nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒09‒07
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. The Impact of COVID-19 Lockdowns and Expanded Social Assistance on Inequality, Poverty and Mobility in Argentina, Brazil, Colombia and Mexico By Nora Lustig; Valentina Martinez Pabon; Federico Sanz; Stephen D. Younger
  2. Older Workers Need Not Apply? Ageist Language in Job Ads and Age Discrimination in Hiring By Burn, Ian; Button, Patrick; Munguia Corella, Luis; Neumark, David
  3. Trends in Absolute Income Mobility in North America and Europe By Manduca, Robert; Hell, Maximilian; Adermon, Adrian; Blanden, Jo; Bratberg, Espen; Gielen, Anne C.; van Kippersluis, Hans; Lee, Keun Bok; Machin, Stephen; Munk, Martin D.; Nybom, Martin; Ostrovsky, Yuri; Rahman, Sumaiya; Sirniö, Outi
  4. The Long-Term Distributional and Welfare Effects of COVID-19 School Closures By Nicola Fuchs-Schündeln; Dirk Krueger; Alexander Ludwig; Irina Popova
  5. A Second Chance? Labor Market Returns to Adult Education Using School Reforms By Patrick Bennett; Richard Blundell; Kjell Salvanes
  6. Demographic Origins of the Decline in Labor's Share By Andrew Glover; Jacob Short
  7. Economic Preferences across Generations and Family Clusters: A Large-Scale Experiment By Chowdhury, Shyamal; Sutter, Matthias; Zimmermann, Klaus F.
  8. Twenty Year Economic Impacts of Deworming By Joan Hamory; Edward Miguel; Michael W. Walker; Michael Kremer; Sarah J. Baird
  9. Inequality and the Coronavirus: Socioeconomic Covariates of Behavioral Responses and Viral Outcomes Across US Counties By Caitlin S. Brown; Martin Ravallion

  1. By: Nora Lustig (Tulane University); Valentina Martinez Pabon (Tulane University); Federico Sanz (Tulane University); Stephen D. Younger (CEQ Institute)
    Abstract: We use microsimulation to estimate the distributional consequences of covid-19-induced lockdown policies in Argentina, Brazil, Colombia and Mexico. Our estimates of the poverty consequences are worse than many others’ projections because we do not assume that the income losses are proportionally equal across the income distribution. We also simulate the effects of most of the expanded social assistance governments have introduced in response to the crisis. This has a large offsetting effect in Brazil and Argentina, much less in Colombia. In Mexico, there has been no such expansion. Contrary to prior expectations, we find that the worst effects are not on the poorest, but those (roughly) in the middle of the ex ante income distribution. In Brazil we find that poverty among the afrodescendants and indigenous populations increases by more than for whites, but the offsetting effects of expanded social assistance also are larger for the former. In Mexico, the crisis induces significantly less poverty among the indigenous population than it does for the nonindigenous one. In all countries the increase in poverty induced by the lockdown is similar for male- and female-headed households but the offsetting effect of expanded social assistance is greater for female-headed households.
    Keywords: Covid-19, inequality, poverty, mobility, microsimulations, Latin America
    JEL: C63 D31 I32 I38
    Date: 2020–08
  2. By: Burn, Ian (University of Liverpool); Button, Patrick (Tulane University); Munguia Corella, Luis (University of California, Irvine); Neumark, David (University of California, Irvine)
    Abstract: We study the relationships between ageist stereotypes – as reflected in the language used in job ads – and age discrimination in hiring, exploiting the text of job ads and differences in callbacks to older and younger job applicants from a resume (correspondence study) field experiment (Neumark, Burn, and Button, 2019). Our analysis uses methods from computational linguistics and machine learning to directly identify, in a field-experiment setting, ageist stereotypes that underlie age discrimination in hiring. The methods we develop provide a framework for applied researchers analyzing textual data, highlighting the usefulness of various computer science techniques for empirical economics research. We find evidence that language related to stereotypes of older workers sometimes predicts discrimination against older workers. For men, our evidence points to age stereotypes about all three categories we consider – health, personality, and skill – predicting age discrimination, and for women, age stereotypes about personality. In general, the evidence is much stronger for men, and our results for men are quite consistent with the industrial psychology literature on age stereotypes.
