nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2020‒11‒09
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Coping with COVID-19: Implications of Differences in Resilience across Racial Groups for Mental Health and Well-being By Carol Graham; Barton H. Hamilton; Yung Chun; Stephen Roll; Will Ross; Karen E. Joynt-Maddox; Michal Grinstein-Weiss
  2. The changing distribution of wealth in the pre-crisis US and UK: the role of socio-economic factors By Cowell, Frank; Karagiannaki, Eleni; McKnight, Abigail
  3. Take the Highway? Paved Roads and Well-Being in Africa By Elodie Djemai; Andrew E. Clark; Conchita D'Ambrosio
  4. Productivity Versus Motivation in Adolescent Human Capital Production: Evidence from a Structurally-Motivated Field Experiment By Christopher Cotton; Brent R. Hickman; John List; Joseph P. Price; Sutanuka Roy
  5. How Should Tax Progressivity Respond to Rising Income Inequality? By Jonathan Heathcote; Kjetil Storesletten; Giovanni L. Violante
  6. Persistence through Revolutions By Alberto Alesina; Marlon Seror; David Y. Yang; Yang You; Weihong Zeng
  7. Income inequality and happiness: perceived or actual, widely or narrowly defined, fair or unfair, self- or community-centred inequality? By John Knight; Ramani Gunatilaka

  1. By: Carol Graham (The Brookings Institution); Barton H. Hamilton (Washington University in St. Louis); Yung Chun (Washington University in St. Louis); Stephen Roll (Washington University in St. Louis); Will Ross (Washington University in St. Louis); Karen E. Joynt-Maddox (Washington University in St. Louis); Michal Grinstein-Weiss (Washington University in St. Louis)
    Abstract: Question: In what ways has the COVID-19 pandemic revealed differences across racial groups in coping, resilience, and optimism, all of which have implications for health and mental well-being?; Findings: Data obtained from 5,000 US survey respondents using a national sample indicate that, despite extreme income and health disparities before and during the COVID-19 outbreak, Blacks and Hispanics remain more resilient and optimistic than their White counterparts. Moreover, the greatest difference in resilience, optimism and better mental health—is found between poor Blacks and poor Whites, with some linkages to behaviors in compliance with lockdown guidelines; Meaning: These deep differences in resilience have implications for the long-term mental health of different population groups in the face of an unprecedented pandemic. Better understanding these dynamics may provide lessons on how to preserve mental health in the face of public health and other large-scale crises.
    Keywords: COVID-19, mental health, optimism, resilience
    JEL: I14 J15 J24
    Date: 2020–09
  2. By: Cowell, Frank; Karagiannaki, Eleni; McKnight, Abigail
    Abstract: The USA and the UK experienced substantial increases in net wealth in the decade that preceded the financial crisis, largely driven by house-price booms in each country. The distribution of these gains across households led to a slight increase in wealth inequality in the USA but a substantial fall in inequality in the UK. We use a decomposition technique to examine the extent to which changes in households' socioeconomic characteristics explain changes in wealth holdings and wealth inequality. In both countries we find that changes in household characteristics had an equalizing effect on wealth inequality, moderating the increase in the USA and accounting for over one-third of the fall in UK wealth inequality.
    Keywords: ES/L016273/1
    JEL: C81 D31 D63 I31
    Date: 2019–01–01
  3. By: Elodie Djemai (Universite Paris-Dauphine, PSL Research University, IRD, LEDa, DIAL); Andrew E. Clark (Paris School of Economics - CNRS); Conchita D'Ambrosio (Department of Cognitive and Behavioral Sciences, University of Luxembourg)
    Abstract: Public Goods aim to improve individual welfare. We investigate the causal consequences of roads on well-being for 24 African countries, instrumenting paved roads by 19th Century hypothetical lines between major ports and cities. We have data on over 32000 individuals, and consider both their objective and subjective well-being. Roads reduce material deprivation, in terms of access to basic needs. But at the same time those closer to roads evaluate their living conditions as being worse. This suggests that roads are a double-edged sword in Africa, either being associated with worse outcomes in non basic-needs domains, or increasing individuals' aspirations.
