nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒01‒11
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Why Is Europe More Equal Than the United States? By Thomas Blanchet; Lucas Chancel; Amory Gethin
  2. Predistribution vs. Redistribution: Evidence from France and the U.S. By Antoine BOZIO; Bertrand GARBINTI; Malka GUILLOT; Jonathan GOUPILLE-LEBRET; Thomas PIKETTY
  3. The Easterlin Paradox By Easterlin, Richard A.; O’Connor, Kelsey J.
  4. Why Do People Stay Poor? By Clare Balboni; Oriana Bandiera; Robin Burgess; Maitreesh Ghatak; Anton Heil
  5. Age-Based Policy in the Context of the Covid-19 Pandemic: How Common are MultiGenerational Households? By Van Rens, Thijs; Oswald, Andrew J.
  6. When to release the lockdown: A wellbeing framework for analysing costs and benefits By Andrew Clark; Jan-Emmanuel De Neve; Daisy Fancourt; Nancy Hey; Christian Krekel; Richard Layard; Gus O'Donnell

  1. By: Thomas Blanchet (PSE - Paris School of Economics, WIL - World Inequality Lab , PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Lucas Chancel; Amory Gethin (PSE - Paris School of Economics, WIL - World Inequality Lab , PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: We combine all available household surveys, income tax and national accounts data in a systematic manner to produce comparable pretax and posttax income inequality series in 38 European countries between 1980 and 2017. Our estimates are consistent with macroeconomic growth rates and comparable with US Distributional National Accounts. We find that inequalities rose in most European countries since 1980 both before and after taxes, but much less than in the US. Between 1980 and 2017, the European top 1% pretax income share rose from 8% to 11% while it rose from 11% to 21% in the US. Europe's lower inequality levels are mainly explained by a more equal distribution of pretax incomes rather than by more equalizing taxes and transfers systems. "Predistribution" is found to play a much larger role in explaining Europe's relative resistance to inequality than "redistribution": it accounts for between two-thirds and
    Date: 2020–09
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03022133&r=all
  2. By: Antoine BOZIO (PSE, EHESS); Bertrand GARBINTI (CREST-ENSAE-IP Paris, WIL); Malka GUILLOT (ETH Zürich, IPP, WIL); Jonathan GOUPILLE-LEBRET (Univ Lyon, CNRS, ENS de Lyon, GATE UMR 5824, F69342 Lyon, France); Thomas PIKETTY (PSE, EHESS)
    Abstract: How much redistribution policies can account for long-run changes in inequality? To answer this question, we quantify the extent of redistribution over time by the percentage reduction from pretax to post-tax inequalities, and decompose the changes in post-tax inequalities into different redistributive policies and changes in pretax inequalities. To estimate these redistributive statistics, we construct homogenous annual series of post-tax national income for France over the 1900-2018 period, and compare them with those recently constructed for the U.S. We obtain three major findings. First, redistribution has increased in both countries over the period, earlier in the U.S., later in France, to reach similar levels today. Second, the substantial long-run decline in post-tax inequality in France over the 1900-2018 period is due mostly to the fall in pretax inequality (accounting for three quarters of the total decline), and to a lesser extent to the direct redistributive role of taxes, transfers and other public spending (about one quarter). Third, the reason why overall inequality is much smaller in France than in the U.S. is entirely due to differences in pretax inequality. These findings suggest that policy discussions on inequality should, in the future, pay more attention to policies affecting pretax inequality and should not focus exclusively on "redistribution".
    Date: 2020–10–29
    URL: http://d.repec.org/n?u=RePEc:crs:wpaper:2020-24&r=all
  3. By: Easterlin, Richard A.; O’Connor, Kelsey J.
    Abstract: The Easterlin Paradox states that at a point in time happiness varies directly with income, both among and within nations, but over time the long-term growth rates of happiness and income are not significantly related. The principal reason for the contradiction is social comparison. At a point in time those with higher income are happier because they are comparing their income to that of others who are less fortunate, and conversely for those with lower income. Over time, however, as incomes rise throughout the population, the incomes of one's comparison group rise along with one's own income and vitiates the otherwise positive effect of own-income growth on happiness. Critics of the Paradox mistakenly present the positive relation of happiness to income in cross-section data or in short-term time fluctuations as contradicting the nil relation of long-term trends.
