A Flying Start? Long Term Consequences of Maternal Time Investments in Children During Their First Year of Life

By:	Carneiro, Pedro (University College London) Loken, Katrine V. (University of Bergen) Salvanes, Kjell G. (Norwegian School of Economics and Business Administration)
URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp5362&r=ltv
We study the impact on children of increasing the time that the mother spends with her child in the first year by exploiting a reform that increased paid and unpaid maternity leave in Norway. The reform increased maternal leave on average by 4 months and family income was unaffected. The increased time with the child led to a 2.7 percentage points decline in high school dropout. For mothers with low education we find a 5.2 percentage points decline. The effect is also especially large for children of mothers who, prior to the reform, would take very low levels of unpaid leave.
Keywords:	adult outcomes, time with mother, maternity leave
JEL:	J13

 

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Inequality and happiness: When perceived social mobility and economic reality do not match

By:	Christian Bjørnskov (Aarhus University) Axel Dreher (University of Goettingen) Justina A.V. Fischer (Faculty of Economics, University of Rome “Tor Vergata”) Jan Schnellenbach (Ruprecht-Karls-Universität Heidelberg,)
URL:	http://d.repec.org/n?u=RePEc:rtv:ceisrp:173&r=ltv
In this paper, we revisit the association between happiness and inequality. We argue that the interaction between the perceived and the actual fairness of the income generation process affects this association. Building on a simple model of individual labor-market participation under uncertainty, we predict that higher levels of perceived fairness cause higher levels of utility, and lower preferred levels of income redistribution. In societies with a low level of actual social mobility, income inequality is perceived more negatively with increased perceived fairness, due to the need for unexpected policy changes as a response to many unsuccessful investments of overly optimistic individuals. This effect becomes smaller as actual social mobility increases. Using data on happiness and a broad set of fairness measures from the World Values Survey, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective wellbeing). We also find strong empirical support for the disappointment effect in countries with low social mobility. Consistent with our theoretical model, the results for high-mobility countries turn out to be ambiguous.
Keywords:	Happiness, life satisfaction, subjective well-being, inequality, income distribution, redistribution, political ideology, justice, fairness, World Values Survey
JEL:	I31

 

Two-Tier Labor Markets in the Great Recession: France vs. Spain

By:	Bentolila, Samuel (CEMFI, Madrid) Cahuc, Pierre (Ecole Polytechnique, Paris) Dolado, Juan José (Universidad Carlos III de Madrid) Le Barbanchon, Thomas (Ecole Polytechnique, Paris)
URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp5340&r=ltv
This paper analyzes the strikingly different response of unemployment to the Great Recession in France and Spain. Their labor market institutions are similar and their unemployment rates just before the crisis were both around 8%. Yet, in France, unemployment rate has increased by 2 percentage points, whereas in Spain it has shot up to 19% by the end of 2009. We assess what part of this differential is due to the larger gap between the dismissal costs of permanent and temporary contracts and the less restrictive rules regarding the use of the latter contracts in Spain. Using a calibrated search and matching model, we estimate that about 45% of the surge in Spanish unemployment could have been avoided had Spain adopted French employment protection legislation before the crisis started.
Keywords:	temporary contracts, unemployment, Great Recession
JEL:	H29

 

Are Women More Sensitive to the Decision-Making Context?

By:	Luis Miller (Centre for Experimental Social Sciences, Nuffield College, University of Oxford) Paloma Ubeda (LINEEX, ERI-CESS, University of Valencia)
URL:	http://d.repec.org/n?u=RePEc:cex:dpaper:2010004&r=ltv
We conduct an experiment to assess gender differences across different economic contexts. Specifically, we test whether women are more sensitive to the decision-making context in situations in which different fairness principles can be used. We find that women adopt more often than men conditional fairness principles that require information about the context. Furthermore, while most men adopt only one decision principle, most women switch between multiple decision principles. These results complement and reinforce Croson and Gneezy’s organizing explanation of greater context sensitivity of women.
Keywords:	Context-sensitivity, Distributive Justice, Gender differences
JEL:	C91