nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒11‒01
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. COVID-19, Lockdowns and Well-Being: Evidence from Google Trends By Abel Brodeur; Andrew E. Clark; Sarah Flèche; Nattavudh Powdthavee
  2. It All Starts with Beliefs: Addressing the Roots of Educational Inequities by Changing Parental Beliefs By John List; Julie Pernaudet; Dana Suskind
  3. Fleshing Out the Olive? On Income Polarization in China By Martin Ravallion; Shaohua Chen
  4. The Economics of Walking About and Predicting US Downturns By David G. Blanchflower; Alex Bryson
  5. The Impact of Victimisation on Subjective Well-Being By Matthew Shannon
  6. Perceptions and Preferences for Redistribution By Stefanie Stantcheva
  7. The redistributive effects of enfranchising non-citizens. Evidence from Sweden By Iñigo Iturbe-Ormaetxe; Santiago Sanchez-Pages; Angel Solano-Garcia
  8. The Lock-In Effects of Part-Time Unemployment Benefits By Hélène Benghalem; Pierre Cahuc; Pierre Villedieu
  9. Inflation, Interest, and the Secular Rise in Wealth Inequality in the U.S.: Is the Fed Responsible? By Edward N. Wolff

  1. By: Abel Brodeur (University of Ottawa [Ottawa], IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics); Andrew E. 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, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics); Sarah Flèche (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université); Nattavudh Powdthavee (University of Warwick [Coventry])
    Abstract: The COVID-19 pandemic has led many governments to implement lockdowns. While lockdowns may help to contain the spread of the virus, they may result in substantial damage to population well-being. We use Google Trends data to test whether the lockdowns implemented in Europe and America led to changes in well-being related topic search terms. Using differences-in-differences and a regression discontinuity design to evaluate the causal effects of lockdown, we find a substantial increase in the search intensity for boredom in Europe and the US. We also found a significant increase in searches for loneliness, worry and sadness, while searches for stress, suicide and divorce on the contrary fell. Our results suggest that people's mental health may have been severely affected by the lockdown.
    Keywords: Loneliness,Well-being,Lockdown,COVID-19,Boredom
    Date: 2021–01
  2. By: John List; Julie Pernaudet; Dana Suskind
    Abstract: Socioeconomic inequalities in child development crystallize at early stages, with associated disparities in parental investment in children. A key to understanding the data patterns is to document the sources underlying the observed inequalities. We first show that there are dramatic differences in parental beliefs across socioeconomic backgrounds (SES), with parents of higher SES being more likely to believe that parental investments impact child development. We then use two field experiments targeted to low-SES families to explore the mutability of such beliefs and their link to parental investments. In both cases, we find that parental beliefs about child development are malleable. The less intensive version of the program based on educational videos changes parental beliefs, but fails to lastingly increase parental investments and child outcomes. By contrast, in the more intensive version of our program combining home visits and feedback, the augmented beliefs are associated with enriched parent-child interactions and improved vocabulary, math, and social-emotional skills for the children. Together, these results suggest that changing parental beliefs can be an important pathway to raising parental investments and reducing socioeconomic gaps in children's skills, but that simple informational policies may not be sufficient.
    Date: 2021
  3. By: Martin Ravallion; Shaohua Chen
    Abstract: In a rare example of an explicit national goal for income distribution besides reducing poverty, China’s leadership has recently committed to expanding the middle-income share—moving to a less polarized “olive-shaped” distribution. Recognizing the potential trade-offs, the paper asks whether China’s experience indicates that income-polarization was a by-product of past economic progress, including poverty reduction. The paper does not find robust time-series evidence of polarizing effects alongside either economic growth or population urbanization (including among those below the national median). There was strong co-movement between polarization and inequality. Larger urban-rural gaps in mean incomes are strongly polarizing in China.
    JEL: I32 O15
    Date: 2021–10
  4. By: David G. Blanchflower; Alex Bryson
    Abstract: Economic shocks are notoriously difficult to predict but recent research suggests qualitative metrics about economic actors’ expectations are predictive of downturns. We show consumer expectations indices from both the Conference Board and the University of Michigan predict economic downturns up to 18 months in advance in the United States, both at national and at state-level. All the recessions since the 1980s have been predicted by at least 10 and sometimes many more point drops in these expectations indices. A single monthly rise of at least 0.3 percentage points in the unemployment rate also predicts recession, as does two consecutive months of employment rate declines. The economic situation in 2021 is exceptional, however, since unprecedented direct government intervention in the labor market through furlough-type arrangements has enabled employment rates to recover quickly from the huge downturn in 2020. However, downward movements in consumer expectations in the last six months suggest the economy in the United States is entering recession now (Autumn 2021) even though employment and wage growth figures suggest otherwise.
