nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2021‒12‒13
eleven papers chosen by
Maximo Rossi
Universidad de la República

  1. Rising Top-Income Persistence in Australia: Evidence from Income Tax Data By Herault, Nicolas; Hyslop, Dean; Jenkins, Stephen P.; Wilkins, Roger
  2. Redistributive Effect and the Progressivity of Taxes and Benefits: Evidence for the UK, 1977–2018 By Jenkins, Stephen P.; Herault, Nicolas
  3. The Intergenerational Transmission of Cognitive Skills: An Investigation of the Causal Impact of Families on Student Outcomes By Hanushek, Eric A.; Jacobs, Babs; Schwerdt, Guido; Van der Velden, Rolf; Vermeulen, Stan; Wiederhold, Simon
  4. Some Welfare Economics of Working Time By FitzRoy, Felix; Jin, Jim
  5. Television, Health, and Happiness: A Natural Experiment in West Germany By Chadi, Adrian; Hoffmann, Manuel
  6. Association between Parents' Nativity Status and Influenza Vaccination Rates among Children By Yasenov, Vasil; Hotard, Michael; Lawrence, Duncan; Hainmueller, Jens
  7. Understanding the Rise in Life Expectancy Inequality By Dahl, Gordon B.; Kreiner, Claus Thustrup; Nielsen, Torben Heien; Serena, Benjamin Ly
  8. Artificial Intelligence, Growth and Employment: The Role of Policy By Philippe Aghion; Céline Antonin; Simon Bunel
  9. Intergenerational Mobility Trends and the Changing Role of Female Labor By Ulrika Ahrsjö; René Karadakic; Joachim Kahr Rasmussen
  10. A decomposition method to evaluate the ‘paradox of progress’ with evidence for Argentina By Javier Alejo; Leonardo Gasparini; Gabriel Montes-Rojas; Walter Sosa-Escudero
  11. The Gender Gap in Earnings Losses after Job Displacement By Illing, Hannah; Schmieder, Johannes F.; Trenkle, Simon

  1. By: Herault, Nicolas (Melbourne Institute of Applied Economic and Social Research); Hyslop, Dean (Motu Economic and Public Policy Research Trust); Jenkins, Stephen P. (London School of Economics); Wilkins, Roger (Melbourne Institute of Applied Economic and Social Research)
    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 late-2010s, 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
  2. By: Jenkins, Stephen P. (London School of Economics); Herault, Nicolas (Melbourne Institute of Applied Economic and Social Research)
    Abstract: We apply the Kakwani approach to decomposing redistributive effect into average rate, progressivity, and reranking components using yearly UK data covering 1977-2018. We examine cash and in-kind benefits, and direct and indirect taxes. In addition, we highlight an empirical implementation issue – the definition of the reference ('pre-fisc') distribution. Drawing on an innovative counterfactual approach, our empirical analysis shows that trends in the redistributive effect of cash benefits are largely associated with cyclical changes in average benefit rates. In contrast, trends in the redistributive effects of direct and indirect taxes are mostly associated with changes in progressivity. For in-kind benefits, changes in the average benefit rate and progressivity each played the major roles at different times.
    Keywords: Kakwani decomposition, inequality, redistributive effect, progressivity, reranking, benefits, taxes
    JEL: D31 H24 H50 I38
    Date: 2021–10
  3. By: Hanushek, Eric A. (Stanford University); Jacobs, Babs (Maastricht University); Schwerdt, Guido (University of Konstanz); Van der Velden, Rolf (ROA, Maastricht University); Vermeulen, Stan (Maastricht University); Wiederhold, Simon (Ifo Institute for Economic Research)
    Abstract: The extensive literature on intergenerational mobility highlights the importance of family linkages but fails to provide credible evidence about the underlying family factors that drive the pervasive correlations. We employ a unique combination of Dutch survey and registry data that links math and language skills across generations. We identify a causal connection between cognitive skills of parents and their children by exploiting within-family between-subject variation in these skills. The data also permit novel IV estimation that isolates variation in parental cognitive skills due to school and peer quality. The between-subject and IV estimates of the key intergenerational persistence parameter are strikingly similar and close at about 0.1. Finally, we show the strong influence of family skill transmission on children's choices of STEM fields.
