nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒08‒10
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Title of Paper: Diversity, Immigration, and Redistribution By Alesina, Alberto F; Stantcheva, Stefanie
  2. Instiutions, Opportunism and Prosocial Behavior: Some Experimental Evidence By Antonio Cabrales; Irma Clots-Figueras; Roberto Hernán-Gonzalez; Praveen Kujal
  3. Growth, Automation, and the Long-Run Share of Labor By Debraj Ray; Dilip Mookherjee
  4. Using Fiscal Data to Estimate the Evolution of Top Income Shares in Belgium By André Decoster; Koen Dedobbeleer; Sebastiaan Maes
  5. How Unequal is Europe? Evidence from Distributional National Accounts, 1980-2017 By Thomas Blanchet; Lucas Chancel; Amory Gethin
  6. The Wrong Kind of AI? Artificial Intelligence and the Future of Labor Demand By Acemoglu, Daron; Restrepo, Pascual
  7. Life expectancy at retirement and income levels in Chile By Edwards, Gonzalo; Soto, Raimundo; Zurita, Felipe

  1. By: Alesina, Alberto F; Stantcheva, Stefanie
    Abstract: This paper provides a simple conceptual framework that captures how different perceptions, attitudes, and biases about immigrants or minorities can shape preferences for redistribution and reviews the empirical evidence on the effects of increasing racial diversity and immigration on support for redistribution.
    Keywords: diversity; Immigration; inequality; race; redistribution; social preferences
    JEL: H21 J15 P16
    Date: 2019–12
  2. By: Antonio Cabrales (Dept. of Economics, Universidad Carlos III de Madrid); Irma Clots-Figueras (School of Economics, University of Kent); Roberto Hernán-Gonzalez (Burgundy School of Business); Praveen Kujal (Dept. of Economics, Middlesex University)
    Abstract: Formal or informal institutions have long been adopted by societies to protect against opportunistic behavior. However, we know very little about how these institutions are chosen and their impact on behavior. We experimentally investigate the demand for different levels of institutions that provide low to high levels of insurance and its subsequent impact on prosocial behavior. We conduct a large-scale online experiment where we add the possibility of purchasing insurance to safeguard against low reciprocity to the standard trust game. We compare two different mechanisms, the private (purchase) and the social (voting) choice of institutions. Whether voted or purchased, we find that there is demand for institutions in low trustworthiness groups, while high trustworthiness groups always demand lower levels of institutions. Lower levels of institutions are demanded when those who can benefit from opportunistic behavior, i.e. low trustworthiness individuals, can also vote for them. Importantly, the presence of insurance crowds out civic spirit even when subjects can choose the no insurance option: trustworthiness when formal institutions are available is lower than in their absence.
    Keywords: Institutions; Trust; Trustworthiness; Voting; Insurance
    JEL: C92 D02 D64
    Date: 2020
  3. By: Debraj Ray (New York University); Dilip Mookherjee (Boston University)
    Abstract: We study a model of long run growth and distribution with two key features. First, there is an asymmetry between physical and human capital. Individual claims on the former can be reproduced linearly and indefinitely. Because no similar claim on humans is possible, human capital accumulation instead takes the form of acquiring occupational skills, the returns to which are determined by an endogenous collection of wages. Second, physical capital can take the form of machines that are complementary to human labor, or robots, a substitute for it. Under a self-replication condition on the production of robot services, our theory delivers progressive automation, with the share of labor in national income converging to zero. The displacement of human labor is gradual, and real wages could rise indefinitely. The results extend to endogenous technical change, as well as relaxations of the sharply posited human-physical asymmetry.
