Monday, March 08, 2010

NEP: New Economics Papers Central and South America 2010-03-06

NEP: New Economics Papers
Central and South America

Edited by:Maximo Rossi
Universidad de la República
Issue date:2010-03-06
Papers:5
Note: Access to full contents may be restricted.
NEP is sponsored by SUNY Oswego.

In this issue we have:

  1. Trade Liberalization, Inequality and Poverty in Brazilian States
    Marta Castilho; Marta Menéndez; Aude Sztulman
  2. The Impact of International Trade Flows on the Growth of Brazilian States
    Marie Daumal; Selin Ozyurt
  3. SMEs and Regional Economic Growth in Brazil
    Túlio A. Cravo; Adrian Gourlay; Bettina Becker
  4. Does Conflict Disrupt Growth? Evidence of the Relationship between Political Instability and National Economic Performance
    Polachek, Solomon; Sevastianova, Daria
  5. Effects of Reserve Requirements in an Inflation Targeting Regime: The Case of Colombia
    Hernando Vargas Herrera; Carlos Varela; Yanneth R. Betancourt; Norberto Rodríguez

Contents.

  1. Date:2009-12
    By:Marta Castilho (Universidade Federal Fluminense, Rio de Janeiro, Brazil)
    Marta Menéndez (Université Paris-Dauphine, LEDa-DIAL, Paris - Paris School of Economics)
    Aude Sztulman (Université Paris-Dauphine, LEDa-DIAL, Paris)
    URL:http://d.repec.org/n?u=RePEc:dia:wpaper:dt201002&r=lam
    This paper studies the impact of trade liberalization and international trade on household income inequality and poverty using detailed micro-data across Brazilian states, from 1987 to 2005. Results suggest that Brazilian states that were more exposed to tariff cuts experienced smaller reductions in household poverty and inequality. If significance of results on Brazilian states depends on the choice of poverty and inequality indicators, robust and contrasting results emerge when we disaggregate into rural and urban areas within states. Trade liberalization contributes to poverty and inequality increases in urban areas and may be linked to inequality declines in rural areas (no significant effect is found for rural poverty). In terms of observed integration to world markets, import penetration plays a similar role as trade liberalization for Brazilian states as a whole. On the contrary, rising export exposure appears to have significantly reduced both measures of household welfare. _________________________________ Cet article étudie l’impact de la libéralisation commerciale et du commerce international sur les inégalités de revenu et le niveau de pauvreté des ménages au sein des états brésiliens, à partir de données individuelles sur la période 1987-2005. D’après l’étude économétrique, les états brésiliens, davantage touchés par la libéralisation commerciale, ont connu de plus faibles réductions des inégalités ou de la pauvreté. Pour les états brésiliens dans leur ensemble, la significativité des résultats dépend du choix des indicateurs de pauvreté et d’inégalité mais, dès lors que l’on distingue les zones rurales et urbaines au sein des états, les effets sont robustes et contrastés. En zone urbaine, la libéralisation commerciale aurait contribué à accroître les niveaux de pauvreté et d’inégalité, tandis qu’elle entraînerait une diminution des inégalités en zone rurale (aucun impact significatif n’est observé sur la pauvreté rurale). En termes d’insertion des états brésiliens dans le commerce international, une hausse du taux de pénétration des importations joue dans le même sens que la libéralisation commerciale. Mais la propension à exporter d’un état contribuerait à réduire tant la pauvreté que les inégalités de revenu.
    Keywords:Trade liberalization, poverty and inequality; Brazilian states, Libéralisation commerciale, pauvreté et inégalités, états brésiliens.
    JEL:D31
  2. Date:2010-01
    By:Marie Daumal (Université Paris 8 Vincennes-Saint-Denis, Université Paris-Dauphine, LEDa, UMR DIAL)
    Selin Ozyurt (Université Paris-Dauphine)
    URL:http://d.repec.org/n?u=RePEc:dia:wpaper:dt201001&r=lam
    The aim of this paper is to explore the impact of Brazil’s trade openness on regional inequalities by estimating the effect of international trade flows on growth of Brazilian states, depending on their income level. For this purpose, we run dynamic growth regressions, using the system GMM estimator, on a panel data set including 26 Brazilian states for the 1989 - 2002 period. Growth rates of Brazilian states are regressed on control variables and on Brazilian states’ trade openness variables. All variables vary across both states and year. The results indicate that trade openness benefits more the Brazilian states with higher levels of per capita income, thereby tending to increase regional inequalities in Brazil. Besides, we find that trade openness advantages more the states with a good level of human capital as well as the industrialized states rather than the states whose main activity is agriculture. The problem that this study reveals is that international trade seems to provide additional advantages to already well developed Brazilian states while one of the priorities of the Brazilian federal government is to achieve a better territorial balance in Brazil. _________________________________ Ce travail a pour objectif d’estimer l’impact des flux de commerce international sur la croissance des Etats brésiliens. A l’aide de l’estimateur GMM, le taux de croissance des Etats brésiliens est régressé sur divers déterminants de la croissance et sur leur taux d’ouverture commerciale. La base de données en panel contient les 26 Etats brésiliens sur la période 1989 - 2002. Les estimations de l’équation de croissance montrent que les flux de commerce international des Etats favorisent davantage la croissance des Etats riches que celle des Etats les moins développés. Nous montrons également qu’il existe au Brésil une convergence conditionnelle. Les Etats pauvres ont un taux de croissance plus élevé que les Etats riches mais il semble que leurs états stationnaires soient très différents les uns des autres, ce qui nous amène à penser que les inégalités régionales resteront importantes dans l’avenir.
    Keywords:International trade, growth equation, GMM estimator, Brazilian states, Commerce international, équation de croissance, estimateur GMM, Etats brésiliens.
    JEL:F43
  3. Date:2010-01
    By:Túlio A. Cravo (Dept of Economics, Loughborough University)
    Adrian Gourlay (Dept of Economics, Loughborough University)
    Bettina Becker (Dept of Economics, Loughborough University)
    URL:http://d.repec.org/n?u=RePEc:lbo:lbowps:2010_01&r=lam
    This paper examines the relationship between the Small and Medium Enterprise (SME) sector and economic growth for an annual panel of Brazilian states for the period 1985-2004. We investigate the importance of the relative size of the SME sector measured by the share of the SME employment in total formal employment and the level of human capital in SMEs measured by the average years of schooling of SME employees. The empirical results indicate that the relative importance of SMEs is negatively correlated with economic growth, a result that is consistent with previous studies examining developing countries. In addition, our results also show that human capital embodied in SMEs may be more important for economic growth than the relative size of the SME sector.
    Keywords:Firm size, market structure, economic growth, human capital.
    JEL:O1
  4. Date:2010-02
    By:Polachek, Solomon (Binghamton University, New York)
    Sevastianova, Daria (University of Southern Indiana)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4762&r=lam
    Current empirical growth models limit the determinants of country growth to geographic, economic, and institutional variables. This study draws on conflict variables from the Correlates of War (COW) project to ask a critical question: How do different types of conflict affect country growth rates? It finds that wars slow the economy. Estimates indicate that civil war reduces annual growth by .01 to .13 percentage points, and high-intensity interstate conflict reduces annual growth by .18 to 2.77 percentage points. On the other hand, low-intensity conflict slows growth much less than high-intensity conflict, and may slightly increase it. The detrimental effect of conflict on growth is intensified when examining non-democracies, low income countries, and countries in Africa.
    Keywords:war, economic growth, conflict
    JEL:C2
  5. Date:2010-02-11
    By:Hernando Vargas Herrera
    Carlos Varela
    Yanneth R. Betancourt
    Norberto Rodríguez
    URL:http://d.repec.org/n?u=RePEc:col:000094:006710&r=lam
    The Colombian economy and financial system have coped reasonably well with the effects of the global financial crisis. Hence, “unconventional” policy measures have not been at the center of the policy decisions and discussions. Nominal short term interest rates have remained the main monetary policy tool and “Quantitative easing” measures have not been central in the policy response. The one “unconventional” monetary instrument used by the Central Bank in Colombia has been changes in reserve requirements (RR) on financial system deposits. Interestingly, they were adopted before the global financial crisis, as a reaction to domestic credit conditions. The effects of RR on interest rate and interest rate pass-through in an inflation targeting regime are not as straightforward as those under a monetary targeting regime. Conceptually, those effects depend on the degree of substitution between deposits and central bank credit as sources of funds for banks and on the extent to which RR changes affect the risks facing banks. The empirical results for Colombia suggest that RR are important long run determinants of business loan interest rates and have been effective in strengthening the pass-through from policy to deposit and lending interest rates.
This nep–lam issue is ©2010 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, it must include this copyright notice. It may not be sold, or placed in something else for sale.
General information on the NEP project can be found at http://nep.repec.org/. For comments please write to the director of NEP, Marco Novarese at <>.

