nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒06‒28
sixteen papers chosen by
Maximo Rossi
Universidad de la República

  1. Intrahousehold Resource Allocation and Individual Poverty: Assessing Collective Model Predictions against Direct Evidence on Sharing By Olivier Bargain; Guy Lacroix; Luca Tiberti
  2. The Voltage Effect in Behavioral Economics By John List
  3. The Impacts of Opportunity Zones on Zone Residents By Matthew Freedman; Shantanu Khanna; David Neumark
  4. Institutions, opportunism and prosocial behavior: Some experimental evidence By Cabrales, Antonio; Clots-Figueras, Irma; Hernán-González, Roberto; Kujal, Praveen
  5. The Heterogeneous Impact of Short-Time Work: From Saved Jobs to Windfall Effects By Pierre Cahuc; Francis Kramarz; Sandra Nevoux
  6. Does Pain Lead to Job Loss? A Panel Study for Germany By Alan Piper; David G. Blanchflower; Alex Bryson
  7. Happy to Help: The Welfare Effects of a Nationwide Micro-Volunteering Programme By Dolan, Paul; Krekel, Christian; Shreedhar, Ganga; Lee, Helen; Marshall, Claire; Smith, Allison
  8. Baby steps: The gender division of childcare during the COVID19 pandemic By Sevilla, Almudena; Smith, Sarah
  9. Failed to Scale: Embracing the Challenge of Scaling in Early Childhood By Snigdha Gupta; John List; Lauren Supplee; Dana Suskind
  10. A Local Community Course That Raises Wellbeing and Pro-sociality: Evidence from a Randomised Controlled Trial By Krekel, Christian; De Neve, Jan-Emmanuel; Fancourt, Daisy; Layard, Richard
  11. Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches By Aronsson, Thomas; Johansson-Stenman, Olof; Wendner, Ronald
  12. Tasks, Automation, and the Rise in US Wage Inequality By Daron Acemoglu; Pascual Restrepo
  13. The Seeds of Ideology: Historical Immigration and Political Preferences in the United States By Giuliano, Paola; Tabellini, Marco
  14. Temptation and Incentives to Wealth Accumulation By Orazio Attanasio; Agnes Kovacs; Patrick Moran
  15. Lords and Vassals: Power, Patronage, and the Emergence of Inequality By Akerlof, Robert; Li, Hongyi; Yeo, Jonathan
  16. The Lock-In Effects of Part-Time Unemployment Benefits By Hélène Benghalem; Pierre Cahuc; Pierre Villedieu

  1. By: Olivier Bargain; Guy Lacroix; Luca Tiberti
    Abstract: Welfare analyses conducted by policy practitioners around the world usually rely on equivalized or per-capita expenditures and ignore the extent of within-household inequality. Recent advances in the estimation of collective models suggest ways to retrieve the complete sharing process within families using homogeneity assumptions (typically preferences stability upon exclusive goods across individuals or household types) and the observation of exclusive goods. So far, the prediction of these models has not been validated, essentially because intrahousehold allocation is seldom observed. We provide such a validation by leveraging a unique dataset from Bangladesh, which contains information on the fully individualized expenditures of each family member. We also test the core assumption (efficiency) and homogeneity assumptions used for identification. It turns out that the collective model predicts individual resources reasonably well when using clothing, i.e., one of the rare goods commonly assignable to male, female and children in standard expenditure surveys. It also allows identifying poor individuals in non-poor households while the traditional approach understates poverty among the poorest individuals.
    Keywords: Collective Model, Engel Curves, Rothbarth Method, Sharing rule
    JEL: D11 D12 I31 J12
    Date: 2021
  2. By: John List
    Abstract: All happy families are alike; each unhappy family is unhappy in its own way. -Leo Tolstoy, Anna Karenina
    Date: 2021
  3. 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.
