Lower Earnings Research Articles

Flood-Related Federally Declared Disaster Events and Community Functioning (COPEWELL)

Objective: Understanding long-term disaster effects is key to building theories of recovery and informing policymaking. Findings regarding long-term recovery are inconsistent, with some scholars finding that disasters have little long-term impact, and others asserting otherwise. To assist in resolving this discord, we apply a conceptual framework and computational model of community resilience (“COPEWELL”) that places community functioning (CF) at the center of evaluating the effects of disaster over time. Using flooding as a disaster type, we hypothesize a change in baseline CF trend when a flood-related federally declared disaster event occurs. Methods: We used county-level flood-related federally declared disaster events (2010–2014) and selected population demographics to study their effects on annual CF trends among United States counties (N = 3141). Results: In multivariate analysis of baseline CF, we found a significant negative relationship of prior five-year flood status, federal regions relative to the Northeast (Region I), lower total earnings, and greater population size. Annual CF trend was 0.09% (95%CI: 0.01%–0.16%). In multivariate analysis, significant predictors included baseline CF (β = −0.0178, −0.0047–−0.0309), any concurrent flood-related federally declared disaster events (−0.0024, −0.0040–−0.0008), ten-year prior flood events (−0.0017, −0.0034–−0.0000) and concurrent population change (−0.0186, −0.0338–−0.0035). Conclusions: Recent floods depress baseline CF, while concurrent and ten-year-ago floods depress trend in CF. Resilience may potentially be modified by raising baseline CF and maintaining population over time.

Parenthood and the gender division of labour across the income distribution:: the relative importance of relative earnings.

This study employs a gendered relative resource approach to examine whether the importance of relative resources in shaping changes in the gender division of labor after first birth varies by couples' household income. A substantial body of scholarship has argued that the gender division of labor within different-sex couples is influenced by partners' relative resources. However, couples face class-based constraints that may alter the relevance of relative resources in shaping changes in gender divisions of labor following the transition to parenthood. This study compares couples' divisions of paid work and housework before and up to four years after first birth, using 28 waves of the British Household Panel Survey and the UK Household Longitudinal Study (N = 1,606 couples). I find that the effect of relative resources on changes in couple's paid work and housework behavior after first birth varies substantially by household income. Among higher-income couples, women's paid work and housework time changes less among those with high relative earnings and more among those with low relative earnings, while men's time allocation varies little after first birth. By contrast, among low-income couples, after first birth women's paid work time and share decreases most among female breadwinners while their male partners' paid work time increases substantially. These findings reflect the greater constraints that low-income couples face in making decisions about the division of household labor after first birth and highlight the need for greater attention to class interactions in the process of gender specialization in both research and work-family policy.

Understanding inactive membership in voluntary contributory schemes: A case study of micro‐traders in Kenya

SummaryMotivationThe provision of health insurance is a public policy response to address the problem of catastrophic health expenditure, which leads to deprivation. Studies show a low uptake of health insurance among informal workers, but the focus has been on understanding enrolment behaviour. Little attention has been paid to understanding inactive membership among informal workers.PurposeThis article asks why informal workers in Kenya are abandoning health insurance schemes. It uses micro‐traders as a case study to understand inactive membership among voluntary contributors in Kenya's national health insurance scheme.Methods and approachBased on primary data combining qualitative and quantitative methods, the article compares inactive members with active and non‐members to identify factors contributing to inactive status.FindingsThis article contends that unmarried voluntary contributors who consider themselves to be healthy and are own‐account workers with low and irregular earnings are more likely to drop out of the scheme. The key drivers of “inactiveness” are the inability to commit to the payment of regular premiums, due to the irregularity of earnings, the change of employment status from formal to informal, and dissatisfaction with scheme services.Policy implicationsSince unmarried, “healthy,” voluntary contributors are more likely to drop out, this creates problems of adverse selection in cases where the scheme retains “unhealthy” members, who are more likely to claim benefits. When “healthy” members drop out, this may force the scheme to increase the level of premiums, since contributory schemes rely on members' contributions. An increase in premiums may trigger further dropouts, which is counterproductive in relation to the global agenda of increasing access to essential health care.