    Keywords: Easterlin Paradox,economic growth,income,happiness,life satisfaction,subjective well-being,long-term,short-term,trends,fluctuations,transition countries,less developed countries,developed countries
    JEL: I31 D60 O10 O5
    Date: 2020
    URL: http://d.repec.org/n?u=RePEc:zbw:glodps:743&r=all
  4. By: Clare Balboni; Oriana Bandiera; Robin Burgess; Maitreesh Ghatak; Anton Heil
    Abstract: There are two views as to why people stay poor. The equal opportunity view emphasizes that differences in individual traits like talent or motivation make the poor choose low productivity jobs. The poverty traps view emphasizes that access to opportunities depends on initial wealth and hence poor people have no choice but to work in low productivity jobs. We test the two views using the random allocation of an asset transfer program that gave some of the poorest women in Bangladesh access to the same job opportunities as their wealthier counterparts in the same villages. The data rejects the null of equal opportunities. Exploiting small variation in initial endowments, we estimate the transition equation and find that, if the program pushes individuals above a threshold level of initial assets, then they escape poverty, but, if it does not, they slide back into poverty. Structural estimation of an occupational choice model reveals that almost all beneficiaries are misallocated at baseline and that the gains arising from eliminating misallocation would far exceed the costs. Our findings imply that large one-off transfers that enable people to take on more productive occupations can help alleviate persistent poverty.
    Keywords: poverty traps, misallocation
    JEL: O10
    Date: 2020–03
    URL: http://d.repec.org/n?u=RePEc:cep:stieop:067&r=all
  5. By: Van Rens, Thijs (University of Warwick, CAGE and IZA); Oswald, Andrew J. (University of Warwick, CAGE and IZA)
    Abstract: Are general lockdowns an appropriate response to the threat of Covid-19? Recent cost-benefit studies do not favour the case for them. Instead, since the virus practises a form of age discrimination (approximately 90% of coronavirus deaths are older than 65), some analysts have suggested an alternative. It is that younger citizens -- the generation worst affected by lockdowns and the one that will predominantly pay the eventual tax bill for furlough -- should be allowed to return to work to sustain the economy. Lockdown advocates argue that this would be dangerous, because older people would get infected by young workers living in the same home. We explore that claim. We find that 96% of UK workers under age 40 do not live with anyone over 65. In fact, 92% of all UK workers live in a household without anyone over 65 years old – and that holds true for white and BAME workers. Releasing young workers would thus expose only a small fraction of older citizens to intra-household transmission, although we recognize that the absolute number of people infected might eventually become considerable, and some vulnerable citizens could potentially be at risk if they live in large households. In general this paper’s results illustrate the potential value of fine-tuning the lifting of restrictions. Our findings buttress the cost-benefit case for age-based policies.
    Keywords: coronavirus; labor market; recession; COVID-19. JEL Classification: I18
    Date: 2020
    URL: http://d.repec.org/n?u=RePEc:cge:wacage:522&r=all
  6. By: Andrew Clark; Jan-Emmanuel De Neve; Daisy Fancourt; Nancy Hey; Christian Krekel; Richard Layard; Gus O'Donnell
    Abstract: In choosing when to end the lockdown, policy-makers have to balance the impact of the decision upon incomes, unemployment, mental health, public confidence and many other factors, as well as (of course) upon the number of deaths from COVID-19. To facilitate the decision it is helpful to forecast each factor using a single metric. We use as our metric the number of Wellbeing-Years resulting from each date of ending the lockdown. This new metric makes it possible to compare the impact of each factor in a way that is relevant to all public policy decisions.
    Keywords: COVID-19, Wellbeing Economics, Cost-Benefit Analysis, Health Policy
    JEL: D6 D61 H12 I31
    Date: 2020–04
    URL: http://d.repec.org/n?u=RePEc:cep:cepops:049&r=all

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