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.
When Income Depends on Performance and Luck: The Effects of Culture and Information on Giving By: Pedro Rey-Biel (Universitat Autònoma de Barcelona and Barcelona GSE) ; Roman Sheremeta (Weatherhead School of Management at Case Western Reserve University and the Economic Science Institute at Chapman University) ; Neslihan Uler (Institute for Social Research at the University of Michigan)June 22, 2015
We study how giving depends on income and luck, and how culture and information about the determinants of others’ income affect this relationship. Our data come from an experiment conducted in two countries, the US and Spain, which have different beliefs about how income inequality arises. We find no cross-cultural differences in giving when individuals are informed about the determinants of income, but when uninformed, Americans give less than Spanish. Culture and information not only affect individual giving, but also the determinants of giving and the beliefs about how income inequality arises. Beliefs partially moderate cross-cultural differences in giving.
Keywords: individual giving, information, culture, beliefs, laboratory experiment
JEL: C91 D64 D83
The Political Economy of Public Income Volatility: With an Application to the Resource Curse By: James A. Robinson ; Ragnar Torvik ; Theirry VerdierJune 22, 2015
We develop a model of the political consequences of public income volatility. As is standard, political incentives create inefficient policies, but we show that making income uncertain creates specific new effects. Future volatility reduces the benefit of being in power, making policy more efficient. Yet at the same time it also reduces the re-election probability of an incumbent and since some of the policy inefficiencies are concentrated in the future, this makes inefficient policy less costly. We show how this model can help think about the connection between volatility and economic growth and in the case where volatility comes from volatile natural resource prices, a characteristic of many developing countries, we show that volatility in itself is a source of inefficient resource extraction.
Keywords: Income Volatility, Public Policy, Politics, Resource Extraction
Bridging Gender Gaps? The Rise and Deceleration of Female Labor Force Participation in Latin America: An overview. By: Leonardo Gasparini (CEDLAS – UNLP) ; Mariana Marchionni (CEDLAS – UNLP)June 15, 2015
This book contributes to the understanding of female labor force participation in Latin America by documenting the changes that took place over the last two decades, exploring their determinants, analyzing their consequences on labor and social outcomes, and discussing implications for public policy. The book highlights a potentially worrisome finding: after around half a century of sustained growth, there are signs of a widespread and significant deceleration in the entry of women into the Latin American labor markets. A version of this paper will be published as Chapter 1 of Gasparini and Marchionni (eds.) (2015). Bridging gender gaps? The rise and deceleration of female labor force participation in Latin America.
Do More of those in Misery Suffer From Poverty, Unemployment or Mental Illness? By: Sarah Flèche ; Richard LayardJune 15, 2015
Studies of deprivation usually ignore mental illness. This paper uses household panel data from the USA, Australia, Britain and Germany to broaden the analysis. We ask first how many of those in the lowest levels of life-satisfaction suffer from unemployment, poverty, physical ill health, and mental illness. The largest proportion suffer from mental illness. Multiple regression shows that mental illness is not highly correlated with poverty or unemployment, and that it contributes more to explaining the presence of misery than is explained by either poverty or unemployment. This holds both with and without fixed effects.
Keywords: Mental health, life-satisfaction, wellbeing, poverty, unemployment
JEL: I1 I3 I31 I32
Innovation and Top Income Inequality By: Philippe Aghion ; Ufuk Akcigit ; Antonin Bergeaud ; Richard Blundell ; David HémousJune 15, 2015
In this paper we use cross-state panel data to show a positive and significant correlation between various measures of innovativeness and top income inequality in the United States over the past decades. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top 1% income share between 1975 and 2010. Yet, innovation does not appear to increase other measures of inequality which do not focus on top incomes. Next, we show that the positive effects of innovation on the top 1% income share are dampened in states with higher lobbying intensity. Finally, from cross-section regressions performed at the commuting zone (CZ) level, we find that: (i) innovativeness is positively correlated with upward social mobility; (ii) the positive correlation between innovativeness and social mobility, is driven mainly by entrant innovators and less so by incumbent innovators, and it is dampened in states with higher lobbying intensity. Overall, our findings vindicate the Schumpeterian view whereby the rise in top income shares is partly related to innovation-led growth, where innovation itself fosters social mobility at the top through creative destruction.
JEL: D63 J14 J15 O30 O31 O33 O34 O40 O43 O47
Analysing Income Distribution Changes : Anonymous Versus Panel Income Approaches By: Gary S. Fields ; Robert Duval-Hernández ; George JakubsonJune 15, 2015
We reconcile, both theoretically and empirically, changes in inequality with panel income changes over periods of economic growth and decline. We also explore what factors account for the trends of short-run inequality and of inequality in individual average earnings. Finally, we explore what factors account for the equalization brought about by economic mobility. Using panel earnings data from Mexico we find that earnings changes are convergent, irrespective of whether inequality rises or falls. This is caused by a small fraction of individuals experiencing large and convergent earnings changes. The equalization that earnings changes bring over a year is mainly driven by changes in the employment and sector of workers.
Keywords: Equality and inequality, Income, Income distribution
By: Leonardo Gasparini (CEDLAS-UNLP and CONICET) ; Mariana Marchionni (CEDLAS-UNLP and CONICET) ; Nicolás Badaracco (CEDLAS-UNLP) ; Joaquín Serrano (CEDLAS-UNLP and CONICET)
This paper documents changes in female labor force participation (LFP) in Latin America exploiting a large database of microdata from household surveys of 15 countries in the period 1992-2012. We find evidence for a significant deceleration in the rate of increase of female LFP in the 2000s, breaking the marked increasing pattern that characterized the region for at least 50 years. The paper documents and characterizes this fact and examines various factors that could be driving the deceleration. Through a set of simple decompositions the paper helps to disentangle whether the patterns in female LFP are mainly accounted for by changes in the distribution of some direct determinants of the labor supply decision (e.g. education), or instead they are chiefly the consequence of some more profound transformation in behavior.
JEL: J2 J1