Long-Term Care

This study examines the redistributive effects of public pensions on old-age income inequality, testing whether public pensions function as the “great equalizer.” Unlike the well-known alleviating effect of public pensions on old-age poverty, the effects of public pensions on old-age income inequality more generally have been less examined, particularly outside Western countries. Using repeated cross-sectional data of elderly Koreans between 1998 and 2010, we applied Gini coefficient decomposition to measure the impact of various income sources on old-age inequality, particularly focusing on public pensions. Our findings show that, contrary to expectations, public pension benefits have inequality-intensifying effects on old-age income in Korea, even countervailing the alleviating effects of public assistance. This rather surprising result is due to the specific institutional context of the Korean public pension system and suggests that the “structuring” of welfare policies could be as important as their expansion for the elderly, particularly for developing welfare states.     

Inequality and the time structure of earnings: evidence from Germany

This paper studies the relationships between annual and subannual inequality and mobility during the course of the year. We apply an exact decomposition framework as outlined in Wodon and Yitzhaki (Econ Bull 4:1–8, 2003), and in Yitzhaki and Wodon (Research on Economic Inequality 12:179–199, 2004). Earnings records of pension insurants in Germany serve as the database. The long time horizon of our database allows us to investigate the stability and robustness of the parameters of the decomposition over time. Specifically, we show that the mobility component of the decomposition, as measured by Gini correlation coefficients, changes over the observation period. This makes it difficult to predict the impact of the income accounting period on inequality in a more general context. Thus, it is of paramount importance to use income data from a uniform accounting period in distributional analyses.     

INEQUALITY AND TRUST: NEW EVIDENCE FROM PANEL DATA

We estimate the causal link from income inequality to generalized trust by reconsidering the country‐level evidence on this issue. First, we exploit the panel dimension of the data, thus controlling for any country unobservable time‐invariant variables, and find a negative relationship between the two variables that holds only for developed countries. Second, we focus on these advanced economies and provide instrumental variable estimates using the predicted exposure to technological change as an exogenous driver of inequality. According to our findings, the negative causal effect of inequality on trust is even larger than that coming from ordinary least squares estimation. We also provide new insights on the effects of different dimensions of inequality, exploiting measures of both static inequality—such as the Gini index and top income shares—and dynamic inequality—proxied by intergenerational income mobility. (JEL D31, O15, Z13)     

Dynastic inequality,mobility and equality of opportunity

One often heard counter to the concern about rising income and wealth inequality is that it is wrong to focus on inequality of outcomes in a “snapshot”. Intergenerational mobility and “equality of opportunity”, so the argument goes, is what matters for normative evaluation. In response to this counter, we ask what pattern of intergenerational mobility leads to lower inequality not between individuals but between the dynasties to which they belong? And how does this pattern in turn relate to commonly held views on what constitutes equality of opportunity? We revive and revisit here our earlier contributions which were in the form of working papers (Kanbur and Stiglitz 1982, 1986) in order to engage with the current debate. Focusing on bistochastic transition matrices in order to hold constant the steady state snapshot income distribution, we develop an explicit partial ordering which ranks matrices on the criterion of inequality between infinitely lived dynasties. A general interpretation of our result is that when comparing two transition matrices, if one matrix is “further away” from the identity matrix then it will lead to lower dynastic inequality. More specifically, the result presents a computational procedure to check if one matrix dominates another on dynastic inequality. We can also assess “equality of opportunity”, defined as identical prospects irrespective of starting position. We find that this is not necessarily the mobility pattern which minimizes dynastic inequality.     

Healing the Hidden Injuries of Class? Redemption Narratives,Aspirational Proxies,and Parents of Low‐Income,First‐Generation College Students

Existing scholarship has examined how low‐income individuals conceptualize their socioeconomically constrained positions in relation to the meritocratic ideologies and stratified mobility structures of the United States, but little is specifically known about how these individuals' ideas regarding their own status may be impacted by raising children who surpass their educational and occupational achievement levels. Drawing on interview data from both low‐income first‐generation (LIFG) college students and the parents of those students, this article examines how parents framed the achievements of their upwardly mobile, college‐going children in relation to their own experiences of socioeconomic, educational, and occupational constraint. Engaging qualitative understandings of the “hidden injuries of class,” the analysis demonstrates how parents of LIFG college students reconciled their own experiences of limited mobility despite hard work with their steadfast beliefs in meritocratic ideals by (1) invoking narratives of personal “redemption” from past “mistakes” or “failures” in relation to their children's educational accomplishments, and (2) conceptualizing their upwardly mobile children as “aspirational proxies” through whose accomplishments they measured their own success.     

