nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2023‒10‒02
five papers chosen by
Maximo Rossi, Universidad de la República

  1. The Intergenerational Transmission of Housing Wealth By Daysal, N. Meltem; Lovenheim, Michael F.; Wasser, David N.
  2. A Multisector Perspective on Wage Stagnation By Ngai, L. Rachel; Sevinc, Orhun
  3. The Impact of Private Schools, School Chains, and Public-Private Partnerships in Developing Countries By Lee Crawfurd; Susannah Hares
  4. Is working enough to escape poverty? Evidence on low-paid workers in Italy By Michele Bavaro; Michele Raitano
  5. Beyond the Great Reversal: Superstars, Unions, and the Euro By Crescioli, Tommaso; Martelli, Angelo

  1. By: Daysal, N. Meltem (University of Copenhagen); Lovenheim, Michael F. (Cornell University); Wasser, David N. (US Census Bureau)
    Abstract: Rising wealth inequality has spurred an increased interest in understanding how and why wealth is correlated across generations. We exploit plausibly exogenous variation in housing wealth driven by home price changes in different areas to isolate the causal impact of parental housing wealth during different childhood periods on children's long-run wealth accumulation. Using population-level Danish administrative data, we find that 27% and 25% of each Krone of parental housing wealth change during early-childhood is transmitted to children's overall and housing wealth in adulthood, respectively. The corresponding transmission rates for parental housing wealth changes during middle-childhood are 25% and 15%, with a transmission to non-housing wealth of 10%. There is little evidence of transmission of parental housing wealth changes that occur during the teenage years. Examining mechanisms, we find that parental housing wealth changes in early and middle-childhood lead to modest increases in adult children's home ownership, educational attainment, and earnings. However, earnings and education can explain only 20-30% of the intergenerational transmission of parental wealth gains during these periods. We argue that the transmission of parental housing wealth changes in childhood are driven in large part by changes to unobserved household environment and parental behaviors that are passed on to children and shape their savings behavior in adulthood.
    Keywords: intergenerational wealth transmission, housing wealth
    JEL: J62 D31
    Date: 2023–09
  2. By: Ngai, L. Rachel (London School of Economics); Sevinc, Orhun (Central Bank of Turkey)
    Abstract: Low-skilled workers are concentrated in sectors that experience fast productivity growth and yet their real wages have been stagnating. We document evidence from the U.S. to show the importance of sectoral reallocations. Key to our two-sector model is the fall in the relative price of the low-skill intensive sector caused by faster productivity growth. When outputs are complements across sectors, this leads to a reallocation of low-skilled workers to the high-skill intensive sector where their marginal product is stagnant. We show that this mechanism is quantitatively important for the stagnation of low-skill real wages and their divergence from aggregate labor productivity during 1980-2010.
    Keywords: wage stagnation, wage-productivity divergence, low-skill wage, multisector model
    JEL: E24 J23 J31
    Date: 2023–07
  3. By: Lee Crawfurd (Center for Global Development); Susannah Hares (Center for Global Development)
    Abstract: How should governments and donors engage with the growing private sector in education in developing countries? Enrolment in private schools now exceeds 50 percent at the primary level in many major urban centres across Africa and Asia. Whilst the majority of these schools are small and independently owned and operated, much policy attention has focused on chains or networks of private schools, and on public-private partnerships, as routes for public and philanthropic engagement. In this paper, we review the evidence on the effects of individual private schools, private school chains, and public-private partnerships (PPPs) on learning, equity, and efficiency. We adopt a comprehensive search strategy for eligible studies, with transparent search criteria. We build on and update prior reviews by Ashley et al. (2014) and Aslam et al. (2017). The search resulted in over 100 studies on low-cost private schools and PPPs, with a large majority being on low-cost private schools. We also provide original analysis of five datasets on school chains. Though some private school students do achieve better learning outcomes, much of this advantage is due to selection of wealthier or better motivated students. What true positive value-added remains is typically small and insufficient to help children achieve meaningfully better learning goals or life outcomes. The very poorest children do not access private schools. School chains are not a major part of education systems and have limited growth potential, making them peripheral in solving the twin challenges of enrolment and learning. Public-private partnerships have shown limited value in improving quality but may represent a low-cost means of increasing access to school. Given the reality that private schools educate a large share of students in many countries, more evidence is needed on how governments can best support these children.
    Keywords: private schools, chains, PPPs, developing countries
    JEL: I25 I28 H52 O15
    Date: 2021–12–16
  4. By: Michele Bavaro (University of Oxford); Michele Raitano (Sapienza University of Rome)
    Abstract: We investigate the dynamics of incidence, intensity and persistence of low pay in Italy from 1990 to 2018 by exploiting a large administrative sample of employees in the private sector. We refer to various relative and absolute low pay thresholds and assess workers’ conditions according to annual earnings, weekly wages and full-time-equivalent (FTE) weekly wages, to depurate low pay dynamics from the influence of changes in worked weeks and hours. Regardless of the chosen threshold, we find that the incidence of low pay is high and steeply increased in the last decades when the focus is on annual earnings and weekly wages. A flat trend emerges instead when low pay is assessed according to FTE weekly wages, signalling that a major role in the low pay dynamics is played by the reduction in the number of hours worked by low-paid individuals because of the increasing spread of part-time contracts. Nevertheless, the share of low-paid workers is rather high even when the focus is on FTE weekly wages. Furthermore, low pay is a persistent status for a large and rising share of workers. These findings reveal a clear worsening of workers’ conditions at the bottom of the earnings distribution in Italy.
    Keywords: Low pay; Earnings; Working Poverty; Minimum wage; Italy
    JEL: J3 J6 I3
  5. By: Crescioli, Tommaso (European Institute, London School of Economics and Political Science); Martelli, Angelo (European Institute, London School of Economics and Political Science)
    Abstract: Has the Euro created a more competitive market? Using a staggered difference-in-differences design we find that the Euro has increased firm-level market power between 23% and 30% after its adoption. This happens because deepening economic integration creates a stronger competitive environment where superstar firms acquire a dominant position. Consistently with this explanation, the Euro effect on market power is between 8% and 9% larger for tradable industries and between 10% and 17% larger for firms in the top 1% of the Eurozone pre-Euro productivity distribution. This rise in market power is mainly driven by changes in labor market competition that more than compensates for the increase in product market competition. Again counterintuitively, we also find that unions under certain conditions can increase the market power of superstar firms. This happens in the presence of cooperation-enhancing institutions that favor agreements between labor and capital and raise firms’ competitiveness by diminishing markdowns.
    Keywords: Competition, Single Currency, Superstar Firms, Market power, Labor Market Institutions
    Date: 2022–12

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