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on Unemployment, Inequality and Poverty |
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Issue of 2018‒02‒26
seven papers chosen by |
| By: | Lordan, Grace (London School of Economics); Neumark, David (University of California, Irvine) |
| Abstract: | We study the effect of minimum wage increases on employment in automatable jobs – jobs in which employers may find it easier to substitute machines for people – focusing on low-skilled workers for whom such substitution may be spurred by minimum wage increases. Based on CPS data from 1980–2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become nonemployed or employed in worse jobs. The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing. We also find some evidence that the same changes improve job opportunities for higher-skilled workers. The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase. |
| Keywords: | minimum wage, employment, automation |
| JEL: | J23 J38 |
| Date: | 2018–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp11297&r=ltv |
| By: | Blundell, Richard (University College London); Pistaferri, Luigi (Stanford University); Saporta-Eksten, Itay (Tel Aviv University) |
| Abstract: | We consider the life cycle choices of a household that in each period decides how much to consume and how to allocate spouses' time to work, leisure, and childcare. In an environment with uncertainty, the allocation of goods and time over the life cycle also serves the purpose of smoothing marginal utility in response to shocks. We combine data on consumption, spouses' wages, hours of work, and time spent with children to estimate the sensitivity of consumption and time allocation to transitory and permanent wage shocks. These structural parameters describe the ability of household to self-insure in response to shocks. We find that behavioral responses to wage shocks depend on the presence of young children. We also find that labor supply cross-responses depend on three counteracting forces: complementarity of leisure time, substitutability of time in the production of child services, and added worker effects. |
| Keywords: | family labor supply, time use, consumption smoothing |
| JEL: | J22 |
| Date: | 2017–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp11237&r=ltv |
| By: | Carlsson, Magnus (Linnaeus University); Fumarco, Luca (Linnaeus University); Rooth, Dan-Olof (Stockholm University) |
| Abstract: | Several studies using observational data suggest that ethnic discrimination increases in downturns of the economy. We investigate whether ethnic discrimination depends on labor market tightness using data from correspondence studies. We utilize three correspondence studies of the Swedish labor market and two different measures of labor market tightness. These two measures produce qualitatively similar results, and, opposite to the observational studies, suggests that ethnic discrimination in hiring decreases in downturns of the economy. |
| Keywords: | hiring discrimination, ethnic discrimination, labor market tightness, the business cycle, correspondence studies, field experiments, ranking models, screening models |
| JEL: | C93 J15 J21 J71 |
| Date: | 2018–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp11285&r=ltv |
| By: | Hamish Low (University Cambridge); Costas Meghir (Cowles Foundation, Yale University); Luigi Pistaferri (Stanford University, NBER, CEPR and SIEPR); Alessandra Voena (University of Chicago, NBER, CEPR and BREAD) |
| Abstract: | The 1996 PRWORA reform introduced time limits on the receipt of welfare in the United States. We use variation by state and across demographic groups to provide reduced form evidence showing that such limits led to a fall in welfare claims (partly due to \banking” benefits for future use), a rise in employment, and a decline in divorce rates. We then specify and estimate a life-cycle model of marriage, labor supply and divorce under limited commitment to better understand the mechanisms behind these behavioral responses, carry out counterfactual analysis with longer run impacts and evaluate the welfare effects of the program. Based on the model, which reproduces the reduced form estimates, we show that among low educated women, instead of relying on TANF, single mothers work more, more mothers remain married, some move to relying only on food stamps and, in ex-ante welfare terms, women are worse off. |
| Keywords: | Time limits, Welfare reform, Life-cycle, Marriage and divorce |
| JEL: | D91 H53 J12 J21 |
| Date: | 2018–02 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:3021&r=ltv |
| By: | Natalia Jiménez Jiménez (Departamento de Economía, Métodos Cuantitativos e Historia Económica, University Pablo de Olavide.); Elena Molis (Department of Economic Theory and Economic History, University of Granada.); Ángel Solano García (Department of Economic Theory and Economic History, University of Granada.) |
| Abstract: | According to Alesina and Angeletos (2005), societies are less redistributive but more efficient when the median voter believes that effort and talent are much more important than luck to determine income. We test these results through a lab experiment in which participants vote over the tax rate and their pre-tax income is determined according to their performance in a real effort task with leisure time. Subjects receive either a high or a low wage and this condition is either obtained through their talent in a tournament or randomly assigned. We compare subjects' decisions in these two different scenarios considering different levels of wage inequality. In our framework, this initial income inequality turns out to be crucial to support the theoretical hypothesis of Alesina and Angeletos (2005). Overall, we find that, only if the wage inequality is high, subjects choose a lower level of income redistribution and they provide a higher effort level in the scenario in which high-wage subjects are selected based on their talent through a tournament (than when it is randomly). Thus, we confirm almost all theoretical results in Alesina and Angeletos (2005) when the wage inequality is high enough. The big exception is for efficiency (measured as the sum of total payoffs), since theoretical results only hold for the scenario in which wage inequality is low. |
| Keywords: | income redistribution, voting, taxation, real-effort task, leisure. |
| JEL: | C92 D72 H30 J41 |
| URL: | https://d.repec.org/n?u=RePEc:gra:wpaper:18/01&r=ltv |
| By: | Chowdhury, Shyamal; Sutter, Matthias; Zimmermann, Klaus F. |
| Abstract: | Economic preferences – like time, risk and social preferences – have been shown to be very influential for real-life outcomes, such as educational achievements, labor market outcomes, or health status. We contribute to the recent literature that has examined how and when economic preferences are formed, putting particular emphasis on the role of intergenerational transmission of economic preferences within families. Our paper is the first to run incentivized experiments with fathers and mothers and their children by drawing on a unique dataset of 1,999 members of Bangladeshi families, including 911 children, aged 6-17 years, and 544 pairs of mothers and fathers. We find a large degree of intergenerational persistence as the economic preferences of mothers and fathers are significantly positively related to their children’s economic preferences. Importantly, we find that socio-economic status of a family has no explanatory power as soon as we control for parents’ economic preferences. A series of robustness checks deals with the role of older siblings, the similarity of parental preferences, and the average preferences within a child’s village. |
| Keywords: | Intergenerational transmission of preferences,time preferences,risk preferences,social preferences,children,parents,Bangladesh,socio-economic status,experiment |
| JEL: | C90 D1 D90 D81 D64 J13 J24 J62 |
| Date: | 2018 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:183&r=ltv |
| By: | Cahuc, Pierre (Ecole Polytechnique, Paris); Carcillo, Stéphane (OECD); Le Barbanchon, Thomas (Bocconi University) |
| Abstract: | This paper analyzes the effectiveness of hiring credits. Using comprehensive administrative data, we show that the French hiring credit, implemented during the Great Recession, had significant positive employment effects and no effects on wages. Relying on the quasi-experimental variation in labor cost triggered by the hiring credit, we estimate a structural search and matching model. Simulations of counterfactual policies show that the effectiveness of the hiring credit relied to a large extent on three features: it was non-anticipated, temporary and targeted at jobs with rigid wages. We estimate that the cost per job created by permanent hiring credits, either countercyclical or time-invariant, in an environment with flexible wages would have been much higher. |
| Keywords: | hiring credit, labor demand, search and matching model |
| JEL: | C31 C93 J6 |
| Date: | 2017–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp11248&r=ltv |