    Keywords: ageist stereotypes, age discrimination, job ads, machine learning
    JEL: J14 J7
    Date: 2020–07
  3. By: Manduca, Robert (University of Michigan); Hell, Maximilian (Stanford University); Adermon, Adrian (IFAU); Blanden, Jo (University of Surrey); Bratberg, Espen (University of Bergen); Gielen, Anne C. (Erasmus University Rotterdam); van Kippersluis, Hans (Erasmus University Rotterdam); Lee, Keun Bok (California State University); Machin, Stephen (London School of Economics); Munk, Martin D. (Aalborg University); Nybom, Martin (SOFI, Stockholm University); Ostrovsky, Yuri (Statistics Canada); Rahman, Sumaiya (Frontier Economics); Sirniö, Outi (University of Turku)
    Abstract: We compute rates of absolute upward income mobility for the 1960-1987 birth cohorts in eight countries in North America and Europe. Rates and trends in absolute mobility varied dramatically across countries during this period: the US and Canada saw upward mobility rates near 50% for recent cohorts, while countries like Norway and Finland saw sustained rates above 70%. Decomposition analysis suggests that differences in the marginal income distributions, especially the amount of cross-cohort income inequality, were the primary driver of differing mobility rates across countries. We also demonstrate that absolute mobility rates can be accurately estimated without linked parent-child data.
    Keywords: absolute intergenerational mobility, income, international comparison
    JEL: J62 D31 P52
    Date: 2020–07
  4. By: Nicola Fuchs-Schündeln (Goethe University Frankfurt); Dirk Krueger (University of Pennsylvania); Alexander Ludwig (SAFE, University of Mannheim); Irina Popova (Goethe University Frankfurt)
    Abstract: Using a structural life-cycle model, we quantify the long-term impact of school closures during the Corona crisis on children affected at different ages and coming from households with different parental characteristics. In the model, public investment through schooling is combined with parental time and resource investments in the production of child human capital at different stages in the children's development process. We quantitatively characterize both the long-term earnings consequences on children from a Covid-19 induced loss of schooling, as well as the associated welfare losses. Due to self-productivity in the human capital production function, skill attainment at a younger stage of the life cycle raises skill attainment at later stages, and thus younger children are hurt more by the school closures than older children. We find that parental reactions reduce the negative impact of the school closures, but do not fully offset it. The negative impact of the crisis on children's welfare is especially severe for those with parents with low educational attainment and low assets. The school closures themselves are primarily responsible for the negative impact of the Covid-19 shock on the long-run welfare of the children, with the pandemic-induced income shock to parents playing a secondary role.
    Keywords: COVID-19, school closures, Inequality, intergenerational persistence
    JEL: D31 E24 I24
    Date: 2020–08
  5. By: Patrick Bennett (Norwegian School of Economics); Richard Blundell (University College London); Kjell Salvanes (Norges Handelshøyskole)
    Abstract: Roughly one third of a cohort drop out of high school across OECD countries, and developing effective tools to address prime-aged high school dropouts is a key policy question. We leverage high quality Norwegian register data, and for identification we exploit reforms enabling access to high school for adults above the age of 25. The paper finds that considerable increases in high school completion and beyond among women lead to higher earnings, increased employment, and decreased fertility. As male education remains unchanged by the reforms, later life education reduces the pre-existing gender earnings gap by a considerable fraction.
