The Use of Distributional National Accounts in Better Capturing the Top Tail of the Distribution

This article explains how the compilation of distributional results in line with national accounts’ totals may assist in overcoming some of the challenges faced by micro data statistics in measuring inequality, including capturing the top tail. As national accounts rely on a harmonised system of concepts and definitions in which multiple data sources are brought together in order to arrive at comprehensive, coherent and consistent results, they may capture elements that may be missing from underlying statistics and may provide more reliable estimates for items that may be more prone to quality issues in underlying statistics. This implies that aligning micro data to national accounts totals may improve the overall quality of distributional results, mainly depending on the way in which any gaps between the micro and macro data are allocated to underlying households. This article provides an overview of possible underlying reasons for the micro-macro gaps, including the issue of the missing rich, and provides guidance on how to deal with them in order to arrive at the best possible distributional results.

     

Household wealth and the measurement of economic well-being in the United States

We analyze the level and distribution of economic well-being in the United States during the 1980s and 1990s based on the standard measure of money income and a measure in which income from wealth is calculated as the sum of lifetime annuity from nonhome wealth and imputed rental-equivalent for owner-occupied homes. Over the 1982–2000 period, median well-being increases faster when these adjustments are made than when standard money income is used. This adjustment also widens the income gap between African-Americans and whites but increases the relative well-being of the elderly. Adding imputed rent and annuities from household wealth to household income considerably increases measured inequality and the share of income from wealth in inequality. However, both measures show about the same rise in inequality over the period. We also find an increasing share of wage and salary income in our expanded definition of income among the richest 1% over the period but do not find that the “working rich” have largely replaced rentiers at the top of the economic ladder.      

The Paradox of Protestantism and Women in Elected Office in the United States

ABSTRACT

In cross-national studies, scholars have found that wealthy countries and those with a Protestant tradition are more likely to have higher levels of women in elected office. Even though the United States should then be high in this domain, it lags behind many similarly situated countries. We posit that one reason for this paradox is that Protestantism in the United States is far more socially conservative than is typical in other Protestant countries. To test our argument, we use state-level data on the proportion of women in elected office from 2002 to 2004 and survey data on church membership. We find a negative relationship between the percentage of Protestants belonging to churches associated with the National Association of Evangelicals, a lobbying group representing socially conservative Protestant denominations, and the proportion of women in elected office.     

From Soviets to oligarchs: inequality and property in Russia 1905-2016

This paper combines national accounts, survey, wealth and fiscal data (including recently released tax data on high-income taxpayers) in order to provide consistent series on the accumulation and distribution of income and wealth in Russia from the Soviet period until the present day. We find that official survey-based measures vastly under-estimate the rise of inequality since 1990. According to our benchmark estimates, top income shares are now similar to (or higher than) the levels observed in the United States. We also find that inequality has increased substantially more in Russia than in China and other ex-communist countries in Eastern Europe. We relate this finding to the specific transition strategy followed in Russia. According to our benchmark estimates, the wealth held offshore by rich Russians is about three times larger than official net foreign reserves, and is comparable in magnitude to total household financial assets held in Russia.     

Estimating dual headed time in food production with implications for SNAP benefit adequacy

Intrahousehold resource allocations have important implications for policies targeted at household resources and thus household welfare. Recent literature has shown, for single headed households, that the Supplemental Nutrition Assistance Program benefits may be inadequate to reach a nutritious diet due to a “time deficit” gap in food production. This paper first develops a simple theoretically based time adjustment multiplier to address this benefit inadequacy for single and dual headed households. A method is then developed for estimating spousal time in food production with limited data. The estimated time deficit gap and time adjustment multiplier are smaller for dual headed households than single headed households. For single headed households, the time adjusted benefits are about $107 per household per week higher than the unadjusted benefits. For dual headed households, ignoring the spousal time contribution, the time adjusted benefits are about $73 per household per week higher than the unadjusted benefits. However, by including the spousal time contribution, this benefit shortfall is reduced by about $50. These findings demonstrate the importance of taking into account intrahousehold time allocation in evaluating the adequacy of the Supplemental Nutrition Assistance Program benefits.