Filling in the GAAPs in Individual Analysts’ Street Earnings Forecasts

Analysts’ street earnings forecasts are sometimes based on GAAP earnings and sometimes based on non-GAAP earnings, which exclude various GAAP earnings components. Therefore, differences in analysts’ street earnings forecasts may capture differences in not only expected performance but also the earnings metric forecasted. We argue that analysts who forecast non-GAAP, rather than GAAP, street earnings are more likely to separately analyze earnings components. Consistent with this argument, we find that analysts who forecast non-GAAP street earnings issue relatively more accurate forecasts. We also argue that excluded earnings components often reflect negative transitory items, and that variation across analysts in the earnings metric forecasted suggests that the negative excluded items are forecasted by only a subset of analysts. Consistent with this assertion, we find that variation across analysts in the earnings metric forecasted is associated with a lower consensus GAAP earnings surprise and lower stock returns around the earnings announcement. Finally, although variation in the earnings metric forecasted is a source of analyst forecast dispersion, we find that it is also incrementally associated with a lower earnings response coefficient, consistent with the existence of transitory items. We therefore find that the variation in the earnings metric forecasted is an important source of analyst forecast dispersion that predicts not only a lower earnings surprise but also a lower earnings response. This paper was accepted by Brian Bushee, accounting. Funding: Financial support from the Gatton College of Business & Economics, the KPMG Fellowship at the Mendoza College of Business, and the Goizueta Business School is gratefully acknowledged. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2022.4553 .

Climate change, air pollution and human health

This article takes stock of recent literature on health impacts of climate change and air pollution, and the corresponding health benefits of policy action aiming to reduce greenhouse gas and air pollutant emissions. We focus particularly on the publications in the Focus Collection on ‘Climate Change, Air Pollution and Human Health’, which illustrate advances in three key research areas. First, the impacts of global warming and air pollution are unevenly distributed, as they disproportionately affect vulnerable socio-economic groups including older adults, pregnant women, children, and people with lower earnings or education levels. Second, recent research improves our understanding and quantification of impacts identified in earlier work, and explores novel impact pathways such as the associations between allergies and climate change, and between air pollution and diabetes mellitus, Alzheimer’s disease and Parkinson’s disease. Third, significant synergies in tackling climate change and air pollution can strengthen the case for ambitious policy action. These synergies are heterogeneous across sectors and regions, point to low-hanging fruit among policy options (e.g. phasing out coal), and provide a strong basis for broader sustainable development, improving health and gender equality. Finally, we point out suggestions for future research. Research advances can guide policies to mitigate future climate change, air pollution and the associated health impacts, while informing adaptation strategies that aim to protect the health of the most vulnerable in society.

How Does Mortality Contribute to Lifetime Pension Inequality? Evidence From Five Decades of Swedish Taxation Data.

As with many social transfer schemes, pension systems around the world are often progressive: individuals with lower incomes receive a higher percentage of their income as a subsequent pension. On the other hand, those with lower earnings have higher mortality and thus accumulate fewer years of pension income. Both of these opposing factors influence the progressiveness of pension systems. Empirical efforts to disentangle the effects of mortality inequality on lifetime pension inequality have been scarce. Using Swedish taxation data linked with death registers for 1970-2018, we study how education and preretirement earnings relate to lifetime pensions from age 60 onward and how mortality inequalities contribute to overall inequalities in lifetime pensions. The results show that a progressive replacement structure and mortality differences contribute to the overall distribution of pension payments over the life course. Up to one quarter of lifetime pension inequality is attributable to the greater longevity of socially advantaged groups-particularly among men. Hence, mortality inequalities are an important determinant of the overall degree of between-group income transfers in a pension system, but they are not as important as inequalities in prior earnings.

Lifetime Earnings in the United States over Six Decades

Between the 1957 and 1983 labor market entry cohorts, median lifetime earnings declined by 10–19 percent for men and increased by 22–33 percent for women, albeit relative to very low median lifetime earnings for the early cohorts. The difference between newer and older cohorts comes from differences in median earnings at the time of labor market entry. Inequality in lifetime earnings has increased significantly within each gender group, but the closing lifetime gender gap has kept overall lifetime inequality flat. The increase among men is largely attributable to subsequent cohorts entering the labor market with progressively higher levels of inequality. (JEL D15, J16, J31, J32)

Does less working time improve life satisfaction? Evidence from European Social Survey

