Unemployment, Inequality & Poverty – Edition March 21

March 25, 2022


March 16, 2022



Productive Robots and Industrial Employment:

The Role of National Innovation Systems*

In a model with robots, and automatable and complementary human tasks, we examine robot-labour substitutions and show how it they are influenced by a country’s “innovation system”. Substitution depends on demand and production elasticities, and other factors influenced by the innovation system. Making use of World Economic Forum data we estimate the relationship for thirteen countries and find that countries with poor innovation capabilities substitute robots for workers much more than countries with richer innovation capabilities, which generally complement them. In transport equipment and non- manufacturing robots and workers are stronger substitutes than in other manufacturing.

JEL Classification: Keywords:

Corresponding author:

J23, L60, O33, O52

robots-employment substitution, automatable tasks, complementary task creation, innovation environment, industrial allocations

Christopher A Pissarides Department of Economics London School of Economics Houghton Street

WC2A 2AE London

United Kingdom

E-mail: c.pissarides@lse.ac.uk


March 16, 2022


The Elusive Explanation for the Declining Labor Share Gene M. Grossman and Ezra Oberfield

NBER Working Paper No. 29165

August 2021

JEL No. E25


A vast literature seeks to measure and explain the apparent decline in the labor share in national income that has occurred in recent times in the United States and elsewhere. The culprits include technological change, increased globalization and the rise of China, the enhanced exercise of market power by large firms in concentrated product markets, the decline in unionization rates and the erosion in the bargaining power of workers in labor markets, and the changing composition of the workforce due to a slowdown in population growth and a rise in educational attaintment. We review this literature, with special emphasis on the pitfalls associated with using cross-sectional data to assess this phenomenon and the reasons why the body of papers collectively explains the phenomenon many times ov

March 16, 2022


Chapter X: Group Identity and Social Preferences

by Yan Chen and Sherry X. Li.

American Economic Review (2009)

Reviewed by Marie Claire Villeval, CNRS, GATE. Author Orchid ID: https://orcid.org/0000-0001-8578-5449

Abstract: Beyond a summary of the paper, this review of “Group Identity and Social Preferences” by Yan Chen and Sherry X. Li highlights its exceptional impact on our understanding of group-contingent social preferences. This paper has made an important theoretical contribution by introducing group identity in the Charness and Rabin (2002)’s model of social preferences. The core of the contribution is to show experimentally that social identity influences distributional preferences, reciprocity and welfare-maximizing behavior. In particular, charity increases and envy decreases when people are matched with an in-group compared to an out-group, and people are more likely to reward and less likely to punish an in- group than an out-group match. This paper has also contributed to the methodological debates about the use of minimal group identity in laboratory experiments. It has inspired many research programs on the role of group-contingent preferences in various dimensions of decision-making in society. It is also important to emphasize its policy implications regarding how group- contingent social preferences could be activated to improve efficiency and the quality of social interactions in our segmented societies. This research agenda is more relevant than ever.

Other-Regarding Preferences and Redistributive Politics

March 16, 2022
  1. By:Fehr, Ernst (University of Zurich); Epper, Thomas(University of Lille); Senn, Julien (University of Zuri).
  2. Abstract:Increasing inequality and associated egalitarian sentiments have again put redistribution on the political agenda. Other-regarding preferences may also affect support for redistribution, but knowledge about their distribution in the broader population and how they are associated with political support for redistributive policies is still scarce. In this paper, we take advantage of Swiss direct democracy, where people voted several times on strongly redistributive policies in national plebiscites, to study the link between other-regarding preferences and support for redistribution in a broad sample of the Swiss population. We document that inequality aversion and altruistic concerns play a quantitatively large positive role in the support for redistribution, in particular for more affluent individuals. In addition, previously identified key motives underlying opposition to redistribution – such as the belief that effort is an important driver of individual success – play no role for selfish individuals but are highly relevant for altruistic and egalitarian individuals. Finally, while inequality averse individuals display strong support for policies that primarily aim at reducing the incomes of the rich, altruistic individuals are considerably less supportive of such policies. Thus, knowledge about the fundamental properties and the distribution of individuals’ other-regarding preferences also provides a deeper understanding about who is likely to support specific redistributive policies.Keywords:social preferences, altruism, inequality aversion, preference heterogeneity, demand for redistributionJEL:D31 D72 H23 H24Date:2022–02URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp15088&r=&r=ltv

Redistributive Effect and the Progressivity of Taxes and Benefits: Evidence for the UK, 1977–2018

March 9, 2022

By:Herault, Nicolas; Jenkins, Stephen P.

:We apply the Kakwani approach to decomposing redistributive effect into average rate, progressivity, and reranking components using yearly UK data covering 1977–2018. We examine cash and in-kind benefits, and direct and indirect taxes. In addition, we highlight an empirical implementation issue – the definition of the reference (‘pre-fisc’) distribution. Drawing on an innovative counterfactual approach, our empirical analysis shows that trends in the redistributive effect of cash benefits are largely associated with cyclical changes in average benefit rates. In contrast, trends in the redistributive effects of direct and indirect taxes are mostly associated with changes in progressivity. For in-kind benefits, changes in the average benefit rate and progressivity each played the major roles at different times. (Stone Center on Socio-Economic Inequality Working Paper)