Trust in Government and the American Public’s Responsiveness to Rising Inequality
Political Research Quarterly, forthcoming
The United States has become increasingly unequal. Income inequality has risen dramatically since the 1970s, yet public opinion toward redistribution has remained largely unchanged. This is puzzling, given Americans’ professed concern regarding, and knowledge of, rising inequality. I argue that trust in government can help to reconcile this. I combine data on state-level income inequality with survey data from the Cumulative American National Election Studies (CANES) from 1984 to 2016. I find that trust in government conditions the relationship between inequality and redistribution, with higher inequality prompting demand for government redistribution, but only among politically trustful individuals. This holds among conservatives and non-conservatives and among the affluent and non-affluent. These findings underscore the relevance of political trust in shaping attitudes toward inequality and economic redistribution and contribute to our understanding of why American public opinion has not turned in favor of redistribution during an era of rising income inequality.
Are Democrats Really the Party of the Poor? Partisanship, Class, and Representation in the U.S. Senate
Cory Maks-Solomon & Elizabeth Rigby
Political Research Quarterly, forthcoming
Scholars have identified partisan differences in policy representation — with Republicans more often found to represent the rich, while Democrats align with the preferences of less affluent voters. This paper explores these partisan differences, questioning this simple conclusion on both theoretical and methodological grounds. Instead, we develop and test a theory in which elected officials of both parties represent their co-partisans, who agree with one another on many policy issues. Yet, on a subset of issues, upper class and lower class co-partisans have diverging policy preferences: rich and poor Democrats disagree on social issues while rich and poor Republicans disagree on economic issues. We analyze roll call voting in the U.S. Senate and find that, in these cases, senators of both parties better represent the preferences held by affluent members of their party. Our findings underscore the value in examining the content of policy debates and theorizing about different forms of representation.
Envy, inequality and fertility
Review of Economics of the Household, September 2019, Pages 923–945
This study seeks to examine the consequences of “keeping up with the Joneses” on household fertility outcomes. “Envy” is introduced in a simple “quality-quantity” trade-off type of fertility model, where the trade-off is induced by the fact that being out of the labor market due to child-bearing is more expensive for people with higher human capital levels. The effect of introducing upward-looking “envy” in the model is that households, notably low-income ones, reduce fertility in an attempt to emulate consumption levels of their high-income neighbors. This effect is stronger the larger the reference consumption — that is, in areas with higher income inequality, which are characterized by longer right tails of income distributions. It follows that if households indeed tend to “keep up with the Joneses,” one should expect lower fertility rates in areas with higher income inequality compared to more equal areas. The empirical analysis using the American Community Survey confirms that indeed, households residing in more unequal metropolitan areas tend to have fewer children than households residing in more equal metropolitan areas.
Does Poverty Undermine Cooperation in Multiethnic Settings? Evidence from a Cooperative Investment Experiment
Max Schaub, Johanna Gereke & Delia Baldassarri
Journal of Experimental Political Science, forthcoming
What undermines cooperation in ethnically diverse communities? Scholars have focused on factors that explain the lack of inter-ethnic cooperation, such as prejudice or the difficulty to communicate and sanction across group boundaries. We direct attention to the fact that diverse communities are also often poor and ask whether poverty, rather than diversity, reduces cooperation. We developed a strategic cooperation game where we vary the income and racial identity of the interaction partner. We find that beliefs about how poor people behave have clear detrimental effects on cooperation: cooperation is lower when people are paired with low-income partners, and the effect is particularly strong when low-income people interact among themselves. We observe additional discrimination along racial lines when the interaction partner is poor. These findings imply that poverty and rising inequality may be a serious threat to social cohesion, especially under conditions of high socioeconomic segregation.
Is Employment Polarization Informative About Wage Inequality and Is Employment Really Polarizing?
Jennifer Hunt & Ryan Nunn
NBER Working Paper, July 2019
Equating a job with an individual rather than an occupation, we re-examine whether U.S. workers are increasingly concentrated in low and high-wage jobs relative to middle-wage jobs, a phenomenon known as employment polarization. By assigning workers in the CPS to real hourly wage bins with time-invariant thresholds and tracking over time the shares of workers in each, we do find a decline since 1973 in the share of workers earning middle wages. However, we find that a strong increase in the share of workers in the top bin is accompanied by a slight decline in the share in the bottom bin, inconsistent with employment polarization. Turning to occupation-based analysis, we show that the share of employment in low-wage occupations is trending up only from 2002-2012, and that the apparent earlier growth and therefore polarization found in the literature is an artefact of occupation code redefinitions. This new timing rules out the hypothesis that computerization and automation lie behind both rising wage inequality and occupation-based employment polarization in the United States.
