nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒10‒19
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Skill Formation and the Trouble with Child Non-Cognitive Skill Measures By Del Bono, Emilia; Kinsler, Josh; Pavan, Ronni
  2. The Relationship between Subjective Wellbeing and Subjective Wellbeing Inequality: Taking Ordinality and Skewness Seriously. By Arthur Grimes; Stephen P. Jenkins; Florencia Tranquilli
  3. Wage inequality and poverty effects of lockdown and social distancing in Europe By Juan C. Palomino; Juan G. Rodríguez; Raquel Sebastian
  4. Directed Search with Phantom Vacancies By Albrecht, James; Decreuse, Bruno; Vroman, Susan

  1. By: Del Bono, Emilia (ISER, University of Essex); Kinsler, Josh (University of Georgia); Pavan, Ronni (University of Rochester)
    Abstract: Research on child skill formation and related policies typically rely on parent- reported measures of child non-cognitive skills. In this paper, we show that parental assessments of child non-cognitive skills are directly affected by the skills of the parents. We develop a dynamic model of child and parental skill formation that accounts for this contamination and show how standard estimates of the production of skills are affected. We then use our model to illustrate how contamination in parental measures of child non-cognitive skills affects estimates of child development policies that also directly affect parental skills.
    Keywords: children, human capital, dynamic factor analysis, measurement, policy
    JEL: C13 C18 I38 J13 J24
    Date: 2020–09
  2. By: Arthur Grimes (Motu Economic and Public Policy Research); Stephen P. Jenkins (London School of Economics and Political Science, and IZA); Florencia Tranquilli (Motu Economic and Public Policy Research, and Victoria University of Wellington)
    Abstract: We argue that the relationship between individual satisfaction with life (SWL) and SWL inequality is more complex than described by leading earlier research such as Goff, Helliwell, and Mayraz (Economic Inquiry, 2018). Using inequality indices appropriate for ordinal data, our analysis using the World Values Survey reveals that skewness of the SWL distribution, not only inequality, matters for individual SWL outcomes; so too does whether we look upwards or downwards at the (skewed) distribution. Our results are consistent with there being negative (positive) externalities for an individual’s SWL from seeing people who are low (high) in the SWL distribution.
    Keywords: subjective wellbeing, ordinal data, inequality, skewness, WVS
    JEL: D31 D63 I31
    Date: 2020–10
  3. By: Juan C. Palomino (University of Oxford (UK), INET and Department of Social Policy and Intervention); Juan G. Rodríguez (Universidad Complutense de Madrid (Spain), EQUALITAS, ICAE and CEDESOG); Raquel Sebastian (Universidad Complutense de Madrid (Spain), EQUALITAS and ICAE)
    Abstract: Social distancing and lockdown measures taken to contain the spread of COVID-19 may have distributional economic costs beyond the contraction of GDP. Here we evaluate the capacity of individuals to work under a lockdown based on a Lockdown Working Ability index which considers their teleworking capacity and whether their occupation is essential or closed. Our analysis reveals substantial and uneven potential wage losses across the distribution all around Europe and we consistently find that both poverty and wage inequality rise in all European countries. Under four different scenarios (2 months of lockdown and 2 months of lockdown plus 6 months of partial functioning of closed occupations at 80%, 70% and 60% of full capacity) we estimate for 29 European countries an average increase in the headcount poverty index that goes from 4.9 to 9.4 percentage points and a mean loss rate for poor workers between 10% and 16.2%. The average increase in the Gini coefficient ranges between 3.5% to 7.3% depending on the scenario considered. Decomposing overall wage inequality in Europe, we find that lockdown and social distance measures produce a double process of divergence: both inequality within and between countries increase.
    Keywords: Wage inequality; Teleworking; Social distancing; Europe; COVID.
    JEL: D33 E24 J21 J31
    Date: 2020–07
  4. By: Albrecht, James (Georgetown University); Decreuse, Bruno (Aix-Marseille University); Vroman, Susan (Georgetown University)
    Abstract: When vacancies are filled, the ads that were posted are often not withdrawn, creating "phantom" vacancies. The existence of phantoms implies that older job listings are less likely to represent true vacancies than are younger ones. We assume that job seekers direct their search based on the listing age and so equalize the expected benefit of a job application across listing age. Forming a match with a vacancy of age α creates a phantom of age α with probability β and this leads to a negative informational externality that affects all vacancies of age α and older. Thus, the magnitude of this externality decreases with the age of the listing when the match is formed. Relative to the constrained efficient search behavior, the directed search of job seekers leads them to over-apply to younger listings. We illustrate the model using US labor market data. The contribution of phantoms to overall frictions is large, but, conditional on the existence of phantoms, the social planner cannot improve much on the directed search allocation.
    Keywords: directed search, phantom vacancies, unemployment
    JEL: J60 D83
    Date: 2020–09

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