Female Earnings Inequality: The Changing Role of Family Characteristics on the Extensive and Intensive Margins

April 29, 2019
By: David CardDean R. Hyslop
Abstract: Although women make up nearly half the U.S. workforce, most studies of earnings inequality focus on men. This is at least in part because of the complexity of modeling both the decision to work (i.e., the extensive margin) and the level of earnings conditional on work (the intensive margin). In this paper we document a series of descriptive facts about female earnings inequality using data for three cohorts in the PSID. We show that inequality in annual earnings of women fell sharply between the late 1960s and the mid-1990s, with a particularly large decline in the extensive margin component. We then fit earnings-generating models that incorporate both intensive- and extensive-margin dynamics to data for the three cohorts. Our models suggest that over 80% of the decline in female earnings inequality can be attributed to a weakening of the link between family-based factors (including the number of children of different ages and the presence and incomes of partners) and the intensive and extensive margins of earnings determination.
JEL: J22
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:25387&r=ltv

Perspectives on Poverty in Europe

April 29, 2019
By: Jenkins, Stephen P. (London School of Economics)
Abstract: I address four topics: how our capacities to monitor poverty in Europe have improved substantially over recent decades; how progress on EU poverty reduction has been disappointing and why this has been; conceptual and measurement issues; and the future direction of EU-level anti-poverty actions. I follow in the footsteps of a giant – my perspectives are essentially elaborations of points made by Tony Atkinson.
Keywords: poverty, material deprivation, Europe, EU-SILC
JEL: C81 D31 I32
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp12014&r=ltv

Revealing Stereotypes: Evidence from Immigrants in Schools

April 29, 2019
By: Alesina, Alberto (Harvard University); Carlana, Michela (Harvard Kennedy School); La Ferrara, Eliana (Bocconi University); Pinotti, Paolo (Bocconi University)
Abstract: If individuals become aware of their stereotypes, do they change their behavior? We study this question in the context of teachers’ bias in grading immigrants and native children in middle schools. Teachers give lower grades to immigrant students compared to natives who have the same performance on standardized, blindly-graded tests. We then relate differences in grading to teachers’ stereotypes, elicited through an Implicit Association Test (IAT). We find that math teachers with stronger stereotypes give lower grades to immigrants compared to natives with the same performance. Literature teachers do not differentially grade immigrants based on their own stereotypes. Finally, we share teachers’ own IAT score with them, randomizing the timing of disclosure around the date on which they assign term grades. All teachers informed of their stereotypes before term grading increase grades assigned to immigrants. Revealing stereotypes may be a powerful intervention to decrease discrimination, but it may also induce a reaction from individuals who were not acting in a biased way.
Keywords: immigrants, teachers, implicit stereotypes, IAT, bias in grading
JEL: I24 J15
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp11981&r=ltv

How Valid are Synthetic Panel Estimates of Poverty Dynamics?

April 29, 2019
By: Nicolas Herault (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne); Stephen P. Jenkins (London School of Economics, Institute for Social and Economic Research, University of Essex, Institute for the Study of Labor (IZA))
Abstract: A growing literature uses repeated cross-section surveys to derive ‘synthetic panel’ data estimates of poverty dynamics statistics. It builds on the pioneering study by Dang, Lanjouw, Luoto, and McKenzie (Journal of Development Economics, 2014) providing bounds estimates and the innovative refinement proposed by Dang and Lanjouw (World Bank Policy Research Working Paper 6504, 2013) providing point estimates of the statistics of interest. We provide new evidence about the accuracy of synthetic panel estimates relative to benchmarks based on estimates derived from genuine household panel data, employing high quality data from Australia and Britain, while also examining the sensitivity of results to a number of analytical choices. Overall, we are more agnostic about the validity of the synthetic panel approach applied to these two rich countries than are earlier validity studies in their applications focusing on middle- and low- income countries.
Keywords: Overty exit, poverty entry, poverty dynamics, pseudo panel, synthetic panel, BHPS, HILDA
JEL: I32 D31 C52
URL: http://d.repec.org/n?u=RePEc:iae:iaewps:wp2018n05&r=ltv

Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010

April 29, 2019
By: Leonardo Gasparini (CEDLAS-FCE-UNLP & CONICET); Sebastián Galiani (University of Maryland); Guillermo Cruces (CEDLAS-FCE-UNLP & CONICET & IZA); Pablo Acosta (World Bank)
Abstract: This paper documents the evolution of wage differentials and the supply of workers by educational level for sixteen Latin American countries over the period 1991- 2013. We find a pattern of rather constant rise in the relative supply of skilled and semiskilled workers over the period. Whereas the returns to secondary education fell over time, in contrast, the returns to tertiary education display a remarkable changing pattern common to almost all economies: significant increase in the 1990s, strong fall in the 2000s and a deceleration of that fall in the 2010s. We conclude that supply-side factors seem to have limited explanatory power relative to demand-side factors in accounting for changes in the wage gap between workers with tertiary education and the rest.
URL: http://d.repec.org/n?u=RePEc:dls:wpaper:0239&r=ltv