    Date: 2020–06
  4. By: André Decoster (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven); Koen Dedobbeleer (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven); Sebastiaan Maes (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven)
    Abstract: Belgium is notoriously absent from the World Wealth and Income Database (, the rapidly expanding international source of comparable data for research on income and wealth inequality. This paper reports on a first attempt to fill this gap. We correct and complete published data on net taxable incomes for the period 1990-2013 to comply with the standards set by the WID database, as expressed in the population control and the income control. Our results show that inferring evolutions of the income share of the top 10% or 1% from published tables of net taxable income is highly misleading. After correction, there is little evidence that top income shares in Belgium have increased during the last 25 years. In contrast to similar analyses for the UK, US, Germany, and to a lesser extent France and the Netherlands, we do not find a clear increase in the income share of the top decile. Also, the significant increase in the income share for the top one percent in many countries, cannot easily be replicated for Belgium. However, some caution is needed. The correction for missing income, preliminary though it is, points to the crucial role played by both our definition of the income reference total and of changing definitions and/or conventions in the National Accounts.
    Keywords: Fiscal Data,Top Incomes,income inequality,Belgium,DINA,Distributional National Accounts
    Date: 2019
  5. By: Thomas Blanchet (PSE - Paris School of Economics, WIL - World Inequality Lab); Lucas Chancel (PSE - Paris School of Economics, WIL - World Inequality Lab , IDDRI - Institut du Développement Durable et des Relations Internationales - Institut d'Études Politiques [IEP] - Paris); Amory Gethin (PSE - Paris School of Economics, WIL - World Inequality Lab)
    Abstract: This paper estimates the evolution of income inequality in 38 European countries from 1980 to 2017 by combining surveys, tax data and national accounts. We develop a harmonized methodology, using machine learning, nonlinear survey calibration and extreme value theory, in order to produce homogeneous pre-tax and post-tax income inequality estimates, comparable across countries and consistent with official national income growth rates. Inequalities have in- creased in a majority of European countries, both at the top and at the bottom of the distribution, especially between 1980 and 2000. The European top 1% grew more than two times faster than the bottom 50% and captured 17% of regional income growth. Relative poverty in Europe went through ups and downs, increasing from 20% in 1980 to 22% in 2017. Inequalities yet remain lower and have increased much less in Europe than in the US, despite the persistence of strong income differences between European countries and the weaker progressivity of European-wide income redistribution.
    Keywords: Simplified Distributional National Accounts,DINA,distribution,Inequality,Europe,pre-tax income,post-tax income,national income
    Date: 2019
  6. By: Acemoglu, Daron; Restrepo, Pascual
    Abstract: Artificial Intelligence is set to influence every aspect of our lives, not least the way production is organized. AI, as a technology platform, can automate tasks previously performed by labor or create new tasks and activities in which humans can be productively employed. Recent technological change has been biased towards automation, with insufficient focus on creating new tasks where labor can be productively employed. The consequences of this choice have been stagnating labor demand, declining labor share in national income, rising inequality and lower productivity growth. The current tendency is to develop AI in the direction of further automation, but this might mean missing out on the promise of the "right" kind of AI with better economic and social outcomes.
    Keywords: artiÂ?cial intelligence; automation; inequality; Innovation; jobs; labor demand; productivity; Tasks; technology; wages
    JEL: J23 J24
    Date: 2019–12
  7. By: Edwards, Gonzalo; Soto, Raimundo; Zurita, Felipe
    Abstract: We document that life expectancies at the age of retirement differ significantly by income levels and gender in Chile. Using a sample of over 500 thousand workers that retired under the annuity system, we find that, conditional on reaching retirement age, there is a three-year difference in life expectancy between the lower and higher income groups. Differences are similar for men and women. We also find that as income per capita in Chile expanded over the past three decades, poverty levels have decreased quite markedly among pensioners. The evidence on income distribution is less clear cut. While income inequality is lower for the new generations, it increases after retirement within each generation as the poor die younger than the rich workers. Gender differences are also noteworthy. First, income among women is less unequal than that of men at retirement age and afterwards. Second, income inequality among retired men progressively worsens over time, while among women it remains stagnant over time. Our results have important im- plications for welfare projections, the allocation of health subsidies among pensioners, and the structure and management of the reserves required to life-insurance companies.
    Keywords: Equidad e inclusión social, Género, Pobreza, Salud, Trabajo y protección social,
    Date: 2020

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