Rising Aspirations Dampen Satisfaction By: Clark, Andrew E. ; Kamesaka, Akiko ; Tamura, Teruyuki

July 30, 2015

It is commonly-believed that education is a good thing for individuals. Yet its correlation with subjective well-being is most often only weakly positive, or even negative, despite the many associated better individual-level outcomes We here square the circle using novel Japanese data on happiness aspirations. If reported happiness comes from a comparison of outcomes to aspirations, then any phenomenon raising both at the same time will have only a muted effect on reported well-being. We find that around half of the happiness effect of education is cancelled out by higher aspirations, and suggest a similar dampening effect for income.

Keywords: education; satisfaction; aspirations; income

URL: http://d.repec.org/n?u=RePEc:cpm:docweb:1507&r=ltv


Family Values and the Regulation of Labor By: Alberto Alesina (2441/4ia9erre4r9nva2eh5b5sac29o) ; Yann Algan (Département d’économie) ; Pierre Cahuc (Department of Economics) ; null null (Anderson School of Management – Global Economics and Management)

July 30, 2015

To be efficient, flexible labor markets require geographically mobile workers. Otherwise firms can take advantage of workers’ immobility and extract rents at their expense. In cultures with strong family ties, moving away from home is costly. Thus, to limit the rents of firms and to avoid moving, individuals with strong family ties rationally choose regulated labor markets, even though regulation generates higher unemployment and lower incomes. Empirically, we find that individuals who inherit stronger family ties are less mobile, have lower wages and higher unemployment, and support more stringent labor market regulations. We find a positive association between labor market rigidities at the beginning of the 21st century and family values prevailing before World War II, and between family structures in the Middle Ages and current desire for labor market regulation. Both results suggest that labor market regulations have deep cultural roots.

Keywords: Regulation of labor; Family values; Labor market; Market regulation

JEL: J2 K2 Z0

URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/20g3idj0jd9iqosvjjdcbu44lu&r=ltv

Do more of those in misery suffer from poverty, unemployment or mental illness? By: Sarah Flèche ; Richard Layard

July 30, 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: I31 I32

URL: http://d.repec.org/n?u=RePEc:ehl:lserod:62589&r=ltv

Adaptation to Poverty in Long-Run Panel Data By: Clark, Andrew E. ; D’Ambrosio, Conchita ; Ghislandi, Simone

July 30, 2015

We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 54,000 individuals living in Germany from 1985 to 2012 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any cause of poverty entry which explains the overall lack of poverty adaptation.

Keywords: income, poverty, subjective well-being, adaptation, SOEP

URL: http://d.repec.org/n?u=RePEc:cpm:docweb:1508&r=ltv

When Experienced and Decision Utility Concur: The Case of Income Comparisons By: Clark, Andrew E. (Paris School of Economics) ; Senik, Claudia (Paris School of Economics) ; Yamada, Katsunori (Kindai University)

July 30, 2015

While there is now something of a consensus in the literature on the economics of happiness that income comparisons to others help determine subjective wellbeing, debate continues over the relative importance of own and reference-group income, in particular in research on the Easterlin paradox. The variety of results in this domain have produced some scepticism regarding happiness analysis, and in particular with respect to the measurement of reference-group income. We here use data from an original Internet survey in Japan to compare the results from happiness regressions to those from hypothetical-choice experiments. The trade-off between own and others’ income (showing the importance of absolute and relative income) is similar in these two sets of results. This kind of validation of experienced utility via direct comparison with decision utility remains rare in this literature.

Keywords: satisfaction, income comparisons, reference-group income, discrete-choice experiments

JEL: D31 D63 I3 J31

URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9189&r=ltv

The Most Egalitarian of All Professions: Pharmacy and the Evolution of a Family-Friendly Occupation By: Goldin, Claudia D. ; Katz, Lawrence F.

July 29, 2015

Pharmacy has become a female-majority profession that is highly remunerated with a small gender earnings gap and low earnings dispersion relative to other occupations. We sketch a labor market framework based on the theory of equalizing differences to integrate and interpret our empirical findings on earnings, hours of work, and the part-time work wage penalty for pharmacists. Using extensive surveys of pharmacists for 2000, 2004, and 2009 as well as samples from the American Community Surveys and the Current Population Surveys, we explore the gender earnings gap, the penalty to part-time work, labor force persistence, and the demographics of pharmacists relative to other college graduates. We address why the substantial entrance of women into the profession was associated with an increase in their earnings relative to male pharmacists. We conclude that the changing nature of pharmacy employment with the growth of large national pharmacy chains and hospitals and the related decline of independent pharmacies played key roles in the creation of a more family-friendly, female-friendly pharmacy profession. The position of pharmacist is probably the most egalitarian of all U.S. professions today.