     

A COMPARATIVE ANALYSIS OF THE NATIVITY WEALTH GAP*

We investigate the relative wealth position of immigrant households residing in Australia, Germany, and the United States. In Germany and the United States, wealth differentials stem from differences in the educational attainment and demographic characteristics of the native and immigrant populations, rather than income differentials. In contrast, the small nativity wealth gap in Australia exists because immigrants to Australia do not translate their relative educational and demographic advantage into a wealth advantage. Overall, we find substantial disparity in the economic well‐being of immigrant and native families which is largely consistent with domestic labor markets and immigration policies. (JEL F22, D31)     

Inheritances and wealth inequality: a machine learning approach

This paper explores the relationship between received inheritances and the distribution of wealth (financial, non-financial and total) in four developed countries: the United States, Canada, Italy and Spain. We follow the inequality of opportunity (IOp) literature and???considering inheritances as the only circumstance? we show that traditional IOp approaches can lead to non-robust and arbitrary measures of IOp depending on discretionary cut-off choices of a continuous circumstance such as inheritances. To overcome this limitation, we apply Machine Learning methods (‘random forest’ algorithm) to optimize the choice of cut-offs and we find that IOp explains over 60% of wealth inequality in the US and Spain (using the Gini coefficient), and more than 40% in Italy and Canada. Including parental education as an additional circumstance ?available for the US and Italy? we find that inheritances are still the main contributor. Finally, using the S-Gini index with different parameters to weight different parts of the distribution, we find that the effect of inheritances is more prominent at the middle of the wealth distribution, while parental education is more important for the asset-poor.

     

Educational Attainment and the Lesbian Wage Premium

This paper provides insight into the wage gap between lesbians and heterosexual women. Using data from the 2000 Decennial Census, we find a lesbian premium that equals approximately 10% for women without a bachelor’s degree, and is nearly non-existent for women with higher levels of education. These findings are consistent with proposition that the gap between lesbians’ and heterosexual women’s commitment to the labor market narrows at higher levels of education. We also find that controls for industry and occupation exert only a small effect on the gap between lesbian and heterosexual women’s wages.

Emerging wealth disparities after the storm: Evidence from Spain

We examine how the recession that started in December 2007 in the United States impacted wealth accumulation and inequality among Spanish households. We find that overall wealth dropped by 15 percent between 2008 and 2011, with losses concentrating among households in the mid and top wealth quintiles. The most hard hit wealth components were business assets, primary home equity, and durable assets, which declined by 40 percent, 23 percent and 19 percent, respectively. Wealth losses among all households were likely sustained by restricted access to credit. Nonetheless, in part due to their more diversified wealth portfolios, households in the top wealth quintile amassed a greater share of the country’s wealth during the recession. Consequently, wealth inequality, which receded during the expansionary years of 2002 through 2005, rose by 2008 and continued its trend in 2011.     

Pareto models for top incomes and wealth

Top incomes are often related to Pareto distribution. To date, economists have mostly used Pareto Type I distribution to model the upper tail of income and wealth distribution. It is a parametric distribution, with interesting properties, that can be easily linked to economic theory. In this paper, we first show that modeling top incomes with Pareto Type I distribution can lead to biased estimation of inequality, even with millions of observations. Then, we show that the Generalized Pareto distribution and, even more, the Extended Pareto distribution, are much less sensitive to the choice of the threshold. Thus, they can provide more reliable results. We discuss different types of bias that could be encountered in empirical studies and, we provide some guidance for practice. To illustrate, two applications are investigated, on the distribution of income in South Africa in 2012 and on the distribution of wealth in the United States in 2013.

     

Stability Rates of Same-Sex Couples: With and Without Children

Abstract

In contrast to earlier studies, several recent ones have claimed that stability rates among same-sex couples are similar to those of different-sex couples. This article reexamines these latest accounts and provides new evidence regarding stability rates using three large, nationally representative datasets from the United States and Canada. Confirming the earliest work, we find that same-sex couples are more likely to break up than different-sex couples. We find that the gap in stability is larger for couples with children, the very group for which concerns about stability are the most important.     

Marriage,Marital History,and Black – White Wealth Differentials Among Older Women

This study investigated the impact of union history and marital transitions on wealth inequality between older Black and White women (N = 7,026). Cohort data from the Health and Retirement Study show large and increasing Black – White differences in wealth. Marital and relationship histories are associated with the wealth accumulation process among older women. Women who married and stay married accumulated levels of wealth that exceeded those of other women with disrupted family lives. The marriage – wealth nexus is sensitive to a woman's position in the wealth distribution. Quantile regression results revealed that racial differences in total wealth holdings between Black and White women exist throughout the wealth distribution, whereas the relationship between current union history and wealth differentials is significant at the lower tail and middle of the distribution. Decomposition analyses highlighted the nontrivial role of racial disparities in marital histories in accounting for the racial wealth gap. As members of the baby boom generation enter their retirement years, it will be more important than ever to monitor the wealth accumulation process among older single and racial/ethnic minority women.     

