Top incomes and the gender divide

In the recent research on top incomes, there has been little discussion of gender. A great deal is known about gender differentials in earnings, but how far does this carry over to total incomes? This paper investigates the gender divide at the top of the income distribution using tax record data for eight countries with individual taxation. It shows that women are strongly under-represented at the top of the distribution. Although the presence of women at the top has increased over time, the rise becomes smaller at the very top. The income gradient by gender has become more marked. The paper also shows that income composition differs by gender and exhibits significant changes over time, underlining the fact that it is not sufficient to look only at earned income.     

Sexual Orientation,Labour Earnings,and Household Income in Canada

Using five cycles of a large nationally representative Canadian health survey, covering 2008 to 2012, the present paper examines the extent of labour earnings and household income gaps among gays, lesbians, and heterosexuals. The data used in this paper has the advantage of allowing for a direct classification of sexual orientation, through respondent self-identification. In accord with previous reports, this paper finds that homosexual females holding fulltime employment earn statistically significantly above comparable heterosexual females. Homosexual males with fulltime employment, on the other hand, are found no different in their earnings, from otherwise identical heterosexual males. When household income is considered, data reveal that lesbian households have statistically significantly lower incomes compared with otherwise identical gay households, who outearn heterosexuals as well. This pattern, not previously reported for Canada but observed in some other countries, is likely due to the combined effects of the general gender wage gap, the fading of homosexual males’ wage penalty, and the existence of two male income earners in a gay male household.     

Fundamental accrued capital gains and the measurement of top incomes: an application to Chile

Most previous studies of income inequality have either ignored capital gains or have used taxable realized capital gains to estimate top incomes. Neither of these approaches is fully satisfactory. We apply for the first time a new methodology that allows us to account for fundamental accrued capital gains as part of the top incomes in a theoretically consistent manner. We estimate the shares of the super-rich in Chile showing that accrued capital gains have a large impact on these estimates. Also, the top income shares estimated using fundamental capital gains appear to exhibit a more stable and presumably more plausible time profile than estimates based on capital gains derived from asset market variations.     

PROFIT SHARING, WAGE BARGAINING, AND UNEMPLOYMENT

The Paper examines the effects of profit sharing in an economy with decentralized wage bargaining. Profit sharing makes workers' income more sensitive to wage changes, and this leads to wage moderation. But economy-wide profit sharing may also improve worker's outside income opportunities, and this strengthens the union's hand in bargaining and tend to raise wages. It turns out that equilibrium unemployment is reduced by profit sharing as long as the elasticity of substitution between labour and capital is less than one, whereas unemployment is increased if the elasticity of substitution is greater than one.     

A living wage for former welfare recipients entering employment: The case of Butler County,Ohio

Since the late 1970s, changes in family income in the United States have varied by income category. While the average income of families with children in the top 20% of the income distribution has grown, the average income of families with children in the bottom 20% has declined. Factors contributing to the growing income gap include disparities in wages paid to low-income workers relative to high-income workers, an increase in female-headed single parent families, and a decrease in the value of the minimum wage. Welfare reform will likely only exacerbate this situation. This study synthesizes existing research as well as data from an Ohio county to demonstrate that the minimum wage incomes available to poor families are not sufficient for even basic necessities. In order for former AFDC recipients to become economically independent, government policies must be enacted to increase wages and/or provide income assistance for poor families.     

Top incomes and human well-being: Evidence from the Gallup World Poll

The share of income held by the top 1 percent in many countries around the world has been rising persistently over the last 30 years. But we continue to know little about the relationship between the rising top income shares and human wellbeing. Using data from 24 countries and years ranging from 2005 to 2013 in the Gallup World Poll and the World Income Database, this study examines the relationship between top income share and different dimensions of subjective wellbeing. The results are mixed, with the negative relationship between top income shares and average life ladder being driven largely by the European sub-sample. For the European countries, we also document evidence that top income is statistically significantly associated with lower average enjoyment and being well-rested yesterday, and higher average stress and sadness yesterday. Overall, our findings suggest that, at least for individuals in Europe, an economic policy that increases national incomes may have significant crowding-out effect on aggregate evaluative wellbeing if it only increases the share of income at the very top of income distribution. More generally, our results highlight the complex relationships between income inequality and subjective wellbeing across different countries.     

