The measurement of structural and exchange income mobility

Chakravarty, Dutta and Weymark (1985) present operational axioms for an ethical index of income mobility that are best suited for a two period world. This paper suggests a decomposition of this index into two terms: (i) an index of structural or snapshot mobility, which captures the welfare effect of differences in the inequality of the cross-section income distributions; and (ii) an index of exchange or rerankings mobility, which captures the welfare impact of rank reversals between the first- and the second-period income distributions. Income inequality reductions and rank reversals are always welfare enhancing. The properties of all the income mobility concepts introduced in the paper do not require any new value judgements beyond the traditional ones.     

Addressing economic vulnerability among low-income families in America: is the basic income approach a viable policy option?

ABSTRACT

Income instability characterizes the lives of many low-income families in America. Growing income inequality, wage stagnation, unstable jobs, and limited savings are only a few of the factors contributing to the chronic economic insecurity that many low-income families experience today. There has been a renewed interest in recent years in the idea of a basic income as a policy solution to address the problem of income instability. This brief provides an overview of the concept of basic income and discusses its strengths and limitations in promoting financial stability among vulnerable families in both the short- and long-term.     

Nonlinear dynamics of the finance-inequality nexus in developing countries

This study examines the dynamics of the finance-inequality nexus in 35 developing countries during the past two decades, using two data sets of income inequality: the University of Texas Inequality Project (UTIP) and the Standardized World Income Inequality Database (SWIID). The empirical results of this study, based on the dynamic panel models, provide new evidence that highlights the nonlinear U-shaped relationship between financial deepening and income distribution. It implies the narrowing of the income-inequality gap at the early stage of financial development of the countries. This improvement, however, will only be sustainable dynamically below a certain threshold level. Further deepening above that level will lead to a reverse effect, which deteriorates income inequality. This reflects the inefficiency of financial markets in improving economic inequality when the threshold level is overshot.     

Reducing poverty and inequality through tax-benefit reform and the minimum wage: the UK as a case-study

Atkinson’s book Inequality: What Can Be Done? (Harvard University Press, 2015) sets out a range of concrete proposals aimed at reducing income inequality, which cover a very broad span but include major changes to the income tax and social transfers system and the minimum wage. These are framed with specific reference to the UK but have much broader relevance in demonstrating how substantial the impact on inequality of such measures could be. This paper assesses the first-round effects of these tax, transfer and minimum wage reforms on income inequality and poverty based on a microsimulation approach using EUROMOD. The reforms involve a significantly more progressive income tax structure, a major increase in the minimum wage to the level which is estimated to represent the ‘Living Wage’, and alternative routes to reforming social transfers – either to strengthen the social insurance element or to restructure the entire system as a Participation Income (a variant of Basic/Citizen’s Income). The results show how the first-round effects of either set of tax and transfer proposals would be to substantially reduce the extent of income inequality and relative income poverty and the paper draws out how the two approaches differ in their effects. The additional impact of raising the minimum wage to the Living Wage is modest, reflecting in particular the position of beneficiaries in the household income distribution and the offsetting effects on household income of the withdrawal of means-tested cash transfers.     

Ranking inequality: Applications of multivariate subset selection

Inequality measures are often presented in the form of a rank ordering to highlight their relative magnitudes. However, a rank ordering may produce misleading inference, because the inequality measures themselves are statistical estimators with different standard errors, and because a rank ordering necessarily implies multiple comparisons across all measures. Within this setting, if differences between several inequality measures are simultaneously and statistically insignificant, the interpretation of the ranking is changed. This study uses a multivariate subset selection procedure to make simultaneous distinctions across inequality measures at a pre-specified confidence level. Three applications of this procedure are explored using country-level data from the Luxembourg Income Study. The findings show that simultaneous precision plays an important role in relative inequality comparisons and should not be ignored. An erratum to this article can be found at     

Satisfaction with home-based employment

Using data from nine state regional research project on at-home income generation, the relationships of three satisfaction variables to demographic and work situation variables of 899 household managers in households with home-based employment are investigated. The satisfaction variables include quality of life, family income, and control over everyday life. The majority of households are satisfied with their quality of life and control over life although only moderately satisfied with income. One variable is related to the three satisfaction variables, the wage earner's control over the amount of work done in a day.This paper reports results from the Cooperative Regional Research Project, NE-167, entitled, At-Home Income Generation: Impact on Management, Productivity and Stability in Rural and Urban Families, partially supported by Cooperative States Research Service, U.S. Department of Agriculture, and the Experiment Stations at the University of Hawaii, Iowa State University, Lincoln University (Missouri), Michigan State University, Cornell University (New York), The Ohio State University, The Pennsylvania State University, Utah State University, and the University of Vermont. This article was accepted in 1992 under the editorship of Charles B. Hennon.Her research interests include evaluation of teaching/learning, program evaluation, and entrepreneurship. She received her Ph.D. from Cornell University.     

