Endophilia or Exophobia: Beyond Discrimination

May 30, 2014
By: Feld, Jan (Department of Economics, School of Business, Economics and Law, Göteborg University)
Salamanca, Nicolás (Ph.D. candidate in economics, Maastricht University)
Hamermesh, Daniel S. (Sue Killam Professor of Economics, University of Texas at Austin; prof in economics, Royal Holloway University of London; and research assoc, IZA and NBER)
URL: http://d.repec.org/n?u=RePEc:hhs:gunwpe:0593&r=ltv
The discrimination literature treats outcomes as relative. But does a differential arise because agents discriminate against others—exophobia—or because they favor their own kind—endophilia? Using a field experiment that assigned graders randomly to students’ exams that did/ did not contain names, on average we find favoritism but no discrimination by nationality, and some evidence of favoritism for the opposite gender. We identify distributions of individuals’ preferences for favoritism and discrimination. We show that a changing correlation between them generates perverse changes in market differentials and that their relative importance informs the choice of a base group in adjusting wage differentials.
Keywords: favoritism; discrimination; field experiment; wage differentials; economics of education
JEL: B40 I24 J71

Multidimensional poverty targeting

May 30, 2014
By: Jean-Yves DUCLOS (Université Laval)
Abdelkrim ARAAR (FERDI)
URL: http://d.repec.org/n?u=RePEc:fdi:wpaper:1589&r=ltv
The importance of taking into account multidimensionality in poverty measurement has been recently emphasized. The poverty alleviation literature has not, however, yet addressed the important issue of policy design for efficient multidimensional poverty reduction. From a positive perspective, it is regularly observed that different poverty dimensions are often correlated and mutually reinforced, especially over time. From a normative perspective, it can be argued that, in addition to being concerned with impacts on multiple dimensions of poverty, policy should also consider impacts on their joint distribution. The paper integrates these two perspectives into a consistent policy evaluation framework. Targeting dominance techniques are also proposed to assess the normative robustness of targeting strategies. The analytical results are applied to data from Vietnam and South Africa and illustrate the role of both normative and positive perspectives in designing efficient multidimensional poverty targeting policies.
JEL: D63 H21 I38

Race-Specific Agglomeration Economies: Social Distance and the Black-White Wage Gap

May 27, 2014
By: Elizabeth Ananat
Shihe Fu
Stephen L. Ross
URL: http://d.repec.org/n?u=RePEc:wyi:wpaper:002057&r=ltv
We demonstrate a striking but previously unnoticed relationship between city size and the black-white wage gap, with the gap increasing by 2.5% for every million-person increase in urban population. We then look within cities and document that wages of blacks rise less with agglomeration in the workplace location, measured as employment density per square kilometer, than do white wages. This pattern holds even though our method allows for non-parametric controls for the effects of age, education, and other demographics on wages, for unobserved worker skill as proxied by residential location, and for the return to agglomeration to vary across those demographics, industry, occupation and metropolitan areas. We find that an individual’s wage return to employment density rises with the share of workers in their work location who are of their own race. We observe similar patterns for human capital externalities as measured by share workers with a college education. We also find parallel results for firm productivity by employment density and share college-educated using firm racial composition in a sample of manufacturing firms. These findings are consistent with the possibility that blacks, and black-majority firms, receive lower returns to agglomeration because such returns operate within race, and blacks have fewer same-race peers and fewer highly-educated same-race peers at work from whom to enjoy spillovers than do whites. Data on self-reported social networks in the General Social Survey provide further evidence consistent with this mechanism, showing that blacks feel less close to whites than do whites, even when they work exclusively with whites. We conclude that social distance between blacks and whites preventing shared benefits from agglomeration is a significant contributor to overall black-white wage disparities.
JEL: J15 J24 J31 R23 R32

Minimum wages: the economics and the politics

May 27, 2014
By: Alan Manning
URL: http://d.repec.org/n?u=RePEc:cep:cepcnp:419&r=ltv
The UK’s national minimum wage has tackled extreme low pay – but the wider problem of low pay remains as serious as ever. That is one of the conclusions of Professor Alan Manning in a discussion of the growing popularity of minimum wages as a way of tackling inequality – and the likelihood that it will lead to minimum wages that are much higher than we have seen before in some parts of the world. He notes that the driving force behind higher minimum wages is that they are very popular with voters – but even most economists now agree that they have little or no negative effect on employment. Big increases in minimum wages will test the view that negative effects on employment must eventually kick in.
Keywords: National Minimum Wage, employment, living wage, politics, public policy
JEL: J31 J38 J41

The colonial legacy: Income inequality in former British African colonies

May 27, 2014
By: Atkinson, A.B.
URL: http://d.repec.org/n?u=RePEc:unu:wpaper:wp2014-045&r=ltv
This paper examines the distribution of top incomes in 15 former British colonies in Africa, drawing on evidence available from income tax records. It seeks to throw light on the position of colonial elites during the period of British rule. Just how uneq
Keywords: inequality, income distribution, colonial Africa

Economic Well-being and Anti-Semitic, Xenophobic, and Racist Attitudes in Germany

May 27, 2014
By: Naci H. Mocan
Christian Raschke
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:20059&r=ltv
The fear and hatred of others who are different has economic consequences because such feelings are likely to translate into discrimination in labor, credit, housing, and other markets. The implications range from earnings inequality to intergenerational mobility. Using German data from various years between 1996 and 2010, we analyze the determinants of racist and xenophobic feelings towards foreigners in general, and against specific groups such as Italians and Turks. We also analyze racist and anti-Semitic feelings towards German citizens who differ in ethnicity (Aussiedler from Eastern Europe) or in religion (German Jews). Individuals’ perceived (or actual) economic well-being is negatively related to the strength of these feelings. Education, and having contact with foreigners mitigate racist, anti-Semitic and xenophobic feelings. People who live in states which had provided above-median support of the Nazi party in the 1928 elections have stronger anti-Semitic feelings today. The results are not gender-driven. They are not an artifact of economic conditions triggering feelings about job priority for German males, and they are not fully driven by fears about foreigners taking away jobs. The results of the paper are consistent with the model of Glaeser (2005) on hate, and with that of Akerlof and Kranton (2000, 2005) on identity in the utility function.
JEL: I30 J15 Z1