nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2022‒03‒14
eight papers chosen by
Maximo Rossi
Universidad de la República

  1. The Elusive Explanation for the Declining Labor Share By Gene M. Grossman; Ezra Oberfield
  2. Causality and Econometrics By Heckman, James J.; Pinto, Rodrigo
  3. Opportunity and Inequality across Generations By Koeniger, Winfried; Zanella, Carlo
  4. Differential Patterns between Private and Public Sector Wages in Spain By de León, Alba Couceiro; Dolado, Juan J.
  5. Productive Robots and Industrial Employment: The Role of National Innovation Systems By Kapetaniou, Chrystalla; Pissarides, Christopher A.
  6. Group Identity and Social Preferences (chapter X) By Marie Claire Villeval
  7. Estimating Monthly Poverty Rates in the United States By Zachary Parolin; Megan Curran; Jordan Matsudaira; Jane Waldfogel; Christoper Wimer
  8. Spatial Wage Curves for Formal and Informal Workers in Turkey By Baltagi, Badi H.; Baskaya, Yusuf Soner

  1. By: Gene M. Grossman (Princeton University and NBER); Ezra Oberfield (Princeton University and NBER)
    Abstract: A vast literature seeks to measure and explain the apparent decline in the labor share in national income that has occurred in recent times in the United States and elsewhere. The culprits include technological change, increased globalization and the rise of China, the enhanced exercise of market power by large firms in concentrated product markets, the decline in unionization rates and the erosion in the bargaining power of workers in labor markets, and the changing composition of the workforce due to a slowdown in population growth and a rise in educational attainment. We review this literature, with special emphasis on the pitfalls associated with using cross-sectional data to assess this phenomenon and the reasons why the body of papers collectively explains the phenomenon many times over.
    Keywords: labor share, national income
    JEL: E01
    Date: 2021–08
  2. By: Heckman, James J. (University of Chicago); Pinto, Rodrigo (University of California, Los Angeles)
    Abstract: This paper examines the econometric causal model for policy analysis developed by the seminal ideas of Ragnar Frisch and Trygve Haavelmo. We compare the econometric causal model with two popular causal frameworks: Neyman-Holland causal model and the do-calculus. The Neyman-Holland causal model is based on the language of potential outcomes and was largely developed by statisticians. The do-calculus, developed by Judea Pearl and co-authors, relies on Directed Acyclic Graphs (DAGs) and is a popular causal framework in computer science. We make the case that economists who uncritically use these approximating frameworks often discard the substantial benefits of the econometric causal model to the detriment of more informative economic policy analyses. We illustrate the versatility and capabilities of the econometric framework using causal models that are frequently studied by economists.
    Keywords: policy analysis, econometric models, causality, identification, causal calculus, directed acyclic graphs, simultaneous treatment effects
    JEL: C10 C18
    Date: 2022–02
  3. By: Koeniger, Winfried (University of St. Gallen); Zanella, Carlo (University of Zurich)
    Abstract: We analyze how intergenerational mobility and inequality would change relative to the status quo if dynasties had access to optimal insurance against low ability of future generations. Based on a dynamic, dynastic Mirrleesian model, we find that insurance against intergenerational ability risk increases in the social optimum relative to the status quo. This implies less intergenerational mobility in terms of welfare but no quantitatively significant change in earnings mobility. Earnings mobility is thus similar across economies with different incentives and welfare, illustrating that changes in earnings mobility cannot be interpreted readily in welfare terms without further analysis.
    Keywords: asymmetric information, intergenerational mobility, inequality, human capital, schooling, bequests
    JEL: E24 H21 I24 J24 J62
    Date: 2022–02
  4. By: de León, Alba Couceiro (Universidad Carlos III de Madrid); Dolado, Juan J. (Universidad Carlos III de Madrid)
    Abstract: This paper studies the wage differentials between the public and private sectors in Spain, as well as its distribution across different educational levels and by gender. To do so, the well-known Oaxaca-Blinder decomposition of mincerian wage regressions is applied for both sectors, breaking down the (public-private) wage gap into a component explained by differences in characteristics and another one capturing differences in returns to those characteristics. Data is drawn from the Wage Structure Survey by INE for 2010, 2014 and 2018. The main findings are: (i) strong wage compression by skills for all workers, and (ii) a female wage premium in the private sector. Both empirical results are rationalised by means of a monopoly-union wage model with monopsonistic features and female statistical discrimination.
    Keywords: public-private wage gap, private sector, public sector, monopsony, unions
    JEL: J31 J38 J42 J45
    Date: 2022–02
  5. By: Kapetaniou, Chrystalla (University of Southampton); Pissarides, Christopher A. (London School of Economics)
