nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒10‒11
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Rethinking the Welfare State By Nezih Guner; Remzi Kaygusuz; Gustavo Ventura
  2. Is Marriage for White People? Incarceration, Unemployment, and the Racial Marriage Divide By Elisabeth M. Caucutt; Nezih Guner; Christopher Rauh
  3. Changes in the educational gradient of fertility not driven by changes in preferences By Daniel Ciganda; Angelo Lorenti; Lars Dommermuth
  4. Income Risk Inequality: Evidence from Spanish Administrative Records By Manuel Arellano; Stéphane Bonhomme; Micole De Vera; Laura Hospido; Siqi Wei
  5. Mortality Rates by College Degree Before and During COVID-19 By Anne Case; Angus Deaton

  1. By: Nezih Guner (CEMFI, Centro de Estudios Monetarios y Financieros); Remzi Kaygusuz (Sabancy University); Gustavo Ventura (Arizona State University)
    Abstract: The U.S. spends non trivially on non-medical transfers for its working-age population in a wide range of programs that support low and middle-income households. How valuable are these programs for U.S. households? Are there simpler, welfare-improving ways to transfer resources that are supported by a majority? What are the macroeconomic effects of such alternatives? We answer these questions in an equilibrium, life-cycle model with single and married households who face idiosyncratic productivity risk, in the presence of costly children and potential skill losses of females associated with non-participation. Our findings show that a potential revenue-neutral elimination of the welfare state generates large welfare losses in the aggregate. Yet, most households support eliminating current transfers since losses are concentrated among a small group. We find that a Universal Basic Income program does not improve upon the current system. If instead per-person transfers are implemented alongside a proportional tax, a Negative Income Tax experiment, there are transfer levels and associated tax rates that improve upon the current system. Providing per-person transfers to all households is quite costly, and reducing tax distortions helps to provide for additional resources to expand redistribution.
    Keywords: Taxes and transfers, household labor supply, income risk, negative income tax.
    JEL: E62 H24 H31
    Date: 2021–07
  2. By: Elisabeth M. Caucutt (University of Western Ontario); Nezih Guner (CEMFI, Centro de Estudios Monetarios y Financieros); Christopher Rauh (University of Cambridge)
    Abstract: The difference in marriage rates between black and white Americans is striking. Wilson (1987) suggests that a skewed sex ratio and higher rates of incarceration and unemployment are responsible for lower marriage rates among the black population. In this paper, we take a dynamic look at the Wilson Hypothesis. Incarceration rates and labor market prospects of black men make them riskier spouses than white men. We develop an equilibrium search model of marriage, divorce, and labor supply in which transitions between employment, unemployment, and prison differ by race, education, and gender. The model also allows for racial differences in how individuals value marriage and divorce. We estimate the model and investigate how much of the racial divide in marriage is due to the Wilson Hypothesis and how much is due to differences in preferences for marriage. We find that the Wilson Hypothesis accounts for more than three quarters of the model´s racial-marriage gap. This suggests policies that improve employment opportunities and/or reduce incarceration for black men could shrink the racial-marriage gap.
    Keywords: Marriage, race, incarceration, inequality, unemployment.
    JEL: J12 J J64
    Date: 2021–07
  3. By: Daniel Ciganda (Max Planck Institute for Demographic Research, Rostock, Germany); Angelo Lorenti (Max Planck Institute for Demographic Research, Rostock, Germany); Lars Dommermuth
    Abstract: Fertility levels have historically been negatively correlated with the amount of information and material resources available to individuals and families. The recent reversal of this trend has been interpreted as a fundamental change in preferences, a return to large families led by more educated individuals. Our analysis shows, however, that the recently documented changes in fertility can be reproduced in the context of declining family size preferences across educational levels, and without assuming any transformation of the underlying behavioral mechanisms that link resources and fertility across cohorts. We demonstrate this point by replicating the stylized facts reported in previous studies using a simulated dataset. We generate this dataset from a model that assumes continuity in the way education shapes reproductive intentions over time. In our simulated population, the reversal in the relationship between education and fertility emerges as a result of the transition from a natural to a regulated fertility regime, as the share of unplanned births decreases over time, and the mechanisms that positively connect educational attainment with \textit{desired} fertility become dominant. We conclude, thus, that the explanation for the weakening educational gradient of fertility lies primarily in the decline of unintended fertility, instead of in changes in fertility preferences.
    JEL: J1 Z0
    Date: 2021
  4. By: Manuel Arellano (CEMFI, Centro de Estudios Monetarios y Financieros); Stéphane Bonhomme (University of Chicago); Micole De Vera (CEMFI, Centro de Estudios Monetarios y Financieros); Laura Hospido (Banco de España); Siqi Wei (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: In this paper we use administrative data from the social security to study income dynamics and income risk inequality in Spain between 2005 and 2018. We construct individual measures of income risk as functions of past employment history, income, and demographics. Focusing on males, we document that income risk is highly unequal in Spain: more than half of the economy has close to perfect predictability of their income, while some face considerable uncertainty. Income risk is inversely related to income and age, and income risk inequality increases markedly in the recession. These findings are robust to a variety of specifications, including using neural networks for prediction and allowing for individual unobserved heterogeneity.
    Keywords: Spain, income dynamics, administrative data, income risk, inequality.
    JEL: D31 E24 E31 J31
    Date: 2021–09
  5. By: Anne Case; Angus Deaton
    Abstract: It is now established that mortality and excess mortality from COVID-19 differed across racial and ethnic groups in 2020. Less is known about educational differences in mortality during the pandemic. We examine mortality rates by BA status within sex, age, and race/ethnic groups comparing 2020 with 2019. Mortality rates have increasingly differed by BA status in the US in recent years and there are good reasons to expect the gap to have widened further during the pandemic. Using publicly available provisional data from the National Center for Health Statistics we find that mortality rates increased in 2020 over 2019 for those with and without a BA, irrespective of age, sex, or race/ethnicity. Although mortality rates increased by more for those without a BA, the ratio of mortality rates for those with and without a BA changed surprisingly little from 2019 to 2020. Among 60 groups (sex by race/ethnicity by age) that are available in the data, the ratio of mortality rates of those without a BA to those with a BA fell for more than half of the groups. Our results suggest that differences in the risk of infection were less important in structuring mortality by education than differences in the risk of death conditional on infection.
    JEL: I1 I21 I24 J1
    Date: 2021–10

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.