Fortunate
Inequality, Media Frames, and Public Support for Welfare
Derek Epp & Jay Jennings
Public Opinion Quarterly, forthcoming
Abstract:
The political preferences of those with high and low incomes are highly correlated, and both groups become less supportive of redistributive spending as economic inequality increases. This article looks for a source of these interincome group correlations by examining trends in media coverage. We find that during periods of higher inequality, media coverage is more likely to focus on the personal characteristics of welfare recipients rather than the social consequences and causes of poverty. Observational and experimental data indicate that this shift in media frames can predict declining support for welfare spending, even for those with lower incomes who might benefit from redistribution. These findings help explain the reactions of the American public to rising inequality.
Trends in U.S. Spatial Inequality: Concentrating Affluence and a Democratization of Poverty
Cecile Gaubert et al.
NBER Working Paper, January 2021
Abstract:
We study trends in income inequality across U.S. states and counties 1960-2019 using a mix of administrative and survey data sources. Both states and counties have diverged in terms of per-capita pre-tax incomes since the late 1990s, with transfers serving to dampen this divergence. County incomes have been diverging since the late 1970s. These trends in mean income mask opposing patterns among top and bottom income quantiles. Top incomes have diverged markedly across states since the late 1970s. In contrast, bottom income quantiles and poverty rates have converged across areas in recent decades.
Does Economic Freedom Boost Growth for Everyone?
Andreas Bergh & Christian Bjørnskov
Kyklos, forthcoming
Abstract:
While the association between economic freedom and long‐term economic growth has been well documented, the parallel research literature on the distributional consequences of economic freedom is full of conflicting findings. In this paper, we take a step toward reconciling these two bodies of literature by exploring the within‐quintile growth consequences of changes in three separate elements of economic freedom: the size of government, institutional quality and and policy quality. Although the distributional consequences of increases in economic freedom are theoretically ambiguous, we find evidence that economic freedom affects all parts of the income distribution equally, in addition to indications that the growth effects are largest for the poorest and richest quintiles.
The declining wealth of the middle class, 1983–2016
Edward Wolff
Contemporary Economic Policy, forthcoming
Abstract:
This article considers trends in wealth at the middle and top of the distribution, with a particular focus on the period around the Great Recession. It illustrates that leverage rates of middle class families relative to high‐wealth families were beneficial to relative rates of return of middle class families for most periods since 1983 but was extremely detrimental during the Great Recession. It also considers the savings rates over time among high‐wealth and middle class families, showing that dissaving slowed the recovery in wealth — especially among the middle class. Differential leverage was also a key factor explaining wealth inequality trends.
For Whom the Bell Curve Tolls: A Lineage of 400,000 English Individuals 1750-2020 Shows Genetics Determines Most Social Outcomes
Gregory Clark
University of California Working Paper, March 2021
Abstract:
Economics, Sociology, and Anthropology are dominated by the belief that social outcomes depend mainly on parental investment and community socialization. Using a lineage of 402,000 English people 1750-2020 we test whether such mechanisms better predict outcomes than a simple additive genetics model. The genetics model predicts better in all cases except for the transmission of wealth. The high persistence of status over multiple generations, however, would require in a genetic mechanism strong genetic assortative in mating. This has been until recently believed impossible. There is however, also strong evidence consistent with just such sorting, all the way from 1837 to 2020. Thus the outcomes here are actually the product of an interesting genetics-culture combination.
Housing Prices and Wealth Inequality
Michael Genovesi
Harvard Working Paper, November 2020
Abstract:
The ability to own a home is thought to be a crucial wealth building tool for many low and middle-income Americans, as gains in home equity often outpace interest rates. Further, for many households, the majority of their net worths are a product of their home equity. Thus, one may surmise that rises in house prices correspond to greater wealth equality, as home equity stakes rise and, subsequently, net worths. Yet, an opposing effect of greater home prices could be an additional barrier to entry for would-be homeowners, consequentially increasing the wealth inequality gap as would be homeowners are left on the homeownership sideline. To untangle this dynamic and determine who benefits from rising home prices, I exploit exogenous variation in U.S. banking deregulations from 1994 to 2005 as an instrument for housing prices, against state-level measures of wealth inequality. I find that an increase in state-level housing price indices is associated with the top 6% of households owning more wealth, and a reduction of the wealth owned by the bottom 50%.
