A leading explanation for the growth of wage inequality is that greater use of information technology increased the demand for human capital. This paper identifies four different explanations for the relationships between computers, skills, and wages: computer-specific human capital, greater general human capital among computer users, greater general human capital for both users and nonusers due to contextual effects, and skill-biased changes in the job composition of the workforce. The paper tests the first three explanations and finds little support for them once pre-computer and other job characteristics are adequately controlled. This conclusion receives further support from a comparison of the timing of inequality growth and computer diffusion and from analyses of the contribution of computer use to overall inequality growth using DiNardo, Fortin, and Lemieux's (1996) reweighting standardization technique.
In-work transfers are often seen as a good trade-off between redistribution and efficiency as they alleviate poverty among low-wage households, while increasing financial…
In-work transfers are often seen as a good trade-off between redistribution and efficiency as they alleviate poverty among low-wage households, while increasing financial incentives to work. In the context of the recent economic downturn, they have been advocated to offset the disincentive effect of wage cuts and to cushion the negative redistributive impact of earnings losses and cuts in the minimum wage. We study this double effect for Ireland, a country deeply affected by the economic crisis, and for which existing in-work support policies are of limited scope. The employment and poverty effects of alternative policies are analysed thanks to counterfactual simulations built using a micro-simulation model, the Living in Ireland Survey 2001 and labour supply estimations. We focus on an extension of the existing scheme, the Family Income Supplement and its replacement by the refundable tax credit in force in the United Kingdom.
In this paper, I support the usefulness of using microsimulation models for the normative analysis of real redistribution system. Drawing from three recent works…
In this paper, I support the usefulness of using microsimulation models for the normative analysis of real redistribution system. Drawing from three recent works (Bourguignon & Spadaro, 2000, 2005; Oliver & Spadaro, 2004), I propose an application consisting in analyzing how social preferences on inequality have changed since the introduction of the 1999 reforms to the Spanish personal income tax (PIT). The starting point is the observed distribution of a population's gross and disposable incomes and the observed marginal tax rates as computed in standard microsimulation models. I show that, using a set of simplifying assumptions, it is possible to identify the social welfare function that would make the observed marginal tax rate schedule optimal. I apply this methodology to the 1998 and 1999 Spanish PIT, using the Eurostat (ECHP) dataset on the income and socio-demographic characteristics of Spanish households.
This paper presents new evidence on the effects of the minimum wage using Brazilian monthly household and firm panel data between 1982 and 2000. By examining the effects…
This paper presents new evidence on the effects of the minimum wage using Brazilian monthly household and firm panel data between 1982 and 2000. By examining the effects on wages, employment and prices together we are able to provide an explanation for the small employment effects prevalent in the literature. Our principal finding is that increasing the minimum wage raises wages and prices with small adverse employment effects. This suggests a general wage-price inflationary spiral, where persistent inflation offsets some of the wage gains. The main policy implication deriving from these results is that the potential of the minimum wage for the policy maker as a tool to help the poor is bigger under low inflation. Under high inflation, the resulting wage-price spiral makes the minimum wage increase – as well as its antipoverty policy potential – short lived. In this case, the wage effects are volatile and the permanent scars are lower employment and higher inflation in Brazil.
This paper uses a sample of school age children from the Nepal Demographic Health Survey (NDHS) to examine the relationship between maternal education and child schooling…
This paper uses a sample of school age children from the Nepal Demographic Health Survey (NDHS) to examine the relationship between maternal education and child schooling in Nepal. Taking advantage of the two-stage stratified sample design, we estimate a sample selection model controlling for cluster fixed effects. These results are then compared to OLS and Tobit models. Our analysis shows that being male significantly increases the likelihood of attending school and for those children attending school, it also affects the years of schooling. Parental education has a similarly positive effect on child school, but interestingly we find maternal education having a relatively greater effect on the schooling of girls. Our results also point to household wealth as having a positive effect on both the probability of schooling and the years of schooling in all our models, with the magnitude of these effects being similar for male and female children. Finally, a comparison of our results with a model ignoring cluster fixed effects produces results that are statistically different both in signs and in the levels of significance.
By the mid-1990s the potential and usefulness of microsimulation models for researching tax-benefit systems had found widespread acceptance. Nevertheless, models were not…
By the mid-1990s the potential and usefulness of microsimulation models for researching tax-benefit systems had found widespread acceptance. Nevertheless, models were not widely available for independent or academic research in all countries of the European Union (EU). Even more important, carrying out consistent comparative tax-benefit microsimulation analysis was still an apparently impossible task. The time seemed ready for a European-Union-wide tax-benefit microsimulation model. Such a model, EUROMOD, is now available.
This chapter is devoted to a short introduction to EUROMOD, including the reasons why it was built, its added value compared to existing models, the trade-offs faced by its builders and lessons that have been learnt from developing such an integrated model. Moreover, it aims to provide an insight into the wide range of possible applications of EUROMOD, underlined by summarizing some indicative findings of studies, which have used the model.