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NEP: New Economics Papers Unemployment, Inequality and Poverty 2010-03-06

NEP: New Economics Papers
Unemployment, Inequality and Poverty

Edited by:Maximo Rossi
University of the Republic
Issue date:2010-03-06
Papers:8
Note: Access to full contents may be restricted.
NEP is sponsored by SUNY Oswego.

In this issue we have:

  1. Social network theory and analysis: a preliminary exploration. CHERE Working Paper 2009/5
    Marion Haas
  2. Obesity and Happiness
    Marina-Selini Katsaiti
  3. Slip Sliding Away: Further Union Decline in Germany and Britain
    Addison, John T.; Bryson, Alex; Teixeira, Paulino; Pahnke, André
  4. The Political Economy of Intergenerational Income Mobility
    Ichino, Andrea; Karabarbounis, Loukas; Moretti, Enrico
  5. Measuring What Employers Really Do about Entry Wages over the Business Cycle
    Martins, Pedro S.; Solon, Gary; Thomas, Jonathan P.
  6. Policies to Create and Destroy Human Capital in Europe
    James J. Heckman; Bas Jacobs
  7. Family Values and the Regulation of Labor
    Alberto F. Alesina; Yann Algan; Pierre Cahuc; Paola Giuliano
  8. A Shred of Credible Evidence on the Long Run Elasticity of Labor Supply
    Orley C. Ashenfelter; Kirk B. Doran; Bruce Schaller

Contents.

