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on Unemployment, Inequality and Poverty |
| By: | Borovickova, Katarina (Federal Reserve Bank of Richmond); Shimer, Robert (University of Chicago) |
| Abstract: | We develop a random search model with two-sided heterogeneity and match-specific productivity shocks to explain why high-productivity workers tend to work at high-productivity firms despite low-productivity workers gaining about as much from such matches. Our model has two key predictions: i) the average log wage that a worker receives is increasing in the worker's and employer's productivity, with low-productivity workers gaining proportionally more at high-productivity firms and ii) there is assortative matching between a worker's productivity and that of her employer. Selective job acceptance drives these patterns. All workers are equally likely to meet all firms, but workers have higher surplus from meeting firms of similar productivity. The high surplus meetings result in matches more frequently, generating assortative matching. Only the subset of meetings that result in matches are observed in administrative wage data, shaping wages. We show that our findings are quantitatively consistent with recent empirical results. Moreover, we prove this selection is not detected using standard empirical approaches, highlighting the importance of theory-guided empirical work. Our results imply that encouraging high-wage firms to hire low-wage workers may be less effective at reducing wage inequality than wage patterns suggest. |
| JEL: | J31 J64 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17454 |
| By: | Bosworth, Steven J. (University of Reading); Della Giusta, Marina (University of Turin) |
| Abstract: | What explains the persistent under-representation of women at the top organizations within high status occupations? The phenomenon has been documented across countries and neither the closing and reversal of education gaps nor family policies appear effective in closing the gaps. We offer an explanation for the persistence of under-representation based on the mutually reinforcing dynamics resulting from returns to organizational prestige at top organizations (The Matthew Effect) and gender stereotypes in hiring arising from the imperfectly observable ability of workers (The Larry Effect). Our model predicts that when organizational prestige is important and complementary to ability in production, fewer women will be found and hired at higher status organizations, there will be a wage premium for both women and men when they move to them but a greater proportion of men will succeed in doing so, regardless of ability. An aggregate level gender wage gap is thus generated from between-organization wage differences and segregation of women and men to lower- and higher-status organizations respectively. We test the predictions of the model in academia where recognized measures of prestige exist and Matthew effects are well documented. We make use of an employer-employee administrative panel comprising the universe of UK academics and find evidence consistent with the model's predictions: persistence of women's under-representation in higher status organizations and a wage premium for moving of about 3 percent for both women and men. |
| Keywords: | prestige, stereotypes, discrimination |
| JEL: | C78 J31 J70 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17460 |
| By: | Eichhorst, Werner (IZA); Krause-Pilatus, Annabelle (IZA); Dolls, Mathias (Ifo Institute for Economic Research); Lay, Max (Ifo Institute for Economic Research) |
| Abstract: | This paper studies the crisis resilience of European welfare states. We analyse the capacity of social policy arrangements to contain poverty and inequality and avoid exclusion before, during and after periods of economic shocks. To achieve this goal, the paper takes a broad perspective to include different layers of protective arrangements, notably upstream systems such as unemployment insurance (UI), job retention and employment protection that are complemented by minimum income support (MIS) schemes. Together, these multiple layers play a crucial role in providing income and job protection in situations of crisis. In that respect we also distinguish systematically between regular/permanent policies (automatic stabilisers) and discretionary, typically temporary crisis response measures. We use a mixed-method approach that combines quantitative and qualitative research, such as descriptive and multivariate quantitative analyses and microsimulation methods based on EUROMOD. This is combined with in-depth case studies covering a sample of five countries that represent different welfare state types (Nordic, Continental, Mediterranean, Liberal and Central/East European) so that we can show the complex mechanisms of multi-layered protection at work and how the policies in place have evolved over time in response to crisis episodes, disentangling the role of automatic stabilisers and discretionary elements. Our observation period ranges from the mid-2000s to the early 2020s and allows us to cover both the Great Recession of 2008/09 and its aftermath as well as the Covid-19 pandemic. We find consistent differences in terms of crisis resilience across countries and welfare state types. In general, Nordic and Continental European welfare states with strong upstream systems and minimum income support show better outcomes in core socio-economic outcomes such as poverty and exclusion risks. However, labour market integration shows some dualisms in Continental Europe. The study shows that minimum income support holds particular importance if there are gaps in upstream systems or cases of severe and lasting crises. |
| Keywords: | minimum income support, crisis resilience, unemployment insurance, job retention, welfare states |
| JEL: | J65 J68 I38 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17463 |
| By: | Gould, Eric D. (Hebrew University, Jerusalem); Lichtinger, Guy (Harvard University) |
| Abstract: | This paper analyzes how the "child penalty" associated with career interruptions for women after becoming a mother is influenced by preferences absorbed during childhood, and how the child penalty, in turn, is related to the quantity and quality (education) of her own children. Using linked administrative data on Israeli parents and children, the analysis shows that mothers who grew up in larger and more traditional families marry men from larger families, and together they have more children. Growing up with more siblings is also associated with a larger child penalty for a mother in earnings and employment, as well as in terms of commuting less and moving to "mother friendly" firms at the expense of higher wage firms. The results also indicate that the child penalty produces two opposing effects on child human capital – a negative impact due to the loss of parental income, and a positive influence of increased maternal time away from work. Overall, the evidence suggests that the family preferences and norms absorbed during childhood significantly influence a woman's choices of spouse, fertility, and child penalty later in life – but with little overall impact on her children's high school achievements. |
| Keywords: | child penalties, child outcomes, family culture |
| JEL: | J12 J13 J16 J22 J24 J31 J62 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17455 |
| By: | Bram De Rock (Institute for Fiscal Studies); Mariia Kovaleva (European Center for Advanced Research in Economics and Statistics); Tom Potoms (University of Sussex) |
| Date: | 2023–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:ifs:ifsewp:23/35 |
| By: | Cullen, Claire (University of Oxford); Joshi, Sarthak (University of Warwick); Vecci, Joseph (University of Gothenburg); Talbot-Jones, Julia (Victoria University of Wellington) |
| Abstract: | Public spending on gender equality and women's empowerment is rising rapidly in many countries. However, the unintended consequences of women's empowerment is rarely measured and remains poorly understood. We study the impact of female empowerment programs on male backlash through a series of experiments involving 1, 007 households in rural India. The paper has four key parts. First, we use an experiment to measure backlash, observing men's decisions to financially penalize women who participated in empowerment programs. We find that men pay to punish empowered women at double the rate of women in an otherwise identical control group (17 percent versus 8 percent). We also show that men engaging in backlash tend to hold more conservative gender attitudes and are more likely to accept or commit intimate partner violence. Second, we test multiple theories on the conditions that trigger backlash and find that backlash occurs regardless of how women become empowered. Third, we examine social image concerns as a potential behavioral mechanism and find that 18 percent of men are willing to pay to conceal their household's involvement in empowerment programs. Those who choose to conceal are more likely to engage in backlash, suggesting that reputational concerns play a key role in driving this behavior. Finally, we test several policies to reduce backlash and find that reframing empowerment programs to emphasize broader community benefits can help mitigate backlash. |
| Keywords: | male backlash, female empowerment, social image, norms, experiments |
| JEL: | C93 J12 J16 O12 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17450 |