    Abstract: In a model with robots, and automatable and complementary human tasks, we examine robot-labour substitutions and show how it they are influenced by a country's "innovation system". Substitution depends on demand and production elasticities, and other factors influenced by the innovation system. Making use of World Economic Forum data we estimate the relationship for thirteen countries and find that countries with poor innovation capabilities substitute robots for workers much more than countries with richer innovation capabilities, which generally complement them. In transport equipment and non-manufacturing robots and workers are stronger substitutes than in other manufacturing.
    Keywords: robots-employment substitution, automatable tasks, complementary task creation, innovation environment, industrial allocations
    JEL: J23 L60 O33 O52
    Date: 2022–02
  6. By: Marie Claire Villeval (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Beyond a summary of the paper, this review of "Group Identity and Social Preferences" by Yan Chen and Sherry X. Li highlights its exceptional impact on our understanding of group-contingent social preferences. This paper has made an important theoretical contribution by introducing group identity in the Charness and Rabin (2002)'s model of social preferences. The core of the contribution is to show experimentally that social identity influences distributional preferences, reciprocity and welfare-maximizing behavior. In particular, charity increases and envy decreases when people are matched with an in-group compared to an out-group, and people are more likely to reward and less likely to punish an ingroup than an out-group match. This paper has also contributed to the methodological debates about the use of minimal group identity in laboratory experiments. It has inspired many research programs on the role of group-contingent preferences in various dimensions of decision-making in society. It is also important to emphasize its policy implications regarding how groupcontingent social preferences could be activated to improve efficiency and the quality of social interactions in our segmented societies. This research agenda is more relevant than ever.
    Date: 2021–08–27
  7. By: Zachary Parolin (Bocconi University, Columbia University); Megan Curran (Columbia University); Jordan Matsudaira (Teacher's College, Columbia University); Jane Waldfogel (Columbia University); Christoper Wimer (Columbia University)
    Abstract: Official poverty estimates for the United States are presented annually, based on a family unit’s annual resources, and reported with a considerable lag. This study introduces a framework to produce monthly estimates of the Supplemental Poverty Measure and official poverty measure, based on a family unit’s monthly income, and with a two-week lag. We argue that a shorter accounting period and more timely estimates of poverty better account for intra-year income volatility and better inform the public of current economic conditions. Our framework uses two versions of the Current Population Survey to estimate monthly poverty given observed changes in demographic and labor market characteristics. Validation tests demonstrate that our monthly estimates of poverty closely align with observed trends in the Survey of Income & Program Participation from 2004 to 2016 and trends in well-being during the COVID-19 pandemic. We apply the framework to measure trends in monthly poverty from January 1994 through September 2021. Monthly poverty rates generally declined in the 1990s, increased throughout the 2000s, and declined after the Great Recession through the onset of the COVID-19 pandemic. Within-year variation in monthly poverty rates, however, has generally increased. Among families with children, within-year variation in monthly poverty rates is comparable to between-year variation, largely due to the average family with children receiving 37 percent of its annual income transfers in a single month through onetime tax credit payments. Moving forward, researchers can apply our framework to produce monthly poverty rates whenever more timely estimates are desired.
    Keywords: poverty,social policy
    Date: 2021–11
  8. By: Baltagi, Badi H. (Syracuse University); Baskaya, Yusuf Soner (University of Glasgow)
    Abstract: This paper estimates spatial wage curves for formal and informal workers in Turkey using individual level data from the Turkish Household Labor Force Survey (THLFS) provided by TURKSTAT for the period 2008-2014. Unlike previous studies on wage curves for formal and informal workers, we extend the analysis to allow for spatial effects. We also consider household characteristics that would affect the selection into formal employment, informal employment, and non-employment. We find that the spatial wage curve relation holds both for formal and informal workers in Turkey for a variety of specifications. In general, the wages of informal workers are more sensitive to the unemployment rates of the same region and other regions than formal workers. We find that accounting for the selection into formal and informal employment affects the magnitudes but not the significance of the spatial wage curves for the formal and informal workers with the latter always being larger in absolute value than that for formal workers.
    Keywords: spatial wage curve, spatial weights, regional labor markets, informal labor markets
    JEL: C21 J30 J60
    Date: 2022–02

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