  1. Date:2009-10
    By:Marion Haas (CHERE, University of Technology, Sydney)
    URL:http://d.repec.org/n?u=RePEc:her:chewps:2009/5&r=ltv
    The rationale for addressing the issue of social networks and social network analysis in the context of health policy is to investigate the extent to which these theoretical and analytical paradigms represent feasible and useful tools to evaluate the effectiveness of strategies aimed at increasing the likelihood that policy makers will use evidence from research in formulating health and health services policy. In this context, the investigation of social network theory and analysis is informed by the needs of the Sax Institute, which is a coalition of University and research groups undertaking public health and health services research in NSW. The aim of the Institute is to build partnerships between researchers and health policy and service delivery agencies and, through these partnerships, develop research assets and programs and support researchers to enable and strengthen policy and practice focused research. Although the final outcome of interest is the formulation of evidence-informed policy (and, by inference, its implementation and the subsequent improvement in outcomes such as enhanced health services delivery and/or improved health status of those affected by the policy), it is unlikely that a direct link between the research evidence used, the formulation of policy, its implementation and any outcomes will be able to be observed within the limited resources available to the Sax Institute. Therefore, for the purposes of this paper, policy formulation and implementation will be treated as processes, and their link to health services and patient/population health status will be assumed. The paper will focus on the use of social networks in encouraging or enhancing links between the research evidence and policy formulation aspects of the process and the feasibility of using social network analysis to evaluate the effectiveness of such links. In particular, the issue of researcher-policy maker interaction will be dealt with, in terms of the extent to which a social network is likely to encourage such interactions and the extent to which interactions, in turn, facilitate the development of evidence-informed policy. The paper is structured as followsa: social networks and social network analysis are described in section 2, including a brief explanation of the theoretical underpinnings of the constructs. Section 3 covers some literature describing how networks have been used to link researchers and policy makers (research policy networks) and any evaluations of such networks. Section 4 will repeat this exercise with examples from the literature of health research policy networks (or similar) and will focus on the extent to which networks are likely to be effective in the context of policy relating to health and health services, and, if they are, what might be the characteristics required for a network to be successful. In turn, this will allow some consideration of how the effectiveness of a network could be evaluated. The final section (section 5) will draw some conclusions from the preceding sections and raise some issues for the Sax Institute to consider.
    Keywords:Social network theory, Australia
    JEL:I10
  2. Date:2010
    By:Marina-Selini Katsaiti
    URL:http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp270&r=ltv
    This paper provides insight on the relationship between obesity and happiness. Using the latest available cross sectional data from Germany (GSOEP 2006), UK (BHPS 2005), and Australia (HILDA 2007). We examine whether there is evidence on the impact of overweight on subjective well being. The Hausman test is employed in the univariate and multivariate specifications chosen and reveals evidence for the presence of endogeneity in the German and the Australian data. Instrumental variable analysis is performed under the presence of endogeneity whereas for the UK we run OLS regressions. Results indicate that in all three countries obesity has a negative and significant effect on the subjective well being of individuals. For Germany, using a differences-in-differences methodology, I find that non-overweight/non-obese individuals are on average 0.5 units happier than their overweight/obese counterparts. Our findings also have important implications for the effect of other socio-demographic, economic and individual characteristics on well being.
    Keywords:Happiness, obesity, instrumental variable analysis, subjective well-being
    JEL:D60
  3. Date:2010-02
    By:Addison, John T. (University of South Carolina)
    Bryson, Alex (National Institute of Economic and Social Research)
    Teixeira, Paulino (University of Coimbra)
    Pahnke, André (IAB, Nürnberg)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4760&r=ltv
    This paper presents the first comparative analysis of the decline in collective bargaining in two European countries where that decline has been most pronounced. Using workplace-level data and a common model, we present decompositions of changes in collective bargaining and worker representation in the private sector in Germany and Britain over the period 1998-2004. In both countries within-effects dominate compositional changes as the source of the recent decline in unionism. Overall, the decline in collective bargaining is more pronounced in Britain than in Germany, thus continuing a trend apparent since the 1980s. Although workplace characteristics differ markedly across the two countries, assuming counterfactual values of these characteristics makes little difference to unionization levels. Expressed differently, the German dummy looms large.
    Keywords:behavioral and composition effects, patterns of erosion, worker representation, union coverage, union recognition, shift share analysis
    JEL:J50
  4. Date:2010-02
    By:Ichino, Andrea (University of Bologna)
    Karabarbounis, Loukas (Harvard University)
    Moretti, Enrico (University of California, Berkeley)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4767&r=ltv
    The intergenerational elasticity of income is considered one of the best measures of the degree to which a society gives equal opportunity to its members. While much research has been devoted to measuring this reduced-form parameter, less is known about its underlying structural determinants. Using a model with exogenous talent endowments, endogenous parental investment in children and endogenous redistributive institutions, we identify the structural parameters that govern the intergenerational elasticity of income. The model clarifies how the interaction between private and collective decisions determines the equilibrium level of social mobility. Two societies with similar economic and biological fundamentals may have vastly different degrees of intergenerational mobility depending on their political institutions. We offer empirical evidence in line with the predictions of the model. We conclude that international comparisons of intergenerational elasticity of income are not particularly informative about fairness without taking into account differences in politico-economic institutions.
    Keywords:intergenerational mobility, public education, political institutions
    JEL:E24
  5. Date:2010-02
    By:Martins, Pedro S. (Queen Mary, University of London)
    Solon, Gary (Michigan State University)
    Thomas, Jonathan P. (University of Edinburgh)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4757&r=ltv
    In models recently published by several influential macroeconomic theorists, rigidity in the real wages that firms pay newly hired workers plays a crucial role in generating realistically large cyclical fluctuations in unemployment. There is remarkably little evidence, however, on whether employers' hiring wages really are invariant to business cycle conditions. We review the small empirical literature and show that the methods used thus far are poorly suited for identifying employers’ wage practices. We propose a simpler and more relevant approach – use matched employer/employee longitudinal data to identify entry jobs and then directly track the cyclical variation in the real wages paid to workers newly hired into those jobs. We illustrate the methodology by applying it to data from an annual census of employers in Portugal over the period 1982-2007. We find that real entry wages in Portugal over this period tend to be about 1.8 percent higher when the unemployment rate is one percentage point lower. Like most recent evidence on other aspects of wage cyclicality, our results suggest that the cyclical elasticity of wages is similar to that of employment.
    Keywords:real wage cyclicality, entry wages, matched employer-employee data
    JEL:E24
  6. Date:2010-02
    By:James J. Heckman
    Bas Jacobs
    URL:http://d.repec.org/n?u=RePEc:nbr:nberwo:15742&r=ltv
    Trends in skill bias and greater turbulence in modern labor markets put wages and employment prospects of unskilled workers under pressure. Weak incentives to utilize and maintain skills over the life-cycle become manifest with the ageing of the population. Policies to promote human capital formation reduce welfare state dependency among the unskilled and offset inefficiencies in human capital formation. Skill formation features strong dynamic complementarities over the life-cycle. Investments in the human capital of children have higher returns than investments in the human capital of older workers. There is no trade-off between equity and efficiency at early ages of human development but there is a substantial trade-off at later ages. Later remediation of skill deficits acquired in early years often does not meet the cost-benefit criterion. Positive returns to active labor market and training policies are doubtful. Skill formation is impaired when the returns to skill formation are low due to low skill use and insufficient skill maintenance later on in life. High marginal tax rates and generous benefit systems reduce labor force participation rates and hours worked and thereby lower the utilization rate of human capital. Tax-benefit systems redistribute resources from outsiders to insiders in labor markets, which can be both distortionary and inequitable. Actuarially fairer early retirement and pension schemes reduce the incentives to retire early and strengthen incentives for human capital investment by increasing the time-horizon over which returns to human capital are harvested.
    JEL:H2
  7. Date:2010-02
    By:Alberto F. Alesina
    Yann Algan
    Pierre Cahuc
    Paola Giuliano
    URL:http://d.repec.org/n?u=RePEc:nbr:nberwo:15747&r=ltv
    Flexible labor markets require geographically mobile workers to be efficient. Otherwise, firms can take advantage of the immobility of workers and extract monopsony rents. In cultures with strong family ties, moving away from home is costly. Thus, individuals with strong family ties rationally choose regulated labor markets to avoid moving and limiting the monopsony power of firms, even though regulation generates lower employment and income. Empirically, we do find that individuals who inherit stronger family ties are less mobile, have lower wages, are less often employed and support more stringent labor market regulations. There are also positive cross-country correlations between the strength of family ties and labor market rigidities. Finally, we find positive correlations between labor market rigidities at the beginning of the twenty first century and family values prevailing before World War II, which suggests that labor market regulations have deep cultural roots.
    JEL:J2
  8. Date:2010-02
    By:Orley C. Ashenfelter
    Kirk B. Doran
    Bruce Schaller
    URL:http://d.repec.org/n?u=RePEc:nbr:nberwo:15746&r=ltv
    Virtually all public policies regarding taxation and the redistribution of income rely on explicit or implicit assumptions about the long run effect of wages rates on labor supply. The available estimates of the wage elasticity of male labor supply in the literature have varied between -0.2 and 0.2, implying that permanent wage increases have relatively small, poorly determined effects on labor supplied. The variation in existing estimates calls for a simple, natural experiment in which men can change their hours of work, and in which wages have been exogenously and permanently changed. We introduce a panel data set of taxi drivers who choose their own hours, and who experienced two exogenous permanent fare increases instituted by the New York City Taxi and Limousine Commission, and we use these data to fit a simple structural labor supply function. Our estimates suggest that the elasticity of labor supply is about -0.2, implying that income effects dominate substitution effects in the long run labor supply of males.
    JEL:H31
This nep–ltv issue is ©2010 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, it must include this copyright notice. It may not be sold, or placed in something else for sale.
General information on the NEP project can be found at http://nep.repec.org/. For comments please write to the director of NEP, Marco Novarese at <>.

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Thursday, March 04, 2010

NEP: New Economics Papers Central and South America 2010-02-27

NEP: New Economics Papers Central and South America 2010-02-27

March 4, 2010 by maximorossi

NEP: New Economics Papers
Central and South America

Edited by: Maximo Rossi
Universidad de la Republica

Issue date: 2010-02-27
Papers: 3
Note: Access to full contents may be restricted.
NEP is sponsored by SUNY Oswego.
In this issue we have:

Quantifying the Impact of Financial Development on Economic Development
Jeremy Greenwood; Juan M. Sanchez; Cheng Wang

Innovation, Productivity and Economic Development in Latin America and the Caribbean
Christian Daude

The economics of growth.
Aghion, P.; Howitt, P.
Contents.