The Native‐Immigrant Income Gap among the Self‐Employed in Sweden

During recent years we have observed that non‐western immigrants are overrepresented among the self‐employed in Sweden. A reason for this might be the difficulties faced by immigrants in the labour market. The unemployment rate among non‐western immigrants in Sweden is higher than among natives with similar human capital characteristics. While this is a well‐established result, we do not know much about how self‐employed immigrants perform economically compared to their native counterparts. The purpose of this paper is to describe and analyse the incomes of self‐employed immigrants and natives in Sweden. We will also discuss possible explanations for the income gap we find. We use Swedish register data for the period 1998 to 2002 and the population studied consists of individuals who have been continuously self‐employed during this period. By performing the analysis on this group of self‐employed we get a measure of the difference among the long‐term self‐employed. The outcome of interest is the average income over the period. Income regressions are estimated using both OLS and quantile regressions. We find that self‐employed immigrants receive significantly lower incomes than their native counterparts when controlling for individual characteristics, industry and start‐up year of the firm. The income gap is larger for non‐western immigrants than for western immigrants. Quantile regressions show that the native‐immigrant income gap is smaller at the top than at the bottom of the income distribution. Several possible explanations for the native‐immigrant income gap are discussed. One possible explanation is that immigrants have a lower reservation wage and accepts staying in business receiving a lower income than comparable natives. Another explanation might be that there is discrimination against self‐employed immigrants that will lead to lower incomes. There can be consumer discrimination or discrimination from banks and real estate owners.     

Distribution, Inequality and Concentration of Incomeamong Older Immigrants in Canada

While there are many studies on differences in earnings between immigrants and the native‐born or among immigrant groups, they do not consider distribution and concentration of income among immigrants explicitly. These aspects are important for understanding the distribution of economic welfare and consumer behaviour among members and hence are policy relevant. Using the 1991 Census data, the distribution and concentration of incomehave been examined among 15 broad birthplace groups for population aged55 years and over. About 19 per cent of males and 15 per cent of femalesreceive less than half the median income and obtain 5 per cent and 3 per centof the aggregate income respectively. About 30 per cent of males and29 per cent of females receive more than one and half times the medianincome and obtain 61 per cent and 59 per cent of aggregate incomerespectively. About 51 per cent of males and 56 per cent of females whoreceive incomes between half and one and half times the median income aretermed middle‐class and their shares of aggregate income amount to 34 and38 per cent respectively. Although older immigrants aged 55 years and over, as a group, have roughlythe same quartile distribution and concentration of income as theirCanadian‐born counterparts, the birthplace groups differ considerably.Those from the developing regions, that is, the groups that have loweraverage annual incomes, also have more inequitable distribution of incomethan the Canadian‐born or their counterparts from the developed regions. Thus, income distribution is more polarized in populations from developingregions than in populations from developed regions or in the Canadian‐bornpopulation. On average, females receive 45 per cent less income than males, and thereis less polarization of income among them than among males regardless ofthe place of birth. A part of the explanation lies in the receipt of government transfers, whichtend to equalize rather than polarize incomes, and older women derive ahigher proportion of their income from government transfers than older men.     

Gender Differences in Personal Income and Financial Risk Tolerance: How Much of a Connection?

Prior research indicates that relative to men, women generally have lower incomes and typically are more risk averse. In a sample of the clientele of financial planners, men had higher personal incomes and exhibited greater financial risk tolerance, which is consistent with previous studies. The authors' objective was to determine how much of the gender difference in income could be explained by risk tolerance. Results indicate that risk tolerance can explain some of the variation in earnings between women and men but that it is not a primary reason for the wage gap.     

Predicting Earnings Among Immigrants To Canada: The Role Of Source Country

The current study examines the importance of country of origin in predicting the labour market earnings among recent immigrants to Canada. The authors argue that, in addition to individual‐level characteristics associated with immigrant capital, macro‐level features associated with immigrant origins must be taken into account when considering the economic performance of immigrants in their host country. Country‐level factors are said to accompany immigrants to their destination country, which generate disparities in the “quality” of immigrants’ human and social capital across origin groups, as well as differences in how they are received by the resident population. The present study uses random effects multilevel modelling to investigate the extent to which immigrant incomes vary randomly across source country while taking into consideration individual‐level characteristics selected on the basis of human capital, social capital, and discrimination theories. Multilevel regression analysis confirms that immigrant incomes indeed vary significantly by country of origin, though the effect is small. Furthermore, it is revealed that the gross domestic product (GDP) of the sending country explains much of the level 2 variability in the labour market earnings of recent immigrants, as well as the relationship between racial minority status and immigrant incomes. The practical significance and policy implications of these findings are discussed.     