Life satisfaction and desire to emigrate: What does the cross-national analysis show?

Few articles explain how life satisfaction and happiness influence intention to migrate to another country. This study fills the gap by investigating the desire to emigrate in relation to individual life satisfaction while testing for moderation effects of national life satisfaction scores, the Human Development Index and Gender Inequality Index at country level. The empirical analysis is based on the unique Gallup World Poll data for 127 countries in 2017. In line with previous research, the findings confirm a negative association between life satisfaction (both individual and country level) and the desire to emigrate. Furthermore, results point to mean country life satisfaction, human development and gender inequality levels acting as moderators of individual-level life satisfaction on the desire to emigrate. Higher aggregate life satisfaction levels act as counter-forces to individual life satisfaction, performing as enablers of stay versus move. In countries with lower human development and higher gender inequality, individual life satisfaction will act as an enabler to move. A comprehensive discussion includes findings for gender and age groups and those born or not born in the country.     

Antecedents and Consequences of Marital Satisfaction in an Emirati Sample: A Structural Equation Model Analysis

This study surveyed 1,000 married Emirati men and women to explore a model of marital satisfaction in relation to self-esteem, satisfaction with life, gender-role attitudes, and general health (physical and psychological). The Emirati Marital Satisfaction Scale (EMSS), State Self-Esteem Scale (SSES), Satisfaction With Life Scale (SWLS), the Arabic General Health Questionnaire, and the Sex-Role Egalitarianism Scale were used. Confirmatory factor analysis (CFA) on the EMSS indicated a moderate fit of the data to one factor structure. CFA on SSES and SWLS indicated an adequate fit of the data to the four-factor solution and one factor, respectively. The structural equation model for the EMSS showed that both general health and gender-role attitudes predict marital satisfaction and that marital satisfaction seems to predict the individual’s well-being as measured by life satisfaction and self-esteem. These results are discussed within the context of the United Arab Emirates culture and directions for future research are provided.     

The impact of taxes and transfer payments on the distribution of income: A parametric comparison

The Luxembourg Income Study data is used to explore the impact of taxes and transfer payments on the distribution of income across 13 countries for different years. The five-parameter generalized beta distribution and 10 of its special cases are considered as models for the size distribution of income. Maximum likelihood methods are used to estimate the model with corresponding measures of goodness of fit and inequality reported. These results identify the best-fitting two-, three-, and four-parameter models as well as describe the inter-temporal patterns of inequality corresponding to earnings, total income, and disposable income. A general pattern of increasing inequality is observed for almost all countries considered along with significantly different distributional impacts of taxes and transfer payments across countries.     

EMU and the dynamics of regional per capita income inequality in Europe

This paper analyzes the evolution of per capita income inequality among 197 European regions between 1977 and 2003, and seeks evidence of the relationship between the European Economic and Monetary Union (EMU) and interregional income inequality. The conclusion is that overall interregional income inequality has decreased since 1977, owing to a decrease in between-country inequality. The panel analysis conducted in this paper suggests that the adoption of the common currency has, thus far, exacerbated regional inequality in poorer EU countries, while it has not significantly affected regional inequality within richer countries. Inequality in less advanced countries has also increased with the establishment of the convergence criteria and with the implementation of the Single Market.     

Comment on ‘the economic marginality of ethnic minorities: An analysis of ethnic income inequality in Singapore’

This note comments on the article concerning income disparity among the major ethnic groups in Singapore, entitled ‘The Economic Marginality of Ethnic Minorities: An Analysis of Ethnic Income Inequality in Singapore’. 1 1?William Lee, ‘The Economic Marginality of Ethnic Minorities: An Analysis of Ethnic Income Inequality in Singapore’, Asian Ethnicity, vol. 5, no. 1 (February 2004). View all notes The article was written by William Lee of Lingnan University in Hong Kong and appeared in the February 2004 issue of Asian Ethnicity, vol. 5, no. 1. The authors of this comment work in the Ministry of Trade and Industry (MTI), Singapore.     

