Inequality and growth: evidence from panel cointegration

This paper uses heterogeneous panel cointegration techniques to estimate the long-run effect of income inequality on per-capita income for 46 countries over the period 1970–1995. We find that inequality has a negative long-run effect on income, both for the sample as a whole and for important sub-groups within the sample (developed countries, developing countries, democracies, and non-democracies). The effect is economically important, with a magnitude about half as high as the magnitude of an increase in the investment share.     

Inequality measurement and the time structure of household income in Israel

The aim of this paper is to empirically evaluate the effect of the length of the accounting period on indices of inequality of household income in Israel. There are three main findings: (1) The analysis of the impact of the accounting period on the Gini index of inequality can be done in a way which is identical to analyzing the effect of the accounting period on the coefficient of variation; (2) changing the accounting period from one to three months decreases, on average, the Gini index of inequality by about 1.7%. Furthermore, the Gini index calculated from a three-month accounting period was 3.9%–4.1% higher than the index based on a 12-month period. The change in the accounting period from 12 months to three months accounts for 27% to 37% of the increase in inequality in the last two decades, depending on the type of income considered. (3) The above relationship is stable over the years but is sensitive to the definition of income.     

Spouse selection and earnings: evidence of marital sorting

This article investigates economic bases for individuals'selection of marriage partners. Its central focus is matching of spouse pairs based on unobservable components of hourly earnings. Using a data extract from the Panel Study of Income Dynamics, we have observations of individuals'wages before and immediately after marriage, along with their spouses'earnings after marriage. We exploit the data to estimate the relation between spouses'wage residuals. The evidence supports positive marital matching on the basis of earnings. The results are robust with respect to variations in the statistical framework of the model.     

Inequality,integration, and policy: issues and evidence from EMU

Simple theoretical arguments imply that while economic integration may or may not increase income inequality and volatility, it certainly makes it difficult for National governments to conduct independent fiscal policies and to enforce income redistribution schemes. Controlling for country-level income variation, available data suggest that Europe’s Economic and Monetary Union (EMU) was associated with a small but significant increase in disposable income inequality, and that this was in turn accounted for by less generous social policies.     

Determinants of savings and remittances: empirical evidence from immigrants to Germany

This paper investigates the determinants of migrants’ financial transfers to their home country using German data. A double-hurdle model is applied to analyze the determinants of the propensity to send transfers to the country of origin and the amount of transfers. The findings reveal that return intentions positively affect financial transfers of immigrants to their home country. The results of a decomposition analysis suggest that only a small part of the gap in financial transfers between temporary and permanent migrants can be attributed to differences in observable characteristics.     

Non-minimization of source taxes on labor income: empirical evidence from Germany

The present paper analyzes the choice of tax classes by married couples under the German withholding tax on wage income. Making use of micro data from official tax returns for the year 1998 and conducting simulation analysis, it is shown that more than 20 percent of the observed households do not choose the tax class combination that minimizes withholding. In the second part of the paper, several explanations for this result are discussed. Among those explanations, transaction costs and Pareto-inefficient intrahousehold-decision-making are the most likely.     

Sexual orientation and full-time monthly earnings, by public and private sector: evidence from Swedish register data

In this paper we explore annual earnings as well as full-time monthly earnings differentials resulting from sexual orientation. We observe that gay males are at an earnings disadvantage compared to male heterosexuals regardless of which earnings measure we use. This earnings disadvantage is found to be larger when we compare gay and heterosexual males who are working full-time. In addition, the disadvantage is larger in the private than in the public sector. Lesbians, however, earn more than heterosexual females. This earnings advantage is considerably smaller when we study full-time monthly rather than annual earnings but an earnings advantage for lesbians at the top of the earnings distribution is documented regardless of which earnings measure we use. In addition, lesbians are doing better than female heterosexuals in the public sector. To sum up, the results indicate that gay males face obstacles on the labor market that hinder them from reaching top-level positions and high earnings. The earnings advantage observed for lesbians is likely to stem from the fact that lesbians devote more time to market work than heterosexual females do.     

Improved legal status as the major source of earnings premiums associated with intermarriage: evidence from the 1986 IRCA amnesty

Exploiting a natural experiment, this paper uses the 1990 US Census data and the 1986 Immigration Reform and Control Act amnesty to investigate the major mechanism through which intermarriage influences immigrant earnings. My strategy involves comparing international marriage premiums received by two groups of Mexican immigrants who arrived before and after the cutoff date of eligibility. Both groups face similar language and culture related obstacles and have to adapt themselves to the new environment, except that unauthorized Mexican workers who arrived before 1982 could obtain legal status through the amnesty while those who arrived after the cutoff date obtained legal status through marriage to a US citizen. Instrumental variables estimates show a significantly larger intermarriage premium for Mexican immigrants who migrated after the cutoff date and no statistically significant intermarriage premium is found in the pre-1982 group. The 35 % premium gap indicates a large effect of intermarriage on immigrant labor market outcomes, operating primarily through an improvement of legal status.     

How to measure and proxy permanent income: evidence from Germany and the U.S.

