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.


June 10, 2019


May 14, 2019
By: John List
Date: 2019

Do Economic Recessions ‘Squeeze the Middle-Class’?

May 14, 2019
By: Alberto BatintiJoan Costa-Font
Abstract: We examine whether economic downturns reshape the distribution of population income giving rise to a “middle-class squeeze.” We test this hypothesis using alternative definitions of middle-class, such as income-based measures from the Luxembourg Income Study (LIS), and perceived measures from the Integrated Values Study (IVS). Our findings suggest that, although recessions do not produce a middle-class squeeze overall, the unanticipated shocks resulting from the Great Recession did. Furthermore, we find that recessions increase the share of the population that regards itself as ‘middle-class.’ Estimates are heterogeneous to the baseline unemployment at the time of a recession, country spending on social protection, to middle-class measures and definitions.
JEL: F22 I30 J64

The Effects of Status Mobility and Group Identity on Trust

May 14, 2019
By: Suchon, Rémi (University of Lyon 2); Villeval, Marie Claire (CNRS, GATE)
Abstract: In a laboratory experiment we test the interaction effects of status and group identity on interpersonal trust. Natural group identity is generated by school affiliation. Status (expert or agent) is awarded based on relative performance in a math quiz that is ex ante less favorable to the subjects from one group. We find that “promoted” trustors (individuals from the disadvantaged group that nevertheless achieve the status of expert) trust less both in-group and out-group trustees, compared to the other members of their group. Rather than playing against the effects of natural group identity, status promotion singles-out individuals. In contrast, trustworthiness is not affected by status and there is no evidence that interacting with promoted individuals impacts trust or trustworthiness.
Keywords: trust, status, group identity, social mobility, experiment
JEL: C92 D91 J62

New ways to measure well-being? A first joint analysis of subjective and objective measures

May 14, 2019
By: Andrén, Daniela (Örebro University School of Business); Clark, Andrew E. (Paris School of Economics); D’Ambrosio, Conchita (Université du Luxembourg); Karlsson, Sune (Örebro University School of Business); Pettersson, Nicklas (Örebro University School of Business)
Abstract: Our study is, to our knowledge, the first joint analysis of subjective and objective measures of well-being. Using a rich longitudinal data from the mothers pregnancy until adulthood for a birth cohort of children who attended school in Örebro during the 1960s, we analyse in a first step how subjective (self-assessed) and objective (cortisol-based) measures of well-being are related to each other. In a second step, life-course models for these two measures are estimated and compared with each other. Despite the fact that our analysis is largely exploratory, our results suggest interesting possibilities to use objective measures to measure well-being, even though this may imply a greater degree of complexity.
Keywords: subjective and objective well-being; general life satisfaction; cortisol; birth-cohort data; adult; child and birth outcomes; multivariate imputation
JEL: A12 D60 I31

When do populations polarize? An explanation

May 14, 2019
By: Jean-Pierre BenoîtJuan Dubra
Abstract: Numerous experiments demonstrate attitude polarization. For instance, Lord, Ross & Lepper presented subjects with the same mixed evidence on the deterrent effect of the death penalty. Both believers and skeptics of its deterrent effect became more convinced of their views; that is, the population polarized. However, not all experiments find this attitude polarization. We propose a theory of rational updating that accounts for both the positive and negative experimental findings. This is in contrast to existing theories, which predict either too much or too little polarization
Keywords: Attitude Polarization; Confirmation Bias; Bayesian Decision Making

The Wrong Kind of AI? Artificial Intelligence and the Future of Labor Demand

May 14, 2019
By: Acemoglu, Daron (MIT); Restrepo, Pascual (Boston University)
Abstract: Artificial Intelligence is set to influence every aspect of our lives, not least the way production is organized. AI, as a technology platform, can automate tasks previously performed by labor or create new tasks and activities in which humans can be productively employed. Recent technological change has been biased towards automation, with insufficient focus on creating new tasks where labor can be productively employed. The consequences of this choice have been stagnating labor demand, declining labor share in national income, rising inequality and lower productivity growth. The current tendency is to develop AI in the direction of further automation, but this might mean missing out on the promise of the “right” kind of AI with better economic and social outcomes.
Keywords: automation, artificial intelligence, jobs, inequality, innovation, labor demand, productivity, tasks, technology, wages
JEL: J23 J24