Basil Bernstein 1924-2000

This paper introduces the Tog coefficient, which can be used to measure the level of inequality in a cross-tabulation of two ordinal-level variables. The Gini coefficient is a standard measure of income inequality which has been adapted by other authors for use in different contexts such as the measurement of health inequalities and the quantification of occupational segregation; the Tog coefficient represents a further stage in this process of development. The paper outlines the construction of the Tog coefficient and illustrates this using a social mobility table based on data from the 1972 Oxford Mobility Study. The trend in social mobility-related inequality as measured by the Tog coefficient is compared with the findings of Goldthorpe et al. based on odds ratios. A more elaborate application of the Tog coefficient uses a variety of data relating to the similarity of spouses' class backgrounds to demonstrate the existence of a long-term decline in the level of inequality in British society.     

INEQUALITY AND GROWTH IN THE UNITED STATES: WHY PHYSICAL AND HUMAN CAPITAL MATTER

We investigate the relationship between economic growth and top income inequality under the influence of human and physical capital accumulation, using an annual panel of U.S. state‐level data. Our analysis is based upon the “unified” framework offered by Galor and Moav (2004) while the empirics account for cross‐section dependence, parameter heterogeneity, and endogeneity, in nonstationary series. We conclude that changes in inequality do not influence growth, neither in the short run nor in the long run in the United States as a whole in the 1929–2013 period. Our findings are robust to the inclusion of overall income inequality measures. These findings provide support for the theoretical prediction of the unified theory of inequality and growth, according to which the growth effect of inequality becomes insignificant in the latest stages of economic development that the United States experiences during our period of investigation. Therefore, future policies aiming at moderating the concentration at the upper end of income distribution are not likely to have adverse growth consequences in developed countries such as the United States. (JEL I21, O47, C23)     

Repelling the “Rutter”: Social Differentiation Among Rural Teenagers

This paper examines low‐income white rural teenagers' management of race and class‐based inequality. It analyzes how these teenagers constructed boundaries to distinguish themselves from outsiders, but also to distinguish themselves from the local abject category of “rutter.” The findings reveal hidden interconnections between race and class in interactional practice, and highlight local processes of differentiation through which actors attempt to deflect stigma and attain credibility. The paper discusses how interactional mechanisms such as “internal othering” and “stigma‐theory” bolster race and class credibility, but reproduce inequality.     

Does income inequality harm health? New cross-national evidence

The provocative hypothesis that income inequality harms population health has sparked a large body of research, some of which has reported strong associations between income inequality and population health. Cross-national evidence is frequently cited in support of this important hypothesis, but the hypothesis remains controversial, and the cross-national work has been criticized for several methodological shortcomings. This study replicates previous work using a larger sample (692 observations from 115 countries over the 1947-1996 period), a wider range of statistical controls, and fixed-effects models that address heterogeneity bias. The relationship between health and inequality shrinks when controls are included. In fixed-effects models that capture unmeasured heterogeneity, the association between income inequality and health disappears. The null findings hold for two measures of income inequality: the Gini coefficient and the share of income received by the poorest quintile of the population. Analysis of a sample of wealthy countries also fails to support the hypothesis.     

Inequality measurement and the time structure of household income in Israel

The aim of this paper is to empirically evaluate the effect of the length of the accounting period on indices of inequality of household income in Israel. There are three main findings: (1) The analysis of the impact of the accounting period on the Gini index of inequality can be done in a way which is identical to analyzing the effect of the accounting period on the coefficient of variation; (2) changing the accounting period from one to three months decreases, on average, the Gini index of inequality by about 1.7%. Furthermore, the Gini index calculated from a three-month accounting period was 3.9%–4.1% higher than the index based on a 12-month period. The change in the accounting period from 12 months to three months accounts for 27% to 37% of the increase in inequality in the last two decades, depending on the type of income considered. (3) The above relationship is stable over the years but is sensitive to the definition of income.     

