nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2022‒03‒21
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Kind or contented? An investigation of the gift exchange hypothesis in a natural field experiment in Colombia By Bogliacino, Francesco; Grimalda, Gianluca; Pipke, David
  2. The Great Gatsby Curve By Steven N. Durlauf; Andros Kourtellos; Chih Ming Tan
  3. Do Family Policies Reduce Gender Inequality? Evidence from 60 Years of Policy Experimentation By Henrik Kleven; Camille Landais; Johanna Posch; Andreas Steinhauer; Josef Zweimüller
  4. Are Fairness Perceptions Shaped by Income Inequality? Evidence from Latin America By Leonardo Gasparini; Germ\'an Reyes
  5. Reconciling Trends in U.S. Male Earnings Volatility: Results from Survey and Administrative Data By Robert A. Moffitt; John M. Abowd; Christopher R. Bollinger; Michael D. Carr; Charles M. Hokayem; Kevin L. McKinney; Emily E. Wiemers; Sisi Zhang; James P. Ziliak
  6. Intergenerational Mobility By Neil A. Cholli; Steven N. Durlauf
  7. How Tight are U.S. Labor Markets? By Alex Domash; Lawrence H. Summers

  1. By: Bogliacino, Francesco (Universidad Nacional de Colombia); Grimalda, Gianluca; Pipke, David
    Abstract: The gift exchange hypothesis postulates that workers reciprocate above market-clearing wages with above-minimum effort. This hypothesis has received inconclusive support in dyadic employer-worker relationships. We present a field-experimental test to assess this hypothesis in the context of a triadic relationship in which only one out of two workers receives a pay increase. We conjecture that inequality aversion motivations may thwart positive reciprocity motivations and analyze the interaction between such motivations theoretically. Across different treatments, the pay increase is assigned to the more productive worker in the initial work session, to the needier worker, or arbitrarily. Two additional conditions in which either none or both workers receive a bonus serve as benchmarks. We find that pay increases lead to decreased productivity. Such a decrease is most sizable in the condition where both workers receive the bonus. A post-diction of this result is that workers interpret the monetary bonus as a signal of the employer’s contentment with their effort, making them feel entitled to reduce their effort. In other treatments, receiving the pay increase while the coworker does not receive a pay increase positively affects productivity, primarily when the pay increase is due to relative productivity. This result is consistent with status-seeking preferences rather than aversion against advantageous inequality. Conversely, not receiving the pay increase while the coworker does, leads to lower productivity, primarily when the pay increase is assigned based on relative needs.
    Date: 2021–11–10
  2. By: Steven N. Durlauf; Andros Kourtellos; Chih Ming Tan
    Abstract: This paper provides a synthesis of theoretical and empirical work on the Great Gatsby Curve, the positive empirical relationship between cross-section income inequality and persistence of income across generations. We present statistical models of income dynamics that mechanically give rise to the relationship between inequality and mobility. Five distinct classes of theories, including models on family investments, skills, social influences, political economy, and aspirations are developed, each providing a behavioral mechanism to explain the relationship. Finally, we review empirical studies that provide evidence of the curve for a range of contexts and socioeconomic outcomes as well as explore evidence on mechanisms.
    JEL: D3 H0 J0 R0
    Date: 2022–02
  3. By: Henrik Kleven (Princeton University); Camille Landais (London School of Economics); Johanna Posch (Analysis Group); Andreas Steinhauer (University of Edinburgh); Josef Zweimüller (University of Zurich)
    Abstract: Do family policies reduce gender inequality in the labor market? We contribute to this debate by investigating the joint impact of parental leave and child care, using administrative data covering the labor market and birth histories of Austrian workers over more than half a century. We start by quasi-experimentally identifying the causal effects of all family policy reforms since the 1950s on the full dynamics of male and female earnings. We then map these causal estimates into a decomposition framework building on Kleven, Landais and Søgaard (2019) to compute counterfactual gender inequality series. Our results show that the enormous expansions of parental leave and child care subsidies have had virtually no impact on gender convergence.
