nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2023‒09‒18
eight papers chosen by
Maximo Rossi, Universidad de la República

  1. Were COVID and the Great Recession Well-Being Reducing? By Blanchflower, David G.; Bryson, Alex
  2. Does democracy make taller men? Cross-country European evidence By Batinti, Alberto; Costa-Font, Joan
  3. Vacancy Duration and Wages By Bassier, Ihsaan; Manning, Alan; Petrongolo, Barbara
  4. The Summer Drop in Female Employment By Brendan M. Price; Melanie Wasserman
  5. The New Economics of Industrial Policy By Réka Juhász; Nathan J. Lane; Dani Rodrik
  6. Does Capitalism Disfavor Women? Evidence from Life Satisfaction By Berggren, Niclas; Bjørnskov, Christian
  7. The Global Inequality Boomerang By Ravi Kanbur; Eduardo Ortiz-Juarez; Andy Sumner
  8. Industry Wage Differentials: A Firm-Based Approach By David Card; Jesse Rothstein; Moises Yi

  1. By: Blanchflower, David G. (Dartmouth College); Bryson, Alex (University College London)
    Abstract: Using micro-data on six surveys – the Gallup World Poll 2005-2023, the U.S. Behavioral Risk Factor Surveillance System, 1993-2022, Eurobarometer 1991-2022, the UK Covid Social Survey Panel, 2020-2022, the European Social Survey 2002-2020 and the IPSOS Happiness Survey 2018-2023 – we show individuals' reports of subjective wellbeing in Europe did decline in the Great Recession of 2008/9 and during the Covid pandemic of 2020-2021 on most measures and on four bordering countries to Ukraine after the Russian invasion in 2022. However, the movements are not large and are not apparent everywhere. We also used data from the European Commission's Business and Consumer Surveys on people's expectations of life in general, their financial situation and the economic and employment situation in the country, all of which dropped markedly in the Great Recession and during Covid, but bounced back quickly, as did firms' expectations of the economy and the labor market. Neither the annual data from the United Nation's Humasn Development Index (HDI) nor data used in the World Happiness Report from the Gallup World Poll shifted much in response to negative shocks. The HDI has been rising in the last decade or so reflecting overall improvements in economic and social wellbeing, captured in part by real earnings growth, although it fell slightly after 2020 as life expectancy dipped. This secular improvement is mirrored in life satisfaction which has been rising in the last decade. However, so too have negative affect in Europe and despair in the United States.
    Keywords: subjective wellbeing, life satisfaction, expectations, Human Development Index, Great Recession, COVID-19
    JEL: I31
    Date: 2023–07
  2. By: Batinti, Alberto; Costa-Font, Joan
    Abstract: We study whether a democracy improves a measure of individual wellbeing: human heights. Drawing on individual-level datasets, we test the democracy and height hypothesis using a battery of eight different measures of democracy and we account for several potential confounders, regional and cohort fixed effects. We document that democracy – or its quality during early childhood – shows a strong and positive conditional correlation with male, but not female, adult stature. Our preferred estimates suggest that being born in a democracy increases average male stature from a minimum of 1.33 to a maximum of 2.4 cm. We also show a positive association when democracy increases from childhood to adolescence, and when we adopt measures of existing democratic capital before birth, and at the end of height plasticity in early adulthood. We also document that democracy is associated with a reduction in inequality of heights distribution. Our estimates are driven by period-specific heterogeneity, namely, early democratizations are associated with taller people more than later ones. Results are robust to the inclusion of countries exposed to communism.
    Keywords: democracy; wellbeing; human heights; waves of democratisation; communism; Europe; survey data
    JEL: I18 P20
    Date: 2022–04–01
  3. By: Bassier, Ihsaan (London School of Economics); Manning, Alan (London School of Economics); Petrongolo, Barbara (University of Oxford)
    Abstract: We estimate the elasticity of vacancy duration with respect to posted wages, using data from the near-universe of online job adverts in the United Kingdom. Our research design identifies duration elasticities by leveraging firm-level wage policies that are plausibly exogenous to hiring difficulties on specific job vacancies, and control for job and market-level fixed-effects. Wage policies are defined based on external information on pay settlements, or on sharp, internally-defined, firm-level changes. In our preferred specifications, we estimate duration elasticities in the range −3 to −5, which are substantially larger than the few existing estimates.
    Keywords: vacancy duration, monopsony, wages
    JEL: J42 J63 J64
    Date: 2023–08
  4. By: Brendan M. Price; Melanie Wasserman
    Abstract: We provide the first systematic account of summer declines in women’s labor market activity. From May to July, the employment-to-population ratio among prime-age US women declines by 1.1 percentage points, whereas male employment rises; women’s total hours worked fall by 9.8 percent, more than twice the decline among men. School closures for summer break—and corresponding lapses in implicit childcare—provide a unifying explanation for these patterns. The summer drop in female employment aligns with cross-state differences in the timing of school closures, is concentrated among mothers with young school-age children, and coincides with increased time spent engaging in childcare. Decomposing the gender gap in summer work interruptions across job types defined by sector and occupation, we find large contributions from both gender differences in job allocation and gender differences within job types in the propensity to exit employment over the summer. Women’s summer work interruptions contribute to gender gaps in pay: women’s weekly earnings decline by 3.3 percent over the summer months, about five times the decline among men.
