Fringe benefits and income inequality

In this paper, we analyze the distribution of fringe benefits among workers and underline its implications for income inequality. To this end, we develop a positional approach to inequality based on the concept of rent as a potential link between positions and their rewards. We hypothesize that workers extract rent in the form of benefits in industries with worker leverage (in the form of unioniziation, internal labor market, and public employment) or share rent with firms in highly profitable industries that endure for efficiency wage reasons. On the basis of a unique dataset from Israel, we test these hypotheses by estimating the probabilities of obtaining benefits according to industries’ structural features while controlling for cross-industrial differences in workers’ demographic and human capital characteristics. The analyses reveal that benefits are determined by structural factors, representing a separate dimension of the rewards attached to positions, different from earnings. We further stress the importance of incorporating fringe benefits into inequality research, given that benefits together with earnings stratify workers and evidently signify structured positions in the economy.     

Income inequality and intragenerational income mobility in Sweden from 1983 to 2010: Following two birth cohorts

Social Indicators Research - Sweden has been known for having one of the most equal income distributions in the world. However, in recent decades, Sweden has experienced increasing income...     

Income inequality and solidarity in Europe

This paper studies the relationship between income inequality, a macro-level characteristic, and solidarity of Europeans. To this aim, solidarity is defined as the ‘willingness to contribute to the welfare of other people’. We rely on a theoretical idea according to which feelings of solidarity are derived from both affective and calculating considerations – we derive competing hypotheses relating the extent of income inequality to these ‘underlying’ motivations for solidarity. Using data from the 1999 European Values Study (EVS), we apply multilevel analysis for 26 European countries. Controlling for household income and a range of macro-level characteristics, we find evidence that in more unequal countries people are less willing to take action to improve the living conditions of their fellow-countrymen. This is true for respondents living in both low- and high-income households. According to our theoretical framework, this finding suggests that, at least when measured in terms of ‘willingness to contribute to the welfare of other people’, feelings of solidarity seem to be influenced more strongly by affective, rather than by calculating considerations.     

Technological progress, income inequality, and fertility

This paper constructs an overlapping-generations model with two different types of technology: modern, which can be accessed only by the skilled, and traditional, which can be accessed by the unskilled. The model described in this paper shows that a rise in the wage premium for skilled workers caused by skill-biased technological changes explains the following key stylized facts: with economic development, the fraction of skilled people increases, the fertility rate declines, and income inequality rises and then falls. The model also explains the observed gradual rises in income inequality in developed countries.      

Party to inequality: Right party power and income inequality in affluent Western democracies

Much social science suggests that income inequality is a product of economic and demographic factors and recent work highlights the influence of Leftist politics in affluent Western democracies. But, prior research has neglected rightist politics. We examine the impact of cumulative right party power on three measures of income inequality in an unbalanced panel of 16 affluent Western democracies from 1969 to 2000. We find that cumulative right party power significantly increases inequality with effects comparable to other established causes. Left party power has less influence than the right on the Gini coefficient and the 90/50 ratio but a larger influence on the 90/10 ratio. Union density is insignificant after controlling for right party power. Right party power partly channels through and partly combines with government expenditures to affect inequality. Temporal interactions show that right parties became more influential after 1989 while left parties became less effective. Supplementary analyses suggest that a component of right party power's effects occurs through labor market inequality prior to taxes and transfers. Sensitivity analyses reveal that the results are robust to a wide variety of alternative specifications and operationalizations and do not depend on the inclusion of the U.S. in the sample. Our results inform debates about the sources of inequality and related sociological theories regarding class, politics, the state and the economy.     

Income inequality and fertility: A comparative view

Summary Most studies pertaining to the relationship between population and economic development suffer from a major flaw. Researchers use aggregate measures like income or energy consumption per head as indicators of economic development. Such aggregate measures fail to take into account the nature of the distribution of income or energy consumption to the population. The present study attempts to demonstrate the importance of incorporating the nature of distribution of resources as an important intervening variable in the study of the overall relationship between population and economic development. A measure of income inequality is developed which represents the difference between rural and urban incomes. This measure is justified in terms of the distinctiveness of urban and rural sectors in the process of development. The data used relate to societal measures of fertility, income, income inequality, etc. Consistently with existing literature, we observe that, generally speaking, economic development does entail a reduction in rural-urban income inequalities. On the other hand, a substantial part of the negative effect of an increase in income per head can be nullified if such an increase were not also accompanied by a reduction in rural-urban income inequality. Also, a substantial part of the negative effect of an increase in income per head and the level of education in reducing the level of infant mortality would be nullified if it did not also result in a reduction of rural-urban income inequality. On the other hand, it is quite possible for the level of education in a society to increase together with an increase in income per head without substantially altering the extent of inequality of income between the rural and the urban population. It is suggested that the positive relationship between rural-urban income inequality and the level of fertility is due to higher rural fertility rates in a high-inequality country. By implication, this would mean that higher standards of living for the rural population compared with its urban counterpart will have a favourable impact in reducing rural fertility.     

