nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2022‒01‒03
nine papers chosen by
Maximo Rossi
Universidad de la República

  1. Income Inequality and Happiness: Which Inequalities Matter n China? By John Knight; Ramani Gunatilaka
  2. Take the Highway? Paved Roads and Well-Being in Africa By Djemaï, Elodie; Clark, Anrew E.; D'Ambrosio, Conchita
  3. Measuring “Good†and “Bad†Inequality: A Cautionary Tale. By Gordon John Anderson
  4. When the loved one passes - women's well-being in widowhood By Adena, Maja; Hamermesh, Daniel S.; Myck, Michał; Oczkowska, Monika
  5. Earnings Dynamics and Its Intergenerational Transmission: Evidence from Norway By Elin Halvorsen; Serdar Ozkan; Sergio Salgado
  6. Intrahousehold Resource Allocation and Individual Poverty: Assessing Collective Model Predictions against Direct Evidence on Sharing By Olivier Bargain; Guy Lacroix; Luca Tiberti
  7. Preferences and Equivalent Income in the UK By An Thu
  8. The importance of capital in closing the entrepreneurial gender gap: a longitudinal study of lottery wins By Sarah Flèche; Anthony Lepinteur; Nattavudh Powdthavee
  9. A Primer on Trade and Inequality By Dani Rodrik

