INCOME INEQUALITY: THE IMPLICATIONS OF ECONOMIC STRUCTURE AND SOCIAL CONDITIONS

During the past few decades income inequality has been increasing in the United States and other developed nations, and is having major social consequences. In this study county-level data for the United States was analyzed to test the relative importance of three alternative approaches for explaining increased levels of inequality. These three approaches include economic structure, social conditions, and a model that maintains that both social conditions and inequality are a function of economic structure. The results revealed that social conditions were much more strongly related to inequality than economic structure and little support was found for the theoretical model. The two social conditions most strongly related to inequality included female employment and the percent of female-headed households. Counties with high levels of female employment tended to have low levels of inequality, while counties with high proportions of female-headed households tend to have high levels of inequality. The implications of these findings are discussed.     

THE EFFECTS OF EXPORTS, PUBLIC DEBT, AND DEVELOPMENT ON INCOME INEQUALITY

Classical economics and most modernization theorists hold that a curvilinear relationship exist between income inequality and development level. In this article that relationship is tested. In addition, it is hypothesized that exports and debt as percentages of gross domestic product increases individual income inequality. Regression analyses with controls for development and time were used to test these relationships (N=28 at two time periods). To test these hypotheses with additional data a panel cross-section design was used with data for countries where it is not available a two separate times (N=37 and N=46). The results do not provide evidence to support a curvilinear relationship between development and income distribution when controls for dependency are included in the regression equation. The results from all six regressions presented support the hypothesis that exports enhance income inequality. Moreover, a covariant analysis indicates that exports effect inequality significantly more in undeveloped countries than in developed countries. It is concluded that for less developed countries pursuing export-oriented production, income does not become more evenly distributed at later stages of development.     

PITFALLS IN TESTING FOR COINTEGRATION BETWEEN INEQUALITY AND THE REAL INCOME

Frank (2009) constructed a comprehensive panel of state‐level income inequality measures using individual tax filing data from the Internal Revenue Service. Employing an array of cointegration exercises for the data, he reported a positive long‐run relationship between income inequality and the real income per capita in the United States. This article questions the validity of his findings. First, we suggest a misspecification problem in his approach regarding the order of integration in the inequality index, which shows evidence of nonstationarity only for the post‐1980 data. Second, we demonstrate that his findings are not reliable because the panel cointegration test he used requires cross‐section independence, which is inappropriate for the U.S. state‐level data. Employing panel tests that allow cross‐section dependence, we find no evidence of cointegration between inequality and the real income. (JEL D31, O40)     

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)     

INEQUALITY AND GROWTH IN THE UNITED STATES: EVIDENCE FROM A NEW STATE-LEVEL PANEL OF INCOME INEQUALITY MEASURES

This paper introduces a new comprehensive panel of annual state-level income inequality measures spanning the postwar period 1945–2004. For many states, the share of income held by the top decile experienced a prolonged period of stability after World War II, followed by a substantial increase in inequality during the 1980s and 1990s. This paper also presents an examination of the long-run relationship between income inequality and economic growth. Our findings indicate that the long-run relationship between inequality and growth is positive in nature and driven principally by the concentration of income in the upper end of the income distribution. ( JEL D31, O40)     

LABOR MARKET SEGMENTATION AND INCOME INEQUALITY IN URBAN CHINA

Though central to the market transition debate, the effect of the institutional realignment on stratification order has not been adequately addressed. I reformulate market transition hypotheses and use data from a recent survey in a Chinese city to test market transition theory and path dependence arguments. I make the linkage between literatures on labor market segmentation and literatures on market transition. I show different returns to human and political capital in the private and state sectors in urban China. My research suggests modifications of the conceptual issues used in the market transition debate.     

THE LIFE-CYCLE LABOR SUPPLY OF MARRIED WOMEN AND ITS IMPLICATIONS FOR HOUSEHOLD INCOME INEQUALITY

In a life-cycle model of married womens' labor supply the husband's expected lifetime income should have a greater effect on his wife's labor supply than should his current income. Using the Panel Study of Income Dynamics data, the husband's average lifetime income (over the panel years) does have a greater negative income effect than current income. However, this income effect has declined over time: the labor supply of wives is becoming less sensitive to their husbands' incomes. This declining elasticity would cause household income inequality to worsen over time, but has been offset by other factors.     