Flows and Boundaries: A Network Approach to Studying Occupational Mobility in the Labor Market
Siwei Cheng & Barum Park
American Journal of Sociology, November 2020, Pages 577–631
Abstract:
Although stratification research has long recognized the importance of mapping out the underlying boundaries that govern the flow of workers in the labor market, the current literature faces two major challenges: (1) the determination of mobility boundaries and (2) the incorporation of changes in mobility boundaries. The authors propose a network approach to address these challenges. The approach conceptualizes the occupational system as a network, in which the nodes are occupations and the edges are defined by the volume and direction of workers who move between the nodes. A flow-based community detection algorithm is introduced to uncover mobility boundaries based on the observed mobility network. Applying this approach to analyze trends in intragenerational occupational mobility in the United States from 1989 to 2015, the authors find that the boundaries that constrain mobility opportunities have become increasingly rigid over time, while, at the same time, decoupled from the boundaries of big classes and microclasses. Moreover, these boundaries are increasingly sorting workers into clusters of occupations with similar skill requirements.
Experienced well-being rises with income, even above $75,000 per year
Matthew Killingsworth
Proceedings of the National Academy of Sciences, January 2021
Abstract:
What is the relationship between money and well-being? Research distinguishes between two forms of well-being: people’s feelings during the moments of life (experienced well-being) and people’s evaluation of their lives when they pause and reflect (evaluative well-being). Drawing on 1,725,994 experience-sampling reports from 33,391 employed US adults, the present results show that both experienced and evaluative well-being increased linearly with log(income), with an equally steep slope for higher earners as for lower earners. There was no evidence for an experienced well-being plateau above $75,000/y, contrary to some influential past research. There was also no evidence of an income threshold at which experienced and evaluative well-being diverged, suggesting that higher incomes are associated with both feeling better day-to-day and being more satisfied with life overall.
Intergenerational Educational Mobility and Life-Course Income Trajectories in the United States
Meir Yaish et al.
Social Forces, forthcoming
Abstract:
A theoretical formulation derived from the cumulative advantage literature, that intergenerational educational mobility has enduring life-course income effects above and beyond individuals’ education, is empirically tested. This formulation contrasts sharply with both the human capital model, which does not consider parental education as a determinant of children’s income, and the sociological research on social mobility, which mostly relies on a snapshot view to study the economic consequences of educational mobility. To test this theory, we use NLSY79 survey data (with Panel Study of Income Dynamics data serving for robustness checks). We apply growth models to the data to estimate if and how the different intergenerational educational mobility groups that are produced by the intersection of parental and respondent education shape life-course income trajectories. Results provide evidence in support of the argument that the intersection of parental and respondent education bears important long-term income consequences, mainly for men. These results, moreover, do not vary by race. We discuss the theoretical and policy implications of our results.
Place-Based Redistribution
Cecile Gaubert, Patrick Kline & Danny Yagan
NBER Working Paper, January 2021
Abstract:
Governments around the world redistribute to distressed areas by conditioning taxes and transfers on location. We show that when poor households are spatially concentrated, transfers from one location to another can yield equity gains that outweigh their efficiency costs, even when income-based transfers are set optimally. Expressions for the optimal transfer size depend on the mobility of households, the earnings responses of movers, and sorting patterns. Surveys find support for targeting tax credits to poor Americans who live in distressed places. A calibration exercise finds optimal transfers of the same order of magnitude as prominent American zone policies.
Income Inequality, Social Comparison, and Happiness in the United States
Tim Futing Liao
Socius: Sociological Research for a Dynamic World, February 2021
Abstract:
Using social comparison theory, I investigate the relation between experienced happiness and income inequality. In the analysis, I study happiness effects of the individual-level within-gender-ethnicity comparison-based Gini index conditional on a state’s overall inequality, using a linked set of the March 2013 Current Population Survey and the 2013 American Time Use Survey data while controlling major potential confounders. The findings suggest that individuals who are positioned to conduct both upward and downward comparison would feel happier in states where overall income inequality is high. In states where inequality is not high, however, such effects are not present because social comparison becomes less meaningful when one’s position is not as clearly definable. Therefore, social comparison matters where inequality persists: One’s comparison with all similar others’ in the income distribution in a social environment determines the effect of one’s income on happiness, with the comparison target being the same gender-ethnic group.