    Keywords: adult education, returns to education, fertility, gender inequality
    JEL: I26 I28 J13
    Date: 2020–08
  6. By: Andrew Glover; Jacob Short
    Abstract: Since 1980, the earnings share of older workers has risen in the United States, simultaneous with a historic decline in labor's share of income. We hypothesize that an aging workforce has contributed to the decline in labor's share. We formalize this hypothesis in an on-the-job search model, in which employers of older workers may have substantial monopsony power due to the decline in labor market dynamism that accompanies age. This manifests as a rising wedge between a worker's earnings and marginal product over the life-cycle. We estimate the age profile of these wedges using cross-industry responses of labor shares to changes in the age-distribution of earnings. We find that a sixty-year-old worker receives half of her marginal product relative to when she was twenty, which, together with recent demographic trends, can account for 59% of the recent decline in the U.S. labor share. Industrial heterogeneity in this age profile is consistent with the monopsony-power mechanism: highly unionized industries exhibit no relationship between age and payroll shares.
    Keywords: demographics, labor share, earnings distribution, income distribution
    JEL: J11 J31 E25
    Date: 2020–08
  7. By: Chowdhury, Shyamal (University of Sydney); Sutter, Matthias (Max Planck Institute for Research on Collective Goods); Zimmermann, Klaus F. (University of Bonn)
    Abstract: Economic preferences are important for lifetime outcomes such as educational achievements, health status, or labor market success. We present a holistic view of how economic preferences are related within families. In an experiment with 544 families (and 1,999 individuals) from rural Bangladesh we find a large degree of intergenerational persistence of economic preferences. Both mothers' and fathers' risk, time and social preferences are significantly (and largely to the same degree) positively correlated with their children's economic preferences, even when controlling for personality traits and socio-economic background data. We discuss possible transmission channels for these relationships within families and find indications that there is more than pure genetics at work. Moving beyond an individual level analysis, we are the first to classify a whole family into one of two clusters, with either relatively patient, risktolerant and pro-social members or relatively impatient, risk averse and spiteful members. Socio-economic background variables correlate with the cluster to which a family belongs to.
    Keywords: economic preferences within families, intergenerational transmission of preferences, time preferences, risk preferences, social preferences, family clusters, socio-economic status, Bangladesh, experiment
    JEL: C90 D1 D90 D81 D64 J13 J24 J62
    Date: 2020–07
  8. By: Joan Hamory; Edward Miguel; Michael W. Walker; Michael Kremer; Sarah J. Baird
    Abstract: This study exploits a randomized school health intervention that provided deworming treatment to Kenyan children and utilizes longitudinal data to estimate impacts on economic outcomes up to 20 years later. The effective respondent tracking rate was 84%. Individuals who received 2 to 3 additional years of childhood deworming experience an increase of 14% in consumption expenditure, 13% in hourly earnings, 9% in non-agricultural work hours, and are 9% more likely to live in urban areas. Most effects are concentrated among males and older individuals. Given deworming's low cost, a conservative annualized social internal rate of return estimate is 37%.
    JEL: I15 J24 O15
    Date: 2020–07
  9. By: Caitlin S. Brown; Martin Ravallion
    Abstract: Not much is obvious about how socioeconomic inequalities impact the spread of infectious diseases once one considers behavioral responses, correlations among multiple covariates and the likely non-linearities and dynamics involved. Social distancing responses to the threat of catching COVID-19 and outcomes for infections and deaths are modelled across US counties, augmenting epidemiological and health covariates with within-county median incomes, poverty and income inequality, and age and racial composition. Systematic socioeconomic effects on social distancing and infections emerge, and most effects do not fade as the virus spreads. Deaths, once infected, are less responsive to socioeconomic covariates. Richer counties tend to see greater gains in social distancing and lower infection rates, controlling for more standard epidemiological factors. Income poverty and inequality tend to increase the infection rate, but these effects are largely accountable to their correlation with racial composition. A more elderly population increases deaths conditional on infections, but has an offsetting effect on the infection rate, consistent with the behavioral responses we find through social distancing.
    JEL: I12 I14 I32
    Date: 2020–07

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.