nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2022‒04‒25
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Maternal depression and child human capital: a genetic instrumental variable approach By Clark, Andrew E.; D'Ambrosio, Conchita; Ghislandi, Simone; Lepinteur, Anthony; Menta, Giorgia
  2. The true returns to the choice of occupation and education By Cotofan, Maria; Layard, Richard; Clark, Andrew E.
  3. Short-and Medium-term Effects of Parental Separation on Children’s Well-Being. Evidence from Uruguay By Marisa Bucheli; Andrea Vigorito
  4. Luck or Rights? An Experiment on Preferences for Redistribution Following Inheritance of Opportunity By Lekfuangfu, Warn N.; Powdthavee, Nattavudh; Riyanto, Yohanes E.
  5. Inequality and Income Dynamics in Germany By Drechsel-Grau, Moritz; Peichl, Andreas; Schmieden, Johannes; Schmid, Kai D.; Walz, Hannes; Wolter, Stefanie
  6. Reconciling Trends in U.S. Male Earnings Volatility: Results from Survey and Administrative Data By Moffitt, Robert A.; Bollinger, Christopher R.; Hokayem, Charles M.; Wiemers, Emily; Abowd, John M.; Carr, Michael; McKinney, Kevin Lee; Zhang, Sisi; Ziliak, James P.

  1. By: Clark, Andrew E.; D'Ambrosio, Conchita; Ghislandi, Simone; Lepinteur, Anthony; Menta, Giorgia
    Abstract: We here address the causal relationship between maternal depression and child human capital using UK cohort data. We exploit the conditionally-exogenous variation in mothers’ genomes in an instrumentalvariable approach, and describe the conditions under which mother’s genetic variants can be used as valid instruments. An additional episode of maternal depression between the child’s birth up to age nine reduces both their cognitive and non-cognitive skills by 20 to 45% of a SD throughout adolescence. Our results are robust to a battery of sensitivity tests addressing, among others, concerns about pleiotropy and the maternal transmission of genes to her child.
    Keywords: mendelian randomisation; maternal depression; human capital; instrumental variables; ALSPAC
    JEL: J24
    Date: 2021–02–26
  2. By: Cotofan, Maria; Layard, Richard; Clark, Andrew E.
    Abstract: Which occupations are best for wellbeing? There is a large literature on earnings differentials, but less attention has been paid to occupational differences in non-pecuniary rewards. However, information on both types of rewards is needed to understand the dispersion of wellbeing across occupations. We analyse subjective wellbeing in a large representative sample of UK workers to construct a measure of “full earnings”, the sum of earnings and the value of non-pecuniary rewards, in 90 different occupations. We first find that the dispersion of earnings underestimates the extent of inequality in the labour market: the dispersion of full earnings is one-third larger than the dispersion of earnings. Equally, the gender and ethnic gaps in the labour market are larger than data on earnings alone would suggest, and the true returns to completed secondary education (though not to a degree) are underestimated by earnings differences on their own. Finally, we show that our main results are similar, and stronger, for a representative sample of US workers.
    Keywords: occupation; wages; non-pecuniary benefits; inequality
    JEL: I31 J31
    Date: 2021–02–19
  3. By: Marisa Bucheli (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República, Uruguay); Andrea Vigorito (Departamento de Economía, Facultad de Ciencias Económicas y de Administración, Universidad de la República, Uruguay)
    Abstract: There is limited quantitative research on the effect of parental union dissolution on children’s well-being in developing countries. Based on three waves of a longitudinal study that follows up a cohort of Uruguayan children from age 6 to 19, we study the short- and medium-term effects of parental separation on school attendance, grade repetition, completed years of schooling, socio-emotional status, time devoted to a wide set of activities, and labour force participation. We carry out a fixed effect estimation comparing children from married or cohabiting couples that remained together versus a similar group that split after 2004. We find evidence that union dissolution worsens child educational outcomes in the short and medium term. Meanwhile, at age 19, socio-emotional well-being, labour force participation and worked hours remain unchanged. Although effects by gender and timing of the divorce (childhood or adolescence) are similar in the short term, at age 19 girls’ educational outcomes are almost unaffected. We do not find robust differences related to child support payments and contact with co-resident fathers. We also explore a set of potential moderators, such as household income, maternal employment, access to durable goods and public transfers, which suggest that worsened educational outcomes are closely connected to post-separation economic hardship.
