Self Worth
Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends
Gerald Auten & David Splinter
Journal of Political Economy, forthcoming
Abstract:
Concerns about income inequality emphasize the importance of accurate income measures. Estimates of top income shares based only on individual tax returns are biased by tax-base changes, social changes, and missing income sources. This paper addresses these shortcomings and presents new estimates of the distribution of national income since 1960. Our analysis of pre-tax income shows that top income shares are lower and have increased less since 1980 than other studies using tax data. In addition, increasing government transfers and tax progressivity have resulted in rising real incomes for all income groups and little change in after-tax top income shares.
Human mobility networks reveal increased segregation in large cities
Hamed Nilforoshan et al.
Nature, 21 December 2023, Pages 586-592
Abstract:
A long-standing expectation is that large, dense and cosmopolitan areas support socioeconomic mixing and exposure among diverse individuals. Assessing this hypothesis has been difficult because previous measures of socioeconomic mixing have relied on static residential housing data rather than real-life exposures among people at work, in places of leisure and in home neighbourhoods. Here we develop a measure of exposure segregation that captures the socioeconomic diversity of these everyday encounters. Using mobile phone mobility data to represent 1.6 billion real-world exposures among 9.6 million people in the United States, we measure exposure segregation across 382 metropolitan statistical areas (MSAs) and 2,829 counties. We find that exposure segregation is 67% higher in the ten largest MSAs than in small MSAs with fewer than 100,000 residents. This means that, contrary to expectations, residents of large cosmopolitan areas have less exposure to a socioeconomically diverse range of individuals. Second, we find that the increased socioeconomic segregation in large cities arises because they offer a greater choice of differentiated spaces targeted to specific socioeconomic groups. Third, we find that this segregation-increasing effect is countered when a city’s hubs (such as shopping centres) are positioned to bridge diverse neighbourhoods and therefore attract people of all socioeconomic statuses. Our findings challenge a long-standing conjecture in human geography and highlight how urban design can both prevent and facilitate encounters among diverse individuals.
Wealth Inequality in a Low Rate Environment
Matthieu Gomez & Émilien Gouin-Bonenfant
Econometrica, forthcoming
Abstract:
We study the effect of interest rates on wealth inequality. While lower rates decrease the growth rate of rentiers, they also increase the growth rate of entrepreneurs by making it cheaper to raise capital. To understand which effect dominates, we derive a sufficient statistic for the effect of interest rates on the Pareto exponent of the wealth distribution: it depends on the lifetime equity and debt issuance rate of individuals in the right tail of the wealth distribution. We estimate this sufficient statistic using new data on the trajectory of top fortunes in the U.S. Overall, we find that the secular decline in interest rates (or more generally of required rates of returns) can account for about 40% of the rise in Pareto inequality; that is, the degree to which the super rich pulled ahead relative to the rich.
Intergenerational Mobility in American History: Accounting for Race and Measurement Error
Zachary Ward
American Economic Review, December 2023, Pages 3213-3248
Abstract:
A large body of evidence finds that relative mobility in the US has declined over the past 150 years. However, long-run mobility estimates are usually based on White samples and therefore do not account for the limited opportunities available for nonwhite families. Moreover, historical data measure the father's status with error, which biases estimates toward greater mobility. Using linked census data from 1850 to 1940, I show that accounting for race and measurement error can double estimates of intergenerational persistence. Updated estimates imply that there is greater equality of opportunity today than in the past, mostly because opportunity was never that equal.
Whose Preferences Matter for Redistribution: Cross-country Evidence
Michel Marechal et al.
NBER Working Paper, December 2023
Abstract:
Using cross-sectional data from 93 countries, we investigate the relationship between the desired level of redistribution among citizens from different socioeconomic backgrounds and the actual extent of government redistribution. Our focus on redistribution arises from the inherent class conflicts it engenders in policy choices, allowing us to examine whose preferences are reflected in policy formulation. Contrary to prevailing assumptions regarding political influence, we find that the preferences of the lower socioeconomic group, rather than those of the median or upper strata, are most predictive of realized redistribution. This finding contradicts the expectations of both leading experts and regular citizens.
