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

Job Creation in a Multi-Sector Labor Market Model for Developing Economies

July 27, 2016
By: Basu, Arnab ; Chau, Nancy H ; Fields, Gary S ; Kanbur, Ravi
This paper proposes an overlapping generations multi-sector model of the labor market for developing countries with three heterogeneities – heterogeneity within self-employment, heterogeneity in ability, and heterogeneity in age. We revisit an iconic paradox in a class of multisector labor market models in which the creation of high-wage employment exacerbates unemployment. Our richer setting allows for generational differences in the motivations for job search to be reflected in two distinct inverted U-shaped relationships between unemployment and high-wage employment, one for youth and a different one for adults. In turn, the relationship between overall unemployment and high-wage employment is shown to be non-monotonic and multi-peaked. The model also sheds light on the implications of increasing high-wage employment on self-employed workers, who make up most of the world’s poor. Nonmonotonicity in unemployment notwithstanding, increasing high-wage employment has an unambiguous positive impact on high-paying self-employment, and an unambiguous negative impact on free-entry (low-wage) self-employment.
Keywords: Harris- Todaro Model.; Multisector Labor Market; Overlapping Generations; Poverty Reduction
JEL: I32 O17

Income Poverty, Affluence and Polarisation Viewed From The Median

July 27, 2016
By: Rolf Aaberge ; A.B. Atkinson ; Henrik Sigstad
The present paper brings together different features of the distribution of income – poverty, affluence and dispersion – in a single framework that allows ready comparisons across countries. We believe that such a unified framework contributes both to the policy debate and to the theoretical understanding of inequality. There are at present largely separate literatures on the measurement of poverty, and (to a limited degree) affluence, and on bi-polariszation. In relation to the EU social indicators, the paper may be seen as providing complementary information.
Keywords: poverty, inequality, polarisation, affluence
JEL: I31

The challenge of measuring UK wealth inequality in the 2000s

July 27, 2016
By: Facundo Alvaredo ; Anthony B. Atkinson ; Salvatore Morelli
The concentration of personal wealth is now receiving a great deal of attention – after having been neglected for many years. One reason is the growing recognition that, in seeking explanations for rising income inequality, we need to look not only at wages and earned income but also at income from capital, particularly at the top of the distribution. In this paper, we use evidence from existing data sources to attempt to answer three questions: (i) What is the share of total personal wealth that is owned by the top 1 per cent, or the top 0.1 per cent? (ii) Is wealth much more unequally distributed than income? (iii) Is the concentration of wealth at the top increasing over time? The main conclusion of the paper is that the evidence about the UK concentration of wealth post-2000 is seriously incomplete and significant investment in a variety of sources is necessary if we are to provide satisfactory answers to the three questions.
Keywords: wealth inequality; estate multiplier; investment income
JEL: D3 H2

Are Universities Becoming More Unequal?

July 22, 2016
By: Yan Lau (Reed College) ; Harvey S. Rosen (Princeton University)
Observers have expressed concern about growing inequality in resources across universities. But are universities really becoming more unequal? We argue that the typical approach of examining endowment growth alone is not sensible. In line with the literature on household inequality, we focus instead on a comprehensive income measure. We find that although there is considerable inequality among institutions, concerns about the inexorable growth of inequality are overblown. Whether one looks at income, endowment wealth, or expenditure, inequality has been high but stable, exhibiting only negligible increases in recent years. Furthermore, there has been little mobility within the higher education sector.
JEL: I23