Mythos Flexibilisierung?

In this article, we address the current debate of increasing work life flexibility in (West-) Germany. In order to shed some light on the contradiction between a widely accepted decrease in work life stability and empirical findings that do not confirm such a decline, we contrast “objective” evidence from occupational trajectories with “subjective” evidence on various dimensions of perceived continuity and discontinuity of job histories. We use the West German part of the German Life History Study for a survival analysis of occupational mobility for cohorts born between 1929 and 1971. Here, using a new concept, we distinguish between direct mobility and indirect mobility which is defined as an occupational change that happens after an employment interruption. In addition, we analyze a new German cross-sectional data set from 2005 on retrospective career perceptions. We employ multinomial regression models to understand whether younger individuals report more unwanted occupational mobility and employment interruptions than older individuals. Our findings indicate that direct occupational mobility has neither increased across cohorts nor has it surged upward for the most recent cohorts, but that there has been an increase in indirect occupational mobility. Furthermore, while there is no higher incidence of unwanted occupational mobility in younger age groups, we find mixed evidence regarding the increased occurrence of unwanted career interruptions in younger age groups. Finally, the desire to experience occupational and firm changes has grown for younger age groups.     

Performance pay,the marriage market and rising income inequality in Taiwan

Taiwan expanded its college access significantly over the past two decades by converting 2-year junior colleges to 4-year colleges and relaxing entrance standards. The share of college graduates in the 22–24 years old population rose from 12 to 71% between 1990 and 2014. This should have suppressed returns to schooling and lowered household income inequality. Instead, Taiwan’s Gini coefficient rose. We show that rising use of performance pay and positive assortative mating in the marriage market jointly increase the household income inequality by 46.5% between 1980 and 2014. Our results suggest that uneven quality of the most recent cohorts of college graduates led to two sources of rising household income inequality: the increased use of bonus pay which increases residual inequality among college graduates; and matching on unobserved skills in the marriage market which increases inequality among married couples.

     

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.     

Immigrant socioeconomic mobility in the United States: Mechanisms of inequality and the role of ethnic capital

We review recent social science research on the socioeconomic mobility of immigrants to the United States by focusing on the educational, occupational, and income attainments among immigrant adults, the first‐generation, and the educational attainment of their children, the New Second‐Generation. Existing research has identified significant inequalities in educational attainment between second‐generation Asian and Latinx immigrant groups. Researchers have also highlighted the importance of ethnic capital for mobility, but we find that they have largely proceeded with the assumption that co‐ethnic ties are easily available as a benefit for immigrants upon resettlement. We propose that future research on immigrant socioeconomic mobility should incorporate conceptual insights from economic and cultural sociology as well as use comparative ethnographic research designs to directly observe how ethnic capital operates to challenge or reinforce patterns of socioeconomic inequality.     

The Willingness to State an Opinion: Inequality,Don't Know Responses,and Political Participation

Most explanations of inequality in political participation focus on costs or other barriers for those with fewer economic, educational, and “cognitive” resources. I argue, drawing on Pierre Bourdieu's work on “political competence,” that social position in the form of income also structures political participation through differences in the sense that one is a legitimate producer of political opinions. I test whether income differences in participation persist net of costs by examining nonparticipation in a setting in which barriers to participation are low: answering political survey questions. Lower‐income people are more likely than others to withhold political opinions by saying “don't know” net of differences in education, “cognitive ability,” or engagement with the survey exercise. Further, political “don't know” rates predict voting rates, net of other predictors. Efforts to democratize participation in American politics must attend not only to the costs of involvement but also to class‐based differences in individuals' relationship to political expression itself.     