    JEL: E17 J01
    Date: 2021–10
  5. By: Matthew Shannon
    Abstract: This paper uses the UK Household Longitudinal Study to explore the relationship between victimisation and several measures of subjective well-being. Using person fixed effects models, I find that being attacked or insulted both significantly reduce well-being at the mean, with no significant differences between men and women in the effect size. Next, using unconditional quantile regression with fixed effects models, I identify the highly heterogeneous effects of victimisation along the unconditional well-being distribution. The effect of victimisation on subjective wellbeing is monotonically decreasing, with those at ‘worse’ quantiles of the well-being distribution experiencing the largest falls in well-being, and those at the ‘better’ quantiles of the distribution experiencing the smallest falls.
    Keywords: Victimisation; Subjective well-being
    JEL: I31 J00 J17 C21
    Date: 2021–09
  6. By: Stefanie Stantcheva
    Abstract: The relationship between the degree of inequality and the demand for redistribution has been a central question in political science and political economy. The famous median-voter model predicts that higher inequality, reflected in a growing gap between the income of the average and the median voter, should lead to increased demand for redistribution, as policymakers cater to the median voter’s preferences (Meltzer and Richard, 1981). Yet, using data from OECD countries, Kenworthy and McCall (2008) show that, despite increases in inequality in those countries, there was no corresponding increase in demand for redistribution. Part of the explanation of this puzzle lies in the realization that it is not only (or even mainly) reality, but perceptions that shape support for policy. This article will explore recent evidence using large-scale social economics surveys and experiments that sheds lights on beliefs about inequality, social mobility, diversity and immigration, social position, and understanding of how policies work.
    JEL: H1 H2 P16
    Date: 2021–10
  7. By: Iñigo Iturbe-Ormaetxe (: Departamento de Fundamentos del An·lisis EconÛmico (FAE), Universidad de Alicante.); Santiago Sanchez-Pages (King's College London.); Angel Solano-Garcia (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: We study theoretically and empirically the redistributive effects of extending voting rights to non-citizens. Our model predicts a tax increase when newly enfranchised voters represent a sufficiently large fraction of voters. We study the 1975 Swedish electoral reform that extended voting rights to non-citizens in municipal elections. In the first term after the reform, there was a tax increase that was not repeated in subsequent terms. This increase was stronger the greater the foreign population in the municipality. This effect was concentrated in municipalities where the size of the non-citizen population was large enough to upturn the previous electoral outcome.
    Keywords: : Immigration, Conflict, Income redistribution, Inequality, enfranchisement.
    JEL: D72 D74 F22
    Date: 2021–10–20
  8. By: Hélène Benghalem (UNIL - Université de Lausanne); Pierre Cahuc (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Pierre Villedieu (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    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
    Date: 2021–05–01
  9. By: Edward N. Wolff
    Abstract: Two hallmarks of U.S. monetary policy since the 1981-1982 recession have been declining interest rates and moderation in inflation. Coincident with these trends has been a surge in U.S. wealth inequality, with the Gini coefficient up by 0.070 between 1983 and 2019. This paper analyzes the connection between these two developments on the basis of the Survey of Consumer Finances. Contrary to expectations, the paper finds that these two monetary effects have reduced wealth inequality rather than increasing it. The effect is sizeable, with the Gini coefficient declining by 0.045 over these years. Asset price changes and debt devaluation accounted for 72.6 percent of the advance of mean wealth over 1983-2019. They also would have led to a 204.9 percent gain in median wealth, compared to the actual rise of 23.4 percent. Moreover, they have helped lower the racial wealth gap rather than enlarging it. These results are at odds with previous literature in which estimates range from a weak negative effect on inequality to neutral, small positive, and strong positive. In terms of methodology, this paper differs from previous work by focusing on only the direct effects of interest rate changes and inflation on the household balance sheet.
    JEL: D31 H31 J15
    Date: 2021–10

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