nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒09‒27
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Homoploutia: Top Labor and Capital Incomes in the United States, 1950-2020 By Yonatan Berman; Branko Milanovic
  2. The Consequences of Chronic Pain in Mid-Life: Evidence from the National Child Development Survey By David G. Blanchflower; Alex Bryson
  3. A Second Chance? The Labor Market Outcomes of Reforming Access to Adult Education By Patrick Bennett; Richard Blundell; Kjell G. Salvanes
  4. The Rise of China’s Global Middle Class in International Perspective By Terry Sicular; Xiuna Yang; Bjorn Gustafsson
  5. Rising top-income persistence in Australia: evidence from income tax data By Hérault, Nicolas; Hyslop, Dean; Jenkins, Stephen P.; Wilkins, Roger
  6. Does Sports Make People Happier, or Do Happy People More Sports? By Bruno S. Frey; Anthony Gullo
  7. Fiscal Policy, Income Redistribution and Poverty Reduction in Argentina By Juan Cruz Lopez Del Valle; Caterina Brest López; Joaquín Campabadal; Julieta Ladronis; Nora Lustig; Valentina Martínez Pabón; Mariano Tommasi
  8. Harms of AI By Daron Acemoglu
  9. Short- and Medium-term Effects of Parental Separation on Children’s Well-being. Evidence from Uruguay By Marisa Bucheli; Andrea Vigorito

  1. By: Yonatan Berman; Branko Milanovic
    Abstract: Homoploutia describes the situation in which the same people (homo) are wealthy (ploutia) in the space of capital and labor income in some country. It can be quantified by the share of capital-income rich who are also labor-income rich. In this paper we combine several datasets covering different time periods to document the evolution of homoploutia in the United States from 1950 to 2020. We find that homoploutia was low after World War II, has increased by the early 1960s, and then decreased until the mid-1980s. Since 1985 it has been sharply increasing: In 1985, about 17% of adults in the top decile of capital-income earners were also in the top decile of labor-income earners. In 2018 this indicator was about 30%. This makes the traditional division to capitalists and laborers less relevant today. It makes periods characterized by high interpersonal inequality, high capital-income ratio and high capital share of income in the past fundamentally different from the current situation. High homoploutia has far-reaching implications for social mobility and equality of opportunity. We also study how homoploutia is related to total income inequality. We find that rising homoploutia accounts for about 20% of the increase in total income inequality in the United States since 1986.
    Date: 2020–12
  2. By: David G. Blanchflower (Bruce V. Rauner ’78 Professor of Economics, Dartmouth College, Hanover, NH 03755-3514. Adam Smith School of Business, University of Glasgow and NBER); Alex Bryson (Professor of Quantitative Social Science, UCL Social Research Institute, University College London, 20 Bedford Way, London WC1H 0AL)
    Abstract: Using data from all those born in a single week in 1958 in Britain we track the consequences of short pain and chronic pain in mid-life (age 44) on health, wellbeing and labor market outcomes in later life. We examine data taken at age 50 in 2008, when the Great Recession hit and then five years later at age 55 in 2013. We find those suffering both short-term and chronic pain at age 44 continue to report pain and poor general health in their 50s. However, the associations are much stronger for those with chronic pain. Furthermore, chronic pain at age 44 is associated with a range of poor mental health outcomes, pessimism about the future and joblessness at age 55 whereas short-duration pain at age 44 is not. Uniquely, we also show that pain experienced in childhood, at ages 11 and 16, reported by a parent and a teacher respectively, collected decades earlier, predicts pain in mid-life, indicating just how persistent pain can be over the life-course.
    Keywords: pain; mental health; general health; sleep; paid work; wellbeing; life-course; birth cohort; NCDS
    JEL: I12 I31
    Date: 2021–09–01
  3. By: Patrick Bennett; Richard Blundell; Kjell G. Salvanes
    Abstract: Developing effective tools to address prime-aged high school dropouts is a key policy question. We leverage high quality Norwegian register data to examine the labour market outcomes of expanding access to adult workers and exploit a large policy reform which greatly enabled access to high school education for adults. Our focus is on women and the results show a large and significant increase in education investments with a strong rise in the rate of college completion, leading to higher earnings, increased employment, and decreased fertility. They also point to an effective policy to reduce the gender earnings gap.
    Keywords: adult education, returns to education, fertility, gender inequality
    JEL: I26 I28 J13
    Date: 2021
  4. By: Terry Sicular; Xiuna Yang; Bjorn Gustafsson
    Abstract: Defining the ‘global middle class’ as being neither poor nor rich in the developed world, we estimate the size of the global middle class in China and 33 other countries and analyze China’s expanding middle class in international perspective. China’s global middle class has grown rapidly and has been catching up with that in developed countries. By 2018 China’s global middle class constituted 25 percent of China’s population; in absolute size it was nearly double the size of the global middle class in the US and similar in size to that in Europe. Cross-country analysis of the relationship between the middle-class population share versus GDP per capita reveals an inverted-U pattern. China is not an outlier from the cross-country pattern, but the speed with which its middle-class has expanded is unusual. The only other countries with similarly large, rapid expansions of the middle class are transition economies.