Stranded! How Rising Inequality Suppressed US Migration and Hurt Those Left Behind
Tamim Bayoumi & Jelle Barkema
IMF Working Paper, June 2019
Using bilateral data on migration across US metro areas, we find strong evidence that increasing house price and income inequality has reduced long distance migration, the type most linked to jobs. For those migrating uphill, from a less to a more prosperous location, lower mobility is driven by increasing house price inequality, as the disincentives from higher house prices dominate the incentives from higher earnings. By contrast, increasing income inequality drives the fall in downhill migration as the disincentives from lower earnings dominate the incentives from lower house prices. The model underlines the plight of those trapped in decaying metro areas-those 'left behind'.
Did Austerity Cause Brexit?
American Economic Review, forthcoming
This paper documents a significant association between the exposure of an individual or area to the UK government’s austerity-induced welfare reforms begun in 2010, and the following: the subsequent rise in support for the UK Independence Party, an important correlate of Leave support in the 2016 UK referendum on European Union membership; broader individual-level measures of political dissatisfaction; and direct measures of support for Leave. Leveraging data from all UK electoral contests since 2000, along with detailed, individual-level panel data, the findings suggest that the EU referendum could have resulted in a Remain victory had it not been for austerity.
Competition and Pay Inequality Within and Between Firms
Claudine Madras Gartenberg & Julie Wulf
University of Pennsylvania Working Paper, June 2019
How does market competition affect pay inequality between and within firms? Using division managers as a pool of similar workers and the Canada-US Free Trade Agreement, we find that greater competition increases overall pay inequality between, but not within, firms. This null effect within firms is not driven by lack of statistical power. Instead, we find that it predominates within subsamples of firms with higher predicted levels of social comparison. Further, increased competition leads to greater pay-performance sensitivity among the higher-paid managers within firms, while it leads to greater overpayment among the others. These last results are consistent with firm principals increasing incentive strength of their best managers, and overpaying the rest. Altogether, this study suggests that, while competition leads to greater pay inequality overall, principals aim to maintain equality within firms, and do so through the differential provision of incentives among employees.
Income Inequality and Congressional Republican Position Taking, 1913–2013
Journal of Politics, forthcoming
McCarty, Poole, and Rosenthal write about the century-long relationship between national income inequality and congressional partisan polarization: rising income inequality corresponds to more polarization. I question this relationship. First, income inequality correlates more strongly with Republican positioning than with polarization, even before Republicans moved asymmetrically rightward. Second, holding the Republican position fixed, leftward movement of congressional Democrats corresponds to decreasing inequality. Consistent with these empirical facts, I explore substantive evidence that (1) suggests that a Republican-centered explanation plausibly runs in either causal direction but (2) casts doubt on whether polarization driven by Democratic extremism contributes to or is fostered by rising income inequality. Given the prominence of McCarty et al.’s argument in scholarship and the commentary on American politics it informs, this observation is central for understanding how politics shapes and responds to income inequality.
Contemporary State Policies and Intergenerational Income Mobility
Lars Lefgren, Jaren Pope & David Sims
NBER Working Paper, May 2019
Using county-level analysis, this study demonstrates that there exists at most a minor relationship between the large, contemporary geographical variation in U.S. intergenerational income mobility and state-level policies. In addition to investigating the effects of specific policies, we introduce an omnibus test for state policy differences in total, based on the principle of geographic discontinuities. We further explore the discrepancy between these findings and the expected efficacy of mobility-enhancing policies seen in common applied economic models and successful program evaluations. We conclude that the gap between quasi-experimental evaluations and observed policy effects presents pressing questions for further study.
Americans overestimate the intergenerational persistence in income ranks
Siwei Cheng & Fangqi Wen
Proceedings of the National Academy of Sciences, 9 July 2019, Pages 13909-13914
Recent research suggests that intergenerational income mobility has remained low and stable in America, but popular discourse routinely assumes that Americans are optimistic about mobility prospects in society. Examining these 2 seemingly contradictory observations requires a careful measurement of the public’s perceptions of mobility. Unlike most previous work that measures perceptions about mobility outcomes for the overall population or certain subgroups, we propose a survey instrument that emphasizes the variation in perceived mobility prospects for hypothetical children across parent income ranks. Based on this survey instrument, we derive the perceived relationship between the income ranks of parents and children, which can then be compared against the actual rank–rank relationship reported by empirical work based on tax data. We fielded this instrument in a general population survey experiment (n = 3,077). Our results suggest that Americans overestimate the intergenerational persistence in income ranks. They overestimate economic prospects for children from rich families and underestimate economic prospects for those from poor families.
