Now showing 1 - 10 of 28
  • Publication
    The measurement of child costs : a Rothbarth-type method consistent with scale economies
    (University College Dublin. School of Economics, 2010-01) ;
    We propose a new methodology to estimate the share of household income accruing to children (i.e., the cost of children). Following the principle of the Rothbarth approach, the identi…cation of the children's share requires the observation of at least one adult-speci…c good. However, our method differs from this traditional approach in that it allows measuring economies of scale in the household and indifference scales in Lewbel (2003)'s sense. We illustrate the method with an application on the French Household Budget Survey.
      364
  • Publication
    Optimal taxation, social contract and the four worlds of welfare capitalism
    (University College Dublin. School of Economics, 2008-07) ;
    Drawing from the formal setting of the optimal tax theory (Mirrlees 1971), the paper identifies the level of Rawlsianism of some European social planner starting from the observation of the real data and redistribution systems and uses it to build a metric that allows measuring the degree of (dis)similarity of the redistribution systems analyzed. It must be considered as a contribution to the comparative research on the structure and typology of the Welfare State (Esping-Andersen, 1990). In particular we consider the optimal taxation model that combines both intensive (Mirrlees) and extensive (Diamond) margins of labor supply, as suggested by Saez (2002) in order to assess the degree of decommodification of seven European welfare systems. We recover the shape of the social welfare function implicit in taxbenefit systems by inverting the model on actual effective tax rates, as if existing systems were optimal according to some Mirrleesian social planner. Actual distributions of incomes before and after redistribution are obtained using a pan-European tax-benefit microsimulation model. Results are discussed in the light of standard classifications of welfare regimes in Europe. There appears to be a clear coincidence of high decommodification and high Rawlsianism in the Scandinavian, social-democratically influenced welfare states (Denmark). There is an equally clear coincidence of low decommodification and utilitarianism in the Anglo–Saxon liberal model (UK) and in the Southern European welfare states (Italy and Spain). Finally, the Continental European countries (Finland, Germany and France) group closely together in the middle of the scale, as corporatist and etatist.
      346
  • Publication
    On modeling household labor supply with taxation
    (University College Dublin. School of Economics, 2007-08)
    Discrete choice models of labor supply easily account for nonlinearity and nonconvexity in budget sets caused by tax-benefit systems. As a result, they have become very popular for ex ante evaluations of policy reforms. In this paper, we question whether the degree of flexibility and the implicit household representation in these models are satisfying when confronted to the data. First, we show that attempts to interpret discrete models structurally lead to unnecessary parametric restrictions in most studies. We suggest instead a fully flexible model that retains usual assumptions on economic rationality except regularity conditions on leisure. Indeed, coefficients may account for both tastes and costs of work, possibly making 'preferences' appear nonconvex. Second, we show that the static unitary representation, implicit in most tax policy analyses, is rejected against a more general model with price- and income- dependent preferences. The latter can be rationalized in terms of collective or intertemporal models and offers promising perspectives in these directions. Simulations show that the magnitude of predicted labor supply responses to tax-benefit reforms is sensitive to the underlying household representation.
      216
  • Publication
    Tax-benefit revealed redistributive preferences over time : Ireland 1987-2005
    (University College Dublin. School of Economics, 2010-10) ;
    By inverting Saez (2002)'s model of optimal income taxation, we characterize the redistributive preferences of the Irish government between 1987 and 2005. The (marginal) social welfare function revealed by this approach is consistently comparable over time and show great stability despite profound changes in market incomes and important fiscal reforms over the period. Results are robust to numerous checks regarding data, income concepts and elasticities. A comparison with the UK shows marked differences reflecting the narrow political spectrum in Ireland compared to radical changes in British politics over the past 30 years. Some "anomalies" in the revealed social welfare function suggests introducing transfers to the working poor.
      393
  • Publication
    No claim, no pain - measuring the non-take-up of social assistance using register data
    (University College Dublin. School of Economics, 2009-12) ; ;
    The main objectives of social assistance bene…fits, including poverty alleviation and labor-market or social reintegration, can be seriously compromised if support is difficult to access. While recent studies point to high non-take-up rates, existing evidence does not make full use of the information recorded by benefi…t agencies. Most studies have to rely on interview-based data, with misreporting and measurement errors affecting the variables needed to establish both bene…fit receipt and benefi…t entitlement. In this paper, we exploit a unique combination of Finnish administrative data and eligibility simulations based on the tax-benefi…t calculator of the Finnish authorities, carefully investigating the measurement issues that remain. We …nd rates of non-take-up that are both substantial and robust: 40% to 50% of those eligible do not claim. Using repeated cross-section estimations for years 1996-2003, we identify a set of stable determinants of claiming behavior and suggest that changes in behavior could drive the observed downward trend in take-up rates during the post-recession period. We discuss the poverty implications of our results.
