The NEP-LTV Blog

September 27, 2010

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.

Dynastic human capital, inequality and intergenerational mobility

March 22, 2017


By: Adermon, Adrian (IFAU – Institute for Evaluation of Labour Market and Education Policy) ; Lindahl, Mikael (Department of Economics, University of Gothenburg; IFAU; IZA; UCLS; CESifo) ; Palme, Mårten (Department of economics, Stockholm University; IZA)
We study the importance of the extended family – or the dynasty – for the persistence in human capital inequality across generations. We use data including the entire Swedish population, linking four generations. This data structure enables us to – in addition to parents, grandparents and great grandparents – identify parents’ siblings and cousins, as well as their spouses, and the spouses’ siblings. We introduce and estimate a new parameter, which we call the intergenerational transmission of dynastic inequality. This parameter measures the between-dynasty variation in intergenerational transmission of human capital. We use three different measures of human capital: years of schooling, family income and an index of occupational status. Our results show that traditional parent-child estimates miss about half of the persistence across generations estimated by the extended model.
Keywords: intergenerational mobility; extended family; dynasty; human capital
JEL: I24 J62


An Analysis of the Labor Market for Uber’s Driver-Partners in the United States

March 22, 2017


By: Jonathan V. Hall ; Alan B. Krueger
Uber, the ride-sharing company launched in 2010, has grown at an exponential rate. This paper provides the first comprehensive analysis of the labor market for Uber’s driver-partners, based on both survey and administrative data. Drivers who partner with Uber appear to be attracted to the platform largely because of the flexibility it offers, the level of compensation, and the fact that earnings per hour do not vary much with the number of hours worked. Uber’s driver-partners are more similar in terms of their age and education to the general workforce than to taxi drivers and chauffeurs. Most of Uber’s driver-partners had full- or part-time employment prior to joining Uber, and many continued in those positions after starting to drive with the Uber platform, which makes the flexibility to set their own hours all the more valuable. Uber’s driver-partners also often cited the desire to smooth fluctuations in their income as a reason for partnering with Uber.
JEL: J01

What’s the good of education on our overall quality of life?: a simultaneous equation model of education and life satisfaction for Australia

March 22, 2017


By: Nattavudh Powdthavee ; Warn N. Lekfuangfu ; Mark Wooden
Many economists and educators favour public support for education on the premise that education improves the overall quality of life of citizens. However, little is known about the different pathways through which education shapes people’s satisfaction with life overall. One reason for this is because previous studies have traditionally analysed the effect of education on life satisfaction using single-equation models that ignore interrelationships between different theoretical explanatory variables. In order to advance our understanding of how education may be related to overall quality of life, the current study estimates a structural equation model using nationally representative data for Australia to obtain the direct and indirect associations between education and life satisfaction through five different adult outcomes: income, employment, marriage, children, and health. Although we find the estimated direct (or net) effect of education on life satisfaction to be negative and statistically significant in Australia, the total indirect effect is positive, sizeable and statistically significant for both men and women. This implies that misleading conclusions regarding the influence of education on life satisfaction might be obtained if only single-equation models were used in the analysis.
Keywords: Australia; indirect effect; education; structural equation model; life satisfaction; HILDA
JEL: I20 I32

Individual Well-Being and the Allocation of Time Before and After the Boston Marathon Terrorist Bombing

