nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2022‒01‒10
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Effect of Health Insurance in India: A Randomized Controlled Trial By Anup Malani; Phoebe Holtzman; Kosuke Imai; Cynthia Kinnan; Morgen Miller; Shailender Swaminathan; Alessandra Voena; Bartosz Woda; Gabriella Conti
  2. Privilege and Hindrance on the U.S. Earnings Distribution by Gender and Race/Ethnicity: The Role of Occupations in an Intersectional Framework with 12 Groups By Olga Alonso-Villar; Coral del Río
  3. How much should we trust estimates of firm effcts and worker sorting? By Bonhomme, Stéphane; Holzheu, Kerstin; Lamadon, Thibaut; Manresa, Elena; Mogstad, Magne; Setzler, Bradley
  4. Productivity and Pay in the US and Canada By Jacob Greenspon; Anna M. Stansbury; Lawrence H. Summers

  1. By: Anup Malani (University of Chicago); Phoebe Holtzman; Kosuke Imai (Harvard University); Cynthia Kinnan (Tufts University); Morgen Miller (University of Chicago); Shailender Swaminathan (Sai University); Alessandra Voena (The University of Chicago); Bartosz Woda (University of Chicago); Gabriella Conti (University College London)
    Abstract: We report on a large randomized controlled trial of hospital insurance for above-poverty-line Indian households. Households were assigned to free insurance, sale of insurance, sale plus cash transfer, or control. To estimate spillovers, the fraction of households offered insurance varied across villages. The opportunity to purchase insurance led to 59.91% uptake and access to free insurance to 78.71% uptake. Access increased insurance utilization. Positive spillover effects on utilization suggest learning from peers. Many beneficiaries were unable to use insurance, demonstrating hurdles to expanding access via insurance. Across a range of health measures, we estimate no significant impacts on health.
    Keywords: randomized control trials, hospital insurance, India, peer effects, Spillover effects
    JEL: I13 C93 I14
    Date: 2021–12
  2. By: Olga Alonso-Villar; Coral del Río
    Abstract: If gender and race/ethnicity did not privilege some groups and harm others in the labor market, one would expect that groups that do not differ in terms of human capital, geographic location, and other basic characteristics would earn wages around average. However, our counterfactual analysis shows substantial disparities among our 12 gender–race/ethnicity groups. All female groups, except Asians, have conditional wages well below average, especially, Native American, Black, and Hispanic women. Moreover, all female groups have conditional wages below those of any male group (except Asian women, who rank above Black men). Male advantage seems to be concentrated in two races, Asians and Whites; the other male groups have conditional wages either below average (Black men) or around average (Hispanic, Native American, and “other race” men). Our intersectional framework allows delving deeper into the gender and race penalties. White women’s gender penalty is much larger than the racial penalty of any male (or female) group. Similarly, Asian women’ gender penalty is larger than the racial penalty of any male group except for Blacks. Distinguishing among more than 400 occupational categories, we find that underpayment within occupations harms especially Native American women whereas occupational sorting strongly impacts Black women (even after including controls). Black men’s occupational sorting also harms them after controlling for characteristics, a finding that we do not see in any other male group.
    Keywords: Earnings, Occupations, Gender, Race, Ethnicity, Intersectionality
    JEL: D63 J15 J16 J71
    Date: 2021–10
  3. By: Bonhomme, Stéphane (University of Chicago); Holzheu, Kerstin (Sciences Po); Lamadon, Thibaut (University of Chicago); Manresa, Elena (New York University); Mogstad, Magne (IFAU - Institute for Evaluation of Labour Market and Education Policy); Setzler, Bradley (University of Chicago)
    Abstract: Many studies use matched employer-employee data to estimate a statistical model of earnings determination where log-earnings are expressed as the sum of worker effects, firm effects, covariates, and idiosyncratic error terms. Estimates based on this model have produced two influential yet controversial conclusions. First, firm effects typically explain around 20% of the variance of log-earnings, pointing to the importance of firm-specific wage-setting for earnings inequality. Second, the correlation between firm and worker effects is often small and sometimes negative, indicating little if any sorting of high-wage workers to high-paying firms. The objective of this paper is to assess the sensitivity of these conclusions to the biases that arise because of limited mobility of workers across firms. We use employer-employee data from the US and several European countries while taking advantage of both fixed-effects and random-effects methods for bias-correction. We find that limited mobility bias is severe and that bias-correction is important. Once one corrects for limited mobility bias, firm effects dispersion matters less for earnings inequality and worker sorting becomes always positive and typically strong.
    Keywords: earnings inequality; firm effects; worker sorting; bias correction; fixed effects; random effects; matched employer employee data
    JEL: C23 J31 J62
    Date: 2021–12–17
  4. By: Jacob Greenspon; Anna M. Stansbury; Lawrence H. Summers
    Abstract: We study the productivity-pay relationship in the United States and Canada along two dimensions. The first is divergence: the degree to which the levels of productivity and pay have diverged. The second is delinkage: the degree to which incremental increases in the rate of productivity growth translate into incremental increases in the rate of growth of pay, holding all else equal. We show that in both countries the pay of typical workers has diverged substantially from average labor productivity over recent decades, driven by both rising labor income inequality and a declining labor share of income. Even as the levels of productivity and pay have grown further apart, we find evidence for some linkage between productivity and pay in both countries: a one percentage point increase in the rate of productivity growth is associated with a positive increase in the rate of pay growth, holding all else equal. This linkage appears stronger in the US than in Canada. Overall, our findings lead us to tentatively conclude that policies or trends which lead to incremental increases in productivity growth, particularly in large relatively closed economies like the USA, will tend to raise middle class incomes. At the same time, other factors orthogonal to productivity growth have been driving productivity and typical pay further apart, emphasizing that much of the evolution in middle class living standards will depend on measures bearing on relative incomes.
    JEL: E24 J24 J3
    Date: 2021–12

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