Right to Have
Mobility, Inequality, and Beliefs About Distribution and Redistribution
George Wilson et al.
Social Forces, forthcoming
Abstract:
Classic theory has long been interested in mobility, but with limited attention to the implications of intergenerational movement for inequality-specific beliefs. In this article, we introduce a dynamic conception and modeling of the impact of intergenerational occupational mobility on inequality orientations generally and distributive and redistributive beliefs in particular. The diagonal models we employ using 2008-2010 General Social Survey samples -- modeling that considers intergenerational occupational origin and destination, and that is replicated on a larger sample across three waves of the GSS -- reveal strong conservatizing effects of mobility overall. Those who occupationally fall relative to their parents, although somewhat more progressive by virtue of the downward mobility experience, tend to cling more so to the conservative beliefs characteristic of their higher status origins. Those experiencing mobility gains, in contrast, usually adopt the more conservative orientations of those who they are now surrounded by and in ways that legitimize individual efforts. These patterns are notably pronounced compared to other aspects of one’s job, political affiliation, and status-related attributes; are somewhat stronger among men than women; and differ significantly for Blacks. We elaborate and conclude by highlighting the need for a mobility-centered corrective to sociological understandings of inequality beliefs and how workplace-related experiences in particular shape ideological leanings.
Can an AI Algorithm Mitigate Racial Economic Inequality? An Analysis in the Context of Airbnb
Shunyuan Zhang et al.
Marketing Science, forthcoming
Abstract:
We study the effect of Airbnb’s smart-pricing algorithm on the racial disparity in the daily revenue earned by Airbnb hosts. Our empirical strategy exploits Airbnb’s introduction of the algorithm and its voluntary adoption by hosts as a quasi-natural experiment. Among those who adopted the algorithm, the average nightly rate decreased by 5.7%, but average daily revenue increased by 8.6%. Before Airbnb introduced the algorithm, white hosts earned $12.16 more in daily revenue than Black hosts, controlling for observed characteristics of the hosts, properties, and locations. Conditional on its adoption, the revenue gap between white and Black hosts decreased by 71.3%. However, Black hosts were significantly less likely than white hosts to adopt the algorithm, so at the population level, the revenue gap increased after the introduction of the algorithm. We show that the algorithm’s price recommendations are not affected by the host’s race -- but we argue that the algorithm’s race-blindness may lead to pricing that is sub-optimal, and more so for Black hosts than for white hosts. We also show that the algorithm’s effectiveness at mitigating the Airbnb revenue gap is limited by the low rate of algorithm adoption among Black hosts. We offer recommendations with which policy makers and Airbnb may advance smart-pricing algorithms in mitigating racial economic disparities.
Rising Inequality As a Threat to the Liberal International Order
Thomas Flaherty & Ronald Rogowski
International Organization, Spring 2021, Pages 495-523
Abstract:
The rise of top-heavy inequality -- earnings concentration in a very thin layer of elites -- calls into question our understanding of the distributional effects of the Liberal International Order. Far more people lose from globalization, and fewer gain, than traditional economic models suggest. We review three modern trade theories (neo-Heckscher-Ohlin-Stolper-Samuelson or H-O-S-S, new new trade theory, and economic geography) that each arrive at the conclusion of top-heavy inequality by introducing some form of unit heterogeneity -- an assumption that the actors we once treated as identical actually differ from one another in important ways. Heterogeneity allows the gains from globalization to concentrate in a narrow segment of workers with superlative talents, extraordinarily productive firms, or heavily agglomerated cities. An analysis of European voting data shows that shocks from trade and migration elicit populist opposition only where the top 1 percent have gained the most. With few politically feasible alternatives to protectionism, most notably the failure of democracies to redistribute income, our analysis predicts a persistence of public support for antiglobalization parties, especially those on the Right.