Long-run trends in top income shares: The role of income and population growth

This paper studies the sensitivity of long-run trends in top income shares to differences in top-share measures. While the standard measure fixes a share of the population, we define alternatives that allow variation in both incomes and size of the top group based on defining absolute income thresholds. In an application to United States data, we find that top income share trends over the past century vary somewhat depending on the measure used. Allowing top groups to increase in size after 1980 along with overall economic growth results in a larger increase of top income shares. The historical drops before WWII are sensitive to the choice of income deflator: using GDP inflates interwar top income shares but using CPI deflates them. Altogether, these results recommend using complementary approaches to defining top income groups when measuring long-term top income share trends.

     

Globalization,Producer Services and Income Inequality across US Metro Areas

We analyze globalization impacts on changes in income inequality, focusing on the top and bottom of the income distribution. Data are for all US metro areas from 1980 to 1990. Income polarization has risen. The international flow of labor polarizes earnings by depressing wages among low-income workers. Producer services increase earnings at the upper levels, but, in contrast to the main theories, are unrelated to polarization.     

Social Capital is Associated with Earnings among Foreign‐born Mexican Men but not Women in Los Angeles County

The mechanisms through which social capital is accumulated may influence its relationship with hourly earnings. Because Mexican men and women accumulate social capital differently, for instance, gender may be an important factor for understanding social capital’s association with Mexican migrant earnings. Unlike past research that often fails to differentiate between various social capital metrics (e.g., social network member reciprocity, participation in civic group organizations, neighbourhood trust), this article estimates two of these associations with wages while controlling for individual‐, household‐ and neighbourhood‐level characteristics. Results suggest that foreign‐born Mexican men receive a wage premium from civic participation (bridging social capital) and a wage penalty from reciprocal social network exchange (bonding social capital). We also find that unauthorized legal status (among Mexican men and all migrants) and having children (among women) were negatively associated with hourly wages. We conclude with a discussion of the relative association of human and social capital with Mexican migrant wages.     

TAX POLICY AND INCOME INEQUALITY IN THE UNITED STATES, 1979–2007

This paper assesses the effects of U.S. tax policy reforms on inequality over around three decades, from 1979 to 2007. It applies a new method for decomposing changes in government redistribution into (1) a direct policy effect resulting from policy changes and (2) the effects of changing market incomes. Over the period as a whole, the tax policy changes increased income inequality by pushing up the income share of high‐income earners (the top 20%). (JEL H23, H31, H53, P16)     

The demographic and socio-economic characteristics of post-1965 immigrants to New York City: a comparative analysis by national origin

This article analyses and compares the demographic and socio‐economic characteristics of persons born abroad who immigrated to New York City after 1965 and still lived in the City in 1990. Using data from the 1990 Census, we classify persons into the twenty four largest national origin groups and compare their demographic and socio‐economic characteristics (sex, age, educational attainment, labour force participation, unemployment, occupation, income, and poverty). We pose and answer three empirical questions. The first question is: what are some of the main differences by national origin in the composition of persons immigrating to New York City after 1965? The second question is: what are some of the main differences in the location of post‐1965 immigrants in New York's socio‐economic structure? The third question is: what are some of the main differences in the economic rewards received by persons who immigrated to New York City since 1965? We find that immigrants with less than a high school education have higher labour force participation rates than the US‐born population in the same educational category and also have slightly higher earnings. Immigrants with a high school degree have labour force participation rates close to (or slightly higher than) the average for the US‐born population but their incomes are slightly lower than the average income for the US‐born population. Immigrants with a college degree have participation rates similar or slightly lower that those of the US‐born population while their earnings are significantly lower that those of US‐born college graduates.     