Quantifying the Impact of Financial Development on Economic Development
Date: 2010-02
By: Jeremy Greenwood (University of Pennsylvania)
Juan M. Sanchez (Federal Reserve Bank of Richmond)
Cheng Wang (Iowa State University and Fudan University)
URL: http://d.repec.org/n?u=RePEc:eag:rereps:17&r=lam
How important is financial development for economic development? A costly-state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U.S. economy, such as intermediation spreads and the firm-size distribution for the years 1974 and 2000. The calibrated model is then used to study cross-country data, using international data on interest-rate spreads. The analysis suggests a country like Uganda could increase its output by 140 to 180% if it could adopt the world’s best practice in the financial sector. Still, this amounts to only 34 to 40% of the gap between Uganda’s potential and actual output.
Keywords: costly-state verification, economic development, financial intermediation, firm-size distribution, interest-rate spreads, cross-country output differences, cross-country TFP differences
JEL: E13

Innovation, Productivity and Economic Development in Latin America and the Caribbean
Date: 2010-02
By: Christian Daude
URL: http://d.repec.org/n?u=RePEc:oec:devaaa:288-en&r=lam
GDP per capita in Latin America has been falling behind high-income countries and other benchmarks for decades and the region’s mediocre growth performance is one of the main reasons why poverty reduction, and living standards more generally, in the region is well below that observed in peer countries. In this paper, we explore some of the potential roots of this poor performance by using development accounting techniques. The results point towards total factor productivity as the main culprit for the region’s lack of convergence. In order to investigate what causes the lack of productivity catch-up, we analyse the determinants of technology diffusion, in particular of internet and mobile phone technologies. The empirical results show that institutions, absorption capacity (human capital), and financial constraints are the main explanatory variables of the diffusion gaps in these technologies between the OECD and Latin America. We also explore the performance of the region in terms of health outcomes, reflected in the evolution of life expectancy, and the specific role played by technological innovation and adoption. Finally, a calibration exercise of an endogenous growth model allows us to assess the extent to which the region’s per capita income gap is due to problems in factor accumulation or distortions that reduce the incentives to innovate; the results point to very different situations across countries in the region. While for some countries we find evidence of ‚innovation shortfalls?, other countries’ problems concentrate around low factor accumulation.
En Amérique latine, le PIB par habitant n’a eu de cesse depuis plusieurs décennies de reculer par rapport à celui des pays à hauts revenus et d’autres pays de références. Les mauvaises performances de la région en terme de croissance sont l’une des principales raisons pour lesquelles la réduction de la pauvreté, et de façon générale le niveau de vie, sont bien plus faibles que ceux observés dans les pays. Dans cet article, nous explorons certaines des raisons potentielles de cette mauvaise performance à l’aide de techniques comptables de développement. Les résultats tendent à montrer que la principale cause de l’absence de convergence de la région est la productivité totale des facteurs. Afin de rechercher pourquoi ces pays n’ont pas comblé leur retard de productivité, nous analysons les déterminants des technologies de diffusion, et en particulier internet et les technologies de téléphonie mobile. Les résultats empiriques montrent que les institutions, la capacité d’absorption (capital humain) et les contraintes financières sont les principales variables explicatives de l’écart qui existe entre les pays de l’OCDE et ceux de l’Amérique latine concernant la diffusion de ces technologies. Nous explorons également la performance de la région en matière de santé, mesurée par l’évolution de l’espérance de vie, et le rôle spécifique joué par l’innovation et l’adoption technologique. Finalement, un exercice de calibrage d’un modèle de croissance endogène nous permet d’évaluer jusqu’à quel point la différence de revenu par tête au sein de la région est due à des problèmes d’allocation des facteurs ou à des distorsions qui diminuent les incitations à innover. Les résultats varient fortement d’un pays à l’autre au sein de la région. Si pour certains pays nous mettons en évidence un « manque d’innovation », pour d’autres, la faible accumulation de facteurs demeure le principal problème.
Keywords: economic growth, innovation, Latin America, total factor productivity, croissance économique, innovation, Amérique latine, productivité totale des facteurs
JEL: O10

The economics of growth.
Date: 2009-01
By: Aghion, P.
Howitt, P.
URL: http://d.repec.org/n?u=RePEc:ner:ucllon:http://eprints.ucl.ac.uk/17829/&r=lam
This comprehensive introduction to economic growth presents the main facts and puzzles about growth, proposes simple methods and models needed to explain these facts, acquaints the reader with the most recent theoretical and empirical developments, and provides tools with which to analyze policy design. The treatment of growth theory is fully accessible to students with a background no more advanced than elementary calculus and probability theory; the reader need not master all the subtleties of dynamic programming and stochastic processes to learn what is essential about such issues as cross-country convergence, the effects of financial development on growth, and the consequences of globalization. The book, which grew out of courses taught by the authors at Harvard and Brown universities, can be used both by advanced undergraduate and graduate students, and as a reference for professional economists in government or international financial organizations.
This nep–lam issue is ©2010 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, it must include this copyright notice. It may not be sold, or placed in something else for sale.
General information on the NEP project can be found at http://nep.repec.org/. For comments please write to the director of NEP, Marco Novarese at .

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Wednesday, March 03, 2010

NEP: New Economics Papers Unemployment, Inequality and Poverty 2010-02-27

NEP: New Economics Papers
Unemployment, Inequality and Poverty

Edited by: Maximo Rossi
Universidad de la República
Issue date: 2010-02-27
Papers: 8
Note: Access to full contents may be restricted.
NEP is sponsored by SUNY Oswego.
In this issue we have:

A Detailed Decomposition of Changes in Wage Inequality in Reunified Post-Transition Germany 1999-2006: Accounting for Sample Selection
Usamah Al-farhan

Women between Part-Time and Full-Time Work: The Influence of Changing Hours of Work on Happiness and Life-Satisfaction
Vanessa Gash; Antje Mertens; Laura Romeu Gordo

Rates of Return to University Education: The Regression Discontinuity Design
Fan, Elliott; Meng, Xin; Wei, Zhichao; Zhao, Guochang

Family Values and the Regulation of Labor
Alesina, Alberto; Algan, Yann; Cahuc, Pierre; Giuliano, Paola

Are Happiness and Productivity Lower among University Students with Newly-Divorced Parents? An Experimental Approach
Proto, Eugenio; Sgroi, Daniel; Oswald, Andrew J.

Transport Infrastructure and Poverty Infrastructure
Sununtar Setboonsarng

Drivers and barriers to educational success - evidence from the longitudinal study of young people in England.
Chowdry, H.; Crawford, C.; Goodman, A.

Genes, economics, and happiness
Jan-Emmanuel De Neve; James H. Fowler; Bruno S. Frey

Contents.