What explains the gender gap in wealth? Evidence from administrative data

Review of Economics of the Household - This paper studies the gender gap in net wealth. We use administrative data on wealth that are linked to the Estonian Household Finance and Consumption...     

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.

     

THE EFFECT OF HOUSING WEALTH LOSSES ON SPENDING IN THE GREAT RECESSION

We use panel data on a complete inventory of household spending and assets to estimate the spending response to the sharp and largely unexpected declines in house values that occurred in the Great Recession. Our study complements the existing literature on this topic by relying exclusively on longitudinal micro data on both household wealth and expenditure. Our data span the period 2002–2012, allowing us to separate trends in spending from innovations in response to unexpected wealth changes. We find the marginal propensity to consume out of an unexpected housing wealth change to be 6 cents per dollar among older American households. (JEL D12, D14, E21)     

Personality and wealth accumulation among older couples: Do dispositional characteristics pay dividends?

This paper explores whether the ‘Big 5’ personality characteristics: Emotional Stability, Extraversion, Conscientiousness, Agreeableness, and Openness to Experience, contribute to net household wealth accumulation among 1172 couple pairs (n = 2344) participating in The Irish Longitudinal Study on Ageing, independent of other socio-demographic and human capital variables. We employ quantile regression to determine whether the effects of personality vary at different levels of the conditional distribution of wealth. Results reveal that the personality characteristics of the financial respondent to the survey are more strongly associated with wealth than those of the non-financial respondent. Specifically, we find that emotional stability and extraversion are positively associated with wealth at the household level among spousal pairs. We also find that conscientiousness is positively associated with wealth, but the relationship is only significant at the lower end of the wealth continuum. In general, agreeableness and openness are negatively associated with wealth although the relationships are non-significant. These findings indicate that personality is an important factor shaping individuals’ consumption preferences and financial decision-making behaviour over the life-course.     

Relationship Transitions Among Older Cohabitors: The Role of Health,Wealth, and Family Ties

This study explored how health, wealth, and family ties shape older cohabitors' chances of marrying or separating. Drawing on rational choice and exchange theories, the author argues these factors affect women and men differently because the rewards, alternatives, and barriers of later‐life union formation differ by gender. The study used panel data from the 1998–2006 Health and Retirement Study and a sample of cohabitors 50 and older (N = 1,136). For older female cohabitors, large families and entitlement income lower the risk of marrying, whereas close social networks raise the risk of separating. Moreover, health and wealth have an interactive relationship in that the risk of marrying is highest for unhealthy male cohabitors when they are very wealthy but is highest for the poorest female cohabitors when they are in excellent health. Older men may be exchanging economic resources for caregiving, and cohabitation may be an adaptive response to the gendered costs and barriers of later‐life union formation.     

Socioeconomic inequality at school entry: A cross-cohort comparison of families and schools

The widening income gap between the wealthy and the disadvantaged in the United States has been well documented and has coincided with a near doubling of the income-achievement gap among school-age children. Motivated by calls for approaches to research that enable comprehensive accounts of change in the social ecologies of children, we leverage recently released data from the National Center for Education Statistics (NCES) to compare two nationally representative samples of kindergartners. Using multiple indicators reflecting children's family and school ecologies, we document a substantial and widening divide between kindergarteners from high- and low-income households. We show that kindergartners from families with low-income are more disadvantaged in 2010, following the Great Recession than they were in 1998 on a number of measures of well-being including higher levels of maternal unemployment and greater food insecurity. We also document a dramatic increase in the proportion of school administrators reporting a decline in school funding as well as increased student mobility in the latter time period. Our results raise concerns that schools may not be prepared to compensate for the widening gap between the rich and the poor.     

“Family-Friendly” Fringe Benefits and the Gender Wage Gap

Evidence suggests a large portion of the gender wage gap is explained by gender occupational segregation. A common hypothesis is that gender differences in preferences or abilities explain this segregation; women may prefer jobs that provide more “family-friendly” fringe benefits. Much of the research provides no direct evidence on gender differences in access to fringe benefits, nor how provision affects wages. Using data from the National Longitudinal Survey of Youth 1979, we find that women are more likely to receive family-friendly benefits, but not other types of fringe benefits. We find no evidence that the differences in fringe benefits explain the gender wage gap.