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. Social network theory and analysis: a preliminary exploration. CHERE Working Paper 2009/5

   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. Obesity and Happiness

   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. Slip Sliding Away: Further Union Decline in Germany and Britain

   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. The Political Economy of Intergenerational Income Mobility

   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. Measuring What Employers Really Do about Entry Wages over the Business Cycle

   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. Policies to Create and Destroy Human Capital in Europe

   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. Family Values and the Regulation of Labor

   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. A Shred of Credible Evidence on the Long Run Elasticity of Labor Supply

   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

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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.

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