      632
  • Publication
    Relative Concerns of Rural-to-Urban Migrants in China
    (University College Dublin. School of Economics, 2011-01) ; ;
    How the income of 'relevant others' affects well-being has received renewed interest in the recent literature using subjective data. Migrants constitutes a particularly interesting group to study this question: as they changed environment, they are likely to be concerned by several potential reference groups including the people 'left behind', other migrants and 'natives'. We focus here on the huge population of rural-to-urban migrants in China. We exploit a novel dataset that comprises samples of migrants and urban people living in the same cities, as well as rural households mostly surveyed in the provinces where migrants are coming from. After establishing these links, we find that the well-being of migrants is largely affected by relative concerns: results point to negative relative concerns toward other migrants and workers of home regions this status effect is particularly strong for migrants who wish to settle permanently in cities. We find in contrast a positive relative income effect vis-à-vis the urban reference group, interpreted as a signal effect: larger urban incomes indicate higher income prospects for the migrants. A richer pattern is obtained when sorting migrants according to the duration of stay, expectations to return to home countries and characteristics related to family circumstances, work conditions and community ties.
      354
  • Publication
    Is informality bad? Evidence from Brazil, Mexico and South Africa
    (University College Dublin. School of Economics, 2010-01) ;
    The informal sector plays an important role in the functioning of labor markets in emerging economies. To characterize better this highly heterogeneous sector, we conduct a distributional analysis of the earnings gap between informal and formal employment in Brazil, Mexico and South Africa, distinguishing between dependent and independent workers. For each country, we use rich panel data to estimate fi…xed effects quantile regressions to control for (time-invariant) unobserved heterogeneity. The dual nature of the informal sector emerges from our results. In the high-tier segment, self-employed workers receive a signi…cant earnings premium that may compensate the bene…fits obtained in formal jobs. In the lower end of the earnings distribution, both informal wage earners and independent (own account) workers face signi…cant earnings penalties vis-à-vis the formal sector. Yet the dual structure is not balanced in the same way in all three countries. Most of the self-employment carries a premium in Mexico. In contrast, the upper-tier segment is marginal in South Africa, and informal workers, both dependent and independent, form a largely penalized group. More consistent with the competitive view, earnings differentials are small at all levels in Brazil.
      256
  • Publication
    The informal sector wage gap : new evidence using quantile estimations on panel data
    (University College Dublin. School of Economics, 2009-05) ;
    This paper provides new evidence on the wage gap between informal and formal salary workers in South Africa, Brazil and Mexico. We use rich datasets that allow us to de…fine informality in a relatively comparable fashion across countries. We compute precise wage differentials by accounting for taxes paid in the formal sector. For each country, we analyze how the sectoral wage gap varies within groups, between groups and over time. To account for unobserved heterogeneity, we use large (unbalanced) panels to estimate …fixed effects models at the mean and at different points of the wage distribution. We fi…nd that unobserved heterogeneity explains a large part of the (conditional) wage gap. The remaining informal sector wage penalty is large in the lower part of the distribution but almost disappears at the top. The penalty primarily concerns young workers and is found to be procyclical. We carefully investigate the robustness of these results and discuss their policy implications as well as regularities across countries.
      296
  • Publication
    Revisiting the cost of children : theory and evidence from Ireland
    (Irish Economic Association, 2009-01-13) ;
    In this paper, we suggest a collective model with parents and (young) children. We identify and estimate scale economies in households and the sharing rule between husband, wife and children. While adult shares and economies of scale are identi…ed thanks to the estimation of individual Engel curves on single individuals, the identi…cation of the resource share accruing to children (the cost of children) requires the observation of adult-speci…c goods as in the traditional Rothbarth method. The useful aspect of the present approach is that it requires only the estimation of Engel curves on cross-sectional data, i.e. price variation is not required. This is an advan- tage for many countries where price variations is indeed limited, as in our application on Irish data.
      183
  • Publication
    Analysing the effects of tax-benefit reforms on income distribution : a decomposition approach
    (University College Dublin. School of Economics, 2007-08) ;
    To assess the impact of tax-benefit policy changes on income distribution over time, we suggest a methodology based on counterfactual simulations. We start by decomposing changes in inequality/poverty indices into three contributions: reforms of the tax-benefit structure (rules, rates, etc.), changes in nominal levels of market incomes and tax-benefit parameters (benefit amounts, tax bands, etc.), and all other changes in the underlying population (market income inequality, demographic composition, employment level, etc.). Then, the decomposition helps to extract an absolute measure of the impact of tax-benefit changes on inequality when evaluated against a distributionally-neutral benchmark, i.e. a situation where tax-benefit parameters are adjusted in line with income growth. We apply this measure to assess recent policy changes in twelve European countries. Finally, the full decomposition allows quantifying the relative role of policy changes compared to all other factors. We provide an illustration on France and Ireland and check the sensitivity of the results to the decomposition order.
      449