    Keywords: union dissolution; child support; education; socio-emotional well-being; Uruguay; panel data
    JEL: J12 J13 I30
    Date: 2021–07
  4. By: Lekfuangfu, Warn N. (Universidad Carlos III de Madrid); Powdthavee, Nattavudh (University of Warwick); Riyanto, Yohanes E. (Nanyang Technological University, Singapore)
    Abstract: We experimentally investigate whether people generally perceive inheritance as effort-induced or luck-induced. By randomly matched two strangers in a lab setting, we test whether the sources of opportunity handed down from the 'testator' subjects determines later redistributive decisions among the 'heir' subjects. On average, redistribution is highest among the heirs whose chance of winning is determined by the pure luck of the paired testator. In contrast, our subjects treat inherited opportunity generated by effort of someone else who they are artificially linked with as relatively fair. Our results suggest that people would feel entitled to bequests and inheritance unless the randomness of inheritance has been made salient to them.
    Keywords: inheritance, fairness, redistribution, experiment, inequality of opportunity
    JEL: D64 H2
    Date: 2022–03
  5. By: Drechsel-Grau, Moritz (University of Zurich); Peichl, Andreas (Ludwig-Maximilians-Universität München); Schmieden, Johannes (IZA); Schmid, Kai D. (Heilbronn University of Applied Sciences); Walz, Hannes (FAU, Erlangen Nuremberg); Wolter, Stefanie (Institute for Employment Research (IAB), Nuremberg)
    Abstract: We provide a comprehensive analysis of income inequality and income dynamics for Germany over the last two decades. Combining personal income tax and social security data allows us – for the first time – to offer a complete picture of the distribution of annual earnings in Germany. We find that cross-sectional inequality rose until 2009 for men and women. After the Great Recession inequality continued to rise at a slower rate for men and fell slightly for women due to compression at the lower tail. We further document substantial gender differences in average earnings and inequality over the life-cycle. While for men earnings rise and inequality falls as they grow older, many women reduce working hours when starting a family such that average earnings fall and inequality increases. Men's earnings changes are on average smaller than women's but are substantially more affected by the business cycle. During the Great Recession, men's earnings losses become magnified and gains are attenuated. Apart from recession years, earnings changes are significantly right-skewed reflecting the good overall state of the German labor market and increasing labor supply. In the second part of the paper, we study the distribution of total income including incomes of self-employed, business owners, and landlords. We find that total inequality increased significantly more than earnings inequality. Regarding income dynamics, entrepreneurs' income changes are more dispersed, less skewed, less leptokurtic and less dependent on average past income than workers' income changes. Finally, we find that top income earners have become less likely to fall out of the top 1 and 0.1 percent.
    Keywords: inequality, income dynamics, mobility, non-labor income
    JEL: D31 E24 E31 J31
    Date: 2022–02
  6. By: Moffitt, Robert A. (Johns Hopkins University); Bollinger, Christopher R. (University of Kentucky); Hokayem, Charles M. (U.S. Census Bureau); Wiemers, Emily (University of Massachusetts Boston); Abowd, John M. (Cornell University); Carr, Michael (University of Massachusetts Boston); McKinney, Kevin Lee (U.S. Census Bureau); Zhang, Sisi (Jinan University); Ziliak, James P. (University of Kentucky)
    Abstract: There is a large literature on earnings and income volatility in labor economics, household finance, and macroeconomics. One strand of that literature has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are strong disagreements in the empirical literature on this important question, with some studies showing upward trends, some showing downward trends, and some showing no trends. Some studies have suggested 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 attempting 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. Using common specifications, measures of volatility, and other treatments of the data, four of the six data series show a lack of any significant long-term trend in male earnings volatility over the last 20-to-30+ years when differences across the data sets are properly accounted for. A fifth data series (the PSID) shows a positive net trend but small in magnitude. A sixth, administrative, data set, available only since 1998, shows no net trend 1998-2011 and only a small decline thereafter. Many of the remaining differences across data series can be explained by differences in their cross-sectional distribution of earnings, particularly differences in the size of the lower tail. We conclude that the data sets we have analyzed, which include many of the most important available, show little evidence of any significant trend in male earnings volatility since the mid-1980s.
    Keywords: administrative data, earnings, volatility
    JEL: J3
    Date: 2022–02

This nep-ltv issue is ©2022 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.