    Keywords: Family, Gender Inequality, Austria
    JEL: J13
    Date: 2021–01
  4. By: Leonardo Gasparini; Germ\'an Reyes
    Abstract: A common assumption in the literature is that the actual level of income inequality shapes individuals' beliefs about whether the income distribution is fair ("fairness views," for short). However, individuals do not directly observe income inequality (which often leads to large misperceptions), nor do they consider all inequities to be unfair. In this paper, we empirically assess the link between objective measures of income inequality and fairness views in a context of high but decreasing income inequality. To do this, we combine opinion poll data with harmonized data from household surveys of 18 Latin American countries from 1997-2015. We find a strong and statistically significant relationship between income inequality and unfairness views across countries and over time. Unfairness views evolved in the same direction as income inequality for 17 out of the 18 countries in our sample. We find that individuals who are older, unemployed, and left-wing are, on average, more likely to perceive the income distribution as very unfair. Finally, we find that fairness views and income inequality have predictive power for individuals' self-reported propensity to mobilize and protest independent of each other, suggesting that these two variables capture different channels through which changes in the income distribution can affect social unrest.
    Date: 2022–02
  5. By: Robert A. Moffitt; John M. Abowd; Christopher R. Bollinger; Michael D. Carr; Charles M. Hokayem; Kevin L. McKinney; Emily E. Wiemers; Sisi Zhang; James P. Ziliak
    Abstract: One strand of the literature in labor economics, household finance, and macroeconomics has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are disagreements in the empirical literature on this question, with some suggestions that the differences are the result of using flawed survey data instead of more accurate administrative data. This paper summarizes the results of a project to reconcile these findings with four different data sets and six different data series--three survey and three administrative data series, including two which match survey respondent data to their administrative data. Four of the six series show no significant trend in male earnings volatility over the last 20-to-30+ years when differences across the data sets are properly accounted for. A fifth shows a positive net trend but small in magnitude. A sixth shows no net trend 1998-2011 and only a small decline thereafter. The remaining differences across data series can be largely explained by differences in the left tail of their cross-sectional earnings distributions. We conclude that the data sets we have analyzed show little evidence of any significant trend in male earnings volatility since the mid-1980s.
    JEL: C23 J31
    Date: 2022–02
  6. By: Neil A. Cholli; Steven N. Durlauf
    Abstract: This essay reviews the theory and empirics of intergenerational mobility. Our review draws on models and empirical analyses of classic and more recent work from both economics and sociology. We summarize models and the surrounding empirical evidence of two key sets of mechanisms: family factors (income, education, credit constraints, household composition, and genes) and social factors (schools, neighborhood sorting, racial segregation, and peer and role model effects). We then discuss and evaluate current methods used to measure intergenerational mobility, including linear regressions and Markov chains. Theoretical models imply nonlinear relationships between parent and child status that are often ignored in practice and offer potentially different interpretations of the evidence of heterogeneity in mobility across locations, groups, and time. We conclude that the next generation of studies would benefit from a closer integration of theory with empirics.
    JEL: D30 H0 J0 R0
    Date: 2022–02
  7. By: Alex Domash; Lawrence H. Summers
    Abstract: Since the outset of the Covid-19 pandemic, labor market indicators that traditionally move together have been sending different signals about the degree of slack in the U.S. labor market. While some indicators on the supply-side, such as the prime-age employment-to-population ratio, suggest that there is still some slack in the labor market, other indicators on the demand-side, such as the job vacancy rate and the quits rate, imply that the labor market is already very tight. In light of these divergent signals, this paper compares alternative labor market indicators as predictors of wage inflation. Using national time series and state cross-section data, we find (i) unemployment is a better predictor of wage inflation than non-employment and (ii) vacancy rates and quit rates have substantial predictive power for wage inflation. We highlight the fact that vacancy and quit rates currently experienced in the United States correspond to a degree of labor market tightness previously associated with sub-2 percent unemployment rates. Finally, we show that predicted firm-side unemployment has dominant explanatory power with respect to subsequent inflation. Our results, along with a cursory analysis of labor force participation information, suggest that labor market tightness is likely to contribute significantly to inflationary pressure in the United States for some time to come.
    JEL: E24 J2 J23 J3
    Date: 2022–02

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