nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒03‒15
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Measuring UK top incomes By Advani, Arun; Andy Summers, Andy; Tarrant, Hannah
  2. Measurement Error in Earnings Data: Replication of Meijer, Rohwedder, and Wansbeek's Mixture Model Approach to Combining Survey and Register Data By Jenkins, Stephen P.; Rios-Avila, Fernando
  3. Technological advance, social fragmentation and welfare By Bosworth, Steven; Snower, Dennis J.
  4. Competing by Default: A New Way to Break the Glass Ceiling* By Nisvan Erkal; Lata Gangadharan; Erte Xiao

  1. By: Advani, Arun (University of Warwick, CAGE Research Centre, the Institute for Fiscal Studies (IFS), and the LSE International Inequalities Institute (LSE III)); Andy Summers, Andy (London School of Economics, LSE III, CAGE and IFS); Tarrant, Hannah (LSE III)
    Abstract: We compare two approaches to measuring UK top income shares - the share of income going to particular subgroups, such as the top 1%. We set out four criteria that an ideal top share series should satisfy: (i) comparability between numerator and denominator ; (ii) comparability over time ; (iii) international comparability; and (iv) practical sustainability. Our preferred approach meets three of these; by contrast the approach currently used to produce UK fiscal income series meets none of them. Changing to our preferred approach matters quantitatively : the share of income going to the top 1% is 2 percentage points higher, but rising more slowly, than under the alternative.
    Keywords: income inequality ; measurement ; national accounts ; top shares JEL Classification: D31 ; D63 ; E01 ; H2 Creation date: 2021
  2. By: Jenkins, Stephen P. (London School of Economics); Rios-Avila, Fernando (Levy Economics Institute)
    Abstract: Meijer, Rohwedder, and Wansbeek (MRW, Journal of Business & Economic Statistics, 2012) develop methods for prediction of a single earnings figure per worker from mixture factor models fitted using earnings data from multiple linked data sources. MRW apply their method using parameter estimates of Kapteyn and Ypma's mixture factor model (KY, Journal of Labour Economics 2007) fitted to earnings data for Swedish workers aged 50+. First, we replicate MRW's empirical analysis using the Swedish model estimates. Second, we check the generality of their empirical finding with a new application. Using estimates of a KY model fit to a linked dataset on earnings for UK employees of all ages, we confirm that MRW's principal findings about the performance of their various predictors of true earnings also hold in this different setting.
    Keywords: earnings prediction, measurement error, mixture factor model, labour earnings, Kapteyn-Ypma model
    JEL: C81 C83 D31
    Date: 2021–03
  3. By: Bosworth, Steven; Snower, Dennis J.
    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.
    JEL: D63 D69 D71 E71 I39 O33 Z10
    Date: 2020
  4. By: Nisvan Erkal; Lata Gangadharan; Erte Xiao
    Abstract: Leadership selection in organizations often requires candidates to actively choose to participate in the competition. We conjecture that such an Opt-in mechanism may contribute to the gender gap observed in leadership positions. We design an Opt-out mechanism where the default is to compete for a leadership position and individuals can opt out of the competition. Data from our experiments show that women are more likely to compete for leadership positions under the Opt-out mechanism and this effectively reduces the gender gap in competition. When given a choice between the Opt-in and Opt-out mechanisms, individuals are equally likely to choose either one. We conclude that the Opt-out mechanism can be an effective and feasible way to break the glass ceiling.
    Keywords: Glass ceiling; Gender inequality; Competition; Leadership; Defaults; Laboratory experiments
    JEL: C92 J16 D01
    Date: 2019–06

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