BackgroundWorktime is one of the main drivers of life satisfaction, and a balanced distribution of working hours and leisure hours directly impacts feelings of well-being. Based on previous studies, we seek to confirm this relationship in the European context and explore other potential driving forces of life satisfaction. Health condition as the mediating variable is also examined.MethodsThis article uses an ordered probit model to analyze the impact of working time on life satisfaction using data extracted from the most recent round (wave 10) of the European Social Survey (ESS). Hypotheses are proposed to test the impact of working time on life satisfaction, the mediating effect of health in the worktime–satisfaction nexus, and the effects of social inclusion, social trust, feelings of safety, and digitalization on life satisfaction.ResultsThe results reveal a negative and significant correlation between hours of work and life satisfaction, thus implying that a shorter working week can improve Europeans’ life satisfaction. Health is found to be an important intermediate variable that plays an essential role in the dynamic through which working times influence life satisfaction. Further, we find that those in the middle class prefer to work shorter hours to achieve a higher feeling of satisfaction and that high earners to a lesser extent, while low earners generally show no preference. Employees of private firms are more satisfied with shorter working hours, while satisfaction for those working in public institutions is not affected by changes in hours worked. Finally, we verify the robustness of our estimations by replacing life satisfaction with happiness.ConclusionsWorking fewer hours contributes to higher life satisfaction in Europe, and health plays an essential mediating role in this relationship. Social inclusion, social trust, feelings of safety and digitalization all play a factor in improving life satisfaction. Compared to other job categories, private sector employees can achieve greater life satisfaction from reducing their total working time.

Foundations of a New Democracy: Schooling, Inequality, and Voting in the Early Republic

Democratic theorists have long argued that states can create more resilient democracies through education. Educational investments are thought to produce more economic equality and instill in citizens greater capacity and responsibility to participate in politics. Using a geographic regression discontinuity design and township-level data from Antebellum New York State, we examine whether state funding for common schools led to higher voter turnout as well as higher earnings and lower inequality. Our estimates support the view that a participatory democratic culture emerged not only because of initial favorable endowments but also because of subsequent government decisions to fund education. New York townships that received more school funding later had higher median earnings, lower earnings inequality, and higher levels of voter turnout. Our findings support the view that maintaining democracy requires active investments by the state, something that has important implications for other places and other times—including today.

Talking with youth about school shootings: Taking initiative in the new school year

Last month's commentary focused on the link between gun reform and prevention of school shootings, with a promise to follow up this month on how we talk to children about tragic events. There is no question that school violence is impacting our nation's youth, with recent discussion outlining the mechanisms by which this can occur. For example, a recent APA's Monitor on Psychology article noted the increase in anxiety and stress in children because of mass shootings and referred to a “cascade of collective trauma” (Abrams, 2022). The article notes that most teens worry about a shooting at their school and that a third of adults avoid some settings due to a fear about violence occurring there. Of course, for those directly impacted, suffering is increased, with effects such as increased absenteeism and reduced high school and college graduation rates. Effects were noted into their mid-twenties — with lower employment rates and earnings. As the number of mass shootings overall increases, this creates a societal effect. Further, this is occurring during what has already been identified as a mental health crisis for our youth (AACAP, 2021).

Занятость как фактор социального самочувствия сельчан

The employment of the rural population, providing a stable income and social guarantees, is one of the key factors determining social well-being in contemporary conditions. The article is focused on the comparison the social well-being of rural population with diverse employment. The empirical basis is the sociological survey of the rural population of Khakassia (2018). Industry workers feel the best of all. State employees (education, culture, healthcare) are experiencing some depression, although it is caused by age features. Agricultural workers are the least satisfied with different aspects of their lives because of difficult nature of agricultural labor and low earnings. Service sector shows dissatisfaction with living conditions such as the lack of jobs, employment and salary levels. Industry workers are the most optimistic about the future. And they make more efforts to improve their lives. Social well-being correlates with the financial welfare according to the data: the higher the level of welfare is the better is the social well-being. The age-related features also take place: social well-being in elder age decreases. Despite some inertia of rural population, it is a certain resource of their durability.

