nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒04‒26
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. Take the highway? Paved roads and well-being in Africa By Andrew E. Clark; Conchita D'Ambrosio; Elodie Djemaï
  2. The Distributional Consequences of Social Distancing on Poverty and Labour Income Inequality in Latin America and the Caribbean By Delaporte, Isaure; Escobar, Julia; Peña, Werner
  3. The Changing Distribution of the Male Ethnic Wage Gap in Great Britain By Clark, Ken; Nolan, Steve
  4. Happiness, Domains of Life Satisfaction, Perceptions, and Valuation Differences Across Genders By Milovanska-Farrington, Stefani; Farrington, Stephen
  5. Can Older Workers Be Retrained? Canadian Evidence from Worker-Firm Linked Data By Fang, Tony; Gunderson, Morley; Lee, Byron
  6. Socioeconomic Gradients in Child Development: Evidence from a Chilean Longitudinal Study 2010 – 2017 By Alejandra Abufhele; Dante Contreras; Esteban Puentes; Amanda Telias; Natalia Valdebenito
  7. Differences in Immigrants Wage Gap: Evidence from Chile By Roberto à lvarez; Miguel A. González; Jaime Ruiz-Tagle
  8. You are What Your Parents Expect: Height and Local Reference Points By Fan Wang; Esteban Puentes; Jere Behrman; Flavio Cunha
  9. Homophily, Peer Effects, and Dishonesty By Liza Charroin; Bernard Fortin; Marie Villeval
  10. Do Financial Incentives Aimed at Decreasing Interhousehold Inequality Increase Intrahousehold Inequality? By Amanda Chuan; John List; Anya Samek

  1. By: Andrew E. Clark; Conchita D'Ambrosio; Elodie Djemaï
    Abstract: Public Goods aim to improve individual welfare. We investigate the causal consequences of roads on well-being in 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 there is no relation between roads and subjective living conditions. The benefit of roads in providing basic needs then seems to be offset by worse outcomes in non basic-needs domains.
    Keywords: roads, subjective well-being, basic needs, material deprivation, Africa
    JEL: D63 I32 O18
    Date: 2021–04
  2. By: Delaporte, Isaure; Escobar, Julia; Peña, Werner
    Abstract: This paper estimates the potential distributional consequences of the first phase of the COVID-19 lockdowns on poverty and labour income inequality in 20 Latin American and Caribbean (LAC) countries. We estimate the share of individuals that are potentially able to remain active under the lockdown by taking into account individuals' teleworking capacity but also whether their occupation is affected by legal workplace closures or mobility restrictions. Furthermore, we compare the shares under the formal (de jure) lockdown policies assuming perfect compliance with the shares under de facto lockdowns where there is some degree of non-compliance. We then estimate individuals' potential labour income losses and examine changes in poverty and labour income inequality. We find an increase in poverty and labour income inequality in most of the LAC countries due to social distancing; however, the observed changes are lower under de facto lockdowns, revealing the potential role of non-compliance as a coping strategy during the lockdowns. Social distancing measures have led to an increase in inequality both between and within countries. Lastly, we show that most of the dispersion in the labour income loss across countries is explained by the sectoral/occupational employment structure of the economies.
    Keywords: COVID-19,Social Distancing,Compliance,Employment,Poverty,Labour Income Inequality
    JEL: D33 E24 J21 J31
    Date: 2021
  3. By: Clark, Ken (University of Manchester); Nolan, Steve (University of Manchester)
    Abstract: We decompose the ethnic pay gap in Great Britain across the distribution of hourly wages, yielding a detailed insight into differences between groups and how these vary over pay percentiles and through time. While some groups experience reductions in the pay gap consistent with lower discrimination, including relatively well paid Indian workers and relatively poorly paid Bangladeshis, others - specifically Black groups - face an apparent glass ceiling barring access to well paid jobs. The increasing educational attainment of Britain's ethnic groups provides some optimism around narrowing pay differentials, particularly at the top of the distribution, while the introduction and uprating of the National Minimum/Living Wage has contributed to improvements at the lower end.
    Keywords: ethnic pay gap, race discrimination, minimum wages, decomposition
    JEL: D31 J15 J31 J38
    Date: 2021–04
  4. By: Milovanska-Farrington, Stefani (University of Tampa); Farrington, Stephen (University of Tampa)
    Abstract: Happiness is strongly associated with goal attainment, productivity, mental health and suicidal risk. This paper examines the effect of satisfaction with areas of life on subjective well-being (SWB), the importance of relative perceptions compared to absolute measures in predicting overall life satisfaction, and differences in the domains of life which have the greatest impact on happiness of men and women. The findings suggest that relative perceptions have a large statistically significant effect on SWB. Satisfaction with family life and health have the largest while satisfaction with income has the lowest impact on overall SWB for both genders. Work satisfaction is more important for men than for women, whereas partner's happiness is more valued by female respondents. Satisfaction with household compared to personal income has a larger effect on SWB in all subsamples except employed women. Understanding the perceived and factual determinants of happiness has urgent implications in the context of the detrimental impact of the Covid-19 outbreak on SWB.
    Keywords: subjective well-being, satisfaction with areas of life, perceptions, values, gender differences
    JEL: D60 I31 J16 D03
    Date: 2021–04
  5. By: Fang, Tony (Memorial University of Newfoundland); Gunderson, Morley (University of Toronto); Lee, Byron (China Europe International Business School)
    Abstract: Based on Statistics Canada's worker-firm matched Workplace and Employee Survey, our econometric analysis indicated that the average probability of receiving training was 9.3 percentage points higher for younger (25-49) compared to older (50+) workers. Slightly more than half of that gap is attributed to older workers having a lower propensity to receive training after controlling for the characteristics that affect training. Their lower propensity to receive training tended to prevail across 54 different training measures. We find that older workers can be trained, but this requires training that is designed for their needs including: slower and self-paced instruction; hands-on practical exercises; modular training components that build in stages; familiarizing them with new equipment; and minimizing required reading and the amount of material covered.
