nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒04‒05
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Life Satisfaction and the Human Development Index Across the World By Rémi Yin; Anthony Lepinteur; Andrew Clark; Conchita Ambrosio
  2. The Impacts of Opportunity Zones on Zone Residents By Matthew Freedman; Shantanu Khanna; David Neumark
  3. Diversity in Schools: Immigrants and the Educational Performance of U.S. Born Students By David N. Figlio; Paola Giuliano; Riccardo Marchingiglio; Umut Özek; Paola Sapienza
  4. The Pink Tide and Inequality in Latin America By German Feierherd; Patricio Larroulet; Wei Long,; Nora Lustig
  5. The Impact of the COVID-19 Pandemic on Teaching Outcomes in Higher Education By Philipp Hansen; Lennart Struth; Max Thon; Tim Umbach
  6. Intergenerational transmission of lockdown consequences: Prognosis of the longer-run persistence of COVID-19 in Latin America By Guido Neidhöfer; Nora Lustig; Mariano Tommasi
  7. Influencers on Economic Issues in Latin America, Spain and the United States By Newland, Carlos; Rosiello, Juan Carlos; Salinas, Roberto
  8. Stochastic Earnings Growth and Equilibrium Wealth Distributions By Thomas J. Sargent; Neng Wang; Jinqiang Yang
  9. Fair and Inclusive Markets: Why Dynamism Matters By Philippe Aghion; Reda Cherif; Fuad Hasanov

  1. By: Rémi Yin (University of Luxembourg [Luxembourg]); Anthony Lepinteur (University of Luxembourg [Luxembourg]); Andrew Clark (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 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); Conchita Ambrosio (University of Luxembourg [Luxembourg])
    Abstract: We use annual data on over 150 countries between 2005 and 2018 to look at the relationship between subjective well-being (both cognitive and affective) and the Human Development Index (HDI). The HDI appears to be more closely related to cognitive than affective well-being. We also consider the relationships between the three HDI components (the Income, Health and Education Indices) and well-being, and find that, on average, the Income Index has the strongest predictive power. Importantly, we find that the three HDI components only matter equally in Western and rich countries. Our analysis contributes to the discussion about cultural sensitivity in paradigms of societal development in two ways. We first show that differences in preferences towards development aims exist. Second, we propose a weighting procedure for a culturally-sensitive version of the HDI.
    Keywords: Human Development Index,Subjective Well-being,Gallup World Poll,Country Groups Human Development Index,Country Groups
    Date: 2021–03
  2. By: Matthew Freedman; Shantanu Khanna; David Neumark
    Abstract: Created by the Tax Cuts and Jobs Act in 2017, the Opportunity Zone program was designed to encourage investment in distressed communities across the U.S. We examine the early impacts of the Opportunity Zone program on residents of targeted areas. We leverage restricted-access microdata from the American Community Survey and employ difference-in-differences and matching approaches to estimate causal reduced-form effects of the program. Our results point to modest, if any, positive effects of the Opportunity Zone program on the employment, earnings, or poverty of zone residents.
    JEL: H25 H73 J23 R38
    Date: 2021–03
  3. By: David N. Figlio; Paola Giuliano; Riccardo Marchingiglio; Umut Özek; Paola Sapienza
    Abstract: We study the effect of exposure to immigrants on the educational outcomes of US-born students, using a unique dataset combining population-level birth and school records from Florida. This research question is complicated by substantial school selection of US-born students, especially among White and comparatively affluent students, in response to the presence of immigrant students in the school. We propose a new identification strategy to partial out the unobserved non-random selection into schools, and find that the presence of immigrant students has a positive effect on the academic achievement of US-born students, especially for students from disadvantaged backgrounds. Moreover, the presence of immigrants does not affect negatively the performance of affluent US-born students, who typically show a higher academic achievement compared to immigrant students. We provide suggestive evidence on potential channels.
    JEL: I21 I24 J15
    Date: 2021–03
  4. By: German Feierherd (Universidad de San Andres); Patricio Larroulet (CEQ Institute); Wei Long, (Tulane University); Nora Lustig (Tulane University)
    Abstract: Latin American countries experienced a significant reduction in income inequality at the turn of the 21st century. From the early 2000s to around 2012, the average Gini coefficient fell from 0.514 to 0.476. The period of falling inequality coincided with leftist presidential candidates achieving electoral victories across the region: by 2009, ten of the seventeen countries had a leftist president – the so-called Pink Tide. We investigate whether there was a “leftist premium” on the decline in inequality and, if there was one, through which mechanisms. Using a range of econometric models, inequality measurements, and samples, we find evidence that leftist governments lowered income inequality faster than non-leftist regimes, increasing the income share captured by the first seven deciles at the expense of the top ten percent. Our analysis suggests that this reduction was achieved by increasing social pensions, minimum wages, and tax revenue.