A Detailed Decomposition of Changes in Wage Inequality in Reunified Post-Transition Germany 1999-2006: Accounting for Sample Selection
Date: 2010
By: Usamah Al-farhan
URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp269&r=ltv
In this article, I analyze the changes in wage inequality in the eastern region, western region and reunified Germany a decade after reunification. For that purpose, I use data from the German Socio-Economic Panel for the period 1999 – 2006, and implement the decomposition methodologies of Fields (2003) and Yun (2006). I find that during the sub-period 1999-2002 each of the characteristics effect, coefficient effect and residual
effect contributed to the increasing levels of wage inequality in Germany. On the other hand, the relative stability in wage inequality during the sub-period 2002-2006 was caused by the fact that the characteristics effect and the residual effect influenced wage inequality negatively, whereas the coefficient effect maintained a positive influence in both the western region, eastern region and in reunified Germany alike. Hence, I conclude that after 1999, changes in wage inequality in Germany can be explained by both; changes in workers characteristics and changes in the wage structure, and not by changes in the wage structure alone, as the case has been during the transition process in the first decade after reunification
Keywords: Wages, Inequality, Decomposition, Transition, Characteristics effect, Coefficient effect, Residual effect, Selection bias, Maximum Likelihood
JEL: D30

Women between Part-Time and Full-Time Work: The Influence of Changing Hours of Work on Happiness and Life-Satisfaction
Date: 2010
By: Vanessa Gash
Antje Mertens
Laura Romeu Gordo
URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp268&r=ltv
This paper asks whether part-time work makes women happy. Previous research on labour supply has assumed that as workers freely choose their optimal working hours on the basis of their innate preferences and the hourly wage rate, outcome reflects preference. This paper tests this assumption by measuring the impact of changes in working-hours on life satisfaction in two countries (the UK and Germany using the German Socio-Economic Panel and the British Household Panel Survey). We find decreases in working-hours bring about positive and significant improvement on well-being for women.
Keywords: Temporary Employment, Unemployment, Health
JEL: J41

Rates of Return to University Education: The Regression Discontinuity Design
Date: 2010-02
By: Fan, Elliott (Australian National University)
Meng, Xin (Australian National University)
Wei, Zhichao (Brown University)
Zhao, Guochang (Australian National University)
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4749&r=ltv
Estimating the rate of return to a university degree has always been difficult due to the problem of omitted variable biases. Benefiting from a special feature of the University Admission system in China, which has clear cutoffs for university entry, combined with a unique data set with information on individual National College Entrance Examination (NCEE) scores, we estimate the Local Average Treatment Effects (LATE) of university education based on a Regression Discontinuity design. To the best of our knowledge, this is the first study to use RD design to estimate the causal effect of a university education on earnings. Our results show that the rates of return to 4-year university education relative to 3-year college education are 40 and 60 per cent for the compliers in the male and female samples, respectively, which are much larger than the simple OLS estimations revealed in previous literature. Since in our sample a large proportion of individuals are compliers (45 per cent for males and 48 per cent for females), the LATEs estimated in this paper have a relatively general implication. In addition, we find that the LATEs are likely to be larger than ATEs, suggesting that the inference drawn from average treatment effects might understate the true effects of the university expansion program introduced in China in 1999 and thereafter.
Keywords: rate of return to education, regression discontinuity design, China
JEL: I21

Family Values and the Regulation of Labor
Date: 2010-02
By: Alesina, Alberto (Harvard University)
Algan, Yann (Sciences Po, Paris)
Cahuc, Pierre (Ecole Polytechnique, Paris)
Giuliano, Paola (University of California, Los Angeles)
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4747&r=ltv
Flexible labor markets require geographically mobile workers to be efficient. Otherwise, firms can take advantage of the immobility of workers and extract monopsony rents. In cultures with strong family ties, moving away from home is costly. Thus, individuals with strong family ties rationally choose regulated labor markets to avoid moving and limiting the monopsony power of firms, even though regulation generates lower employment and income. Empirically, we do find that individuals who inherit stronger family ties are less mobile, have lower wages, are less often employed and support more stringent labor market regulations. There are also positive cross-country correlations between the strength of family ties and labor market rigidities. Finally, we find positive correlations between labor market rigidities at the beginning of the twenty first century and family values prevailing before World War II, which suggests that labor market regulations have deep cultural roots.
Keywords: family values, labor regulation
JEL: E0

Are Happiness and Productivity Lower among University Students with Newly-Divorced Parents? An Experimental Approach
Date: 2010-02
By: Proto, Eugenio (University of Warwick)
Sgroi, Daniel (University of Warwick)
Oswald, Andrew J. (University of Warwick)
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4755&r=ltv
We live in a high-divorce age. It is now common for university faculty to have students who are touched by a recent divorce. It is likely that parents themselves worry about effects on their children. Yet there has been almost no formal research into the important issue of how recent parental-divorce affects students at university. This paper designs such a study. In it, to avoid 'priming', we measure students' happiness with life before we inquire into their family background. We also measure student achievement in a randomized-trial productivity task. Our results seem both of scientific interest and of potential interest to parents. This study finds no evidence that students suffer after parental divorce
Keywords: labor productivity, divorce, well-being, happiness, experimental economics
JEL: J24
Transport Infrastructure and Poverty Infrastructure
Date: 2010
By: Sununtar Setboonsarng
URL: http://d.repec.org/n?u=RePEc:ess:wpaper:id:2418&r=ltv
The main issues surrounding this concern and provides a range of policy, regulatory, and institutional measures that could help strengthen the impact of transport infrastructure on poverty reduction are summarized.
Keywords: institutional measures, policy, transport, infrastructure, gender dimensions, poverty reduction, investment, income, India, Thailand, rural, savings, developing countries

Drivers and barriers to educational success - evidence from the longitudinal study of young people in England.
Date: 2009-04-30
By: Chowdry, H.
Crawford, C.
Goodman, A.
URL: http://d.repec.org/n?u=RePEc:ner:ucllon:http://eprints.ucl.ac.uk/18314/&r=ltv
This study examined why young people from poor families have lower attainment in school, are more likely to become NEET (Not in Education, Employment or Training) after compulsory education, and are more likely to participate in a range of risky behaviours whilst teenagers. The Longitudinal Study of Young People in England is combined with school and neighbourhood information to document the links between lower socio-economic position and poorer outcomes: identifying the key factors amongst parental education and material resources; school and neighbourhood peer groups; and the attitudes and beliefs of young people and their parents that help sustain those links.

Genes, economics, and happiness
Date: 2010-02
By: Jan-Emmanuel De Neve
James H. Fowler
Bruno S. Frey
URL: http://d.repec.org/n?u=RePEc:zur:iewwpx:475&r=ltv
Research on happiness has produced valuable insights into the sources of subjective well-being. A major finding from this literature is that people exhibit a 'baseline' happiness that shows persistent strength over time, and twin studies have shown that genes play a significant role in explaining the variance of baseline happiness between individuals. However, these studies have not identified which genes might be involved. This article presents evidence of a specific gene that predicts subjective well-being. Using data from the National Longitudinal Study of Adolescent Health, we show that individuals with a transcriptionally more efficient version of the serotonin transporter gene (5HTT) are significantly more likely to report higher levels of life satisfaction. Having one or two alleles of the more efficient type raises the average likelihood of being very satisfied with one's life by 8.5% and 17.3%, respectively. This result may help to explain the stable component of happiness and suggests that genetic association studies can help us to better understand individual heterogeneity in subjective well- being.
Keywords: Happiness, subjective well-being, genetics
JEL: A12

This nep–ltv issue is ©2010 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, it must include this copyright notice. It may not be sold, or placed in something else for sale.
General information on the NEP project can be found at http://nep.repec.org/. For comments please write to the director of NEP, Marco Novarese at <>.
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Friday, February 19, 2010

NEP: New Economics Papers Central and South America 2010-02-13

NEP: New Economics Papers
Central and South America

Edited by:Maximo Rossi
Universidad de la Republica
Issue date:2010-02-13
Papers:5
Note: Access to full contents may be restricted.
NEP is sponsored by SUNY Oswego.