    Keywords: training, older workers, worker-firm matched data, Canada
    JEL: J14 J18 J24
    Date: 2021–04
  6. By: Alejandra Abufhele; Dante Contreras; Esteban Puentes; Amanda Telias; Natalia Valdebenito
    Abstract: Empirical evidence shows that lack of resources during infancy and the process of accumulating disadvantages throughout childhood have important consequences in cognitive and socio-emotional development. This paper examines socioeconomic gradients across cognitive and socio-emotional measures. Using longitudinal data from a 7 year - 3 wave panel data, we study the patterns of socioeconomic status and child development in Chile and estimate how much of the wealth gap can be explained by different mediators like maternal educational and skills, child attendance to preschool and school, possession of books, or violence indicators at home. We show strong associations between household wealth and child development, and as the child grows, the gap between the most extreme quintiles of the distribution, both in cognitive and socio-emotional skills remains, but decreases in magnitude. Taking advantage of the longitudinal nature of the data, we calculate a permanent skill for each child and each skill dimension in this 7-year period. The analysis for the permanent component shows that wealth gaps are important to determine cognitive ability but not socioemotional skills. While mediators account for some of the associations, there is still a large socioeconomic gap that persists in cognitive skills among children. By understanding the dynamism of social and cognitive vulnerability experienced during childhood and employing longitudinal data and methods, this study contributes to and extends the existing literature on socioeconomic gaps and child development in the context of Latin American.
    Date: 2020–12
  7. By: Roberto à lvarez; Miguel A. González; Jaime Ruiz-Tagle
    Abstract: This paper analyses migratory wage gaps in Chile taking into account differences in their characteristics in order to improve the comparability between groups. Using data from the Chilean National Socioeconomic Characterization Survey (CASEN) we employ a matching procedure developed by Nopo (2008) which allow to estimate a common support and the mean counterfactual wage for immigrants. It is found that immigrants tend to do better in labour markets, earning on average more than natives in both 2015 and 2017. The heterogeneity of the immigrant population is relevant as those from countries with high Afro-descendant or Hispanic population earn on average -16% than natives. Scarce time spent in the country is an important determinant of their insertion in local labour markets since it explain near 60% of the gap. In fact, more recent immigration from countries with high African/Hispanic population have tend to earn -26% less. This cannot be explained by time spent in the country alone, so some discrimination could be relevant. These claims are supported by the finding that immigrants of the same group, but with more than five years of residence, are still subject to occupational segregation
    Date: 2020–11
  8. By: Fan Wang (University of Houston); Esteban Puentes (Universidad de Chile); Jere Behrman (University of Pennsylvania); Flavio Cunha (Rice University)
    Abstract: Recent estimates are that about 150 million children under five years of age are stunted, with substantial negative consequences for their schooling, cognitive skills, health, and economic productivity. Therefore, understanding what determines such growth retardation is significant for designing public policies that aim to address this issue. We build a model for nutritional choices and health with reference-dependent preferences. Parents care about the health of their children relative to some reference population. In our empirical model, we use height as the health outcome that parents target. Reference height is an equilibrium object determined by earlier cohorts’ parents’ nutritional choices in the same village. We explore the exogenous variation in reference height produced by a proteinsupplementation experiment in Guatemala to estimate our model’s parameters. We use our model to decompose the impact of the protein intervention on height into price and reference-point effects. We find that the changes in reference points account for 65% of the height difference between two-year-old children in experimental and control villages in the sixth annual cohort born after the initiation of the intervention.
    Keywords: stunting, Child Development, Guatemala, protein intervention
    JEL: I15 D80 D90 O15
    Date: 2021–04
  9. By: Liza Charroin (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne); Bernard Fortin (Département d'Economique, Université Laval - ULaval - Université Laval [Québec], CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi [Montréal] - UQAM - Université du Québec à Montréal = University of Québec in Montréal, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics); Marie Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics)
    Abstract: If individuals tend to behave like their peers, is it because of conformity, that is, the preference of people to align behavior with the behavior of their peers; homophily, that is, the tendency of people to bond with similar others; or both? We address this question in the context of an ethical dilemma. Using a peer effect model allowing for homophily, we designed a real-effort laboratory experiment in which individuals could misreport their performance to earn more. Our results reveal a preference for conformity and for homophily in the selection of peers, but only among participants who were cheating in isolation. The size of peer effects is similar when identical peers were randomly assigned and when they were selected by individuals. We thus jointly reject the presence of a self-selection bias in the peer effect estimates and of a link strength effect.
    Keywords: Peer Effects,Homophily,Dishonesty,Self-Selection Bias,Experiment
    Date: 2021–04
  10. By: Amanda Chuan; John List; Anya Samek
    Abstract: Research has shown that giving disadvantaged families financial incentives to invest in their children could decrease socioeconomic inequality by enhancing human capital formation. Yet, within the household how are such gains achieved? We use a field experiment to investigate how parents allocate time when they receive financial incentives. We find that incentives increase investment in the target child. But, parents achieve these gains by substituting away from time spent with the child's sibling(s). An unintended consequence is that intrahousehold inequality increases and aggregate gains from the program are overstated when focusing only on target children.
    Date: 2021

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