    Keywords: Roads, Subjective Well-being, Basic Needs, Material Deprivation, Africa
    JEL: D63 I32 O18
    Date: 2020–07
  4. By: Christopher Cotton (Queen's University); Brent R. Hickman (Olin Business School, University of Washington); John List (University of Chicago); Joseph P. Price (Brigham Young University); Sutanuka Roy
    Abstract: We leverage a field experiment across three distinct school districts to identify key pieces of a structural model of adolescent human capital production. Our focus is inspired by the contemporary psychology of education literature, which expresses learning as a function of the ratio of the time spent on learning to the time needed to learn. By capturing two crucial student-level unobservables—which we denote as academic efficiency (turning inputs into outputs) and time preference (motivation)—our field experiment lends insights into the underpinnings of adolescent skill formation and provides a novel view of how to lessen racial and gender achievement gaps. One general insight is that students who are falling behind their peers, whether correlated to race, gender, or school district, are doing so because of academic efficiency rather than time preference. We view this result, and others found in our data, as fundamental to practitioners, academics, and policymakers interested in designing strategies to provide equal opportunities to students.
    Keywords: Human capital, field experiment, structural econometrics, psychology of education, learning, school districts, school quality, demographics, gender gap, racial gap
    JEL: C93 I21 I24 J22 J24 O15
    Date: 2020–10
  5. By: Jonathan Heathcote; Kjetil Storesletten; Giovanni L. Violante
    Abstract: We address this question in a heterogeneous-agent incomplete-markets model featuring exogenous idiosyncratic risk, endogenous skill investment, and flexible labor supply. The tax and transfer schedule is restricted to be log-linear in income, a good description of the US system. Rising inequality is modeled as a combination of skill-biased technical change and growth in residual wage dispersion. When facing shifts in the income distribution like those observed in the US, a utilitarian planner chooses higher progressivity in response to larger residual inequality but lower progressivity in response to widening skill price dispersion reflecting technical change. Overall, optimal progressivity is approximately unchanged between 1980 and 2016. We document that the progressivity of the actual US tax and transfer system has similarly changed little since 1980, in line with the model prescription.
    Keywords: Optimal taxation; Income distribution; Skill-biased technical change; Tax progressivity; Incomplete markets; Labor supply; Redistribution; Inequality
    JEL: J22 H20 E20 J24 I22 D30
    Date: 2020–10–19
  6. By: Alberto Alesina (Harvard University, NBER, CEPR, and IGIER Bocconi); Marlon Seror (University of Bristol, Paris School of Economics and DIAL); David Y. Yang (Harvard University and NBER); Yang You (Harvard University); Weihong Zeng (
    Abstract: Can efforts to eradicate inequality in wealth and education eliminate intergenerational persistence of socioeconomic status? The Chinese Communist Revolution in the 1950s and Cultural Revolution from 1966 to 1976 aimed to do exactly that. Using newly digitized archival records and contemporary census and household survey data, we show that the revolutions were effective in homogenizing the population economically in the short run. However, the pattern of inequality that characterized the pre-revolution generation re-emerges today. Almost half a century after the revolutions, individuals whose grandparents belonged to the pre-revolution elite earn 16 percent more and have completed more than 11 percent additional years of schooling than those from non-elite households. In addition, individuals with pre-revolution elite grandparents hold different values: they are less averse to inequality, more individualistic, more pro-market, and more likely to see hard work as critical to success. Through intergenerational transmission of values, socioeconomic conditions thus survived one of the most aggressive attempts to eliminate differences in the population and to foster mobility.
    Date: 2020–07
  7. By: John Knight; Ramani Gunatilaka
    Abstract: The effect of inequality on happiness should intrigue social scientists. Of the many dimensions of income inequality, we explore four, analysing a rich data set for China. Does actual or perceived inequality have a greater effect on happiness? We find that perceptions of inequality are the more important. How broad is the reference group with which people compare themselves? They report that it is narrow; and indeed narrowly defined inequality has the greater effect on happiness. Do perceptions of the degree of fairness of inequality matter? The degree of perceived fairness is found to ameliorate the adverse effect of inequality on happiness. Is it self-centred or community-centred inequality which affects happiness? Both measures of inequality have significant effects, but in opposite directions. The research and policy implications are discussed.
    Keywords: China; Happiness; Inequality; Reference group
    JEL: D03 D63 Z13
    Date: 2020–10–26

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