    Keywords: Opportunity Zones, Place-Based Policies, Tax Incentives, Employment, Poverty
    JEL: H25 J23 J38 R12 R38
    Date: 2021–06
  4. By: Cabrales, Antonio; Clots-Figueras, Irma; Hernán-González, Roberto; Kujal, Praveen
    Abstract: Formal or informal institutions have long been adopted by societies to protect against opportunistic behavior. However, we know very little about how these institutions are chosen and their impact on behavior. We experimentally investigate the demand for different levels of institutions that provide low to high levels of insurance and its subsequent impact on prosocial behavior. We conduct a large-scale online experiment where we add the possibility of purchasing insurance to safeguard against low reciprocity to the standard trust game. We compare two different mechanisms, the private (purchase) and the social (voting) choice of institutions. Whether voted or purchased, we find that there is demand for institutions in low trustworthiness groups, while high trustworthiness groups always demand lower levels of institutions. Lower levels of institutions are demanded when those who can benefit from opportunistic behavior, i.e. low trustworthiness individuals, can also vote for them. Importantly, the presence of insurance crowds out civic spirit even when subjects can choose the no insurance option: trustworthiness when formal institutions are available is lower than in their absence.
    Keywords: institutions; Insurance; Trust; trustworthiness; voting
    JEL: C92 D02 D64
    Date: 2020–05
  5. By: Pierre Cahuc (Département d'économie); Francis Kramarz (ENSAE ParisTech (ENSAE)); Sandra Nevoux (Banque de France)
    Abstract: To understand which firms take-up short-time work and which workers they enroll in this program, we provide a model which shows that short-time work may save jobs in firms hit by strong negative revenue shocks, but not in less severely-hit firms, where hours worked are reduced, without saving jobs. Using detailed data on the administration of the program covering the universe of French establishments in the 2008-2009 Great Recession, we find that short-time work did indeed save jobs and increase hours of work in firms faced with large negative shocks. These firms have been able to recover rapidly in the aftermath of the Recession thanks to short-time work. We also provide evidence of large windfall effects which significantly increased the cost of the policy per job saved; yet we also find that short-time work remains more cost-efficient at saving jobs than wage subsidies.
    Keywords: Short-time Work; Unemployement; Hours of work
    JEL: E24 J22 J65
    Date: 2021–05
  6. By: Alan Piper; David G. Blanchflower; Alex Bryson
    Abstract: The cross-sectional association between pain and unemployment is well-established. But the absence of panel data containing data on pain and labor market status has meant less is known about the direction of any causal linkage. Those longitudinal studies that do examine the link between pain and subsequent labor market transitions suggest results are sensitive to the measurement of pain and model specification. We contribute to this literature using large-scale panel data from the German Socio-Economic Panel (GSOEP) for the period 2002 to 2018. We show that pain leads to job loss. Workers suffering pain are more likely than others to leave their job for unemployment or economic inactivity. This probability rises with the frequency of the pain suffered in the previous month. The effect persists having accounted for fixed unobserved differences across workers, is apparent among those who otherwise report good general health and is robust to the inclusion of controls for mental health, life satisfaction and the employee’s occupation.
    JEL: J0 J64
    Date: 2021–05
  7. By: Dolan, Paul (London School of Economics); Krekel, Christian (London School of Economics); Shreedhar, Ganga (London School of Economics); Lee, Helen (National Health Service); Marshall, Claire (National Health Service); Smith, Allison (Royal Voluntary Service)
    Abstract: There is a strong suggestion from the existing literature that volunteering improves the wellbeing of those who give up their time to help others, but much of it is correlational and not causal. In this paper, we estimate the wellbeing benefits from volunteering for England's National Health Service (NHS) Volunteer Responders programme, which was set up in response to the Covid-19 pandemic. Using a sample of over 9,000 volunteers, we exploit the oversubscription of the programme and the random assignment of volunteering tasks to estimate causal wellbeing returns, across multiple counterfactuals. We find that active volunteers report significantly higher life satisfaction, feelings of worthwhileness, social connectedness, and belonging to their local communities. A social welfare analysis shows that the benefits of the programme were at least 140 times greater than its costs. Our findings advance our understanding of the ways in which pro-social behaviours can improve personal wellbeing as well as social welfare.