Corporate governance and earnings quality: the behavioral theory of corporate governance (evidence from Iran)

PurposeThis study aims to examine the relationship between corporate governance (CG) and various measures of earnings quality in listed companies on Tehran Stock Exchange (TSE). The theoretical intuition for prediction of any relationship between earnings quality and CG is based on the behavioral theory and the institutional settings in Iran.Design/methodology/approachThis study used the data of 117 listed companies on the TSE for the period from 2005 to 2019. The authors use panel data regression as the main methodology, along with principal component analysis, t-test and rank-sum test.FindingsThis study finds that the CG has a positive association with earnings quality. More precisely, better CG mechanisms cause lower earnings smoothness, more predictable and persistent earnings, and higher levels of timeliness, conservatism and value relevance. The relationship between CG and earnings quality is statistically and economically significant for all models.Originality/valueThe findings further the understanding of the role of CG in improving earnings quality in an Islamic and emerging country. First, this study provides evidence on the relation between CG and earnings quality by focusing on the behavioral theory, which suggests that corporate decision-making is not only influenced by formal CG mechanisms, but also by informal CG arrangements. In this case, this study departs from the restrictive theories (specifically, agency theory) that are widely used in past literature. Second, this study constructs an index that fits to corporate context of Iran rather than applying indexes introduced in Anglo-American environments.

The State of the Humanities circa 2022

The State of the Humanities circa 2022

Information versus Investment

AbstractWe quantify the real implications of trade-offs between firm information disclosure and long-term investment efficiency. We estimate a dynamic equilibrium model in which firm managers confront realistic incentives to misreport earnings and distort their real investment choices. The model implies a socially optimal level of disclosure regulation that exceeds the estimated value. Counterfactual analysis reveals that eliminating earnings misreporting completely through disclosure regulation incentivizes managers to distort real investment. Lower earnings informativeness raises the cost of capital, which results in a 5.7$\%$ drop in average firm value, but more modest effects on social welfare and aggregate growth.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Joint board management meetings and earnings management

PurposeJoint board management meetings bring boards of directors and top management teams together to share information and discuss company matters. The authors investigate whether these joint meetings are associated with higher agency costs or information sharing benefits in the context of firm earnings management.Design/methodology/approachUsing publicly disclosed data on the frequency of joint board management meetings in Indonesian firms, the authors examine the relationship between joint board management meetings and earnings management during 2010–2017.FindingsThe authors find that more joint board management meetings are associated with lower earnings management. This is consistent with joint board management meetings providing net information sharing benefits. Additional testing indicates that the results are the strongest when firms hold more joint board management meetings than regular board meetings.Originality/valueThe findings suggest that in addition to holding regular board and audit committee meetings, formal meetings between boards of directors and top management teams are beneficial to shareholders by restricting opportunistic accounting choices by firm management.

Does Audit Committee Moderate the Relationship Between Auditor Independence and Earnings Management During Initial Implementation of MFRS in Malaysia?

This paper presents an evaluation of auditor independence concerns against the backdrop of current Malaysian corporate financial scandals by examining the relationship between auditor independence and earnings management, and the role of audit committees in overseeing auditor independence. The study used 1,035 firm-year data in the main market of Bursa Malaysia from 2012 to 2014 and employed multivariate regression analyses. The results revealed that when non-audit fees and total fees were higher, it could reduce the auditor’s independence as higher fees can create economic dependency on his clients. This study found that audit committee size and the frequency of meetings were positively related to earnings management. When testing the audit committee moderation on auditor independence, the study found that audit committee size and its frequency of meetings weaken the positive relationships between lower auditor independence and earnings management. These findings help regulators and professional bodies think about the impact of audit and NAS fees on auditor independence and the audit committee's oversight responsibility. To assess auditor independence, companies should form a fully independent audit committee in accordance with the Malaysian Code on Corporate Governance 2021 (Securities Commission of Malaysia, 2021).

Child marriage: using the Indonesian family life survey to examine the lives of women and men who married at an early age

An understanding of the experiences of men and women who marry before adulthood is important in motivating social change. Using fixed effects estimation (the inclusion of geographic fixed effects at diminishing levels of aggregation and sister fixed effects where possible) on panel data from the Indonesian Family Life Survey (IFLS), we follow the lives of a sample of 40,800 women and men for up to two decades and examine a wide range of factors associated with child marriage. We examine the lives of both girls and boys who marry early, and the differential experience of girls marrying older men versus young boys. Child marriage is found to be associated with lesser educational attainment, lower earnings and less say in household decision-making, for both men and women. Women are less likely to have a medically-supervised birth and their children are more likely to die, be stunted and perform worse on cognitive tests. Negative factors are mostly exacerbated when young girls marry similarly underage men.