    JEL: D31 O15 O53 P3
    Date: 2021–07
  5. By: Hérault, Nicolas; Hyslop, Dean; Jenkins, Stephen P.; Wilkins, Roger
    Abstract: We use a new Australian longitudinal income tax dataset, Alife, covering 1991–2017, to examine levels and trends in the persistence in top-income group membership, focussing on the top 1%. We summarize persistence in multiple ways, documenting levels and trends in rates of remaining in top-income groups; re-entry to the top; the income changes associated with top-income transitions; and we also compare top-income persistence rates for annual and ‘permanent’ incomes. Regardless of the perspective taken, top-income persistence increased markedly over the period, with most of the increase occurring in the mid-2000s and early 2010s. In the mid- to late2010s, Australian top-income persistence rates appear to have been near the top of the range of tax-data estimates for other countries. Using univariate breakdowns and multivariate regression, we show that the rise in top-income persistence in Australia was experienced by many population subgroups.
    Keywords: top incomes; income mobility; top-income persistence
    JEL: D31 I31 C81
    Date: 2021–09
  6. By: Bruno S. Frey; Anthony Gullo
    Abstract: We contribute to the happiness literature by analyzing the causal relationship between sports and happiness. Using longitudinal data from the German Socio- Economic Panel (GSOEP), we find a positive correlation between sports participa- tion and reported life satisfaction. This relationship is stronger at younger and older ages than in middle age, and for people in bad health compared to those in average health. We further provide evidence for both causal directions. It turns out that the causal impact of engaging in sports on happiness is about four times higher than the effect of happiness on engaging in sports.
    Keywords: happiness; life satisfaction; well-being; sports; causality
    Date: 2021–09
  7. By: Juan Cruz Lopez Del Valle; Caterina Brest López; Joaquín Campabadal; Julieta Ladronis; Nora Lustig; Valentina Martínez Pabón; Mariano Tommasi
    Abstract: We implement a fiscal incidence analysis for Argentina with data from the 2017 national household survey. We find that Argentina’s fiscal system reduces inequality and poverty more than it is the case in many other comparable countries. This result is driven more by the size of the state (as measured by social spending to GDP) than by the progressivity of the fiscal system. While there are spending items that are quite progressive and even pro-poor, taxes are unequalizing and a number of subsidies benefit disproportionately the rich.
    Keywords: Fiscal policy, inequality, poverty, incidence, public economics
    JEL: E62 D6 H22 H23 I14 I24 I32
    Date: 2021–08
  8. By: Daron Acemoglu
    Abstract: This essay discusses several potential economic, political and social costs of the current path of AI technologies. I argue that if AI continues to be deployed along its current trajectory and remains unregulated, it may produce various social, economic and political harms. These include: damaging competition, consumer privacy and consumer choice; excessively automating work, fueling inequality, inefficiently pushing down wages, and failing to improve worker productivity; and damaging political discourse, democracy's most fundamental lifeblood. Although there is no conclusive evidence suggesting that these costs are imminent or substantial, it may be useful to understand them before they are fully realized and become harder or even impossible to reverse, precisely because of AI's promising and wide-reaching potential. I also suggest that these costs are not inherent to the nature of AI technologies, but are related to how they are being used and developed at the moment - to empower corporations and governments against workers and citizens. As a result, efforts to limit and reverse these costs may need to rely on regulation and policies to redirect AI research. Attempts to contain them just by promoting competition may be insufficient.
    JEL: J23 J31 L13 L40 O33 P16
    Date: 2021–09
  9. By: Marisa Bucheli (Universidad de la República (Uruguay). Facultad de Ciencias Sociales, Departamento de Economía.); Andrea Vigorito (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: There is limited quantitative research on the effect of parental union dissolution on children’s well-being in developing countries. Based on three waves of a longitudinal study that follows up a cohort of Uruguayan children from age 6 to 19, we study the short- and medium-term effects of parental separation on school attendance, grade repetition, completed years of schooling, socio-emotional status, time devoted to a wide set of activities, and labour force participation. We carry out a fixed effect estimation comparing children from married or cohabiting couples that remained together versus a similar group that split after 2004. We find evidence that union dissolution worsens child educational outcomes in the short and medium term. Meanwhile, at age 19, socio-emotional well-being, labour force participation and worked hours remain unchanged. Although effects by gender and timing of the divorce (childhood or adolescence) are similar in the short term, at age 19 girls’ educational outcomes are almost unaffected. We do not find robust differences related to child support payments and contact with co-resident fathers. We also explore a set of potential moderators, such as household income, maternal employment, access to durable goods and public transfers, which suggest that worsened educational outcomes are closely connected to post-separation economic hardship.
    Keywords: union dissolution; child support; education; socio-emotional well-being; Uruguay; panel data
    JEL: J12 J13 I30
    Date: 2021–07

This nep-ltv issue is ©2021 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.