    Keywords: intergenerational mobility, parent-child skill transmission, causality, STEM
    JEL: I24 I26 J12 J24 J62
    Date: 2021–11
  4. By: FitzRoy, Felix (University of St. Andrews); Jin, Jim (University of St. Andrews)
    Abstract: Few skilled workers in the UK have flexible working time – GPs are the exception – most can only choose between unemployment, or full-time work, which has changed little in recent years, while part time work is mainly unskilled. This market rigidity imposes major welfare losses, in contrast to flexibility of worktime for all in the Netherlands, which has the best work-life balance. Stagnating real wages and rising employer market power and inequality follow declining unionisation, but a standard four-day week, tax reform, basic income, and flexibility rights for all could reverse these trends and provide major welfare gains.
    Keywords: working hours, relative income, labour share, basic income
    JEL: D63 J22 H23
    Date: 2021–10
  5. By: Chadi, Adrian (University of Konstanz); Hoffmann, Manuel (Texas A&M University)
    Abstract: Watching television is the most time-consuming human activity besides work but its role for individual well-being is unclear. Negative consequences portrayed in the literature raise the question whether this popular pastime constitutes an economic good or bad, and hence serves as a prime example of irrational behavior reducing individual health and happiness. Using rich panel data, we are the first to comprehensively address this question by exploiting a large-scale natural experiment in West Germany, where people in geographically restricted areas received commercial TV via terrestrial frequencies. Contrary to previous research, we find no health impact when TV consumption increases. For life satisfaction, we even find positive effects. Additional analyses support the notion that TV is not an economic bad and that non-experimental evidence seems to be driven by negative self-selection.
    Keywords: health, happiness, well-being, natural experiment, television consumption, time-use, entertainment, CSPT, ArcGIS, mass media
    JEL: C26 D12 I31 H12 J22 L82
    Date: 2021–09
  6. By: Yasenov, Vasil (Stanford University); Hotard, Michael (Stanford University); Lawrence, Duncan (Stanford University); Hainmueller, Jens (Stanford University)
    Abstract: Previous research has documented lower vaccination rates among ethnic and racial minorities as well as foreign-born people, thus raising concerns about health inequities during pandemics. We analyzed influenza vaccination rates among children with US-born parents and those with at least one immigrant parent. We found that children with immigrant parents have higher odds of receiving the influenza vaccination even after controlling for socio-demographic characteristics.
    Keywords: influenza vaccine, immigration, mixed-status families
    JEL: I12 I14 I18
    Date: 2021–09
  7. By: Dahl, Gordon B. (University of California, San Diego); Kreiner, Claus Thustrup (University of Copenhagen); Nielsen, Torben Heien (University of Copenhagen); Serena, Benjamin Ly (University of Copenhagen)
    Abstract: We provide a novel decomposition of changing gaps in life expectancy between rich and poor into differential changes in age-specific mortality rates and differences in "survivability". Declining age-specific mortality rates increases life expectancy, but the gain is small if the likelihood of living to this age is small (ex ante survivability) or if the expected remaining lifetime is short (ex post survivability). Lower survivability of the poor explains between one-third and one-half of the recent rise in life expectancy inequality in the US and the entire change in Denmark. Our analysis shows that the recent widening of mortality rates between rich and poor due to lifestyle-related diseases does not explain much of the rise in life expectancy inequality. Rather, the dramatic 50% reduction in cardiovascular deaths, which benefited both rich and poor, made initial differences in lifestyle-related mortality more consequential via survivability.
