This blog is an experiment to explore the feasibility of scientific discussion on an Economics blog. NEP-LTV disseminates every week new working papers in the field of Unemployment, Inequality & Poverty. Among them, the NEP-LTV editor selects one to be discussed. Everyone is invited to comment. Try to stay civil, or your comments will be removed. And encourage others to read or join in the discussion.
By: Sebastian Galiani (University of Maryland)
Paul Gertler (UC Berkeley)
Ryan Cooper (J-PAL)
Sebastian Martinez (Inter-American Development Bank)
Adam Ross (Bill & Melinda Gates)
Raimundo Undurraga (New York University)
This paper provides empirical evidence on the causal effects that upgrading slum dwellings has on the living conditions of the extremely poor. In particular, we study the impact of providing better houses in situ to slum dwellers in El Salvador, Mexico and Uruguay. We experimentally evaluate the impact of a housing project run by the NGO TECHO which provides basic pre-fabricated houses to members of extremely poor population groups in Latin America. The main objective of the program is to improve household well-being. Our findings show that better houses have a positive effect on overall housing conditions and general well-being: treated households are happier with their quality of life. In two countries, we also document improvements in children’s health; in El Salvador, slum dwellers also feel that they are safer. We do not find this result, however, in the other two experimental samples. There are no other noticeable robust effects on the possession of durable goods or in terms of labor outcomes. Our results are robust in terms of both internal and external validity because they are derived from similar experiments in three different Latin American countries.
JEL: I12 I31 J13 O15 O18
By: Del Boca, Daniela (University of Turin)
Flinn, Christopher (New York University)
Wiswall, Matthew (Arizona State University)
In this paper we utilize a model of household investments in the development of children to explore the impact of various transfer policies on the distribution of child outcomes. We develop a cost criterion that can be used to compare the cost effectiveness of unrestricted, restricted, and conditional cash transfer systems, and find that an optimally chosen conditional cash transfer program is the most cost efficient way to attain any given gain in average child quality. We explore several design elements for the conditional cash transfer system and discuss the role of production function uncertainty and measurement error.
Keywords: child development, time allocation, income transfers, conditional cash transfers
JEL: J13 D1
By: Jenkins, Stephen P.
This article assesses two secondary data compilations about income inequality – the World Income Inequality Database (WIIDv2c), and the Standardized World Income Inequality Database (SWIIDv4.0) which is based on WIID but with all observations multiply-imputed. WIID and SWIID are convenient and accessible sources for researchers seeking cross- national data with global coverage for relatively long time periods. Against these benefits must be set costs arising from lack of data comparability and quality and also, in the case of SWIID, questions about its imputation model. WIID and SWIID users need to recognize this benefit-cost trade-off and ensure their substantive conclusions are robust to potential data problems. I provide detailed description of the nature and contents of both sources plus illustrative regression analysis. From a data issues perspective, I recommend WIID over SWIID, though my support for use of WIID is conditional.
By: Richard Layard
Treating mental illness should be a top national priority, especially as proven psychological therapies effectively cost nothing. Richard Layard explains how CEP research has led to a new deal for mental health – but much remains to be done. Mental illness has much greater economic costs than physical illness – but evidence-based ways of treating mental health problems have no net cost to the Exchequer.
Keywords: mental health, psychological therapy, government policy
|By:||Feld, Jan (Department of Economics, School of Business, Economics and Law, Göteborg University)
Salamanca, Nicolás (Ph.D. candidate in economics, Maastricht University)
Hamermesh, Daniel S. (Sue Killam Professor of Economics, University of Texas at Austin; prof in economics, Royal Holloway University of London; and research assoc, IZA and NBER)
|The discrimination literature treats outcomes as relative. But does a differential arise because agents discriminate against others—exophobia—or because they favor their own kind—endophilia? Using a field experiment that assigned graders randomly to students’ exams that did/ did not contain names, on average we find favoritism but no discrimination by nationality, and some evidence of favoritism for the opposite gender. We identify distributions of individuals’ preferences for favoritism and discrimination. We show that a changing correlation between them generates perverse changes in market differentials and that their relative importance informs the choice of a base group in adjusting wage differentials.|
|Keywords:||favoritism; discrimination; field experiment; wage differentials; economics of education|
|JEL:||B40 I24 J71|
|By:||Jean-Yves DUCLOS (Université Laval)
Abdelkrim ARAAR (FERDI)
Luca TIBERTI (FERDI)
|The importance of taking into account multidimensionality in poverty measurement has been recently emphasized. The poverty alleviation literature has not, however, yet addressed the important issue of policy design for efficient multidimensional poverty reduction. From a positive perspective, it is regularly observed that different poverty dimensions are often correlated and mutually reinforced, especially over time. From a normative perspective, it can be argued that, in addition to being concerned with impacts on multiple dimensions of poverty, policy should also consider impacts on their joint distribution. The paper integrates these two perspectives into a consistent policy evaluation framework. Targeting dominance techniques are also proposed to assess the normative robustness of targeting strategies. The analytical results are applied to data from Vietnam and South Africa and illustrate the role of both normative and positive perspectives in designing efficient multidimensional poverty targeting policies.|
|JEL:||D63 H21 I38|
Stephen L. Ross
|We demonstrate a striking but previously unnoticed relationship between city size and the black-white wage gap, with the gap increasing by 2.5% for every million-person increase in urban population. We then look within cities and document that wages of blacks rise less with agglomeration in the workplace location, measured as employment density per square kilometer, than do white wages. This pattern holds even though our method allows for non-parametric controls for the effects of age, education, and other demographics on wages, for unobserved worker skill as proxied by residential location, and for the return to agglomeration to vary across those demographics, industry, occupation and metropolitan areas. We find that an individual’s wage return to employment density rises with the share of workers in their work location who are of their own race. We observe similar patterns for human capital externalities as measured by share workers with a college education. We also find parallel results for firm productivity by employment density and share college-educated using firm racial composition in a sample of manufacturing firms. These findings are consistent with the possibility that blacks, and black-majority firms, receive lower returns to agglomeration because such returns operate within race, and blacks have fewer same-race peers and fewer highly-educated same-race peers at work from whom to enjoy spillovers than do whites. Data on self-reported social networks in the General Social Survey provide further evidence consistent with this mechanism, showing that blacks feel less close to whites than do whites, even when they work exclusively with whites. We conclude that social distance between blacks and whites preventing shared benefits from agglomeration is a significant contributor to overall black-white wage disparities.|
|JEL:||J15 J24 J31 R23 R32|