Permanent income (PI) is an enduring concept in the social sciences and is highly relevant to the study of inequality. Nevertheless, there has been insufficient progress in measuring PI. We calculate a novel measure of PI with the German Socio-Economic Panel (SOEP) and U.S. Panel Study of Income Dynamics (PSID). Advancing beyond prior approaches, we define PI as the logged average of 20+ years of post-tax and post-transfer (“post-fisc”) real equivalized household income. We then assess how well various household- and individual-based measures of economic resources proxy PI. In both datasets, post-fisc household income is the best proxy. One random year of post-fisc household income explains about half of the variation in PI, and 2–5 years explain the vast majority of the variation. One year of post-fisc HH income even predicts PI better than 20+ years of individual labor market earnings or long-term net worth. By contrast, earnings, wealth, occupation, and class are weaker and less cross-nationally reliable proxies for PI. We also present strategies for proxying PI when HH post-fisc income data are unavailable, and show how post-fisc HH income proxies PI over the life cycle. In sum, we develop a novel approach to PI, systematically assess proxies for PI, and inform the measurement of economic resources more generally.     

The effect of macroeconomic conditions on parental time with children: evidence from the American time use survey

This paper investigates the effect of changes in macroeconomic conditions on time allocation to children among mothers and fathers in the US. The study relies on 2003–2013 American Time Use Survey (ATUS) data. Accounting for a variety of personal demographic characteristics, as well as state and year fixed effects, we find that an increase in state-level unemployment rates is associated with an increase in enriching child–father time in families with small children (ages 0–4). However, there is heterogeneity in results by race, education and marital status, with results being statistically significant for white, married and college-educated fathers. Additionally, we find some evidence that an increase in unemployment rates is also associated with an increase in primary childcare for fathers in families with small children, as well as some declines in total time that fathers spend with older children. In contrast to this result, we find that mothers’ total time with children, as well as primary childcare time, is invariant to macroeconomic fluctuations in the labor market, however, as the unemployment rate goes up we do observe small declines in enriching time that white mothers in families with small children devote to enriching activities.     

Identification of the covariance structure of earnings using the GMM estimator

In recent years there has been a rapid growth in the number of studies that have used the GMM estimator to decompose the earnings covariance structure into its permanent and transitory parts. Using a heterogeneous growth model of earnings, we consider the performance of the estimator in this context. We use Monte Carlo simulations to examine the sensitivity of parameter identification to key features such as panel length, sample size, the degree of persistence of earnings shocks and the specification of the earnings model. We show that long panels allow the identification of the model, even when persistence in transitory shocks is high. Short panels, on the other hand, are insufficient to identify individual parameters of the model even with moderate levels of persistence.     

The consequences of own and spousal disability on labor market outcomes and subjective well-being: evidence from Germany

In this paper, I contrast the effects of individual and spousal disability on subjective well-being and labor supply using data on couples from the German Socio-Economic Panel for the years 1984–2006. I find almost no effects in terms of labor market outcomes for both men and women, which stands in stark contrast to the effects of individual disability. The life-satisfaction of women, but not of men, is reduced considerably by their partners’ disability. The effects are about 50–73 % as large as those of individual disability. I also find no evidence that individuals adapt to their partners’ disability, although there is adaptation to individual disability.     

Inequality and happiness: Insights from Latin America

Inequality is a contentious topic in economics, and its effect on individual welfare remains an open question. We address this question from the perspective of a novel approach in economics – the study of happiness. In this discussion, we draw from our research on the topic, which is based on new empirical evidence from Latin America. We find several differences from studies conducted in the United States and Europe, especially regarding the role of perceptions of mobility and status. We find that inequality has negative effects on happiness in Latin America, where it seems to be a signal of persistent unfairness. Our research also examines the effects of several variables, including wealth, status, and reference group size, on the link between inequality and happiness, with the presumption that these variables can help us identify the channels through which inequality operates as a signaling mechanism. This article is based on a longer research paper [14], which is under review for publication.     

The changing practice of eating: evidence from UK time diaries, 1975 and 2000

This paper examines some central themes about change in consumption behaviour through an empirical investigation of the practice of eating. It analyses patterns of food consumption in the UK using time diary data from 1975 and 2000. The practice of eating is decomposed into four component activities which are used to explore systematically the inter-relationships between social processes - such as commodification and temporal fragmentation - and ways of providing and consuming food. It charts the expansion of eating out, the degree to which it substitutes for other eating activities, and the implications of its development for social relations and the temporal organization of daily life. Analysis reveals that food consumption continues to be differentiated along established lines of social division, although the content of those divisions has changed and varies across components of the practice. Increasing commodification of the food chain is documented, but without appearing to have a corrosive impact on household organization or social relationships. While tendencies indicative of temporal fragmentation are revealed, counter-tendencies exist which suggest that the practice of eating is resilient to many forms of external pressure. Finally, the application of a practice-based analytical approach permits critical evaluation of theories of social transformation.     

Private time and public time: the temporal structure of social accessibility and professional commitments

This paper highlights the temporal aspects of social accessibility, demonstrating that time is a major dimension of social organization along which both privacy and professional commitments are defined in modern society. An analysis of the temporal structure of professional commitments within the domain of health care, leads to the claim that the temporally rigid way in which most professional commitments are defined today is one of the key characteristics of modern social organization. A general conceptual scheme, constructed around the temporal structure of social accessibility, is evaluated in terms of its use in helping us identify and differentiate various occupational roles as well as various status rankings within stratification systems. The symbolic significance of the temporal organization of social accessibility is stressed-both in general, and for professional commitments in particular.