Moving Up in Rural America: Economic Attainment of Nonmetro Latino Immigrants

Rapid Hispanic population growth represents a pronounced demographic transformation in many nonmetropolitan counties, particularly since 1990. Its considerable public policy implications stem largely from high proportions of new foreign‐born residents. Despite the pressing need for information on new immigrants in nonmetro counties and a bourgeoning scholarship on new rural destinations, few quantitative analyses have measured systematically the social and economic well‐being of Latino immigrants. This study analyzes the importance of place for economic well‐being, an important public policy issue related to rural Hispanic population growth. We consider four measures of economic mobility: full‐time, year‐round employment; home ownership; poverty status; and income exceeding the median national income. We conduct this analysis for 2000 and 2006–2007 to capture two salient periods of nonmetro Hispanic population growth, using a typology that distinguishes among nonmetropolitan areas by the categories of “traditional” immigrant destinations concentrated in the Southwest and Northwest, “new” immigrant destinations to capture recent and rapid Hispanic population growth in the Midwest and Southeast, and “all other” rural destinations as a reference category representing more typical nonmetro population trends. We also compare our results to those for metropolitan destinations. We find that place type matters little for stable employment but more so for wealth accumulation and income security and mobility. Compared with urban Latino immigrants, rural Latino immigrants exhibit higher rates of homeownership as well as greater likelihoods of falling into poverty and lower likelihoods of earning a measure of U.S. median income. From 2000 to 2006–2007, rural‐urban differences deteriorated slightly in favor of urban areas. We conclude by discussing implications of these findings and those of addressing rural immigrant economic well‐being more generally.     

Source decomposition of changes in income inequality: the integral-based approach and its approximation by the chained Shapley-value approach

This paper proposes source decomposition of the change in income inequality between two time points using the integral-based approach (IBA) and the (chained) Shapley-value approach as its approximation. In comparison to static Shapley-value decompositions and traditional decompositions for the square of the coefficient of variation and the Gini index, the new dynamic Shapley-value approach is intuitively appealing as a decomposition procedure for changes in inequality. It is expected to yield relatively small differences among various inequality measures, essentially maintaining consistency with income source classification. Path dependency, a possible drawback of the new decompositions, is not expected to be a particular problem in the usual cases. The properties are illustrated for application to the increase in US family income inequality during 1979–1996. In this empirical study, the new decompositions showed a tendency that was clearly different from those of the existing decompositions, indicating that the proposed procedures shed new light on analysis of the causes of inequality changes. An extension to incorporate other factors such as family structure is also successful without loss of the desirable properties.     

Poverty and economic development: not as direct as it may seem

The relationships among various subsets of economic development, poverty, crime, and/or income inequality have been separately investigated in several theoretical and empirical studies. However, there has been very little empirical analysis on the interdependence among all these variables in one framework. This paper examines the causality between economic development and poverty while incorporating crime and inequality. It employs a co-integration test, a 4-variable vector autoregressive (VAR) model, and a Granger test in the US over the period 1959–2001. Findings reveal a feedback loop mechanism between economic development, poverty, and crime. Interestingly, income inequality as measured by the Gini coefficient has no important impact on any of the variables.     

An Ex-Post View of Inequality of Opportunity in France and its Regions

This paper proposes an ex-post measure of inequality of opportunity in France and its regions by assessing the inequality between individuals exerting the same effort. To this end, we define a fair income that fulfils ex-post equality of opportunity requirements. Unfairness is measured by an unfair Gini based on the distance between the actual income and the fair income. Our findings reveal that the measures of ex-post inequality of opportunity largely vary across regions, and that this is due to differences in reward schemes and in the impact of the non responsibility factors of income. We find that most regions have actual incomes closer to fair incomes than to average income, excepted Ile de France where the actual income looks poorly related to effort variables. Finally, we find that income inequality and inequality of opportunity are positively correlated among regions.     

Entropy Measures of Inequality*

Although sociologists have long been interested in the analysis of inequality, there have been relatively few systematic attempts to measure it. Most measurement has utilized popular existing measures such as the Gini coefficient, which unfortunately is relatively difficult to compute and interpret. This article presents a new measure of inequality (B) that is based upon the concept of entropy. The B measure is used for categorical data and complements Theil's (T) entropy measure for continuous data. The B measure is illustrated for both income and wealth data and successfully meets several criteria for evaluating measures of inequality. These include the criteria of scale invariance, sensitivity to transfers, and adequate upper bounds. A further advantage of sociological entropy measures of inequality is that they facilitate interdisciplinary comparison of work on inequality between sociology and other disciplines (such as economics) which use entropy measures of inequality.