Education and income inequality: The role of a social protection system

In this paper we aim to understand the role a welfare state can play in stimulating risky but profitable activities like investment in education, and in reducing income inequality. We analyze how unemployment benefits may affect investment in education when the latter is characterized by uncertain returns. This is done in an overlapping generations model in which endogenous growth is introduced through human capital accumulation. We develop a numerical example of the model in order to reproduce some key differences between the European versus the North American economy; differences that, according to this model, result from the different degree of social protection characterizing both economies. Received: 02 June 1999/Accepted: 22 February 2000     

Family structure and income inequality in families with children, 1976 to 2000

Using 24 years of data from the March supplements to the Current Population Survey and detailed categories of family structure, including cohabiting unions, I assess the contribution of changes in family structure to the dramatic rise in family income inequality. Between 1976 and 2000, family structure shifts explain 41% of the increase in inequality, but the influence of family structure change is not uniform within this period or across racial-ethnic groups. In general, the estimated role of family structure change is inversely related to the magnitude of the changes in inequality. Furthermore, by including cohabitation, I find lower levels of total inequality and a weaker role for demographic shifts in family structure for trends in income inequality.     

Income and inequality as determinants of mortality: An international cross-section analysis

This paper analyses the effects of income and income distribution on mortality. The likely relation between income and mortality for individuals is discussed, and implications for the determinants of mortality at the community level inferred. Measures of income inequality are likely to be related to mortality on aggregate data because of the non-linearity of income effects. An international cross-section analysis is then undertaken in which different measures of income and income distribution are investigated as determinants of mortality, with life expectancy at birth and age five, and infant mortality taken as measures of the dependent variable. It is found that income distribution is consistently and strongly related to mortality; in a relatively inegalitarian country life expectancy may be between five and ten years lower than in a more egalitarian country.     

Income inequality and self-rated health status: Evidence from the european community household panel

We examine the effect of income inequality on individualś self-rated health status in a pooled sample of 11 countries, using longitudinal data from the European Community Household Panel survey. Taking advantage of the longitudinal and cross-national nature of our data, and carefully modeling the self-reported health information, we avoid several of the pitfalls suffered by earlier studies on this topic. We calculate income inequality indices measured at two standard levels of geography (NUTS-0 and NUTS-1) and find consistent evidence that income inequality is negatively related to self-rated health status in the European Union for both men and women, particularly when measured at national level. However, despite its statistical significance, the magnitude of the impact of inequality on health is very small.     

Family income at the bottom and at the top: Income sources and family characteristics

Attention has recently been focused on wealth as a source of long-term economic security and on wealth ownership as a crucial aspect of the racial economic divisions in the United States. This literature, however has been concerned primarily with the wealth gap between poor and middle-class families, and between the white and black middle class. In this paper, we investigate the incomes of families at the top and bottom of the family income distribution. We examine the sources of income and the demographic characteristics of these high-income and low-income families using family level data from the 1988 to 2003 Current Population Surveys.     

The impact of income inequality on self-rated general health: Evidence from a cross-national study

Previous studies report a strong negative association between income inequality and population health at the aggregate level. However, it is still in hot debate whether this ecological association indicates a genuine, causal effect of income inequality on health, as asserted by the Wilkinson hypothesis, or it simply reflects a nonlinear effect of individual income on health, as suggested by the absolute income hypothesis. Drawing data from the 2005 round of the World Values Survey, I analyze the relationship between individual income, income inequality, and self-rated general health in a multilevel framework. Results show no independent detrimental effect of country income inequality on individual self-rated general health. In contrast, self-rated general health is strongly associated with absolute material conditions both at the individual and at the country level. Therefore, this study gives more evidence to the absolute income hypothesis, i.e., the strong ecological association between income inequality and population health is more likely a reflection of the nonlinear effect of individual income on health rather than a genuine effect of income inequality.     

Public transfers and marital dissolution

In this paper, we analyze determinants of marital dissolution, focusing on the alleged influences from public transfers, child allowance, and child support awards. We use a Norwegian panel of 2,806 couples with information on public and private transfers in cases of divorce. The sample was observed over a 5-year period, with the purpose of registering marital dissolution. We find that the level of transfers has a significantly positive effect on divorce probability and that the distribution of transfers in favor of the wife increases this probability. Our findings are consistent with noncooperative family models allowing for inefficient outcomes.