Dying from envy: The role of inequality
Irakli Japaridze & Nagham Sayour
Health Economics, June 2021, Pages 1374-1392
Abstract:
We hypothesize that when interpersonal comparisons, often referred to as “keeping up with the Joneses”, are operational, relative deprivation (income inequality) results in increased likelihood of morbidity among lower income households. Using a simple theoretical model, we show that the larger the income disparities between “the Joneses” and “the followers”, the higher is the followers' expenditure on conspicuous consumption and the lower is their expenditure on health. We empirically test our hypotheses using Canadian data from the Canadian Community Health Survey and the Survey of Household Spending and US data from the National Health Interview Survey. We find that, in peer groups defined by geographic proximity of residence or similar socio‐economic background, larger income disparities are associated with higher spending by the followers on conspicuous consumption, lower health expenditure, worse self‐reported health and younger age at death.
How Important Is Health Inequality for Lifetime Earnings Inequality?
Roozbeh Hosseini, Karen Kopecky & Kai Zhao
Federal Reserve Working Paper, January 2021
Abstract:
Using a dynamic panel approach, we provide empirical evidence that negative health shocks reduce earnings. The effect is primarily driven by the participation margin and is concentrated in less educated individuals and those with poor health. We build a dynamic, general equilibrium, life cycle model that is consistent with these findings. In the model, individuals whose health is risky and heterogeneous choose to either work, or not work and apply for social security disability insurance (SSDI). Health affects individuals’ productivity, SSDI access, disutility from work, mortality, and medical expenses. Calibrating the model to the United States, we find that health inequality is an important source of lifetime earnings inequality: nearly 29 percent of the variation in lifetime earnings at age 65 is due to the fact that Americans face risky and heterogeneous life cycle health profiles. A decomposition exercise reveals that the primary reason why individuals in the United States in poor health have low lifetime earnings is because they have a high probability of obtaining SSDI benefits. In other words, the SSDI program is an important contributor to lifetime earnings inequality. Despite this, we show that it is ex ante welfare improving and, if anything, should be expanded.
Whose News? Class-Biased Economic Reporting in the United States
Alan Jacobs et al.
American Political Science Review, forthcoming
Abstract:
There is substantial evidence that voters’ choices are shaped by assessments of the state of the economy and that these assessments, in turn, are influenced by the news. But how does the economic news track the welfare of different income groups in an era of rising inequality? Whose economy does the news cover? Drawing on a large new dataset of US news content, we demonstrate that the tone of the economic news strongly and disproportionately tracks the fortunes of the richest households, with little sensitivity to income changes among the non-rich. Further, we present evidence that this pro-rich bias emerges not from pro-rich journalistic preferences but, rather, from the interaction of the media’s focus on economic aggregates with structural features of the relationship between economic growth and distribution. The findings yield a novel explanation of distributionally perverse electoral patterns and demonstrate how distributional biases in the economy condition economic accountability.
Socioeconomic Segregation, Campus Social Context, and Disparities in Bachelor's Degree Attainment
Dafna Gelbgiser
Demography, June 2021, Pages 1039-1064
Abstract:
It is well established that students from different socioeconomic backgrounds attend different colleges, net of their academic preparation. An unintended consequence of these disparities is that in the aggregate, they enhance socioeconomic segregation across institutions of higher education, cultivating separate and distinct social environments that can influence students' outcomes. Using information on the academic careers of a nationally representative sample of U.S. high school students who entered college in the mid-2000s, matched with external information on the social context of each college, this study evaluates the extent of socioeconomic segregation by social context in higher education and its implications for socioeconomic inequality in bachelor's degree attainment. Results confirm that social context is highly consequential for inequality in student outcomes. First, disparities in social context are extensive, even after differences in demographics, skills, attitudes, and college characteristics are accounted for. Second, the social context of campus, as shaped by segregation, is a robust predictor of students' likelihood of obtaining a bachelor's degree. Finally, the degree attainment rates of all students are positively associated with higher concentrations of economic advantages on campus. Combined, these results imply that socioeconomic segregation across colleges exacerbates disparities in degree attainment by placing disadvantaged students in social environments that are least conducive to their academic success.
