On The Measurement Of Illegal Wage Discrimination: The Michael Jordan Paradox

Standard wage discrimination models assume that independent observers are able to distinguish a priori which workers are suffering from discrimination. However, this assumption may be inadequate when severe penalties can be imposed on discriminatory employers. Antidiscrimination laws will induce firms to behave in such a way that independent observers (for instance, lawyers, economists) cannot easily detect discriminatory practices. This problem can be solved by estimating the discriminatory wage gap using finite mixture or latent class models because these procedures do not require the a priori classification of workers. In fact, the standard discrimination model can be seen as a particular case of our method when the probabilities of belonging to a group are fixed (to one or zero). We estimate discrimination coefficients for Germany and United Kingdom using the European Community Household Panel (ECHP). We obtain unambiguous higher discrimination in Germany for a wide set of measuresdiscrimination; wages; latent class model; finite mixture models.

Is an inequality-neutral flat tax reform really neutral?

Let us assume a revenue- and inequality-neutral flat tax reform shifting from a graduated-rate tax. Is this reform really distributional neutral? Traditionally, there has been a bias toward the inequality analysis, forgetting other relevant aspects of the income distribution. This kind of reforms implies a set of composite transfers, both progressive and regressive, even though inequality remains unchanged. This paper shows that polarization is a useful tool for characterizing this set of transfers caused by inequality-neutral tax reforms. A simulation exercise illustrates how polarization can be used to discriminate between two inequality-neutral tax alternatives.polarization, inequality, flat tax

Measuring polarization, inequality, welfare and poverty

This paper analyzes the relationship between polarization and inequality, welfare and poverty measures. First, the Wolfson polarization measure is generalized in terms of the between-groups and within-groups Gini components for income groups separated by any z income value. Second, it is shown that polarization is the difference between the welfare levels of rich and poor income groups when feelings of identification between individuals are based on their utility functions. Third, the proposed polarization measure is a function of the Sen poverty index, its extension due to Shorrocks (1995) and the normalized poverty deficit index when the z income value represents the poverty line. In addition, these results are linked to the Esteban and Ray (1994) and Esteban et al. (1999) polarization measures.polarization, inequality, welfare, poverty.

Measuring Bipolarization, Inequality, Welfare and Poverty

This paper analyzes the relationship between bipolarization and inequality, welfare and poverty measures. First, we clarify the similarities and differences between bipolarization and inequality measures. Second, it is shown that bipolarization is the difference between the welfare levels of the richer and poorer income groups when feelings of identification between individuals are based on their utility functions. In fact, bipolarization is interpreted as the welfare of the richer group that is wasted to compensate for income bipolarization. Third, a relationship between bipolarization measurement and the normalized poverty deficit index is established. These findings are applied to the polarization measures of Wolfson (1994), Esteban and Ray (1994) and Lasso de la Vega and Urrutia (2006).bipolarization, inequality, welfare, poverty.

Partial and complete equality-of-opportunity orderings

This paper proposes a partial equality-of-opportunity ordering based on the inequality-of-opportunity curve, a mechanism that gives preference to those who are worse in terms of opportunity. Moreover, it provides a complete ordering that depends on a sensitivity parameter representing the degree of priority in the equality-of-opportunity policy. The Moreno-Ternero approach is obtained as a particular case. This proposal is applied to a set of 11 countries to compare their degree of equality of opportunity. Results show the relevance for economic policy of observing inequality of opportunity over tranches. Denmark dominates, in terms of posttax income, all other economies.equality of opportunity, partial ordering, circumstances, responsibility.

Participation of Married Women in the Labour Market and the 'Added Worker Effect' in Europe

In this paper, we estimate labour participation equations for married women for eleven European countries, using data from the European Community Household Panel corresponding to the years 1994, 1995 and 1996. The main objective of our study is to test whether the 'added worker effect' holds. From our results it can be concluded that the labour market participation of the married woman basically depends on her personal and family characteristics, her non-wage income and her potential earnings. In only a few countries does the participation of married women seem to be related to the work status of the husband. However, the consistently significant and negative effect of the woman's non-wage income (basically the husband's wage) prevents the 'added worker effect' from being completely rejected as a hypothesis. It seems, therefore, that female labour market participation continues to have a 'secondary' role in the family sphere in some European countries.Female participation ; added worker effect