Third TRISP Workshop April 2021

Team of “Trends in Inequality: Sources and Policy” met virtually to discuss project output

On 22 and 23 April 2019, the international team of TRISP (“Trends in Inequality: Sources and Policy”) met virtually in a third project workshop. The researchers used this meeting opportunity to present their current projects and to develop furtherly their research. The workshop was supposed to take place at the IIES Stockholm, but due to the corona pandemic it took place virtually. After a warm welcome by Per Krusell (IIES Stockholm), Giulio Fella (Queen Mary University) presented the paper Women and men's labour income risk over the business cycle (joint with Mariacristina De Nardi, Marike Knoef, Gonzalo Paz-Pardo and Raun Van Ooijen). The authors use Dutch administrative data on earnings and hours to decompose earnings growth into wage and hours changes and to evaluate their contribution to the non-linearity and non-gaussianity in earnings. They show that non-linear and non-Gaussian features display qualitatively similar features for women and men but they differ quantitatively. Uta Bolt (University of Cambridge) presented the work “The Intergenerational Elasticity of Earnings: Exploring the Mechanisms” (joint with Eric French, Jamie Hentall MacCuish and Cormac O’Dea). They implement a multi-level mediation analysis to assess the direct and indirect effects of alternative drivers of the intergenerational elasticity of earnings. Using data covering a British cohort's first 55 years of life, they show that most of the intergenerational elasticity of earnings (IGE) is explained by differences in: years of schooling, cognitive skills, investments of parental time and school quality, and family circumstances during childhood. Then, Kurt Mitman (IIES Stockholm) presented his paper “The curious incidence with of shocks across the income distribution” (joint with Tobias Broer and John Kramer). This work uses German administrative data to measure the heterogeneous co-movement of earnings, separation rates and job finding rates in response to shocks. They find that income risk for workers at the bottom of the income distribution is almost entirely due to cyclical fluctuations in labor, while for higher incomes it is mostly due to fluctuations of income growth in continued employment. Irina Popova (Goethe University Frankfurt) closed the first day of the workshop with her presentation on “The Long-Term Distributional and Welfare Effects of Covid-19 School Closures” (joint work with Nicola Fuchs-Schündeln, Dirk Krueger and Alexander Ludwig). They use a structural life-cycle model to quantify the long-term impact of school closures during the Corona pandemic on children affected at different ages and coming from households with different parental background. They document a large negative effect on children long-term earnings, which is more severe for  children of younger age and lower parental income. The second day of the workshop started with a presentation by Zainab Iftikhar (Goethe University Frankfurt) on “How much do norms matter for quantity and quality?”. The author investigates the effect of fertility norms on the number of children and on the investment in children education. By using Pakistani data, he finds that norms explain the 2/5th of the variation in the number of children, and 1/5th of the  Then, Anna-Maria Tkhir (Goethe University Frankfurt) discussed her paper “Pension System Reforms in the Presence of Informality”. She develops an overlapping-generation life-cycle model with incomplete markets and informality to assess the aggregate effects of reforms raising the minimum requirements for pension. In an application to the Brazilian case, she finds that raising the retirement age by 5 years maximizes the welfare gain and minimizes the pension expenditure to GDP ratio.  Finally, Arash Nekoei (IIES Stockholm) presented the paper “Is Perfect Experience Rating Perfect?”. In this work, he extends the theory on optimal unemployment benefits to a model with endogenous job destruction margin and moral hazard. Agenda