Consumer Redlining and the Reproduction of Inequality at Dollar General
Tracy Vargas
Qualitative Sociology, June 2021, Pages 205-229
Abstract:
This paper extends our knowledge of consumer redlining by providing empirical evidence documenting its occurrence at Dollar General stores while also providing an explanation as to why it occurs in the first place. My data was primarily collected during six months of fieldwork working as a low-wage sales associate. It was also supplemented by additional participant observation at the eighteen other Dollar General stores in my fieldsite’s district and fifty in-depth interviews with coworkers and employees. My findings revealed significant disparities in store quality and customer service between the store locations I examined. Of the nineteen stores in the district, three standout stores emerged as the very worst. Conditions there were dirtier and more hazardous than the rest, with under-stocked shelves, slow customer service, and a contentious atmosphere for those who worked and shopped amidst the squalor. Therefore, I identified these stores as consumer redlined. My findings illustrate how the automated management of Dollar General’s labor supply undermined frontline managers’ authority and workers’ ability to resist precarious scheduling, contributing to the degradation of retail work. While algorithmic labor management standardized employer-driven “flexible” scheduling, the system also resulted in an unequal distribution of payroll hours amongst store locations. I argue that this automated scheduling system functioned to minimize labor cost and maximize profit, exacerbating the degradation of labor and instigating the reproduction of inequality - in this case, by generating consumer redlining. Additionally, my research shows how computer technology can intentionally undermine the power of frontline managers by automatic flexible scheduling, making it difficult to remedy the source of complaints at consumer-redlined stores: systemic understaffing.
Where Is the Middle Class? Evidence from 60 Million English Death and Probate Records, 1892-1992
Neil Cummins
Journal of Economic History, June 2021, Pages 359-404
Abstract:
This article analyzes a newly constructed individual level dataset of every English death and probate from 1892-1992. This analysis shows that the twentieth century’s “Great Equalization” of wealth stalled in mid-century. The probate rate, which captures the proportion of English holding any significant wealth at death rose from 10 percent in the 1890s to 40 percent by 1950 and has stagnated to 1992. Despite the large declines in the wealth share of the top 1 percent, from 73 to 20 percent, the median English individual died with almost nothing throughout. All changes in inequality after 1950 involve a reshuffling of wealth within the top 30 percent. I translate the individual level data to synthetic households; the majority have at least one member probated. Yet the bottom 60 percent of households hold only 12 percent of all wealth, at their peak wealth-holding level, in the early 1990s. I also compare the new wealth data with existing estimates of top wealth shares, home-ownership trends, wealth survey distributions, aggregate wealth, and the wealth Gini coefficient.
The Attention Trap: Rational Inattention, Inequality, and Fiscal Policy
Alistair Macaulay
European Economic Review, June 2021
Abstract:
I show that if it is costly for households to process information about asset returns, a model with ex-ante identical households features persistent inequality. The steady state has a two-agent structure, with inequality maintained by a complementarity between attention and wealth: wealthy households have stronger incentives to pay attention to asset choices, and so earn higher returns than asset-poor households. Fiscal expansions are less powerful in this model than in a standard model with heterogeneous discount factors, because when an expansion causes poor households to start saving, they also increase their attention. They therefore earn higher interest rates, and so save even more, smoothing the windfall from the policy over a longer time period. I provide evidence for this increase in attention using cross-state variation in uncertainty about savings interest rates in the aftermath of the 2017 Tax Cuts and Jobs Act in the US. The effects of fiscal policy therefore depend not just on the existence of inequality, but also on the cause of that inequality.
Moving Mountains: Geography, Neighborhood Sorting, and Spatial Income Segregation
Victor Yifan Ye & Charles Becker
Boston University Working Paper, March 2021
Abstract:
Using a novel geospatial panel combined with data from the 2015 American Community Survey (ACS), we investigate the effect of topography - altitude and terrain unevenness - on income segregation at the neighborhood level. Specifically, we perform large-scale counterfactual simulations by estimating household preferences for topography, altering the topographical profile of each city, and observing the resulting neighborhood sorting outcome. We find that unevenness contributes to the segmentation of markets: in the absence of hilliness, rich and poor households experience greater mixing. Hillier cities are more income-segregated because of their unevenness; the opposite is true for flatter cities.