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.

Ethnic Inequality

August 10, 2016
By: Alesina, Alberto Francesco ; Michalopoulos, Stelios ; Papaioannou, Ellias
This study explores the consequences and origins of between-ethnicity economic inequality across countries. First, combining satellite images of nighttime luminosity with the historical homelands of ethnolinguistic groups we construct measures of ethnic inequality for a large sample of countries. We also compile proxies of overall spatial inequality and regional inequality across administrative units. Second, we uncover a strong negative association between ethnic inequality and contemporary comparative development; the correlation is also present when we condition on regional inequality, which is itself related to under-development. Third, we investigate the roots of ethnic inequality and establish that differences in geographic endowments across ethnic homelands explain a sizable fraction of the observed variation in economic disparities across groups. Fourth, we show that ethnic-specific inequality in geographic endowments is also linked to under-development.

“Tongue Tide”: The Economics of Language Offers Important Lessons for How Europe Can Best Integrate Migrants

August 10, 2016
By: Chiswick, Barry R. (George Washington University)
This policy analysis discusses issues regarding the migration to Europe of large numbers of immigrants and refugees who, on arrival, do not know their host country’s language. It reviews problems of economic integration into the labor market, the consequences of the formation of immigrant enclaves divorced from the host country labor market, and considers public policies to facilitate their linguistic and economic integration.
Keywords: immigrants, refugees, language, enclaves, Europe, discrimination
JEL: F22 J15 J24 J31 J61

Exposure to Poverty and Productivity

August 10, 2016
By: Dalton, Patricio (Tilburg University, Center For Economic Research) ; Gonzalez Jimenez, Victor (Tilburg University, Center For Economic Research) ; Noussair, Charles (Tilburg University, Center For Economic Research)
We study whether poverty can induce affective states that decrease productivity. In a controlled laboratory setting, we find that subjects randomly assigned to a treatment, in which they view a video featuring individuals that live in extreme poverty, exhibit lower subsequent productivity compared to subjects assigned to a control treatment. Questionnaire responses, as well as facial recognition software, provide quantitative measures of the affective state evoked by the two treatments. Subjects exposed to images of poverty experience a more negative affective state than those in the control treatment. Further analyses show that individuals in a more positive emotional state exhibit less of a treatment effect. Also, those who exhibit greater attentiveness upon viewing the poverty video are less productive. The results are consistent with the notion that exposure to poverty can induce a psychological state in individuals that adversely affects productivity.
Keywords: poverty; productivity; mood; emotions; limited attention; experiments
JEL: D03 J24 C91

Family, Community and Long-Term Earnings Inequality

August 10, 2016
By: Bingley, Paul (Danish National Centre for Social Research (SFI)) ; Cappellari, Lorenzo (Università Cattolica del Sacro Cuore) ;Tatsiramos, Konstantinos (University of Nottingham)
This paper studies the influence of family, schools and neighborhoods on life-cycle earnings inequality. We develop an earnings dynamics model linking brothers, schoolmates and teenage parish neighbors using population register data for Denmark. We exploit differences in the timing of family mobility and the partial overlap of schools and neighborhoods to separately identify sorting from community and family effects. We find that family is far more important than community in influencing earnings inequality over the life cycle. Neighborhoods and schools influence earnings only early in the working life and this influence falls rapidly and becomes negligible after age 30.
Keywords: sibling correlations, neighborhoods, schools, life-cycle earnings, inequality
JEL: D31 J62

European Identity and Redistributive Preferences

July 29, 2016

By: Joan Costa-i-Font ; Frank Cowell
How important is spatial identity in shifting preferences for redistribution? This paper takes advantage of within-country variability in the adoption of a single currency as an instrument to examine the impact of the rescaling of spatial identity in Europe. We draw upon data from the last three decades of waves of the European Values Survey and we examine the impact of joining the single currency on preferences for redistribution. Our instrumentation strategy relies on using the exogenous effect of joining a common currency, alongside a battery of robustness checks and alternative instruments. Our findings suggest that joining the euro has a boosting effect on European identity; an opposite and comparable effect is found for national pride. We find that European identity increases preferences for redistribution, and that national pride exerts an equivalent reduction in preferences for redistribution.
Keywords: spatial identity, Europe, welfare state support
JEL: D69 O52 H53

The Gender Wage Gap: Extent, Trends, and Explanations

July 29, 2016

By: Francine D. Blau ; Lawrence M. Kahn
Using PSID microdata over the 1980-2010, we provide new empirical evidence on the extent of and trends in the gender wage gap, which declined considerably over this period. By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top. We then survey the literature to identify what has been learned about the explanations for the gap. We conclude that many of the traditional explanations continue to have salience. Although human capital factors are now relatively unimportant in the aggregate, women’s work force interruptions and shorter hours remain significant in high skilled occupations, possibly due to compensating differentials. Gender differences in occupations and industries, as well as differences in gender roles and the gender division of labor remain important, and research based on experimental evidence strongly suggests that discrimination cannot be discounted. Psychological attributes or noncognitive skills comprise one of the newer explanations for gender differences in outcomes. Our effort to assess the quantitative evidence on the importance of these factors suggests that they account for a small to moderate portion of the gender pay gap, considerably smaller than say occupation and industry effects, though they appear to modestly contribute to these differences.

JEL: J16 J24 J31 J71


Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries

July 27, 2016
By: Erling Barth ; James Davis ; Richard B. Freeman ; Sari Pekkala Kerr
Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries


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