When the Rich Get Richer: Class, Globalization, and the Sociotropic Determinants of Populism
Kathleen Powers & Brian Rathbun
International Studies Quarterly, December 2023
Abstract:
Globalization is frequently linked to populism in advanced industrial societies, yet scholars have found little evidence for a direct connection between citizens’ personal economic fortunes and populist beliefs. We draw on the sociotropic tradition to argue that beliefs about how the global economy differently affects groups in society link globalization to populism and its component elements -- anti-elitism, people-centrism, and demand for popular sovereignty. Data from an original survey of US residents support our argument that beliefs about whether wealthy Americans have gained from globalization -- the rich getting richer -- correlate with populist attitudes. This pattern holds while adjusting for a broad range of pocketbook measures and the nativist attitudes associated with right-wing populism. Results from a pre-registered experiment further show that exposure to an article about globalization enriching Davos billionaires increases two of three populist beliefs, lending causal leverage to our empirical tests. Our results emphasize the class dynamics created by outside financial forces, rather than the effects on the country as a whole, suggesting that international relations (IR) scholars gain important insights by accounting for globalization’s uneven effects. Perceptions about globalization inform attitudes about politics in general, a layer deeper than foreign economic policy preferences.
Life Course Trajectories and Wealth Accumulation in the United States: Comparing Late Baby Boomers and Early Millennials
Rob Gruijters, Zachary Van Winkle & Anette Fasang
American Journal of Sociology, September 2023, Pages 530–569
Abstract:
Millennials are often assumed to be economically worse off than previous generations because of more precarious employment and unstable family lives. Using sequence analysis and unconditional quantile decomposition, we analyze the work and family trajectories of late baby boomers and early millennials and relate them to wealth holdings at age 35. We find that the poorest millennials have less wealth than their baby boomer counterparts, but the wealthiest millennials have more. Millennials are less likely to enter high-status occupations and are more likely to work in low-skilled service jobs, and family trajectories show a strong decline of traditional early marriage and parenthood; however, changes in life course trajectories cannot account for the increase in wealth inequality. Instead, the distribution of wealth has become more unequal because the economic returns to typical middle-class trajectories have increased, while the returns to typical working-class trajectories have stagnated or declined.
Economic Inequality Fosters the Belief That Success Is Zero-Sum
Shai Davidai
Personality and Social Psychology Bulletin, forthcoming
Abstract:
Ten studies (N = 3,628; including five pre-registered), using correlational and experimental methods and employing various measures and manipulations, reveal that perceived economic inequality fosters zero-sum beliefs about economic success -- the belief that one person’s gains are inevitably offset by others’ losses. As the gap between the rich and the poor expands, American participants increasingly believed that one can only get richer at others’ expense. Moreover, perceptions of economic inequality fostered zero-sum beliefs even when the distribution of resources was not strictly zero-sum and did so beyond the effect of various demographics variables (household income, education, subjective socioeconomic status) and individual differences (political ideology, social dominance orientation, interpersonal trust). Finally, I find that zero-sum beliefs account for the effect of inequality on people’s view of the world as unjust. The article concludes with a discussion of the theoretical and practical implications of zero-sum beliefs about economic success.
Family Trees and Falling Apples: Historical Intergenerational Mobility Estimates for Women and Men
Kasey Buckles et al.
NBER Working Paper, November 2023
Abstract:
Efforts to document long-term trends in socioeconomic mobility in the United States have been hindered by the lack of large, representative datasets that include information linking parents to their adult children. This problem has been especially acute for women, who are more difficult to link because their surnames often change between childhood and adulthood. In this paper, we use a new dataset, the Census Tree, that overcomes these issues by building on information from an online genealogy platform. Users of the platform have private information that allows them to create links among the 1850 to 1940 decennial censuses; the Census Tree combines these links with others obtained using machine learning and traditional linking methods to produce a dataset with hundreds of millions of census-to-census links, nearly half of which are for women. With these data, we produce estimates of the intergenerational transmission of socioeconomic status from fathers to their sons and daughters. We find that for married men and women, the patterns of mobility over this period are remarkably similar. Single women, however, are less mobile than their male counterparts. We also present new estimates that show that assortative mating was much stronger than previously estimated for the US.