    Keywords: mortality, life expectancy, inequality
    JEL: I14 J10
    Date: 2021–09
  8. By: Philippe Aghion (Harvard University [Cambridge]); Céline Antonin (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po); Simon Bunel
    Abstract: In this survey paper, we argue that the effects of artificial intelligence (AI) and automation on growth and employment depend to a large extent on institutions and policies. We develop a two‑fold analysis. In a first section, we survey the most recent literature to show that AI can spur growth by replacing labor by capital, both in the production of goods and services and in the production of ideas. Yet, we argue that AI may inhibit growth if combined with inappropriate competition policy. In a second section, we discuss the effect of robotization on employment in France over the 1994‑2014 period. Based on our empirical analysis on French data, we first show that robotization reduces aggregate employment at the employment zone level, and second that non‑educated workers are more negatively affected by robotization than educated workers. This finding suggests that inappropriate labor market and education policies reduce the positive impact that AI and automation could have on employment.
    Keywords: Artificial intelligence,Growth,Automation,Robots,Employment
    Date: 2019–12–18
  9. By: Ulrika Ahrsjö (Department of Economics, Stockholm University); René Karadakic (Department of Economics, Norwegian School of Economics); Joachim Kahr Rasmussen (Department of Economics, University of Copenhagen)
    Abstract: We present new evidence on the existence and drivers of trends in intergenerational income mobility using administrative income data from Scandinavia along with survey data from the United States. Harmonizing the data from Sweden, Denmark and Norway, we first find that intergenerational rank associations in income have increased uniformly across Scandinavia for cohorts of children born between 1951 and 1979. These trends are robust to a large set of empirical specifications that are common in the associated literature. However, splitting the trends by gender, we find that father-son mobility has been stable in all three countries, while correlations involving females display substantial trends. Similar patterns are confirmed in the US data, albeit with slightly different timing. Utilizing information about individual occupation, education and income in the Scandinavian data, we find that intergenerational mobility in latent economic status has remained relatively constant for all gender combinations. This suggests that a gradual reduction in gender-specific labor market segregation, increased female labor force participation and increased female access to higher education has strengthened the signal value that maternal income carries about productivity passed on to children. Based on these results, we argue that the observed decline in intergenerational mobility in Scandinavia is consistent with a socially desirable development where female skills are increasingly valued at the labor market, and that the same is likely to be true also in the US.
    Keywords: Intergenerational Mobility, Labor Force Participation
    JEL: J62 J21
    Date: 2021–11–29
  10. By: Javier Alejo (IECON-Universidad de la Rep´ublica); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET); Gabriel Montes-Rojas (UBA & CONICET); Walter Sosa-Escudero (UdeSA & CONICET)
    Abstract: The ‘paradox of progress’ is an empirical regularity that associates more education with larger income inequality. Two driving and competing factors behind this phenomenon are the convexity of the ‘Mincer equation’ (that links wages and education) and the heterogeneity in its returns, as captured by quantile regressions. We propose a joint least-squares and quantile regression statistical framework to derive a decomposition in order to evaluate the relative contribution of each explanation. The estimators are based on the ‘functional derivative’ approach. We apply the proposed decomposition strategy to the case of Argentina 1992 to 2015.
    JEL: J31 C21 I24 J46 O54
    Date: 2022–01
  11. By: Illing, Hannah (University of Bonn); Schmieder, Johannes F. (Boston University); Trenkle, Simon (IZA)
    Abstract: Existing research has shown that job displacement leads to large and persistent earnings losses for men, but evidence for women is scarce. Using administrative data from Germany, we apply an event study design in combination with propensity score matching and a reweighting technique to directly compare men and women who are displaced from similar jobs and firms. Our results show that after a mass layoff, women's earnings losses are about 35% higher than men's, with the gap persisting five years after job displacement. This is partly explained by a higher propensity of women to take up part-time or marginal employment following job loss, but even full-time wage losses are almost 50% (or 5 percentage points) higher for women than for men. We then show that on the household level there is no evidence of an added worker effect, independent of the gender of the job loser. Finally, we document that parenthood magnifies the gender gap sharply: while fathers of young children have smaller earnings losses than men in general, mothers of young children have much larger earnings losses than other women.
    Keywords: household structure, labor supply, gender pay gap, job-loss
    JEL: J63 J22 J23 J16
    Date: 2021–09

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