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on Unemployment, Inequality and Poverty |
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Issue of 2021‒01‒25
nine papers chosen by |
| By: | Brüll, Eduard; Gathmann, Christina |
| Abstract: | We analyze the evolution of the wage structure in East Germany over the past two decades and compare it to West Germany. Both regions experienced a rise in wage inequality between 1995 and 2009 with wage dispersion in East Germany exceeding West Germany, esp. at the top. We also show that wage inequality is no longer rising in Germany and has even been declining in East Germany after 2009. Compositional changes of the workforce and selection along the employment margin play only a minor role as does the decline of union coverage for the rise in wage inequality. The adoption of minimum wages in selected industries, in contrast, explains all of the turnaround in East German wage inequality after 2009. Demand side changes seem to account for the rise in wage dispersion at the top. |
| Keywords: | Wage inequality,Labor market institutions,Germany |
| JEL: | J21 J23 J24 J31 J42 J64 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:20081&r=all |
| By: | Raquel Carrasco; J. Ignacio García-Pérez; Juan F. Jimeno |
| Abstract: | Wage dynamics is closely intertwined with job flows. However, composition effects associated to the different sizes and characteristics of workers entering/exiting into/from employment that may blur the “true” underlying wage growth, are not typically accounted for. In this paper, we take these composition effects into consideration and compute wage growth in Spain during the 2006-2018 period after netting out the consequences of employment dynamics. Our results show that the “true” underlying wage growth in the Spanish economy during recessions (expansions) was, on average, significantly lower (higher) that the observed with raw data. This may help to explain some macro puzzles, such as the “vanishing” Phillips curve. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaeee:eee2021-03&r=all |
| By: | Hupkau, Claudia (CUNEF, Madrid); Isphording, Ingo E. (IZA); Machin, Stephen (London School of Economics); Ruiz-Valenzuela, Jenifer (London School of Economics) |
| Abstract: | We study the effect of negative labour market shocks borne by parents during the Covid-19 crisis on resource and time investments in children and the channels through which negative labour market shocks experienced by parents might affect children. Using data collected in the UK before and during the pandemic, we show that fathers and mothers that were already disadvantaged were more likely to have suffered negative earnings and employment shocks. These shocks had an immediate intergenerational impact: Children whose fathers reported an earnings drop to zero are significantly less likely to have received additional paid learning resources compared to similar children whose fathers did not experience a drop in earnings. Potentially offsetting this, they received about 30 more mins of parental help with schoolwork per day. Parental mental health is negatively affected when they experience earnings losses, and fathers who experience a full loss in earnings were less likely to quarrel or talk about things that matter with their kids than fathers who did not suffer earnings drops. The interactions between labour market shocks, parental investments and school closures are likely to have important implications for future inequality. |
| Keywords: | job loss, job insecurity, child outcomes |
| JEL: | J63 J65 I20 I24 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14000&r=all |
| By: | Binder, Martin; Blankenberg, Ann-Kathrin |
| Abstract: | Self-employment contributes to employment growth and innovativeness and many individuals want to become self-employed due to the autonomy and exibility it brings. Using "subjective well-being" as a broad summary measure that evaluates an individual's experience of being self-employed, the chapter discusses evidence and explanations why self-employment is positively associated with job satisfaction, even though the self-employed often earn less than their employed peers, work longer hours and experience more stress and higher job demands. Despite being more satisfied with their jobs, the self-employed do not necessarily enjoy higher overall life satisfaction, which is due to heterogeneity of types of self-employment, as well as motivational factors, work characteristics and institutional setups across countries. |
| Keywords: | self-employment,entrepreneurship,subjective well-being,job satisfaction,lifesatisfaction |
| JEL: | L26 J24 J28 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:411&r=all |
| By: | Marco Castillo; John A. List; Ragan Petrie; Anya Samek |
| Abstract: | We use field experiments with nearly 900 children to investigate how skills developed at ages 3-5 drive later-life outcomes. We find that skills map onto three distinct factors - cognitive skills, executive functions, and economic preferences. Returning to the children up to 7 years later, we find that executive functions, but not cognitive skills, predict the likelihood of receiving disciplinary referrals. Economic preferences have an independent effect: children who displayed impatience at ages 3-5 were more likely to receive disciplinary referrals. Random assignment to a parenting program reduced disciplinary referrals. This effect was not mediated by skills or preferences. |
| JEL: | C91 C93 D12 D81 I21 I26 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28288&r=all |
| By: | Roozbeh Hosseini; Karen A. Kopecky; Kai Zhao |