DISAGGREGATING THE EFFECTS OF RACIAL AND ECONOMIC INEQUALITY ON EARLY TWENTIETH-CENTURY EXECUTION RATES

This article examines how class inequality may have influenced the historical use of executions in the United States, both within the South and outside of the South. Specifically, this article asks whether executions acted as a mechanism to maintain an exploitative class system in the entire United States, just as lynching maintained a racial caste system in the South. Much of the literature on the historical determinants of macrolevel execution rates has examined these disparities in terms of racial inequality. This study demonstrates that racial inequality alone cannot account for the high number of executions that typified the early twentieth century United States and contends that it is important to expand our understanding of the effects of class inequality on both historical and contemporary trends in executions.     

OCCUPATIONAL SEX SEGREGATION AND ECONOMIC INEQUALITY UNDER SOCIALISM:

An increase in scholarly attention to income differences between sex-typed occupations has generated a burgeoning literature. Typically-female occupations require preemployment education, not prolonged on-the-job training; receive less renumeration for work autonomy than male-typed occupations; and are concentrated in economically disadvantaged industrial sectors. However, these issues have received only preliminary consideration regarding noncapitalist societies and research has lacked an integrative, analytical focus. This study compares the earnings effects of education, type of work, and industrial sector between female- and male-dominated occupations in socialist Yugoslavia. As expected, average earnings are significantly higher in male than in female occupations. The results from the earnings regressions reveal a higher explained variance and larger economic returns to education among female- dominated occupations, especially in the managerial and professional strata. A decomposition of the earnings difference between sex-typed occupations suggests a variation in the source of inequality across skill strata. In the discussion, a comparison of capitalism and socialism reveals that while some aspects of the earnings attainment process may be unique to socialism, others are not.     

NOT ALL BANKS ARE EQUAL: COOPERATIVE BANKING AND INCOME INEQUALITY

This paper studies the role of different types of credit institutions in income inequality. By analyzing Italian local (provincial) credit markets over the 2001–2011 period, we find that cooperative banks mitigate income inequality in local communities more than their commercial counterparts. The results also suggest that it is the specific nature and orientation of cooperative banks, more than their relationship lending technologies, that improve income distribution. The impact of cooperative banking on inequality appears however to be partly channeled by a reduced dynamism of local economies, especially lower migratory flows and business turnover. (JEL G21, G38, O15)     

ACCOUNTING FOR URBAN CHINA'S RISING INCOME INEQUALITY: THE ROLES OF LABOR MARKET,HUMAN CAPITAL,AND MARRIAGE MARKET FACTORS

This paper analyzes China's rising family income inequality since the early 1990s when the urban labor market started its transformation from a centrally controlled to a market‐driven one. We document the trends in income inequality over the period of 1992–2009 using the Urban Household Survey data, and adopt the approach recently proposed by Eika et al. (2014) to decompose changes in income inequality. We find that labor market factors accounted for about three‐quarters of the overall increases in income inequality while falling marriage rate contributed the other quarter. Changes in human capital levels and marital assortativeness have not contributed to the rising inequality. (JEL D31, I26, J12)     

PUBLIC SPENDING REALLOCATIONS AND ECONOMIC GROWTH ACROSS DIFFERENT INCOME LEVELS

This article examines the effects of public spending reallocations on economic growth. Assembling a disaggregated public spending dataset of 83 countries over the 1970–2011 period, we show that spending reallocations toward education, from health and social protection, have significant growth‐promoting effects across a wide range of countries' income levels. However, income heterogeneity matters, particularly when reallocations involve infrastructure spending. Specifically, a reallocation from this spending to education also promotes growth, albeit primarily when a country's income level is low. This occurs because the effects of infrastructure spending are particularly weak in low‐income countries, possibly due to the low quality of governance. (JEL O43, H50, O11)     