    Keywords: subjective wellbeing, volunteering, pro-social action, quasi-natural experiment, social welfare analysis, COVID-19
    JEL: I31 I38 D61 D64
    Date: 2021–05
  8. By: Sevilla, Almudena; Smith, Sarah
    Abstract: The COVID19 pandemic has caused shocks to the demand for home childcare (with the closure of schools and nurseries) and the supply of home childcare (with many people not working). We collect real-time data on daily lives to document that UK families with young children have been doing the equivalent of a working week in childcare. Women have been doing the greater share, but overall, the gender childcare gap (the difference between the share of childcare done by women and the share done by men) for the additional, post-COVID19 hours is smaller than that for the allocation of pre-COVID19 childcare. However, the amount of additional childcare provided by men is very sensitive to their employment â?? the allocation has become more equal in households where men are working from home and where they have been furloughed/ lost their job. There are likely to be long-term implications from these changes â?? potentially negative for the careers of parents of young children; but also, more positively for some families, for sharing the burden of childcare more equally in the future.
    Keywords: childcare; Coronavirus; COVID19; Gender
    JEL: J21 J22 J24 J33 J63
    Date: 2020–05
  9. By: Snigdha Gupta; John List; Lauren Supplee; Dana Suskind
    Abstract: Failed to Scale: Embracing the Challenge of Scaling in Early Childhood
    Date: 2021
  10. By: Krekel, Christian (London School of Economics); De Neve, Jan-Emmanuel (University of Oxford); Fancourt, Daisy (University College London); Layard, Richard (London School of Economics)
    Abstract: Despite a wealth of research on its correlates, relatively little is known about how to effectively raise wellbeing in local communities by means of intervention. Can we teach people to live happier lives, cost-effectively and at scale? We conducted a randomised controlled trial of a scalable social-psychological intervention rooted in self-determination theory and aimed at raising the wellbeing and pro-sociality of the general adult population. The manualised course ("Exploring What Matters") is run by non-expert volunteers (laypeople) in their local communities and to date has been conducted in more than 26 countries around the world. We found that it has strong, positive causal effects on participants' subjective wellbeing and pro-sociality (compassion and social trust) while lowering measures of mental ill health. The impacts of the course are sustained for at least two months post-treatment. We compare treatment to other wellbeing interventions and discuss limitations and implications for intervention design, as well as implications for the use of wellbeing as an outcome for public policy more generally.
    Keywords: wellbeing, pro-social behaviour, communities, intervention, RCT
    JEL: C93 I12 I31
    Date: 2021–06
  11. By: Aronsson, Thomas (Department of Economics, Umeå University); Johansson-Stenman, Olof (School of Business, Economics and Law, University of Gothenburg, Sweden); Wendner, Ronald (Department of Economics, University of Graz, Austria)
    Abstract: This paper analyzes optimal taxation of charitable giving to a public good in a Mirrleesian framework with social comparisons. Leisure separability together with zero transaction costs of giving imply that charitable giving should be subsidized to such an extent that governmental contributions are completely crowded out, regardless of whether the government acknowledges warm glows of giving. Stronger concerns for relative charitable giving and larger transaction costs support lower marginal subsidies, whereas relative consumption concerns work in the other direction. A dual screening approach, where charitable giving constitutes an indicator of wealth, is also presents. Numerical simulations supplement the theoretical results.
    Keywords: Conspicuous consumption; conspicuous charitable giving; optimal taxation; public good provision; warm glow; multiple screening
    JEL: D03 D62 H21 H23
    Date: 2021–06–18
  12. By: Daron Acemoglu; Pascual Restrepo
    Abstract: We document that between 50% and 70% of changes in the US wage structure over the last four decades are accounted for by the relative wage declines of worker groups specialized in routine tasks in industries experiencing rapid automation. We develop a conceptual framework where tasks across a number of industries are allocated to different types of labor and capital. Automation technologies expand the set of tasks performed by capital, displacing certain worker groups from employment opportunities for which they have comparative advantage. This framework yields a simple equation linking wage changes of a demographic group to the task displacement it experiences. We report robust evidence in favor of this relationship and show that regression models incorporating task displacement explain much of the changes in education differentials between 1980 and 2016. Our task displacement variable captures the effects of automation technologies (and to a lesser degree offshoring) rather than those of rising market power, markups or deunionization, which themselves do not appear to play a major role in US wage inequality. We also propose a methodology for evaluating the full general equilibrium effects of task displacement (which include induced changes in industry composition and ripple effects as tasks are reallocated across different groups). Our quantitative evaluation based on this methodology explains how major changes in wage inequality can go hand-in-hand with modest productivity gains.