March 22, 2017

By: Andrew Clark (PSE – Paris-Jourdan Sciences Economiques – ENS Paris – École normale supérieure – Paris – INRA – Institut National de la Recherche Agronomique – EHESS – École des hautes études en sciences sociales – École des Ponts ParisTech (ENPC) – CNRS – Centre National de la Recherche Scientifique, PSE – Paris School of Economics) ; Elena Stancanelli (PSE – Paris School of Economics, CES – Centre d’économie de la Sorbonne – UP1 – Université Panthéon-Sorbonne – CNRS – Centre National de la Recherche Scientifique)
There is a small literature on the economic costs of terrorism. We consider the effects of the Boston marathon bombing on Americans’ well-being and time allocation. We exploit data from the American Time Use Survey and Well-Being Module in the days around the terrorist attack to implement a regression-discontinuity design. The bombing led to a significant and large drop of about 1.5 points in well-being, on a scale of one to six, for residents of the States close to Boston. The happiness of American women also dropped significantly, by almost a point, regardless of the State of residence. Labor supply and other time use were not significantly affected. We find no well-being effect of the Sandy Hook shootings, suggesting that terrorism is different in nature from other violent deaths.
Keywords: Well-being,Time Use,Terrorism

Is Global Equality the Enemy of National Equality?

March 21, 2017

By: Rodrik, Dani
The bulk of global inequality is accounted for by income differences across countries rather than within countries. Expanding trade with China has aggravated inequality in some advanced economies, while ameliorating global inequality. But the ‘China shock’ is receding and other low-income countries are unlikely to replicate China’s export-oriented industrialization experience. Relaxing restrictions on cross-border labor mobility might have an even stronger positive effect on global inequality. However it also raises a similar tension. While there would likely be adverse effects on low-skill workers in the advanced economies, international labor mobility has some advantages compared to further liberalizing international trade in goods. I argue that none of the contending perspectives — national-egalitarian, cosmopolitan, utilitarian — provides on its own an adequate frame for evaluating the consequences.


Segregation of women into low-paying occupations in the US

March 21, 2017


By: Carlos Gradín (Universidade de Vigo and EQUALITAS, Spain)
We present an approach to measure the stratification of occupations by sex. For that, we extend the conventional framework for measuring gender segregation to take into account the quality of jobs (e.g. average earnings) predominantly held by each sex. We complement segregation curves and measures derived from them, with their associated concentration curves and indices, to determine whether women are segregated into low-paying jobs. We investigate with this approach the long-term trends of gender segregation and stratification of occupations by sex in the US using census data. Our results show that de-stratification of occupations by sex was more intense than their desegregation, and lasted longer, even after segregation had stagnated. Neither segregation nor stratification levels can be explained by the different characteristics of male and female workforces, although the profound changes in the composition of workers over time (e.g. education, marital status) did help to substantially explain their trends. Changes in the earnings structure favoring occupations held by women since 1980 additionally contributed to reduce stratification over time. Finally, changes in the conditional occupational distribution by sex only reduced segregation and stratification before 1990.
Keywords: occupational segregation, stratification, low-paying occupations, gender.
JEL: J16 J42 J71 J82

Estimation and Inference for Actual and Counterfactual Growth Incidence Curves

March 21, 2017


By: Ferreira, Francisco H. G. (World Bank) ; Firpo, Sergio (Insper, São Paulo) ; Galvao, Antonio F. (University of Iowa)
Different episodes of economic growth display widely varying distributional characteristics, both across countries and over time. Growth is sometimes accompanied by rising and sometimes by falling inequality. Applied economists have come to rely on the Growth Incidence Curve, which gives the quantile-specific rate of income growth over a certain period, to describe and analyze the incidence of economic growth. This paper discusses the identification conditions, and develops estimation and inference procedures for both actual and counterfactual growth incidence curves, based on general functions of the quantile potential outcome process over the space of quantiles. The paper establishes the limiting null distribution of the test statistics of interest for those general functions, and proposes resampling methods to implement inference in practice. The proposed methods are illustrated by a comparison of the growth processes in the United States and Brazil during 1995-2007. Although growth in the average real wage was disappointing in both countries, the distribution of that growth was markedly different. In the United States, wage growth was mediocre for the bottom 80 percent of the sample, but much more rapid for the top 20 percent. In Brazil, conversely, wage growth was rapid below the median, and negative at the top. As a result, inequality rose in the United States and fell markedly in Brazil.
Keywords: growth incidence curves, potential outcomes, inference, quantile process
JEL: C14 C21 D31 I32