.
    Keywords: recessions, inequality, labor market, unemployment, coronavirus
    JEL: J21 J22 J24 J33 J63
    Date: 2020
  3. By: Alberto Prati (Aix-Marseille University, CNRS, EHESS, Centrale Marseille, AMSE; France); Claudia Senik (Sorbonne-University and Paris School of Economics, France)
    Abstract: Can people remember correctly their past well-being? We study three national surveys of the British, German and French population, where more than 50,000 European citizens were asked questions about their current and past life satisfaction. We uncover systematic biases in recalled subjective well-being: on average, people tend to overstate the improvement in their well-being over time and to understate their past happiness. But this aggregate figure hides a deep asymmetry: while happy people recall the evolution of their life to be better than it was, unhappy ones tend to exaggerate its worsening. It thus seems that feeling happy today implies feeling better than yesterday. These results offer an explanation of why happy people are more optimistic, perceive risks to be lower and are more open to new experiences.
    Keywords: life satisfaction, remembered utility, memory biases, intra-personal comparisons
    JEL: I31 D91
    Date: 2020–04
  4. By: Denys Dukhovnov (Max Planck Institute for Demographic Research, Rostock, Germany); Joan Ryan; Emilio Zagheni (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Objectives: This study aims to evaluate the impact of demographic change on long-term, macro-level childcare and adult care transfers, and the associated well-being effects of informal caregiving. Method: We measure the impact of demographic change on non-monetary care exchanged between different groups by estimating matrices of time transfers by age and sex, and weighting the time flows by self-reported indicators of well-being, for activities related to childcare and adult care. The analysis employs cross-sectional data from the American Time Use Survey 2011-2013, and the Panel Study of Income Dynamics, Disability and Use of Time Module 2013 to produce the estimates of well-being associated with various forms of care. Results: We show that people have more positive feelings when caring for children than when caring for adults. Although reductions in the country-level care supply are expected to be small relative to demand, future projections indicate a 17.1% decrease in the ratio of time spent caring for children under age 15 relative to time spent caring for the rest of the population by 2050. While this change is expected to produce only a minor increase in the ratio of negative-to-positive feelings associated with caregiving, purely due to population aging, it could have nontrivial deterioration of well-being for some caregivers. Discussion: Significant reductions in absolute caregiver well-being caused by demographic changes at the population level may reduce workload, productivity, and adversely impact health, if not offset by caregiver-friendly family policies.
    Keywords: USA, child care, household, time budget
    JEL: J1 Z0
    Date: 2020
  5. By: Daniela Del Boca; Chiara Pronzato; Giuseppe Sorrenti
    Abstract: Employment contributes to reduce the risk of poverty. Through a randomized controlled trial, we evaluate the impact of a conditional cash transfer program (CCT) to low-income families with dependent children on household members’ labor supply. The attendance of labor-market-oriented mentoring courses constitutes the condition to obtain the transfer. One year after admission to the program, fathers assigned to the CCT program are more likely to work (+14 percent) than fathers assigned to an unconditional cash transfer program or to a pure control group. No effect arises for mothers. Increased paternal investments in activities enhancing labor market opportunities and improved family networks seem to explain the results.
    Keywords: conditional cash transfers, poverty, household labor supply, mentoring courses
    JEL: I10 I20 J24 I31
    Date: 2020
  6. By: Layard, Richard; Clark, Andrew E.; De Neve, Jan-Emmanuel; Krekel, Christian; Fancourt, Daisy; Hey, Nancy; O'Donnell, Gus
    Abstract: In choosing when to end the lockdown, policy-makers have to balance the impact of the decision upon incomes, unemployment, mental health, public confidence and many other factors, as well as (of course) upon the number of deaths from COVID-19. To facilitate the decision it is helpful to forecast each factor using a single metric. We use as our metric the number of Wellbeing-Years resulting from each date of ending the lockdown. This new metric makes it possible to compare the impact of each factor in a way that is relevant to all public policy decisions.
    Keywords: Covid-19; coronavirus; Wellbeing Economics; Cost-Benefit Analysis; Health Policy
    JEL: D60 D61 I31
    Date: 2020–04
  7. By: Markus Gehrsitz; Henry Saffer; Michael Grossman
    Abstract: We show that tax-induced increases in alcohol prices can lead to substantial substitution and avoidance behavior that limits reductions in alcohol consumption. Causal estimates are derived from a natural experiment in Illinois where spirits and wine taxes were raised sharply and unexpectedly in 2009. Beer taxes were increased by only a trivial amount. We construct representative and consistent measures of alcohol prices and sales from scanner data collected for hundreds of products in several thousand stores across the US. Using several differences-in-differences models, we show that alcohol excise taxes are instantly over-shifted by a factor of up to 1.5. Consumers react by switching to less expensive products and increase purchases of low-tax alcoholic beverages, thus all but offsetting any moderate, tax-induced reductions in total ethanol consumption. Our study highlights the importance of tax-induced substitution, the implications of differential tax increases by beverage group and the impacts on public health of alternative types of tax hikes whose main aims are to increase revenue.
    JEL: I12 I18
    Date: 2020–05

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