    Keywords: Income Inequality, Political process, Latin America, Minimum wages, Pensions, Taxes
    JEL: D63 D72 H20 I38 N36 O1
    Date: 2021–03
  5. By: Philipp Hansen (University of Cologne); Lennart Struth (University of Cologne); Max Thon (University of Cologne); Tim Umbach (
    Abstract: The COVID-19 pandemic forced much of the world to adapt suddenly to severe restrictions. In this study, we attempt to quantify the impact of the pandemic on student performance in higher education. To collect data on important covariates, we conducted a survey among first-year students of Microeconomics at the University of Cologne. In contrast to other studies, we are able to consider a particularly suitable performance measure that was not affected by the COVID-19 restrictions implemented shortly before the start of the summer term 2020. While the average performance improves in the first term affected by the restrictions, this does not apply to students with a low socioeconomic background. Trying to identify more specific channels explaining this finding, interestingly, our data yield no evidence that the average improvement results from the altered teaching formats, suggesting instead that the enhanced performance stems from an increase in available study time.
    Keywords: COVID-19, Education and Inequality, Higher Education, Well Being
    JEL: I24 I23 I31
    Date: 2021–03
  6. By: Guido Neidhöfer (ZEW); Nora Lustig (Tulane University); Mariano Tommasi (Universidad de San Andres)
    Abstract: The shock on human capital caused by COVID-19 is likely to have long lasting consequences, especially for children of low-educated families. Applying a counterfactual exercise we project the effects of school closures and other lockdown policies on the intergenerational persistence of education in 17 Latin American countries. First, we retrieve detailed information on school lockdowns and on the policies enacted to support education from home in each country. Then, we use this information to estimate the potential impact of the pandemic on schooling, high school completion, and intergenerational associations. In addition, we account for educational disruptions related to household income shocks. Our findings show that, despite that mitigation policies were able to partly reduce instructional losses in some countries, the educational attainment of the most vulnerable could be seriously affected. In particular, the likelihood of children from low educated families to attain a secondary schooling degree could fall substantially.
    Keywords: COVID-19, Lockdowns, Human capital, School closures, Intergenerational persistence, Education, Inequality, Latin America
    JEL: I24 I38 J62
    Date: 2021–03
  7. By: Newland, Carlos (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Rosiello, Juan Carlos (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Salinas, Roberto (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: The technological progress in our modern societies has witnessed the emergence of persons who deploy different means of communication across social networks, seeking to generate an impact among their audiences. These efforts in social media communications attempt to alter consumption preferences and patterns, political choices, as well as reinforce or modify opinions of all sorts and stripes. Individuals who attain greater relevance due to effects they trigger on third parties are characterized as influencers, and one of their preferred means of communication are online platforms or social media. Among them, Twitter stands out as the most conducive space for debates on ideas, political parties, or public policies. This social media platform is a microblogging service that allows a person to send short messages (up to 280 characters) that are displayed on a user’s individual page, and that are replicated on their followers’ pages. In this paper, we aim to identify the most important influencers in Latin America, the United States and Spain, who use this social media network to debate issues primarily related to economics and economic policy. On this subject, there is a very strong discussion about the role that the government should play in economic life, the pros and cons of greater regulation, the problem of income distribution, the impact of inflation, and the nature of free markets and capitalism. We will first describe the methodology we employed, in order to then proceed to illustrate a ranking of the ten most relevant influencers, in terms of number of followers, from Argentina, Brazil, Colombia, Chile, Mexico, Spain, and the United States. We then explore their profiles and present an analysis of the economic issues debated on the relevant Twitter accounts on a per country basis. Finally, based on this analysis, we present a hypothesis on the positioning of influencers in economic matters.
    Date: 2021–03
  8. By: Thomas J. Sargent; Neng Wang; Jinqiang Yang
    Abstract: The cross-section distribution of U.S. wealth is more skewed than the distribution of labor earnings. Stachurski and Toda (2019) explain how plain vanilla Bewley-Aiyagari-Huggett (BAH) models with infinitely lived agents can't generate that pattern because an equilibrium risk-free rate is lower than the time rate of preference and each person's wealth process is stationary. We provide two modifications of a BAH model that generate this pattern: (1) overlapping generations of agents who have low wealth at birth and pass through N life-stage transitions of stochastic lengths, and (2) labor-earnings processes that exhibit stochastic growth. With only a few parameters such a model can well approximate mappings from the Lorenz curve and Gini coefficient for cross-sections of labor earnings to their counterparts for cross sections of wealth. Three forces amplify inequality in wealth relative to inequality in labor-earnings: stochastic life-stage transitions; a precautionary savings motive for high wage earners that is especially strong after they receive positive permanent earnings shocks; and an energetic life-cycle saving motive for agents who have low wealth at birth. An equilibrium risk-free interest rate that exceeds a time preference rate fosters a fat-tailed wealth distribution.
    JEL: D14 D31 E21
    Date: 2021–03
  9. By: Philippe Aghion; Reda Cherif; Fuad Hasanov
    Abstract: We show empirical evidence that there may not be a tradeoff between market income inequality and high sustained growth, which is key for poverty alleviation. We argue that the economies that achieved high sustained growth and low market income inequality are characterized by dynamism—a drive toward sophisticated export industries, innovation, and creative destruction and a high level of competition. What a country produces and how much it competes domestically and internationally are important for achieving fair and inclusive markets. We explore policy options to steer industrial and market structures toward providing growth opportunities for both workers and firms.
    Keywords: Income inequality;Inclusive growth;Competition;Income;Income distribution;Inequality,creative destruction,market power,industrial policy,sophistication,innovation,manufacturing,WP,monopsony power,panel data,supply firm,laggard firm,technology company
    Date: 2021–02–05

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