Rurality and Income Inequality in the United States, 1975–2015

Recent events have focused attention on the perceived widening of the economic divide between urban and rural areas, and on the continued rise of national income inequality. We demonstrate that, in fact, the average income gap between urban (metropolitan) and rural (nonmetropolitan) households has not risen over the past 40 years, and makes virtually no contribution to national income inequality. Rising national inequality is driven by rising inequality within both urban and rural America, not by an urban/rural divergence. As is well known, the growing dispersion of household money income is partly driven by rising wage inequality, particularly in urban areas. Less well recognized is the role played by other income sources. We show that a decline in the progressivity of the distribution of social security payments and cash transfers, and an increase in the regressivity of the distribution of retirement incomes, have jointly made a comparably large contribution to rising income inequality. At the same time, the share of income from self-employment has declined, particularly in rural America, and because self-employment income is very unequally distributed, its diminution has retarded the growth of rural inequality. In 2014–15, however, rural inequality increased, cutting the urban/rural inequality gap in half.     

Union-nonunion wage differentials and the functional distribution of income: Some simulation results from a general equilibrium model

During the past two decades, a number of studies have established the ability of unions to obtain wages for their members that exceed the payment to similar but nonunionized workers. This article investigates empirically the impact that this wage differential has on the real incomes of union labor, nonunion labor, and capital. The analysis is accomplished by solving explicitly a numerically specified general equilibrium system with and without the union wage premium. Comparison of real factor incomes in each equilibrium yields the desired information. The findings indicate that union labor gains as a result of the differential, while nonunion labor and capital lose. This outcome is realized both in terms of real income levels and in a redistributive sense. I would like to thank Nick Carlozzi and Aris Protopapadakis for valuable comments and Mary Agnes McPeak for excellent research assistance. Remaining errors are my responsibility alone.     

Work hours,social value of leisure and globalisation

We examine how openness interacts with the coordination of consumption–leisure decisions in determining the equilibrium working hours and wage rate when there are leisure externalities (e.g., due to social interactions). The latter are modelled by allowing a worker's marginal utility of leisure to be increasing in the leisure time taken by other workers. Coordination takes the form of internalising the leisure externality and other relevant constraints (e.g., labour demand). The extent of openness is measured by the degree of capital mobility. We find that: coordination lowers equilibrium work hours and raises the wage rate; there is a U-shaped (inverse-U-shaped) relationship between work hours (wages) and the degree of coordination; coordination is welfare improving; and, the gap between the coordinated and uncoordinated work hours (and the corresponding wage rates) is affected by the extent and nature of openness.     

Illustrating the Implications of How Inequality is Measured: Decomposing Earnings Inequality by Race and Gender

This paper makes three distinct contributions: it presents a novel modification to an established methodology for assessing inequality using the CPS ASEC data, it illustrates how valuable a multi-metric inequality analysis is by reconciling some open questions regarding the trend in inequality and the role of the composition of income along the distribution, and it provides a baseline assessment of the trend in earnings inequality for four distinct groups of income earners. The evolution of earnings inequality from 1995 to 2010 is compared to increasing inequality in total income as documented by Thomas Piketty and Emmanuel Saez to show that earnings inequality has followed a qualitatively similar, though less extreme trend. In the process, the disconnect between the trend in the Gini coefficient and inequality assessed via the share of income going to the top 1 % of income earners is reconciled through the use of several alternative inequality indices. Finally, the evolution of the earnings distribution for black women, black men, white women, and white men are considered separately, which shows that there are important differences in the experience of inequality. The main findings are that only white men have experienced changes in within-group earnings inequality that parallel the changes in inequality seen in the overall distribution. By contrast, black income earners have seen no notable increase in within-group inequality by any measure, suggesting that they may rightly perceive growing inequality as primarily a between-group phenomena.     

The difference between wages and wage potentials: Earnings disadvantages of immigrants in Germany

Immigrants in Germany have poor earnings performance relative to natives. Claiming that human-capital endowments determine earnings potentials rather than actual earnings, a stochastic earnings frontier is estimated and used to seek systematic differences between natives and migrants for GSOEP data for the year 2000. While empirical results clearly support the frontier assumption, natives and immigrants are surprisingly about the same with respect to the frontier. Assuming a half-normal distribution of the wage gap, on average, both groups transform a modest 84% share of their potential income into market earnings. This implies wage inequality can be attributed to human-capital differentials alone. The human-capital endowments of immigrants are largely determined by the very low percentage who have college degrees, their slow assimilation and zero-return on imported experience. The paper also tries to explain individual wage gaps, which are significantly decreased in married subjects raising families, but increased in employees in small- or medium-sized relative to larger firms. However, these variables only make minor contributions to the variance.