MEASURING AND ANALYZING CLASS INEQUALITY WITH THE GINI INDEX INFORMED BY MODEL-BASED CLUSTERING

The most widely used measure for studying social, economic, and health inequality is the Gini index/ratio. Whereas other measures of inequality possess certain useful characteristics, such as the straightforward decomposability of the generalized entropy measures, the Gini index has remained the most popular, at least in part due to its ease of interpretation. However, the Gini index has a limitation in measuring inequality. It is less sensitive to how the population is stratified than how individual values differ. The twin purposes of this paper are to explain the limitation and to propose a model-based method—latent class/clustering analysis for understanding and measuring inequality. The latent cluster approach has the major advantage of being able to identify potential "classes" of individuals who share similar levels of income or one or more other attributes and to assess the fit of the model-based classes to the empirical data, based on different cluster distributional assumptions and the number of latent classes. This paper distinguishes class inequality from individual inequality, the type that is better captured by the Gini. Once the classes are estimated, the membership of estimated classes obtained from the best fitting model facilitates the decomposition of the Gini index into individual and class inequality. Class inequality is then measured by two relative stratification indices based on either the relative size of the Gini between-class components or the relative number of stratified individuals. Therefore, the Gini index is extended and assisted by model-based clustering to measure class inequality, thereby realizing its great potential for studying inequality. Income data from France and Hungary are used to illustrate the application of the method.     

A simultaneous equation model of economic development and income inequality

The paper extends existing work on inequality and economic development by estimating a cross-country structural model that identifies bi-directional relationships between income inequality and other indicators of social and economic development. Overall, lower inequality is associated with improvements in other development indicators, but this is the result of several complex interactions. The most striking feature of the structural model is the insight it provides into the reasons behind the negative ‘Africa dummy’ in previous cross-country growth studies.     

Household finances and well-being in Australia: An empirical analysis of comparison effects

This paper explores the importance of the household’s financial position for an individual’s level of well-being. Initially, the empirical analysis, based on the Household, Income and Labour Dynamics in Australia (HILDA) Survey, a large nationally representative panel survey, aims to ascertain the impact of the household’s monetary financial position on overall life satisfaction and financial well-being, with the latter being measured by financial satisfaction and subjective prosperity. The empirical analysis confirms that the household’s level of net wealth, assets and debt are important determinants of overall life satisfaction and financial well-being. The paper goes on to explore whether the financial situation of households in a comparison group influences an individual’s overall life satisfaction and financial well-being. The results suggest that the financial position of households in the comparison group is an important determinant of an individual’s level of overall life satisfaction and financial well-being, with information effects generally dominating comparison effects. In addition, the effects of the comparison group are asymmetric depending on whether a household’s financial position is above or below the average of the reference group.     

THE DECOMPOSITION OF INEQUALITY BY CLASS AND BY OCCUPATION:

Sociological research on earnings and income has focused on predicting individual income. Analyses most often use occupational status or class, along with other economically relevant variables, to explain earnings or income variations among individuals (income determination). Aggregate inequality (income distribution) has received considerably less attention, except in cross-national research. This especially holds for applying central concepts of stratification to the analysis of inequality. That is, class and occupation differences in economic rewards are rarely used to investigate aggregate earnings or income inequality. This study, using 1976 and 1977 Panel Study of Income Dynamics survey data, estimates the proportion of total earnings/income inequality accounted for by class and by occupation. Theil's index is used to measure earnings and income inequality and thus decompose total inequality into between-and within-group components. Wright's five-category schema is replicated for decomposition of inequality by class and a traditional four-category ordinal typology for decomposition by occupation. The two schemas show similar results: both class and occupation respectively account for between one-fifth and one-fourth of total earnings and income inequality. The results show the relevance of these central stratification typologies for the analysis of aggregate inequality.     

Trend Analysis of Anticipated Lifetime Income Inequality among Post‐war Japanese Youth

This study aims to measure the inequality of anticipated lifetime income and the inequality of annual income among the younger generation (24–29‐year‐old men), and to examine any trends that can be found in terms of inequality between 1955 and 2005 in Japan. Anticipated lifetime income is defined in this study as the present value of the total anticipated annual income that one is likely to earn each year between the ages of 24 and 59 years, assuming that there is no intragenerational class mobility. The anticipated lifetime income for each young male is estimated using the Social Stratification and Social Mobility Survey dataset, which is a Japanese national cross‐sectional survey of social stratification and social mobility. An inequality in the anticipated lifetime income can be regarded as an “inequality of outlook” among the younger generation. As a result of this analysis, it was found that the Gini coefficient, the most general measurement of income inequality, had significantly increased for anticipated lifetime income between 1995 and 2005. At the same time, the gap between the Gini coefficient of anticipated lifetime income and that of annual income had narrowed. It is suggested that “inequality of outlook,” which cannot be easily identified using a superficial index, has increased significantly.     