Textual analysis of the annual report and corporate performance: evidence from China

PurposeThis paper aims to examine the relationship between the readability of annual reports and corporate performance in Chinese listed firms.Design/methodology/approachThis research examined the annual report readability factors of Chinese listed companies by using a textual analysis method using Python to extract the text from the annual reports, convert it into numerical form to facilitate statistical analysis and then merge the results with data from the Chinese stock market to explain the impact on corporate performance and predict future earnings in the Chinese financial markets from 2008 to 2021.FindingsStudy findings indicate that firms with better financial reporting readability are more profitable, incur lower agency costs and have low earnings in the Chinese stock markets when readability is low (i.e. more complexity and length of annual reports). It was also found that when a listed company has a good performance, it prefers to use a short space to explain its operating and financial status. More generally, the means of the report length are short, and accounting terms are used less frequently; in the case of a poor company, the annual report is particularly long and accounting terms are more frequently used. In the context of the COVID-19 crisis, this study served as a proxy measure of returns prior to the announcement of the COVID-19 pandemic. In addition, an instrumental variable approach is used, which helps results to remain robust and control for fixed effects and potential endogeneity problems.Research limitations/implicationsAlthough this study’s results cannot be generalised globally because of their limited scope, they can still be generalised across non-English speaking countries. Thus, future cross-country research is encouraged to examine the textual analysis of financial reports across those countries.Practical implicationsThis study conveys two messages to investors and policymakers within the Chinese market. First, investors ought to pay greater attention to the nonfinancial information contained in annual reports to improve the accuracy of their predictions regarding future firm performance. Second, Chinese policymakers are encouraged to instate a policy for the use of plain English in annual reports to make them more readable by international investors.Originality/valueThis study contributes to the paucity of research that examines English-written annual reports in non-English speaking countries by examining the readability of annual reports in the Chinese market.

When Pay Equity Policy Is not Enough: Persistence of the Gender Wage Gap Among Health, Education, and STEM Professionals in Canada, 2006‒2016

This study examines gender, geographic, and earnings inequalities within and across 13 health, education, and STEM (science, technology, engineering, and mathematics and computer science) professions in Canada. Data from the 2006 and 2016 population censuses were pooled and linked to a continuous geospatial remoteness index for assessing trends in occupational feminization and associated employment earnings among degree-holding professionals aged 25–54. Linear regression and Oaxaca-Blinder decomposition methods were used to analyze how personal, professional, and socioenvironmental factors may attenuate or magnify wage differentials by sex. Results show the STEM professions tended to remain male-dominated, heavily urbanized, and subject to significantly lower earnings for women compared to men. Other historically female-dominated professions, notably nursing professionals and secondary school teachers, were characterized with geographic distributions most closely approaching the general population, relatively narrower gender wage gaps, but also lower average annual earnings. A significant gender wage differential was found in each profession, with women earning 4.6‒12.5% less than men, after adjusting for traditional human capital measures, social characteristics intersecting with gender, and community remoteness and accessibility. Residential remoteness and census period generally explained little of the gender wage gap. Despite decades of pay equity policies in Canada, women’s earnings averaged 2.3‒7.9% less than men’s due to unexplained factors, a finding which may be attributed, at least in part, to persistent (unmeasured) gender discrimination even in highly educated professions.

Exposure to Conflict, Migrations and Long-run Education and Income Inequality: Evidence from Bosnia and Herzegovina

ABSTRACT We investigate the long-term relationship between conflict-related migration and individual socioeconomic inequality. Looking at the post-conflict environment of Bosnia and Herzegovina (BiH), a former Yugoslav state most heavily impacted by the wars of the early 1990s, the paper focuses on differences in educational performance and income between four groups: migrants, internally displaced persons, former external migrants, and those who did not move. The analysis leverages a municipality-representative survey (n ≈ 6,000) that captured self-reported education and income outcomes as well as migration histories. We find that individuals with greater exposure to conflict had systematically worse educational performance and lower earnings two decades after the war. Former external migrants now living in BiH have better educational and economic outcomes than those who did not migrate, but these advantages are smaller for external migrants who were forced to move. We recommend that policies intended to address migration-related discrepancies should be targeted on the basis of individual and family experiences caused by conflict.