  1. By: John Knight; Ramani Gunatilaka
    Abstract: The effect of inequality on happiness should intrigue social scientists. Of the many dimensions of income inequality, we explore four, analysing a rich data set for China. Does actual or perceived inequality have a greater effect on happiness? We find that perceptions of inequality are the more important. How broad is the reference group with which people compare themselves? They report that it is narrow; and indeed narrowly defined inequality has the greater effect on happiness. Do perceptions of the degree of fairness of inequality matter? They do, as they ameliorate the adverse effect of inequality on happiness, especially for the poorest. Is it self-centred or community-based inequality which affects happiness? Both measures have significant effects, but in opposite directions. The research and policy implications are discussed.
    Keywords: China; Happiness; Inequality; Reference group; Relative
    JEL: D03 D63 I31 Z13
    Date: 2021
  2. By: Djemaï, Elodie; Clark, Anrew E.; D'Ambrosio, Conchita
    Abstract: Public Goods aim to improve individual welfare. We investigate the causal consequences of roads on well-being in 24 African countries, instrumenting paved roads by 19th Century hypothetical lines between major ports and cities. We have data on over 32 000 individuals, and consider both their objective and subjective well-being. Roads reduce material deprivation, in terms of access to basic needs, but at the same time there is no relation between roads and subjective living conditions. The benefit of roads in providing basic needs then seems to be offset by worse outcomes in non basic-needs domains.
    Keywords: Roads, Subjective Well-being, Basic Needs, Material Deprivation, Africa
    Date: 2021–11
  3. By: Gordon John Anderson
    Abstract: While income inequality is generally thought to have a deleterious effect on societal wellbeing, some inequality, necessary for optimal resource allocation, is beneficial. Inequality as usually measured is an amalgam of both, but from both policy and well-being measurement perspectives, distinguishing between beneficial and less beneficial inequality typologies makes sense. Here the distinction is explored in considering the progress of personal incomes in 21st Century Canada. Using standard inequality measures, techniques for identifying and measuring “Good†and “Bad†inequality are proposed and applied in analysing Human Resource, Gender and Immigrant status-based income differences. Analysis categorising Human Resource-based differences as efficiency promoting “Good†inequalities and Gender and Immigrant status-based differences as discriminatory and “Bad†inequalities, reveals that under all proposed measures, whilst Overall and “Good†inequalities grew over the sample period, “Bad†inequality components diminished, emphasising the point that inequality measures need to be fit for purpose lest they be misleading.
    Keywords: Inequality Measurement
    JEL: C10 D31 D63
    Date: 2021–12–20
  4. By: Adena, Maja; Hamermesh, Daniel S.; Myck, Michał; Oczkowska, Monika
    Abstract: A partner's loss is a life-changing experience, and we need more evidence to understand the dynamics of its consequences better. We draw on numerous datasets to examine differences between widowed and partnered older women and to provide a comprehensive picture of well-being in widowhood. Most importantly, our analysis accounts for time use in widowhood, an aspect which has not been studied previously. Based on data from several European countries we trace the evolution of well-being of women who become widowed by comparing them with their matched non-widowed 'statistical twins.' We examine the role of an exceptionally broad set of potential moderators of widowhood's impact on well-being including how individuals spend their time. We confirm a dramatic decrease in mental health and life satisfaction after the loss of partner, followed by a slow recovery. An extensive set of controls recorded prior to widowhood, including detailed family ties and social networks, provides little help in explaining the deterioration in well-being. Unique data from time-diaries kept by older women from several European countries and the U.S. tell us why: the key factor behind widows' reduced well-being is increased time spent alone. This points towards potential areas of support and suggestions both for the widows' families and possibly for public policy. Reducing widows' time spent alone could result in major improvements in their quality of life.
    Keywords: widowhood,well-being,social networks,time use
    JEL: I31 I19 J14
    Date: 2021
  5. By: Elin Halvorsen; Serdar Ozkan; Sergio Salgado
    Abstract: Using administrative data from Norway, we first present stylized facts on labor earnings dynamics between 1993 and 2017 and its heterogeneity across narrow population groups. We then investigate the parents’ role in children’s income dynamics—the intergenerational transmission of income dynamics. We find that children of high-income, high-wealth fathers enjoy steeper income growth over the life cycle and face more volatile but more positively skewed income changes, suggesting that they are more likely to pursue high-return, high-risk careers. Children of poorer fathers also face more volatile incomes, but theirs grow more gradually and are more left skewed. Furthermore, the income dynamics of fathers and children are strongly correlated. In particular, children of fathers with steeper life-cycle income growth, more volatile incomes, or higher downside risk also have income streams of similar properties. We also confirm that fathers’ significant role in workers’ income dynamics is not simply spurious because of omitted variables, such as workers’ own permanent income. These findings shed new light on the determinants of intergenerational mobility.
    Keywords: earnings dynamics; top income inequality; heterogeneity; intergenerational mobility
    JEL: E24 J24 J31
    Date: 2021–12–16
  6. By: Olivier Bargain (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique, Larefi - Laboratoire d'analyse et de recherche en économie et finance internationales - Université Montesquieu - Bordeaux 4); Guy Lacroix; Luca Tiberti
    Date: 2021
  7. By: An Thu (Department of Economics, University of Sheffield, UK)
    Abstract: The use of multidimensional wellbeing has emerged from a shift of the main focus of policies from income to the consideration of other non-income dimensions. Using the ordered logit fixed effects modelling technique in a life satisfaction regression to estimate coefficients related to income and non-income life domains, the study has examined the computation of a preference- based single index measure of wellbeing called equivalent income. It is noted that one contribution from this study is that the analysis takes into account hedonic adaptation when computing of equivalent income. This aspect is new in the literature and none of the previous studies included adaptation in the estimation of equivalent income. The coefficients related to income and non-income life domains estimated from the life sat- isfaction regressions are used to calculate equivalent income at the individual level. The results confirm low degree of overlap between individuals with the lowest equivalent income and those worst-off identified by equivalised income and by life satisfaction. The estimated willingness to pay (WTP) for perfect health accounts for a large proportion of equivalised income, while WTP for being employed is quite low. In addition, the findings conclude that across wellbeing measures, women aged 40-50 with lower education, living with other people in an urban area, childless and do not own a home out- right are often identified as the worst-off. Regarding adaptation, the results confirm no adaptation to impairment after more than three years since onset.
    Keywords: Equivalent income, willingness-to-pay, subjective wellbeing, life satisfaction
    JEL: D63 I3 I31
    Date: 2021–11
  8. By: Sarah Flèche (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEP - LSE - Centre for Economic Performance - LSE - London School of Economics and Political Science); Anthony Lepinteur (University of Luxembourg [Luxembourg]); Nattavudh Powdthavee (WBS - Warwick Business School - University of Warwick [Coventry])
    Abstract: Can capital constraints explain why there are more male than female entrepreneurs in most societies? We study this issue by exploiting longitudinal data on lottery winners. Comparing between large to small winners, we find that an increase in lottery win in period t-1 significantly increases the likelihood of becoming self-employed in period t. This windfall effect is statistically the same in magnitude for men and women; a one percent increase in exogenous income increases the probability of female selfemployment by 0.6 percentage points, which is approximately 10% of the gender entrepreneurial gap. These results suggest that we can causally reduce the gender entrepreneurial gap by improving women's access to capital that might not be as readily available to the aspiring female entrepreneurs as it is to male entrepreneurs.
    Keywords: BHPS JEL codes: J16,lottery wins,self-employment,gender inequality,BHPS JEL Codes: J16,Gender inequality,J24,J21
    Date: 2021–04
  9. By: Dani Rodrik
    Abstract: In the public imagination globalization’s adverse effects have loomed large, contributing significantly to the backlash against the political mainstream and the rise of far-right populism. The literature on trade and inequality is in fact exceptionally rich, with important theoretical insights as well as extensive empirical findings that sheds light on this recent experience. Some of the key results of this literature, discussed here, are as follows: Redistribution is the flip side of the gains from trade, and it becomes larger relative to net gains from trade in the advanced stages of globalization. Compensation is difficult for both economic and political reasons. International trade often differs from other market exchanges, raising fairness concerns in ways that domestic markets do not. The economic benefits of deep integration are generally ambiguous. Dynamic or growth gains from trade are uncertain.
    JEL: F02 F16
    Date: 2021–11

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