Why Do the Rich Oppose Redistribution? An Experiment with America’s Top 5%
Alain Cohn et al.
University of Michigan Working Paper, May 2019
Wealthy individuals have a disproportionate influence on politics and firms. We study attitudes toward redistribution of a large sample of the top 5% in the U.S. in terms of income and financial assets, and find that they prefer less redistribution than a representative sample of the bottom 95%. The differences in tax attitudes and political views can be largely attributed to differences in distributional preferences, which we measured in an experiment where choices affected the pay of pairs of workers in a real-effort task. Wealthy Americans redistribute less to the low-income worker, thus accepting more inequality than the rest of the population. The gap in distributional preferences is primarily driven by individuals who acquired wealth over their lifetime rather than those who were born into wealth. Our findings raise the possibility that wealthy individuals contribute to the persistent income inequality in the U.S.
Market Transition, Industrialization, and Social Mobility Trends in Postrevolution China
Xiang Zhou & Yu Xie
American Journal of Sociology, May 2019, Pages 1810-1847
This study examines trends in intergenerational class mobility in China by analyzing six comparable, nationally representative surveys between 1996 and 2012. Defying a simplistic, unidirectional account, the authors report two countervailing trends in social mobility in postrevolution China. On the one hand, the authors find a decline in social fluidity following China’s transition from state socialism to a market economy, as the link between origin and destination in vertical social status has significantly strengthened. On the other hand, horizontal mobility between the agricultural and nonagricultural sectors has increased substantially during recent decades. To put these trends in a global context, the authors compare China’s experience with those in 11 advanced industrial countries. The authors find that despite its recent decline, social fluidity in China is still high by international standards. Yet, the direction of vertical social mobility trends in China stands in contrast with that in mature capitalist countries, in which the class structure has either stayed stable or become more open over time.
The decline of Western European social democracy: Exploring the transformed link between welfare state generosity and the electoral strength of social democratic parties, 1975–2014
Karl Loxbo et al.
Party Politics, forthcoming
Social democratic parties are crumbling at the polls. Surprisingly, however, the causes of this demise remain largely unexplored. This article contributes to filling this gap in the research by studying the long-term impact of welfare state generosity on the vote share of social democratic parties in 16 Western European democracies. If the welfare state indeed was a key factor behind social democratic growth in the past, we ask whether the recent plight of these parties is down to a reversal of their previously dominant success factor? The article makes three principal findings. First, we show that social democratic parties primarily benefited electorally from expansive reforms at lower levels of welfare state generosity. Second, we find that this dynamic of diminishing returns also helps explain the demise of the Social Democratic party family in the whole of Western Europe. Lastly, our results reveal that programmatic turns to the right predict electoral losses in the least generous welfare states, whereas such shifts either pass unnoticed or predict vote gains in the most generous ones. We conclude by arguing that the structure of welfare state institutions is one important explanation for variations in the demise of the once powerful Social Democratic party family.
Social democratic representation and welfare spending: A quantitative case study
Political Science Research and Methods, forthcoming
The welfare state literature argues that Social Democratic party representation is of key importance for welfare state outcomes. However, few papers are able to separate the influence of parties from voter preferences, which implies that the partisan effects will be overstated. I study a natural experiment to identify a partisan effect. In 1995, the Labour Party (Ap) in the Norwegian municipality of Flå filed their candidate list too late and could not participate in the local election. Ap was the largest party in Flå in the entire post-World War period, but have not regained this position. I use the synthetic control method to study the effects on welfare spending priorities. I find small and insignificant partisan effects.
Induced Social Power Improves Visual Working Memory
Britt Hadar, Roy Luria & Nira Liberman
Personality and Social Psychology Bulletin, forthcoming
The possibility that social power improves working memory relative to conditions of powerlessness has been invoked to explain why manipulations of power improve performance in many cognitive tasks. Yet, whether power facilitates working memory performance has never been tested directly. In three studies, we induced high or low sense of power using the episodic recall task and tested participants’ visual working memory capacity. We found that working memory capacity estimates were higher in the high-power than in the low-power condition in the standard change-detection task (Study 1), in a variation of the task that introduced distractors alongside the targets (Study 2), and in a variation that used real-world objects (Study 3). Studies 2 and 3 also tested whether high power improved working memory relative to low power by enhancing filtering efficiency, but did not find support for this hypothesis. We discuss implications for theories of both power and working memory.