In this issue we have:

  1. Depósitos Em Moeda Estrangeira Como Hedge Para Investidores Brasileiros De Longo Prazo: Uma Aplicação Da Teoria Da Escolha Estratégica De Portfólio
    Carlos Eduardo Meyer dos Santos; Marcos Antonio C. da Silveira
  2. Real Gross Domestic Income, Relative Prices and Economic Performance Across the OECD
    Macdonald, Ryan
  3. Is Informality Bad? Evidence from Brazil, Mexico and South Africa
    Bargain, Olivier; Kwenda, Prudence
  4. Falling Kidnapping Rates and the Expansion of Mobile Phones in Colombia
    Santiago Montenegro; Álvaro Pedraza
  5. Collective Action forWatershed Management: Field Experiments in Colombia and Kenya
    Juan Camilo Cárdenas; Luz Ángela Rodríguez; Nancy Johnson

Contents.

  1. Date:2010-01
    By:Carlos Eduardo Meyer dos Santos
    Marcos Antonio C. da Silveira
    URL:http://d.repec.org/n?u=RePEc:ipe:ipetds:1462&r=lam
    O viés doméstico é observado na composição dos portfólios de diferentes classes de ativos financeiros. A literatura oferece argumentos conflitantes quanto à racionalidade deste comportamento no caso de portfólios investidos em títulos de curto prazo, usualmente denominados depósitos em moeda. No contexto de uma economia sujeita à forte volatilidade cambial, o pensamento convencional sugere que investidores conservadores devem concentrar estes depósitos em títulos domésticos. No entanto, estes instrumentos podem ser bastante arriscados para um investidor de longo prazo devido à incerteza quanto à taxa de juros de curto prazo vigente nos períodos futuros. Não menos importante, sob a hipótese da paridade descoberta de juros, pode ser ótimo para este investidor manter depósitos em moeda estrangeira como hedge intertemporal contra uma deterioração das oportunidades domésticas de investimento. Na raiz deste argumento está o fato de que o menor retorno esperado dos títulos domésticos, à medida que estimula a saída de capitais, é acompanhado pela depreciação real da moeda doméstica. Logo, depósitos em moeda estrangeira reduzem a volatilidade da riqueza futura, uma vez que o tamanho da riqueza corrente tende a aumentar quando seu retorno esperado diminui. Este trabalho avalia a eficiência dos depósitos em moeda estrangeira como hedge intertemporal para investidores brasileiros de longo prazo. A principal conclusão é que investidores razoavelmente conservadores devem manter parte significativa destes depósitos em dólares, libras e ienes. The home bias is observed in the composition of portfolios of different classes of financial assets. The literature offers conflicting arguments about the rationality of this behavior in the case of the portfolios invested in short-term securities, commonly known as currency deposits. In the context of an economy subject to strong volatility, the conventional wisdom suggests that conservative investors should concentrate these deposits on domestic bonds. However, these instruments can be very risky for a long-term investor due to uncertainty about the future short-term interest rate. Not least important, under the assumption of uncovered interest parity, it may be optimal for this investor to maintain foreign currency deposits as a hedge against a deterioration of the domestic investment opportunities. On the root of this argument is the fact that the lower expected return on domestic bonds, as it stimulates the outflow of capital, it is accompanied by real depreciation of the domestic currency. Therefore, the foreign currency deposits reduce the volatility of future wealth as the size of current wealth tends to increase when its expected return decreases. This work evaluates the effectiveness of the foreign currency deposits as an intertemporal hedge for Brazilian long-term investors. The main conclusion is that fairly conservative investors should allocate significant part of these deposits in dollars, pounds and ienes.
  2. Date:2010-01-28
    By:Macdonald, Ryan
    URL:http://d.repec.org/n?u=RePEc:stc:stcp5e:2010059e&r=lam
    This paper uses Organization for Economic Co-operation and Development (OECD) data to examine changes in labour productivity, real gross domestic product (GDP), real gross domestic income (GDI), economic aggregates and relative economic growth over time. Real GDI combines changes in production (real GDP), with a trading gain derived from relative price changes. The paper considers two sources of trading gains: the terms of trade and the real exchange rate. For OECD countries, the terms of trade is the more important price ratio, making a contribution to real income growth that is, on average, an order of magnitude larger than the real exchange rate. Over long time periods, the most important source of real income growth is changes in production. Over shorter time horizons, however, the trading gain can make noteworthy contributions. Changes in aggregates, like real private consumption or the relative economic performance of nations, are shown to be particularly dependent on the trading gain during the large swings in resource prices that occurred after 2002.
    Keywords:Economic accounts, Gross domestic product, Productivity accounts
  3. Date:2010-01
    By:Bargain, Olivier (University College Dublin)
    Kwenda, Prudence (University College Dublin)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4711&r=lam
    The informal sector plays an important role in the functioning of labor markets in emerging economies. To characterize better this highly heterogeneous sector, we conduct a distributional analysis of the earnings gap between informal and formal employment in Brazil, Mexico and South Africa, distinguishing between dependent and independent workers. For each country, we use rich panel data to estimate fixed effects quantile regressions to control for (time-invariant) unobserved heterogeneity. The dual nature of the informal sector emerges from our results. In the high-tier segment, self-employed workers receive a significant earnings premium that may compensate the benefits obtained in formal jobs. In the lower end of the earnings distribution, both informal wage earners and independent (own account) workers face significant earnings penalties vis-à-vis the formal sector. Yet the dual structure is not balanced in the same way in all three countries. Most of the self-employment carries a premium in Mexico. In contrast, the upper-tier segment is marginal in South Africa, and informal workers, both dependent and independent, form a largely penalized group. More consistent with the competitive view, earnings differentials are small at all levels in Brazil.
    Keywords:quantile regression, earnings differential, informal sector, salary work, self-employed, fixed effects model
    JEL:J21
  4. Date:2009-11-09
    By:Santiago Montenegro
    Álvaro Pedraza
    URL:http://d.repec.org/n?u=RePEc:col:000089:006652&r=lam
    This paper tries to explain why kidnapping has fallen so dramatically in Colombia during the period 2000-2008. The widely held belief is that the falling kidnapping rates can basically be explained as a consequence of the success of President Alvaro Uribe´s democratic security policy. Without providing conclusive alternative explanations, some academic papers have expressed doubts about Uribe’s security policy being the main cause of this phenomenon. While we consider the democratic security policy as constituting a necessary condition behind Colombia’s falling kidnapping rates, we argue in this paper that a complementary condition underlying this phenomenon has been the significant increase during this period in the speed and quality of communications between potential victims and public security forces. In this sense, the expansion of the mobile phone industry in Colombia implies that there has been a substantial reduction in information asymmetries between kidnappers and targeted citizens. This has led to a higher level of deterrence as well as to higher costs for perpetrating this type of crime. This has resulted in a virtuous circle: improved security allows higher investments in telecommunications around the country, which in turn lead to faster communications between citizens and security forces, which consequently leads to greater security. We introduce a Becker-Ehrlich type supply and demand model for kidnappings. Using regional and departmental data on kidnapping, the police and mobile phones, we show that mobile phone network expansion has expanded the effective coverage of public protection; this, in turn, has led to a spectacular reduction in kidnapping rates.
  5. Date:2009-11-15
    By:Juan Camilo Cárdenas
    Luz Ángela Rodríguez
    Nancy Johnson
    URL:http://d.repec.org/n?u=RePEc:col:000089:006649&r=lam
    The dilemma of collective action around water use and management involves solving both the problems of provision and appropriation. Cooperation in the provision can be affected by the rival nature of the appropriation and the asymmetries in the access. We report two field experiments conducted in Colombia and Kenya. The Irrigation Game was used to explore the provision and appropriation decisions under asymmetric or sequential appropriation, complemented with a Voluntary Contribution Mechanism experiment which looks at provision decisions under symmetric appropriation. The overall results were consistent with the patterns of previous studies: the zero contribution hypotheses is rejected whereas the most effective institution to increase cooperation was face-to-face communication, and above external regulations, although we find that communication works much more effectively in Colombia. We also find that the asymmetric appropriation did reduce cooperation, though the magnitude of the social loss and the effectiveness of alternative institutional options varied across sites.
This nep–lam issue is ©2010 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, it must include this copyright notice. It may not be sold, or placed in something else for sale.
General information on the NEP project can be found at http://nep.repec.org/. For comments please write to the director of NEP, Marco Novarese at <>.