Accounting for income distribution trends: A density function decomposition approach

This paper develops methods for decomposing changes in the income distribution using subgroup decompositions of the income density function. Overall changes are related to changes in subgroup shares and changes in subgroup densities, where the latter are broken down further using elementary transformations of individual incomes. These density decompositions are analogous to the widely-used decompositions of inequality indices by population subgroup, except that they summarize multiple features of the income distribution (using graphs), rather than focusing on a specific feature such as dispersion, and are not dependent on the choice of a specific summary index. Nonetheless, since inequality and poverty indices can be expressed as PDF functionals, our density-based methods can also be used to provide numerical decompositions of these. An application of the methods reveals the multi-faceted nature of UK income distribution trends during the 1980s.     

Spousal resources and relationship quality in eight European countries

ABSTRACT

We relate relationship satisfaction and thoughts about leaving a romantic relationship to a couple’s relative and absolute resources and check for context-dependency of those associations. Our theoretical point of departure is that the more resources women have compared to their spouses, the higher their intra-household bargaining power to negotiate themselves out of unpleasant tasks, particularly in gender-egalitarian and very income equal and unequal societies. In traditional societies (which score low on the Gender Empowerment Measure (GEM)), the inflexible role of men within the household presumably prevents women from bargaining a better position, which in turn negatively affects relationship quality. Income equality (low GINI coefficient) may be a prerequisite for women’s bargaining position, where more inequality (mid-GINI) may be detrimental for it. Nevertheless, extreme income inequality (high GINI) may again be favorable for women’s relationship power. Using country fixed effects models on data from the Generations and Gender Surveys (GGS), we compare men and women who are in a couple (formed after 1995) for eight European countries. We find that absolute resources matter more than relative resources, at least for relationship satisfaction: Higher educated couples are more satisfied with their relationships, which could suggest lower stress levels in those couples (in more traditional contexts). Second, we observe GINI context-dependency of the association between relative education and relationship satisfaction for women and relative education and exit thoughts for men, although opposite to what we expected. Perhaps reference group theory or gender display theory can explain these unexpected results. Finally, we find that women have more break-up plans in societies with a lower score on GEM. This last result is consistent with the notion that bargaining only works in egalitarian contexts.     

Untangling the tolerance of socioeconomic inequality: Comparing Japan,the United States,South Korea,and the People's Republic of China

The last three decades have witnessed major institutional and structural transformations across both economically developed and developing countries. While many individuals and groups have benefited from these changes, they have simultaneously resulted in growing disparities between the haves and have-nots. The growing socioeconomic inequalities, however, have not been met with significant resistance and it has been even observed that people have become more tolerant of inequalities. This article explores the motivations behind tolerating socioeconomic inequality, and investigates how the tolerance of socioeconomic inequality has changed over the past 25 years, while also comparing it across very distinctive political and socioeconomic regimes. This study overcomes a gap in research by employing longitudinal, cross-sectional survey data to analyze temporal change in attitudes towards inequality. Fixed effects models are applied on five waves of World Values Survey data (1994–2020) on four distinctly different post-industrial countries: Japan, the People's Republic of China, South Korea, and the United States. The paper argues that, on an individual level, there is a tendency to accept inequality normalizing narratives and defend one's own self-interest, derived from one's structural position. This accounts for a considerable part of the variation in tolerance for socioeconomic inequality across these nations. The article concludes that trends in tolerating socioeconomic inequality have over time become more similar across these four countries with distinctly different political–economic regimes.     

Well-being inequality and reference groups: an agenda for new research

In this paper it is argued that subjective well-being (SWB) of the individual depends on two types of variables. The first type consists of characteristics of the individual himself, such as age, health, income, etc. The second type of variables consists of the characteristics of the individuals belonging to his reference group. The vast literature about happiness, quality of life, and well-being informs us extensively about the effects of objective variables. How the second type affects well-being is much less investigated. It is argued that the concept of well-being inequality cannot be properly defined without taking the referencing process into account. The reference effect depends on how frequently individuals compare with others and on the degree of social transparency in society. We attempt to give a structural embedding of the idea of reference groups in SWB-models. In this paper we employ the reference-extended model for incorporating in happiness studies the concept of inequality in happiness or SWB. Finally, we plead for an extension of the present happiness paradigm by setting up a new additional agenda for empirical research in order to get quantified knowledge about the referencing process. As a first step we suggest a new question module to be included in new survey questionnaires.