| Abstract: | Using a dynamic panel approach, we provide empirical evidence that negative health shocks reduce earnings. The effect is primarily driven by the participation margin and is concentrated in less educated individuals and those with poor health. We build a dynamic, general equilibrium, life cycle model that is consistent with these findings. In the model, individuals whose health is risky and heterogeneous choose to either work, or not work and apply for social security disability insurance (SSDI). Health affects individuals’ productivity, SSDI access, disutility from work, mortality, and medical expenses. Calibrating the model to the United States, we find that health inequality is an important source of lifetime earnings inequality: nearly 29 percent of the variation in lifetime earnings at age 65 is due to the fact that Americans face risky and heterogeneous life cycle health profiles. A decomposition exercise reveals that the primary reason why individuals in the United States in poor health have low lifetime earnings is because they have a high probability of obtaining SSDI benefits. In other words, the SSDI program is an important contributor to lifetime earnings inequality. Despite this, we show that it is ex ante welfare improving and, if anything, should be expanded. |
| Keywords: | earnings; health; frailty; inequality; disability; dynamic panel estimation; life-cycle models |
| JEL: | D52 D91 E21 H53 I13 I18 |
| Date: | 2021–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:89469&r=all |
| By: | Edward L. Glaeser; Michael Luca; Erica Moszkowski |
| Abstract: | How does gentrification transform neighborhoods? Gentrification can harm current residents by increasing rental costs and by eliminating old amenities, including distinctive local stores. Rising rents represent redistribution from tenants to landlords and can therefore be offset with targeted transfers, but the destruction of neighborhood character can – in principle – reduce overall social surplus. Using Census and Yelp data from five cities, we document that while gentrification is associated with an increase in the number of retail establishments overall, it is also associated with higher rates of business closure and higher rates of transition to higher price points. In Chicago and Los Angeles especially, non-gentrifying poorer communities have dramatically lower turnover than richer or gentrifying communities. However, the primary transitions appear to the replacement of stores that sell tradable goods with stores that sell non-tradable services. That transition just seems to be slower in poor communities that do not gentrify. Consequently, the business closures that come with gentrification seem to reflect the global impact of electronic commerce more than the replacement of idiosyncratic neighborhood services with generic luxury goods. |
| JEL: | H75 J15 L81 R30 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28271&r=all |
| By: | Bosworth, Steven J. (University of Reading); Snower, Dennis J. (Hertie School of Governance) |
| Abstract: | This paper models the welfare consequences of social fragmentation arising from technological advance. We start from the premise that technological progress falls primarily on market-traded commodities rather than prosocial relationships, since the latter intrinsically require the expenditure of time and thus are less amenable to productivity increases. Since prosocial relationships require individuals to identify with others in their social group whereas marketable commodities are commonly the objects of social status comparisons, a tradeoff arises between in-group affiliation and inter-group status comparisons. People consequently narrow the bounds of their social groups, reducing their prosocial relationships and extending their status-seeking activities. As prosocial relationships generate positive externalities whereas status-seeking activities generate negative preference externalities, technological advance may lead to a particular type of "decoupling" of social welfare from material prosperity. Once the share of status goods in total production exceeds a crucial threshold, technological advance is shown to be welfare-reducing. |
| Keywords: | conspicuous consumption, bowling alone, decoupling, social fragmentation, growth |
| JEL: | D63 D69 D71 E71 I39 O33 Z10 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14042&r=all |
| By: | Alberto Alesina; Sebastian Hohmann; Stelios Michalopoulos; Elias Papaioannou |
| Abstract: | This paper offers a comprehensive account of the intergenerational transmission of education across religious groups in Africa, home to some of the world’s largest Christian and Muslim communities. First, we use census data from 20 countries to construct new upward and downward religion-specific intergenerational mobility (IM) statistics. Christian boys and girls have much higher upward and lower downward mobility than Muslims and Animists. Muslims perform well only in a handful of countries where they are small minorities. Second, we trace the roots of these disparities. Although family structures differ across faiths, this variation explains only a small fraction of the observed IM inequities (roughly 12%). Inter-religious differences in occupational specialization and urban residence do not play any role. In contrast, regional features explain nearly half of the imbalances in educational mobility. Third, we isolate the causal impact of regions from spatial sorting exploiting information on children whose households moved when they were at different ages during childhood. Irrespective of the religious identity, regional exposure effects are present for all children moving before 12. Fourth, we map and characterize the religious IM gaps across thousands of African regions. Among numerous regional geographic, economic, and historical features, the district's Muslim share is the most important correlate. Children adhering to Islam underperform Christians in areas with substantial Muslim communities. Fifth, survey data reveal that Muslims display stronger in-group preferences and place a lower valuation on education. Our findings call for more research on the origins of religious segregation and the role of religion-specific, institutional, and social conventions on education and opportunity. |
| JEL: | N0 N37 O0 O1 O15 O55 Z12 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28270&r=all |