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Thursday, February 18, 2010

NEP: New Economics Papers Unemployment, Inequality and Poverty 2010-02-13

NEP: New Economics Papers
Unemployment, Inequality and Poverty

Edited by:Maximo Rossi
University of the Republic
Issue date:2010-02-13
Papers:12
Note: Access to full contents may be restricted.
NEP is sponsored by SUNY Oswego.

In this issue we have:

  1. Pro-Poor Tax Reforms, with an Application to Mexico
    Jean-Yves Duclos; Paul Makdissi; Abdelkrim Araar
  2. Testing for Mobility Dominance
    Yélé Maweki Batana; Jean-Yves Duclos
  3. Property Rights, Standards of Living, and Economic Growth: Western Canadian Cree
    Ann Carlos; Frank Lewis
  4. Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance
    Ek, Susanne; Holmlund, Bertil
  5. Inequality Aversion and Risk Attitudes
    Ferrer-i-Carbonell, Ada; Ramos, Xavi
  6. Objective Confirmation of Subjective Measures of Human Well-being: Evidence from the USA
    Oswald, Andrew J.; Wu, Stephen
  7. Youth Unemployment: Déjà Vu?
    Bell, David N.F.; Blanchflower, David G.
  8. Youth Employment in Europe: Institutions and Social Capital Explain Better than Mainstream Economics
    Contini, Bruno
  9. Screening, Competition, and Job Design: Economic Origins of Good Jobs
    Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
  10. Divorced Fathers' Proximity and Children's Long Run Outcomes: Evidence from Norwegian Registry Data
    Kalil, Ariel; Mogstad, Magne; Rege, Mari; Votruba, Mark
  11. Mental Health and Working Conditions in European Countries
    Cottini, Elena; Lucifora, Claudio
  12. Wage Inequality and the Changing Organization of Work
    Dennis Görlich; Dennis Snower

Contents.

