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on Unemployment, Inequality and Poverty |
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Issue of 2019‒06‒10
six papers chosen by |
| By: | Sandra E. Black; Paul J. Devereux; Petter Lundborg; Kaveh Majlesi |
| Abstract: | Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for pre-birth factors and we find little evidence that nature/nurture interactions are important. When bequests are taken into account, the role of adoptive parental wealth becomes much stronger. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth. We further build on the existing literature by providing a more comprehensive view of the role of nature and nurture on intergenerational mobility, looking at a wide range of different outcomes using a common sample and method. We find that environmental influences are relatively more important for wealth-related variables such as savings and investment decisions than for human capital. We conclude by studying consumption as an overall measure of welfare and find that, like wealth, it is more determined by environment than by biology. |
| Keywords: | Intergenerational mobility; Wealth inequality; Nature and nurture; Wealth transmission; Environmental influences |
| JEL: | J00 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucn:wpaper:201904&r=all |
| By: | Daron Acemoglu (MIT and NBER); Pascual Restrepo (Boston University) |
| Abstract: | We present a framework for understanding the effects of automation and other types of technological changes on labor demand, and use it to interpret changes in US employment over the recent past. At the center of our framework is the allocation of tasks to capital and labor—the task content of production. Automation, which enables capital to replace labor in tasks it was previously engaged in, shifts the task content of production against labor because of a displacement effect. As a result, automation always reduces the labor share in value added and may reduce labor demand even as it raises productivity. The effects of automation are counterbalanced by the creation of new tasks in which labor has a comparative advantage. The introduction of new tasks changes the task content of production in favor of labor because of a reinstatement effect, and always raises the labor share and labor demand. We show how the role of changes in the task content of production—due to automation and new tasks—can be inferred from industry-level data. Our empirical decomposition suggests that the slower growth of employment over the last three decades is accounted for by an acceleration in the displacement effect, especially in manufacturing, a weaker reinstatement effect, and slower growth of productivity than in previous decades. |
| Keywords: | automation, displacement effect, labor demand, inequality, productivity, reinstatement effect, tasks, technology, wages. |
| JEL: | J23 J24 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:bos:iedwpr:dp-315&r=all |
| By: | Brunello, Giorgio (University of Padova); Kiss, David (Leibniz University of Hannover) |
| Abstract: | We investigate whether tests taken during a high stakes grade by German primary and secondary students produce higher math scores than in lower stakes grades. We identify a high stakes grade with the final grade of primary or secondary school, because good performance in that grade can affect future opportunities. Our difference-in-differences estimates show that high stakes increase math scores on average by 0.17 to 0.23 standard deviations, a sizeable effect. |
| Keywords: | high stakes testing, student motivation, achievement, (perceived) returns to education |
| JEL: | J24 D91 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12338&r=all |
| By: | Brunello, Giorgio (University of Padova); Wruuck, Patricia (European Investment Bank) |
| Abstract: | Labour markets are currently in a phase of cyclical recovery and undergoing structural transformation due to globalisation, demographic trends, advancing digital technologies and automation and changes in labour market institutions. Against this background, businesses increasingly report that the limited availability of skills poses an impediment to corporate investment. Genuine skill constraints can negatively affect labour productivity and hamper the ability to innovate and adopt technological developments. For individual Europeans, not having "the right skills" limits employability prospects and access to quality jobs. For Europe at large, persistent skill gaps and mismatches come at economic and social costs. This paper reviews the recent economic literature on skill mismatch and skill shortages with a focus on Europe a focus on Europe. |
| Keywords: | skill, shortages, mismatch, Europe |
| JEL: | J24 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12346&r=all |
| By: | Gustafsson, Björn Anders (University of Gothenburg); Yang, Xiuna (China Development Research Foundation); Sicular, Terry (University of Western Ontario) |
| Abstract: | We investigate whether Chinese household incomes have caught up to those of the middle class in the developed world. Using nationwide survey data for 2002 and 2013, we find considerable catch up. Defining the global middle class as being neither poor nor rich in the developed world, we estimate that China's global middle class grew rapidly after 2002, reaching 250 million in 2013. We describe the characteristics of this middle class, which is predominately urban, in the eastern region, and wage-earning. A distinct business middle class exists but is relatively small. Analysis of the chances of attaining the middle class reveals the importance of an individual's circumstances at birth. Parents' education and occupation matter. Being born with an urban hukou provides a large advantage. For those born with a rural hukou, the most effective pathways to the middle class are migration and, if possible, obtaining an urban hukou. |
| Keywords: | China, middle class, income distribution, economic mobility |
| JEL: | D31 P36 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12345&r=all |
| By: | James J. Heckman (The University of Chicago); Ganesh Karapakula (Center for the Economics of Human Development, University of Chicago) |
| Abstract: | This paper examines the impact of the iconic Perry Preschool Project on the children and siblings of the original participants. The children of treated participants have fewer school suspensions, higher levels of education and employment, and lower levels of participation in crime, compared with the children of untreated participants. Impacts are especially pronounced for the children of male participants. These treatment effects are associated with improved childhood home environments. The intergenerational effects arise despite the fact that families of treated subjects live in similar or worse neighborhoods than the control families. We also find substantial positive effects of the Perry program on the siblings of participants who did not directly participate in the program, especially for male siblings. The appendix to this paper may be found here. |
| Keywords: | externalities, early childhood intervention, Spillover effects, intergenerational effects |
| JEL: | C40 I21 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2019-033&r=all |