nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒06‒29
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. Non Cognitive Skills and Childcare Attendance By Daniela Del Boca; Enrica Maria Martino; Chiara Pronzato
  3. The Adverse Effect of the COVID-19 Labor Market Shock on Immigrant Employment By Borjas, George J.; Cassidy, Hugh
  4. What Accounts for the Rising Share of Women in the Top 1%? By Burkhauser, Richard V.; Herault, Nicolas; Jenkins, Stephen P.; Wilkins, Roger
  5. The Declining Worker Power Hypothesis: An Explanation for the Recent Evolution of the American Economy By Anna Stansbury; Lawrence H. Summers
  6. The Seeds of Ideology: Historical Immigration and Political Preferences in the United States By Giuliano, Paola; Tabellini, Marco
  7. The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013 By Card, David; Johnston, Andrew C.; Leung, Pauline; Mas, Alexandre; Pei, Zhuan

  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.
    Keywords: Wage Differentials,Immigrants,Linked Employer-Employee Data,Firm Effects,
    Date: 2020–06–11
  2. By: Daniela Del Boca; Enrica Maria Martino; Chiara Pronzato
    Abstract: While several studies have explored the determinants of cognitive outcomes, this paper focuses on non-cognitive skills, for which there is less empirical evidence. Non- cognitive skills have been recognized as important determinants of cognitive skills and later life outcomes. We analyze the impact of attending formal childcare at ages 0-2 on attitudes toward schooling and on the social behavior of children at the end of their first year of primary school and at the end of high school. We find that attendance of childcare significantly improves school readiness and social behavior in elementary school but the impact disappears in high school. The e ects are more beneficial for boys and for children of mothers with lower educational attainment and of fathers in low-level occupations. In addition, we find that formal childcare attendance enhances the social behavior of children without siblings and improves attitudes toward school of children with siblings.
    Keywords: non-cognitive ability, child development, childcare
    Date: 2020
  3. By: Borjas, George J. (Harvard University); Cassidy, Hugh (Kansas State University)
    Abstract: Employment rates in the United States fell dramatically between February 2020 and April 2020 as the initial repercussions of the COVID-19 pandemic reverberated through the labor market. This paper uses data from the CPS Basic Monthly Files to document that the employment decline was particularly severe for immigrants. Historically, immigrant men were more likely to be employed than native men. The COVID-related labor market disruptions eliminated the immigrant employment advantage. By April 2020, immigrant men had lower employment rates than native men. The reversal occurred both because the rate of job loss for at-work immigrant men rose relative to that of natives, and because the rate at which out-of-work immigrants could find jobs fell relative to the native job-finding rate. A small part of the relative increase in the immigrant rate of job loss arises because immigrants were less likely to work in jobs that could be performed remotely and suffered disparate employment consequences as the lockdown permitted workers with more "remotable" skills to continue their work from home.
    Keywords: immigration, labor supply, COVID-19
    JEL: J21 J61
    Date: 2020–05
  4. By: Burkhauser, Richard V. (Cornell University); Herault, Nicolas (Melbourne Institute of Applied Economic and Social Research); Jenkins, Stephen P. (London School of Economics); Wilkins, Roger (Melbourne Institute of Applied Economic and Social Research)
    Abstract: The share of women in the top 1% of the UK's income distribution has been growing over the last two decades (as in several other countries). Our first contribution is to account for this secular change using regressions of the probability of being in the top 1%, fitted separately for men and women, in order to contrast between the sexes the role of changes in characteristics and changes in returns to characteristics. We show that the rise of women in the top 1% is primarily accounted for by their greater increases (relative to men) in the number of years spent in full-time education. Although most top income analysis uses tax return data, we derive our findings taking advantage of the much more extensive information about personal characteristics that is available in survey data. Our use of survey data requires justification given survey under-coverage of top incomes. Providing this justification is our second contribution.
    Keywords: Top 1%, top incomes, inequality, gender differences, survey under-coverage
    JEL: D31 J16 C81
    Date: 2020–06
  5. By: Anna Stansbury; Lawrence H. Summers
    Abstract: Rising profitability and market valuations of US businesses, sluggish wage growth and a declining labor share of income, and reduced unemployment and inflation, have defined the macroeconomic environment of the last generation. This paper offers a unified explanation for these phenomena based on reduced worker power. Using individual, industry, and state-level data, we demonstrate that measures of reduced worker power are associated with lower wage levels, higher profit shares, and reductions in measures of the NAIRU. We argue that the declining worker power hypothesis is more compelling as an explanation for observed changes than increases in firms’ market power, both because it can simultaneously explain a falling labor share and a reduced NAIRU, and because it is more directly supported by the data.
    JEL: E02 E2 E25 J01 J3 J31 J42 J51 L12
    Date: 2020–05
  6. By: Giuliano, Paola (University of California, Los Angeles); Tabellini, Marco (Massachusetts Institute of Technology)
    Abstract: We test the relationship between historical immigration to the United States and political ideology today. We hypothesize that European immigrants brought with them their preferences for the welfare state, and that this had a long-lasting effect on the political ideology of US born individuals. Our analysis proceeds in three steps. First, we document that the historical presence of European immigrants is associated with a more liberal political ideology and with stronger preferences for redistribution among US born individuals today. Next, we show that this correlation is not driven by the characteristics of the counties where immigrants settled or other specific, socioeconomic immigrants' traits. Finally, we conjecture and provide evidence that immigrants brought with them their preferences for the welfare state from their countries of origin. Consistent with the hypothesis that immigration left its footprint on American ideology via cultural transmission from immigrants to natives, we show that our results are stronger when inter-group contact between natives and immigrants, measured with either intermarriage or residential integration, was higher. Our findings also indicate that immigrants influenced American political ideology during one of the largest episodes of redistribution in US history — the New Deal — and that such effects persisted after the initial shock.
    Keywords: immigration, culture, political ideology, preferences for redistribution
    JEL: D64 D72 H2 J15 N32 Z1
    Date: 2020–05
  7. By: Card, David (University of California, Berkeley); Johnston, Andrew C. (University of California, Merced); Leung, Pauline (Princeton University); Mas, Alexandre (Princeton University); Pei, Zhuan (Cornell University)
    Abstract: We provide new evidence on the effect of the unemployment insurance (UI) weekly benefit amount on unemployment insurance spells based on administrative data from the state of Missouri covering the period 2003-2013. Identification comes from a regression kink design that exploits the quasi-experimental variation around the kink in the UI benefit schedule. We find that UI durations are more responsive to benefit levels during the recession and its aftermath, with an elasticity between 0.65 and 0.9 as compared to about 0.35 pre-recession.
    Keywords: unemployment insurance, benefits, labor supply, employment, unemployment
    JEL: J64 J65 D91
    Date: 2020–06

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