  1. Date:2010
    By:Jean-Yves Duclos
    Paul Makdissi
    Abdelkrim Araar
    URL:http://d.repec.org/n?u=RePEc:lvl:lacicr:1001&r=ltv
    This paper proposes a methodology for testing for whether tax reforms are pro-poor. This is done by extending stochastic dominance techniques to help identify tax reforms that will necessarily be deemed absolutely or relatively pro-poor by a wide spectrum of poverty analysts. The statistical properties of the various estimators are also derived in order to make the method implementable using survey data. The methodology is used to assess the pro-poorness of possible reforms to Mexico’s indirect tax system. This leads to the identification of several possible pro-poor tax reforms in that country. It also shows how the pro-poorness of a tax reform depends on one’s conception of poverty as well as on the revenue and efficiency impact of the reform.
    Keywords:Stochastic dominance, pro-poor changes, tax reforms, Mexico
    JEL:D12
  2. Date:2010
    By:Yélé Maweki Batana
    Jean-Yves Duclos
    URL:http://d.repec.org/n?u=RePEc:lvl:lacicr:1002&r=ltv
    This paper proposes tests for stochastic dominance in mobility based on the empirical likelihood ratio. Two views of mobility are considered, either based on measures of absolute mobility or on transition matrices. First-order and second-order dominance conditions in mobility are first derived, followed by the derivation of statistical inferences techniques to test a null hypothesis of non dominance against an alternative of mobility dominance. An empirical analysis, based on the US Panel Study of Income Dynamics (PSID), is performed by comparing four income mobility periods ranging from 1970 to 1990.
    Keywords:Mobility, Stochastic dominance, Transition matrices, Empirical Likelihood ratio, Bootstrap tests
    JEL:C10
  3. Date:2010-01
    By:Ann Carlos (University of Colorado, Boulder)
    Frank Lewis (Queen's University)
    URL:http://d.repec.org/n?u=RePEc:qed:wpaper:1232&r=ltv
    The Great Divergence in standards of living for populations around the world occurred in the late 18th century. Prior to that date evidence suggests that real wages of most Europeans, many living in China and India were similar. Some a little higher and some a little lower but with a low dispersion. By the middle of the 19th century, a divergence had occurred with western Europe pulling away from other groups. Little is known about the standards of living of the aboriginal peoples of North America many of whom were primarily hunter/gatherer’s at the end of the 18th century. Based on comparisons of expenditure, we show that the standard of living of aboriginal people in 1740 was similar to that of wage workers in London. However, within the next century, there would be a great divergence. This paper explores the ways in which hunter-gatherer lifeways and the concomitant property rights structures reduced the likelihood that native economy could experience modern rates of economic growth. Native society and property rights structures which provided a relatively high standard of living in the mid eighteenth century and for part of the nineteenth was unable to provide avenues for further development.
    Keywords:native americans, living standards, property rights
    JEL:N51
  4. Date:2010-01
    By:Ek, Susanne (Uppsala University)
    Holmlund, Bertil (Uppsala University)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4701&r=ltv
    The paper develops an equilibrium search and matching model where two-person families as well as singles participate in the labor market. We show that equilibrium entails wage dispersion among equally productive risk-averse workers. Marital status as well as spousal labor market status matter for wage outcomes. In general, employed members of two-person families receive higher wages than employed singles. The model is applied to a welfare analysis of alternative unemployment insurance systems, recognizing the role of spousal employment as a partial substitute for public insurance. The optimal system involves benefit differentiation based on marital status as well as spousal labor market status. Optimal differentiation yields small welfare gains but gives rise to large wage differentials.
    Keywords:job search, wage bargaining, wage differentials, unemployment, unemployment insurance
    JEL:J31
  5. Date:2010-01
    By:Ferrer-i-Carbonell, Ada (IAE Barcelona (CSIC))
    Ramos, Xavi (Universitat Autònoma de Barcelona)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4703&r=ltv
    Using self reported measures of life satisfaction and risk attitudes, we empirically test whether there is a relationship between individuals inequality and risk aversion. The empirical analysis uses the German SOEP household panel for the years 1997 to 2007 to conclude that the negative effect of inequality measured by the sample gini coefficient by year and federal state is larger for those individuals who report to be less willing to take risks. Nevertheless, the empirical results suggest that even though inequality and risk aversion are related, they are not the same thing. The paper shows that the relationship between risk attitudes and inequality aversion survives the inclusion of individual characteristics (i.e. income, education, and gender) that may be correlated with both risk attitudes and inequality aversion.
    Keywords:happiness, inequality aversion, risk attitudes, well-being
    JEL:D3
  6. Date:2010-01
    By:Oswald, Andrew J. (University of Warwick)
    Wu, Stephen (Hamilton College)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4695&r=ltv
    A huge research literature, across the behavioral and social sciences, uses information on individuals' subjective well-being. These are responses to questions – asked by survey interviewers or medical personnel – such as "how happy do you feel on a scale from 1 to 4?" Yet there is little scientific evidence that such data are meaningful. This study examines a 2005-2008 Behavioral Risk Factor Surveillance System random sample of 1.3 million United States citizens. Life-satisfaction in each U.S. state is measured. Across America, people's answers trace out the same pattern of quality of life as previously estimated, using solely non-subjective data, in a literature from economics (so-called 'compensating differentials' neoclassical theory due originally to Adam Smith). There is a state-by-state match (r = 0.6, p <>
    Keywords:compensating differentials, well-being, happiness, spatial equilibrium
    JEL:I31
  7. Date:2010-01
    By:Bell, David N.F. (University of Stirling)
    Blanchflower, David G. (Dartmouth College)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4705&r=ltv
    This paper reviews current issues in youth labour markets in developed countries. It argues that young people aged 16-25 have been particularly hard hit during the current recession. Using the USA and UK as cast studies, it analyses both causes and effects of youth unemployment using micro-data. It argues that there is convincing evidence that the young are particularly susceptible to the negative effects of spells of unemployment well after their initial experience of worklessness. Because the current youth cohort is relatively large, the longer-term outlook for youth unemployment is quite good, but there is a strong case for policy intervention now to address the difficulties that the current cohort is having in finding access to work.
    Keywords:youth unemployment, scarring, ethnic crime, health, life satisfaction, wages, ALMP
    JEL:J01
  8. Date:2010-01
    By:Contini, Bruno (LABORatorio R. Revelli)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4718&r=ltv
    Why did employment growth – high in the last decade – take place at the expense of young workers in the countries of Central and Southern Europe? This is the question addressed in this paper. Youth unemployment has approached or exceeded 20% despite a variety of factors, common to most EU countries. According to neo-classical economics all would be expected to exert a positive impact on its evolution: population ageing and the demographic decline, low labor cost of young workers, flexibility of working arrangements, higher educational attainment, low unionization of young workers, early retirement practices of workers 50+. But neither seems to provide a convincing explanation. Historically based institutions and political tradition, cultural values, social capital – factors that go beyond the standard explanation of economic theory – provide a more satisfying interpretation.
    Keywords:youth employment, unemployment, social capital, institutions
    JEL:J0
  9. Date:2010-01
    By:Bartling, Björn (University of Zurich)
    Fehr, Ernst (University of Zurich)
    Schmidt, Klaus M. (University of Munich)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4710&r=ltv
    In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These "high-performance work systems" are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees.
    Keywords:job design, high-performance work systems, screening, reputation, competition, trust, control, social preferences, complementarities
    JEL:C91
  10. Date:2010-01
    By:Kalil, Ariel (University of Chicago)
    Mogstad, Magne (Statistics Norway)
    Rege, Mari (University of Stavanger)
    Votruba, Mark (Case Western Reserve University)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4715&r=ltv
    This study examines the link between divorced nonresident fathers' proximity and children's long-run outcomes using high-quality data from Norwegian population registers. We follow (from birth to young adulthood) 15,992 children born into married households in Norway in the years 1975-1979 whose parents divorce during his or her childhood. We observe the proximity of the child to his or her father in each year following the divorce and link proximity to children's educational and economic outcomes in young adulthood, controlling for a wide range of observable characteristics of the parents and the child. Our results show that closer proximity to the father following a divorce has, on average, a modest negative association with offspring's young-adult outcomes. The negative associations are stronger among children of highly-educated fathers. Complementary Norwegian survey data show that highly-educated fathers report more post-divorce conflict with their ex-wives as well as more contact with their children (measured in terms of the number of nights that the child spends at the fathers' house). Consequently, the father's relocation to a more distant location following the divorce may shelter the child from disruptions in the structure of the child's life as they split time between households and/or from post-divorce interparental conflict.
    Keywords:fathers' proximity, divorce, child development, long-run outcomes, relocation
    JEL:J12
  11. Date:2010-01
    By:Cottini, Elena (University of Milan)
    Lucifora, Claudio (Università Cattolica del Sacro Cuore)
    URL:http://d.repec.org/n?u=RePEc:iza:izadps:dp4717&r=ltv
    Increased pressure for labour market flexibility and increasing demand over workers' performance have fostered the idea that working conditions, in most European countries, have progressively deteriorated with adverse effects on psychological well being and mental health. This paper investigates the links between contractual arrangements, working conditions and mental health using time-series cross-section data for 15 European countries. We use different waves of the European Working Conditions Survey (1995, 2000, 2005) to document recent patterns in mental health at the workplace and to assess how these are related to various job attributes. We find substantial heterogeneity in mental health incidence at the workplace both across workers, as well as between countries. Given population heterogeneity in responses to mental health questions, we implement a methodology for differential reporting in ordered response models which allows for threshold shifts. We show that a set of workplace attributes, such as: working in shifts, performing complex and intensive tasks and having restricted job autonomy lead to a higher probability of reporting mental health problems. We also provide evidence of a positive causal effect of adverse overall working conditions on mental health distress. We show that labour market institutions, and health and safety regulations can explain a significant part of cross-country differences.
    Keywords:working conditions, mental health, health and safety regulation, labour market institutions
    JEL:C25
  12. Date:2010-01
    By:Dennis Görlich
    Dennis Snower
    URL:http://d.repec.org/n?u=RePEc:kie:kieliw:1588&r=ltv
    This paper sheds light on how changes in the organization of work lead to wage inequality. We present a theoretical model in which workers with a wider span of competence (higher level of multitasking) earn a wage premium. Since abilities and opportunities to expand the span of competence are distributed unequally among workers across and within education groups, our theory explains (1) rising wage inequality between groups, (2) rising wage inequality within groups, and (3) the polarization of work and the decoupling of the income distribution. Using a rich German data set covering a 20-year period from 1986 to 2006, we provide empirical support for our model
    Keywords:wage inequality, multitasking, tasks, organizational change
    JEL:J31
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