Inefficient Short-Time Work

April 10, 2019
By: Pierre Cahuc (Département d’économie); Sandra Nevoux (Banque de France)
Abstract: This paper shows that the reforms which expanded short-time work in France after the great 2008-2009 recession were largely to the benefit of large firms which are recurrent short-time work users. We argue that this expansion of short-time work is an inefficient way to provide insurance to workers, as it entails cross-subsidies which reduce aggregate production. An efficient policy should provide unemployment insurance benefits funded by experience rated employers’ contributions instead of short-time work benefits. We find that short-time work entails significant production losses compared to an unemployment insurance scheme with experience rating.
Keywords: Short-time work; Unemployment insurance; Experience rating
JEL: J63 J65
URL: http://d.repec.org/n?u=RePEc:spo:wpecon:info:hdl:2441/68ufmnnh3j9vmblf03huqt18qe&r=ltv

When Short-Time Work Works

April 10, 2019
By: Pierre Cahuc (École polytechnique (X)); Francis Kramarz (Sciences Po); Sandra Nevoux (Banque de France)
Abstract: Short-time work programs were revived by the Great Recession. To understand their operating mechanisms, we first provide a model showing that short-time work may save jobs in firms hit by strong negative revenue shocks, but not in less severely-hit firms, where hours worked are reduced, without saving jobs. The cost of saving jobs is low because short-time work targets those at risk of being destroyed. Using extremely detailed data on the administration of the program covering the universe of French establishments, we devise a causal identification strategy based on the geography of the program that demonstrates that short-time work saved jobs in firms faced with large drops in their revenues during the Great Recession, in particular when highly levered, but only in these firms. The measured cost per saved job is shown to be very low relative to that of other employment policies.
URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/6596a4s9af8lt872jnqvm5jg73&r=ltv

Men without work: Why are they so unhappy in the US compared to other places?

April 10, 2019
By: Sergio Pinto (University of Maryland); Carol Graham (The Brookings Institution)
Abstract: The global economy is full of paradoxes. Despite progress in technology, reducing poverty, and increasing life expectancy, the poorest states lag behind, and there is increasing inequality and anomie in the wealthiest ones. A key driver of such unhappiness in advanced countries is the decline in the status and wages of low-skilled labor. A related feature is the increase in prime-aged males (and to a lesser extent women) simply dropping out of the labor force, particularly in the U.S. This same group is over-represented in the “deaths of despair.” There is frustration among this same cohort in Europe and it is reflected in voting trends in both contexts. Prime-aged males out of the labor force in the U.S. are the least hopeful and most stressed and angry compared to the same group in other regions, including the Middle East. Our aim is to better understand this cohort as part of a broader need to rethink our growth models and to explore policies that encourage the participation of able workers in the new global economy and can provide incentives for community involvement and other forms of engagement for those who can no longer work.
Keywords: well-being, happiness, Inequality, gender, unemployment
JEL: I31 D63 E24 J68 J16
URL: http://d.repec.org/n?u=RePEc:hka:wpaper:2019-016&r=ltv

Wealth Disparities for Early Childhood Anthropometrics and Skills: Evidence from Chilean Longitudinal Data

April 1, 2019
By: Jere R. Behrman (Department of Economics, University of Pennsylvania); Dante Contreras (Department of Economics, University of Chile); Isidora Palma (Department of Economics, University of Chile); Esteban Puentes (Department of Economics, University of Pennsylvania)
Abstract: We study wealth disparities in the formation of anthropometrics, cognitive skills and socio-emotional skills. We use a sample of preschool and early school children in Chile. We extend the previous literature by using longitudinal data, which allow us to study the dynamics of child growth and skills formation. Also, we include information on mother’s and father’s schooling attainment and mother’s cognitive ability. We find that there are no significant anthropometric differences favoring the better-off at birth (and indeed length differences at birth to the disadvantage of the better-off), but during the first 30 months of life wealth disparities in height-for-age z scores (HAZ) favoring the better-off emerge. Moreover, we find wealth disparities in cognitive skills favoring the better-off emerge early in life and continue after children turn 6 years of age. We find no concurrent wealth disparities for and socio-emotional skills. Thus, even though the wealth disparities in birth outcomes if anything favor the poor, significant disparities favoring the rich emerge in the early post-natal period. Mother’s education and cognitive ability also are significantly associated with disparities in skill formation.
Keywords: Wealth disparities, anthropometrics, cognitive skills, socio-emotional skills
JEL: I14 I31 D30
URL: http://d.repec.org/n?u=RePEc:pen:papers:17-019&r=ltv

Human Capital Inequality: Empirical Evidence

April 1, 2019
By: Brant Abbott (University of British Columbia); Giovanni Gallipoli (University of British Columbia)
Abstract: Wealth inequality has received considerable attention, with mounting evidence of steady and economically meaningful changes in the concentration of wealth ownership. By definition, wealth inequality captures disparity in the ownership of productive capital and other non-labor factors of production. In contrast, in this article we focus on the distribution of human capital and its implications for the accrual of economic resources to individuals and households. Human capital inequality can be thought of as measuring disparity in the ownership of labor factors of production, which are usually compensated in the form of wage income.
Keywords: Inequality, wealth distribution, human capital
JEL: J24 D31 I24
URL: http://d.repec.org/n?u=RePEc:hka:wpaper:2018-085&r=ltv