URL: http://d.repec.org/n?u=RePEc:hrv:faseco:17368603&r=ltv

The Dynamics of Inequality By: Xavier Gabaix ; Jean-Michel Lasry ; Pierre-Louis Lions ; Benjamin Moll

July 29, 2015

The past forty years have seen a rapid rise in top income inequality in the United States. While there is a large number of existing theories of the Pareto tails of the income and wealth distributions at a given point in time, almost none of these address the fast rise in top inequality observed in the data. We show that standard theories, which build on a random growth mechanism, generate transition dynamics that are an order of magnitude too slow relative to those observed in the data. We then suggest parsimonious deviations from the basic model that can explain such changes, namely heterogeneity in mean growth rates or deviations from Gibrat’s law. These deviations are consistent with theories in which the increase in top income inequality is driven by the rise of “superstar” entrepreneurs or managers.

JEL: D31 E24

URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:21363&r=ltv

Not Working At Work: Loafing, Unemployment and Labor Productivity By: Burda, Michael C ; Genadek, Katie R. ; Hamermesh, Daniel S.

July 29, 2015

Using the American Time Use Survey (ATUS) 2003-12, we estimate time spent by workers in non-work while on the job. Non-work time is substantial and varies positively with the local unemployment rate. While the average time spent by workers in non-work conditional on any positive non-work rises with the unemployment rate, the fraction of workers who report time in non-work varies pro-cyclically, declining in recessions. These results are consistent with a model in which heterogeneous workers are paid efficiency wages to refrain from loafing on the job. That model correctly predicts relationships of the incidence and conditional amounts of non-work with wage rates and measures of unemployment benefits in state data linked to the ATUS, and it is consistent with observed occupational differences in non-work.

Keywords: efficiency wage; labor productivity; loafing; non-work; shirking; time use

JEL: E24 J22

URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:10712&r=ltv

Youth Unemployment in Old Europe: The Polar Cases of France and Germany By: Pierre Cahuc (Department of Economics) ; Stéphane Carcillo (Departement d’Economie de Sciences Po) ; Ulf Rinne (Institute for the Study of Labor (IZA)) ; Klaus F. Zimmermann (Bonn University (Bonn Graduate School of Economics) (BGSE))

July 29, 2015

France and Germany are two polar cases in the European debate about rising youth unemployment. Similar to what can be observed in Southern European countries, a “lost generation” may arise in France. In stark contrast, youth unemployment has been on continuous decline in Germany for many years, hardly affected by the Great Recession. This paper analyzes the diametrically opposed developments in the two countries to derive policy lessons. As the fundamental differences in youth unemployment primarily result from structural differences in labor policy and in the (vocational) education system, short-term oriented policies do not address the core of the problems. Ultimately, the youth unemployment disease in France and in other European countries has to be cured with structural reforms.
Keywords: Labor Policy; Labor Market Institutions; Great Recession; Youth Unemployment; Minimum Wages; Demographic Trends; Vocational Education and Training; Unemployment Protection
JEL: J24 J38 J68
URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/7k0plsobem9tuo09eg04jujb9a&r=ltv

Does Protecting Older Workers from Discrimination Make It Harder to Get Hired? Evidence from Disability Discrimination Laws By: David Neumark ; Joanne Song ; Patrick Button

July 29, 2015

We explore the effects of disability discrimination laws on hiring of older workers. A concern with anti-discrimination laws is that they may reduce hiring by raising the cost of terminations and – in the specific case of disability discrimination laws – raising the cost of employment because of the need to accommodate disabled workers. Moreover, disability discrimination laws can affect non-disabled older workers because they are fairly likely to develop work-related disabilities, yet are not protected by these laws. Using state variation in disability discrimination protections, we find little or no evidence that stronger disability discrimination laws lower the hiring of non-disabled older workers. We similarly find no evidence of adverse effects of disability discrimination laws on hiring of disabled older workers.
JEL: J14 J71 J78
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:21379&r=ltv