    JEL: J13 J16 J22 J24
    Date: 2023–08
  5. By: Réka Juhász; Nathan J. Lane; Dani Rodrik
    Abstract: We discuss the considerable literature that has developed in recent years providing rigorous evidence on how industrial policies work. This literature is a significant improvement over the earlier generation of empirical work, which was largely correlational and marred by interpretational problems. On the whole, the recent crop of papers offers a more positive take on industrial policy. We review the standard rationales and critiques of industrial policy and provide a broad overview of new empirical approaches to measurement. We discuss how the recent literature, paying close attention to measurement, causal inference, and economic structure, is offering a nuanced and contextual understanding of the effects of industrial policy. We re-evaluate the East Asian experience with industrial policy in light of recent results. Finally, we conclude by reviewing how industrial policy is being reshaped by a new understanding of governance, a richer set of policy instruments beyond subsidies, and the reality of de-industrialization.
    JEL: L5
    Date: 2023–08
  6. By: Berggren, Niclas (Research Institute of Industrial Economics (IFN)); Bjørnskov, Christian (Aarhus University and)
    Abstract: There is widespread concern, especially in certain feminist circles, that a market-oriented economic system, or capitalism, disfavors women. This could take many forms, such as lower wages for the same type of work, reduced career opportunities, disparities in ownership and the upholding of traditional gender roles. In all, this could influence overall life satisfaction such that capitalism confers more life satisfaction on men than on women. We test empirically whether this concern is justified. Using the epidemiological approach to rule out reverse causality, we first confirm previous findings that most areas of economic freedom (legal quality in particular, but also monetary stability, openness and regulation) are beneficial for general life satisfaction. When looking at women and men separately, we find virtually no statistically significant differences, and in the cases we do, the estimates reveal a more beneficial outcome for women. Hence, we conclude that capitalism does not seem to favor men more than women in terms of life satisfaction.
    Keywords: Economic freedom; Capitalism; Market economy; Life satisfaction; Gender; Happiness
    JEL: B52 D02 D63 F13 H11 I31 K20 K38 P16
    Date: 2023–08–28
  7. By: Ravi Kanbur (Cornell University); Eduardo Ortiz-Juarez (King’s College London); Andy Sumner (King’s College London)
    Abstract: The decline in global inequality over the last decades has spurred a "sunshine" narrative of falling global inequality that has been rather oversold, in the sense, we argue, it is likely to be temporary. Our work first formalizes the intuition that the fall in global inequality will eventually reverse. We derive the location of the turning point for a specific measure of inequality: the mean log deviation. We make use of a custom-built database of global income to estimate this turning point. We find there is a potentially startling global inequality "boomerang, " possibly in the mid-to-late 2020s, which would have happened even if there were no pandemic, and that the pandemic is likely to bring forward the global inequality boomerang. The scholarly significance of the main finding is that there is a new type of Kuznets curve, where inequality first falls and then rises as middle-income countries grow fast and approach the income levels of rich countries. The policy significance is that interventions to counteract the upward movement in global inequality will require even stronger focus on lowering the within-country inequality component of global inequality.
    Keywords: global inequality, inequality boomerang, COVID-19 pandemic
    JEL: D31 D63 O15
    Date: 2022–05–06
  8. By: David Card; Jesse Rothstein; Moises Yi
    Abstract: We revisit the estimation of industry wage differentials using linked employer-employee data from the U.S. LEHD program. Building on recent advances in the measurement of employer wage premiums, we define the industry wage effect as the employment-weighted average workplace premium in that industry. We show that cross-sectional estimates of industry differentials overstate the pay premiums due to unmeasured worker heterogeneity. Conversely, estimates based on industry movers understate the true premiums, due to unmeasured heterogeneity in pay premiums within industries. Industry movers who switch to higher-premium industries tend to leave firms in the origin sector that pay above-average premiums and move to firms in the destination sector with below-average premiums (and vice versa), attenuating the measured industry effects. Our preferred estimates reveal substantial heterogeneity in narrowly-defined industry premiums, with a standard deviation of 12%. On average, workers in higher-paying industries have higher observed and unobserved skills, widening between-industry wage inequality. There are also small but systematic differences in industry premiums across cities, with a wider distribution of pay premiums and more worker sorting in cities with more high-premium firms and high-skilled workers.
    JEL: J31 J62
    Date: 2023–08

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