UBS Center Newsletter July 2018

16 SCHOLARSHIPS Senior scholarship holder Giacomin Favre. The history of economic inequality Economic inequality is on the rise, reaching levels similar to those at the end of the 19th century. The lack of intergenerational mobility is a very impor- tant aspect of inequality. Hence, decomposing mobility into its components is central to under- standing inequality. In a joint project with Joël Floris and Ulrich Woi- tek, we analyze social mobility of decennial citi- zenry cohorts of Zurich born between 1780 and 1870. We constructed a detailed microlevel data set on Zurich’s citizenry between 1794 and 1929 origi- nating from the citizen’s directories and tax regis- tries . This data set is unique for the period of the 19th century and allows us to answer a broad set of demographic questions. We find that social mobility exhibited an inverted u-shape featuring a decline in the second half of the century. The decline coincides with the second industrial revolution and a shift of the occupation- al distribution towards upper middle class jobs. Moreover, Zurich emigrants tended to be both geographically and socially more mobile than nonmigrants. However, emigrants tended to ex- hibit downward mobility, which potentially points towards difficulties gaining a foothold in the coun- try of destination. Project on disability insurance systems In another project, Andreas Haller and I compare two disability insurance systems. Disability insur- ance programs are growing considerably in many countries. On average, OECD countries spend almost three times more on disability insurance than on unemployment insurance. Policy makers therefore seek ways to reduce disability insurance expenditures. Providing incentives for recipients of disability insurance to return to work can reduce costs without reducing the insurance value itself. Currently, disability insurance systems feature strong work disincentives: recipients lose most of their benefits if they earn above a certain ceiling ( cash cliff ). We analyze the effects of replacing this cash cliff with a benefit offset , which reduces ben- efits more gradually with higher income. A benefit offset might increase the labor supply of disability insurance recipients and thus reduce payments. However, disability insurance becomes more attrac- tive, which induces entry. We show that the welfare effect crucially depends on two sufficient statistics : the earnings and the benefit take-up elasticity. What comes next? We are currently working on the disability insur- ance project, estimating the sufficient statistics for the U.S. Social mobility and disability insurance What did social mobility look like in 19th century Zurich and what changed after the second industrial revolution? What are the right work incentives in disability insurance? Favre Giacomin