    JEL: J23 J31 O33
    Date: 2021–06
  13. By: Giuliano, Paola; Tabellini, Marco
    Abstract: We test the relationship between historical immigration to the United States and political ideology today. We hypothesize that European immigrants brought with them their preferences for the welfare state, and that this had a long-lasting effect on the political ideology of US born individuals. Our analysis proceeds in three steps. First, we document that the historical presence of European immigrants is associated with a more liberal political ideology and with stronger preferences for redistribution among US born individuals today. Next, we show that this correlation is not driven by the characteristics of the counties where immigrants settled or other speci c, socioeconomic immigrants' traits. Finally, we provide evidence that immigrants brought with them their preferences for the welfare state from their countries of origin. Consistent with the hypothesis that immigration left its footprint on American ideology via cultural transmission from immigrants to natives, we show that our results are stronger when inter-group contact between natives and immigrants, measured with either intermarriage or residential integration, was higher. Our fi ndings also indicate that immigrants influenced American political ideology during one of the largest episodes of redistribution in US history--the New Deal-- and that such effects persisted after the initial shock.
    Keywords: cultural transmission; Immigration; Political Ideology; Preferences for Redistribution
    JEL: D64 D72 H2 J15 N32 Z1
    Date: 2020–05
  14. By: Orazio Attanasio; Agnes Kovacs; Patrick Moran
    Abstract: We propose a rich model of household behavior to study the effect of two important policies: mortgage interest tax deduction and mandatory mortgage amortization. These policies have attracted some controversy, first because they are conceived to increase overall saving, an objective that the literature does not agree they can achieve, and second because they incentivize illiquid savings and may thus increase the share of ‘wealthy hand-to-mouth’ households. We build a life-cycle model where housing may act as a commitment device to counteract present biases arising from temptation. We show that the model matches several empirical facts, including the large share of wealthy hand-to-mouth households. We evaluate the effect of the two policies and find that they increase wealth accumulation by 7 and 10% respectively. Our results demonstrate that these policies not only induce portfolio re-balancing, as emphasized by the previous literature, but also increase savings by making commitment more accessible.
    JEL: D11 D14 D91 E21 R21
    Date: 2021–06
  15. By: Akerlof, Robert; Li, Hongyi; Yeo, Jonathan
    Abstract: This paper uses a laboratory experiment to study competitions for power-and the role of patronage in such competitions. We construct and analyze a new game-the "chicken-and-egg game"-in which chickens correspond to positions of power and eggs are the game's currency. We find that power tends to accumulate, through a "power begets power" dynamic, in the hands of "lords." Other subjects behave like their vassals in the sense that they take lords' handouts rather than compete against them. We observe substantial wealth inequality as well as power inequality. There are also striking gender differences in outcomes-particularly in rates of lordship. In a second treatment, where we eliminate patronage by knocking out the ability to transfer eggs, inequality is vastly reduced and the "power begets power" dynamic disappears.
    Keywords: gender differences; inequality; institutions; patronage; Power
    JEL: D02 D31 D72 J16 O10
    Date: 2020–05
  16. By: Hélène Benghalem (Université de Lausanne (UNIL)); Pierre Cahuc (Département d'économie); Pierre Villedieu (Département d'économie)
    Abstract: We ran a large randomized controlled experiment among about 150,000 recipients of unemployment benefits insurance in France in order to evaluate the impact of part-time unemployment benefits. We took advantage of the lack of knowledge of job seekers regarding this program and sent emails presenting the program. The information provision had a significant positive impact on the propensity to work while on claim, but reduced the unemployment exit rate, showing important lock-in effects into unemployment associated with part-time unemployment benefits. The importance of these lock-in effects implies that increasing the marginal tax rate on earnings from work while on claim in the neighborhood of its current level would not decrease labor supply and would decrease the expenditure net of taxes of the unemployment insurance agency.
    Keywords: Unemployment insurance; Part-time unemployment benefits; Lock-in effects; Unemployment duration
    JEL: H5 J64 J65
    Date: 2021–05

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