Testing the relationship between income inequality and life expectancy: a simple correction for the aggregation effect when using aggregated data

In this paper, we show a simple correction for the aggregation effect when testing the relationship between income inequality and life expectancy using aggregated data. While there is evidence for a negative correlation between income inequality and a population’s average life expectancy, it is not clear whether this is due to an aggregation effect based on a non-linear relationship between income and life expectancy or to income inequality being a health hazard in itself. The proposed correction method is general and independent of measures of income inequality, functional form assumptions of the health production function, and assumptions on the income distribution. We apply it to data from the Human Development Report and find that the relationship between income inequality and life expectancy can be explained entirely by the aggregation effect. Hence, there is no evidence that income inequality itself is a health hazard.     

Does regional variation affect ecological mortality research? An examination of mortality, income inequality and health infrastructure in the Mississippi Delta

Mortality research has often focused on individual-level, socioeconomic, and demographic factors indicating health outcomes. Consistent with a recent trend in the public health field, this research examines mortality at the aggregate, contextual level. Based on Wilkinson’s relative income hypothesis, specifically being manifest through an underinvestment in social goods including health infrastructure, the focus of this study is a regional examination in the effects of income inequality on mortality at the county level. Health infrastructure is included as a mediating variable in the relationship between income inequality and mortality, relating back to Wilkinson’s work. Unlike previous research, regional differences in this relationship are examined to identify variation at the county level in health outcomes. The Mississippi Delta is an adequate test bed to examine the relationship between these variables based on its socioeconomic, demographic, and high inequality characteristics. It is hypothesized that Delta-designated counties within the three-state Delta region distinguish a significant positive relationship between income inequality and mortality, that this relationship is stronger than in non-Delta classified counties, and that health infrastructure significantly mediates the relationship between income inequality and mortality.     

Relative income and fertility

The present study examines the relationship between relative income (i.e., actual income in relation to the expected income of one’s socioeconomic group) and fertility, using data collected by the 1967-1968Canadian Family Growth Study (Balakrishnan et al., 1975). We broaden the tests of relative income beyond cumulative fertility to spacing behavior and then examine some of the assumptions included in the relative income model of fertility. Results of the tests, in brief, are as follows: (a) Relative income is found to be more closely related to spacing than to cumulative fertility; and (b) the relationship between relative income and fertility is strongest among those couples who plan their life ahead and have a high level of education and occupation, and when temporal alignment is brought between the measures of relative income and fertility. For the relative income model to receive confirmation, it was specified that the following hypotheses must be confirmed: (a) that fertility behavior would vary positively with relative income but the fertility norm would show no relationship with relative income; and (b) that consumption norms and behavior would show no relationship with relative income. The outcome of these tests are in the expected direction, giving support to the relative income model. In addition, there is some evidence of predictive capability of the relative income model for correlative behavior.     

Absolute Income,Relative Income,and Happiness

This paper uses data from the World Values Survey to investigate how an individual’s self-reported happiness is related to (i) the level of her income in absolute terms, and (ii) the level of her income relative to other people in her country. The main findings are that (i) both absolute and relative income are positively and significantly correlated with happiness, (ii) quantitatively, changes in relative income have much larger effects on happiness than do changes in absolute income, and (iii) the effects on happiness of both absolute and relative income are small when compared to the effects several non-pecuniary factors.

Intergenerational transfers in industrialised countries

Estimates of the direction of net intergenerational transfers for Britain and Japan indicate that they are from younger to older generations. The estimates are similar to those for the USA by Lee and Lapkoff (1988). In the absence of capital dilution effects, because of these transfers, higher fertility would increase lifetime consumption in these countries. The strength of the transfer effect is somewhat higher for Japan than Britain or the USA, primarily because of longer life expectancy among the Japanese.I am grateful for the help of Professor Naohiro Ogawa and his colleagues at the Nihon University Population Research Institute (NUPRI), who were instrumental in compiling the data for Japan used in the calculations in the paper, which was partly written while I was a visiting research fellow at NUPRI. They are not, however, responsible for the use I have made of the data and their help.     

Parental transfers and the labor supply of children

To finance their personal consumption, children may rely on transfers in the form of pocket money made by their parents and on personal resources earned from labor market activities. In this paper that focuses on the interaction between these two sources of income, we consider a model of parental transfer where the child can choose his own income through labor supply. The parent commits to a transfer amount that the child takes as given. For our empirical analysis, we use a cross-sectional French survey that includes detailed information about pocket money from parents to schoolchildren. Using a maximum-likelihood method, we estimate a simultaneous-equations model and find that parental transfers do not significantly influence the child's labor supply.