nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2023‒11‒20
eight papers chosen by
Maximo Rossi, Universidad de la República

  1. Are the upwardly mobile more left-wing? By Andrew E. Clark; Maria Cotofan
  2. Social Preferences and Redistributive Politics By Ernst Fehr; Thomas Epper; Julien Senn
  3. Optimal Taxation and Other-Regarding Preferences By Aronsson, Thomas; Johansson-Stenman, Olof
  4. Intergenerational Transmission of Inequality: Maternal Endowments, Investments, and Birth Outcomes By Eshaghnia, Sadegh S. M.; Heckman, James J.
  5. Getting the measure of inequality By Jenkins, Stephen P.
  6. The minimum wages, turnover, and the shape of the wage distribution By Pierre Brochu; David A. Green; James Townsend; Thomas Lemieux
  7. Vacancy duration and wages By Ihsaan Bassier; Alan Manning; Barbara Petrongolo
  8. The Missing Type: Where Are the Inequality Averse (Students)? By Thomas Epper; Julien Senn; Ernst Fehr

  1. By: Andrew E. Clark; Maria Cotofan
    Abstract: It is well-known that the wealthier are more likely to have Right-leaning political preferences. We here in addition consider the role of the individual's starting position, and in particular their upward social mobility relative to their parents. In 18 waves of UK panel data, both own and parental social status are independently positively associated with Right-leaning voting and political preferences: given their own social status, the upwardly-mobile are therefore more Left-wing. We investigate a number of potential mediators: these results do not reflect the relationship between well-being and own and parents' social status but are rather linked to the individual's beliefs about how fair society is.
    Keywords: social mobility, voting, redistribution, satisfaction, fairness, Technological change, Wellbeing
    Date: 2023–07–21
  2. By: Ernst Fehr (Department of Economics, Zurich University. Blümlisalpstrasse 10, 8006 Zurich, Switzerland); Thomas Epper (IESEG School of Management, Univ. Lille, CNRS, UMR 9221- LEM - Lille Economie Management F-59000 Lille, France); Julien Senn (Department of Economics, Zurich University. Blûmlisalpstrasse 10, 8006 Zurich, Switzerland)
    Abstract: Increasing inequality and associated egalitarian sentiments have put redistribution on the political agenda. In this paper, we take advantage of Swiss direct democracy, where people voted several times on strongly redistributive policies in national plebiscites, to study the link between social preferences and a behaviorally validated measure of support for redistribution in a broad sample of the Swiss population. Using a novel nonparametric Bayesian clustering algorithm, we uncover the existence of three fundamentally distinct preference types in the population: predominantly selfish, inequality averse and altruistic individuals. We show that inequality averse and altruistic individuals display a much stronger support for redistribution, particularly if they are more affluent. In addition, we show that previously identified key motives underlying opposition to redistribution – such as the belief that effort is an important driver of individual success – play no role for selfish individuals but are highly relevant for other-regarding individuals. Finally, while inequality averse individuals display strong support for policies that primarily aim to reduce the incomes of the rich, altruistic individuals are considerably less supportive of these policies. Thus, knowledge about the qualitative properties of social preferences and their distribution in the population also provides insights into which preference type supports specific redistributive policies, which has implications for how policy makers may design redistributive packages to maximize political support for them.
    Keywords: Social Preferences, Altruism, Inequality Aversion, Preference Heterogeneity, Demand for Redistribution
    JEL: D31 D72 H23 H24
    Date: 2023–10
  3. By: Aronsson, Thomas (Umeå University, Umeå School of Business); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The present paper analyzes optimal redistributive income taxation in a Mirrleesian framework extended with other-regarding preferences at the individual level. We start by developing a general model where the other-regarding preference component of the utility functions is formulated to encompass almost any form of preferences for other people’s disposable income, and then continue with four prominent special cases. Two of these reflect self-centered inequality aversion, based on Fehr and Schmidt (1999) and Bolton and Ockenfels (2000), whereas the other two reflect non-self-centered inequality aversion, where people have preferences for a low Gini coefficient and a high minimum income level in society, respectively. We find that other-regarding preferences may substantially increase the marginal tax rates, including the top rates, and that different types of other-regarding preferences have very different implications for optimal taxation.
    Keywords: Optimal Taxation; Redistribution; Social Preferences; Inequality Aversion
    JEL: D62 D90 H21 H23
    Date: 2023–10
  4. By: Eshaghnia, Sadegh S. M. (Center for the Economics of Human Development (CEHD)); Heckman, James J. (University of Chicago)
    Abstract: Newborn health is an important component in the chain of intergenerational transmission of disadvantage. This paper contributes to the literature on the determinants of health at birth in two ways. First, we analyze the role of maternal endowments and investments (education and smoking in pregnancy) on the probability of having a baby who is small for gestational age (SGA). We estimate both the total impact of maternal endowments on birth outcomes, and we also decompose it into a direct, "biological" effect and a "choice" effect, mediated by maternal behaviors. Second, we estimate the causal effects of maternal education and smoking in pregnancy, and investigate whether women endowed with different traits have different returns. We find that maternal cognition affects birth outcomes primarily through maternal education, that personality traits mainly operate by changing maternal smoking, and that the physical fitness of the mother has a direct, "biological" effect on SGA. We find significant heterogeneity in the effects of education and smoking along the distribution of maternal physical traits, suggesting that women with less healthy physical constitutions should be the primary target of prenatal interventions.
    Keywords: health production, intergenerational transmission, human capital
    JEL: I12 I14 J24
    Date: 2023–09
  5. By: Jenkins, Stephen P.
    Keywords: OUP deal
    JEL: J1
    Date: 2023–08–29
  6. By: Pierre Brochu (Institute for Fiscal Studies); David A. Green (Institute for Fiscal Studies); James Townsend (Institute for Fiscal Studies); Thomas Lemieux (University of British Colombia)
    Date: 2023–10–30
  7. By: Ihsaan Bassier; Alan Manning; Barbara Petrongolo
    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, wages, monopsony, employment
    Date: 2023–08–18
  8. By: Thomas Epper (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management F-59000 Lille, France); Julien Senn (Department of Economics, Zurich University. Blümlisalpstrasse 10, 8006 Zurich, Switzerland); Ernst Fehr (Department of Economics, Zurich University. Blümlisalpstrasse 10, 8006 Zurich, Switzerland)
    Abstract: The empirical evidence on the existence of social preferences—or lack thereof—is predominantly based on student samples. Yet, knowledge about whether these findings can be extended to the general population is still scarce. In this paper, we compare the distribution of social preferences in a student and in a representative sample. Using descriptive analysis and a rigorous clustering approach, we show that the distribution of the general population’s social preferences fundamentally differs from the students’ distribution. In the general population, three types emerge: an inequality averse, an altruistic, and a selfish type. In contrast, only the altruistic and the selfish types emerge in the student population. The absence of an inequality averse type in the student population is particularly striking considering the fact that this type comprises about 50 percent of the individuals in the general population sample. Using structural estimation, we show that differences in age and education are likely to explain these results. Younger and more educated individuals—which typically characterize students— not only tend to have lower degrees of other-regardingness but this reduction in other-regardingness basically nullifies behindness aversion among students. Differences in income, however, do not seem to affect social preferences. These findings are important in view of the fact that almost all applications of social preference ideas involve the general population rather than students.
    Keywords: Social Preferences, Altruism, Inequality Aversion, Preference Heterogeneity, Subject pools, Sample Selection
    JEL: C80 C90 D30 D63
    Date: 2023–10

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