FACTOR INCOME DISTRIBUTION AND ENDOGENOUS ECONOMIC GROWTH: PIKETTY MEETS ROMER

What is the relationship between the economy's long-run growth rate, its capital-income ratio, and its factor income distribution? A satisfactory answer requires an endogenous growth and savings rate. We scrutinize Piketty's (2014) theory in a richly parameterized variant of Romer's (1990) seminal model with and without population growth. The economy's growth and savings rate are exogenous in Piketty's theory and endogenous in Romer's. In contrast to Piketty's Second Fundamental Law of Capitalism a smaller growth rate may be associated with a smaller capital-income ratio. Moreover, it may go together with a greater or a smaller capital share. (JEL E10,E21,E25,O33,O41)     

ALL OR NOTHING: VIDEO LOTTERY TERMINAL GAMBLING AND ECONOMIC RESTRUCTURING IN RURAL NEWFOUNDLAND

The sudden collapse of the cod fishery off Canada's east coast in the early 1990s directly affected the livelihoods of more than 30,000 fishers and fish-processing plant workers in the province of Newfoundland and Labrador. In response to the crisis, the federal government closed the fishery and introduced a series of adjustment programs with the aim of reducing capacity in the industry and encouraging displaced people to seek employment elsewhere. This article examines how a small group of people living in a fishery-dependent region on the east coast of Newfoundland began using free-spending video lottery terminal gambling as a way to engage with these efforts to downsize and restructure their industry. Despite the personal and financial strains that regular gambling often created, the communal spending associated with it became a way in which some people sought to affirm local ties and critique neoliberal adjustment programs designed to encourage mobility, personal ambition, and sound financial management. The power of this critique was, however, contingent on the capacity of the core players to continue to define their behaviour as an exercise in solidarity. This idea was perpetually undermined by government programs and media stories, which presented heavy gambling as an individual weakness or addiction, and by the increasing social stratification that accompanied the restructuring of the fishing industry, making the disparities between gamblers much more difficult to hide.     

FDI AND INCOME INEQUALITY: EVIDENCE FROM A PANEL OF U.S. STATES

This study employs state‐level panel data to explore the relationship between inward foreign direct investment (FDI) and income inequality in the United States. Using panel cointegration techniques that allow for cross‐sectional heterogeneity and cross‐sectional dependence, we find that, in the long run, FDI exerts a significant and robust negative effect on income inequality in the United States. This result for the United States as a whole does not imply that FDI narrows income gaps in each individual state. There is considerable heterogeneity in the long‐run effects of FDI on income inequality across states, with some states (21 out of 48 cases) exhibiting a positive relationship between FDI in income inequality.(JEL F21, D31, C23)     

SHIFTING ARRANGEMENTS: INDO-TRINIDADIAN WOMEN,GLOBALIZATION, AND THE RESTRUCTURING OF FAMILY LIFE

This article focuses on the changing relationships between East-Indian daughters-in-law and mothers-in-law in a developing society: Trinidad, West Indies. Changes in how families are structured are seen as active responses to processes of globalization. While these changes have provided younger women with opportunities to resist older arrangements, their responses have in turn created new problems that remain unresolved. I argue that these families' experiences of change are linked to complex relations that include increased access to education, changes in the village economy, and global media penetration, all of which are part of broader processes of modernization and globalization. The study draws on ethnographic fieldwork as well as census data and economic, educational, and demographic changes since World War II.     

SOCIAL SECURITY, THE FAMILY, AND ECONOMIC GROWTH

We show that a defined-benefits PAYG social security system distorts key family-based choices that affect economic growth. We identify human capital as the engine of growth, and the motivating forces linking the family's overlapping generations as mutually productive intergenerational transfers and/or altruism. The PAYG system is shown to affect adversely at least one of three determinants of the economy's growth path: fertility, savings, and investment in human capital. The specific effects may vary over different stages of economic development. The growth rate is expected to fall in advanced economies. Our analysis indicates that the effect may be sizeable. ( JEL 915, 111, 850)