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The Causal Effects of Income on Political Attitudes and Behavior: A Randomized Field Experiment
David Broockman et al.
NBER Working Paper, November 2024
Abstract:
We study the causal effects of income on political attitudes and behavior with a field experiment. In the experiment, a non-profit gifted 1,000 low-income Americans $1,000 per month for three years tax-free, and 2,000 control participants $50 monthly. Contrary to resource models of participation, we find no effects on political participation or engagement, and rule out effects equivalent to the observational association between turnout and income. Political preferences largely do not change, with the estimates again distinguishable from the observational relationship that economic conservatism increases with income. Dispositions such as trust in government, polarization, and support for democracy also do not change. We do find effects consistent with mood misattribution: affect towards one's own racial group, other racial groups, and some politicians slightly improves. There is also some evidence that treated participants saw work as more important for individuals, society, or even as a requirement for accessing government programs; qualitative evidence illuminates potential mechanisms. Our findings contrast with findings from other economic shocks such as government-sponsored or taxable transfers -- thereby helping clarify the mechanisms likely responsible for their effects -- and underscore the durability of political predispositions.
Like Mother, Like Child? The Rise of Women’s Intergenerational Income Persistence in Sweden and the United States
Gunnar Brandén, Martin Nybom & Kelly Vosters
Journal of Labor Economics, forthcoming
Abstract:
We examine intergenerational mobility in Sweden and the US since 1985, focusing on labor incomes of men, women, and households. Increased persistence among women, alongside stable father-son persistence, contributes to an overall mobility decline. Surprisingly, mother-son and mother-daughter persistence show similar rising trends and levels across countries, despite Sweden’s earlier rise in women’s labor force participation and lower conventionally measured persistence. Decomposition analyses reveal that differing relative contributions of maternal characteristics (e.g., employment) underlie the parallel trends. Contrasting parental assortative mating drives the coinciding levels, as US-specific negative income-based sorting offsets the mobility-depressing effects of positive human capital sorting.
Is Meritocracy Not So Bad After All? Educational Expansion and Intergenerational Mobility in 40 Countries
Herman van de Werfhorst
American Sociological Review, forthcoming
Abstract:
In the face of continued socioeconomic inheritance, the belief that the simple expansion of educational opportunities will create meritocratic societies has been met with skepticism. It is well documented that within expanding educational systems, class-advantaged families attempt to secure further advantages for their offspring. Conversely, for many, the modernist belief that educational expansion is a means to achieving a fairer society remains compelling. Studying trends in intergenerational occupational mobility in 40 countries from four continents, I examine whether educational expansion enhances occupational mobility, and whether such trends are counteracted by heightened persistence between social origin and destination within education groups. The results indicate that educational expansion over time, and the policies supporting it, are linked to improved intergenerational occupational mobility. Furthermore, this increased mobility through expanded educational opportunities is not negated by a strengthening of within-education elite persistence in occupational status, suggesting that occupational mobility patterns can genuinely change through educational expansion. The modernist ideology around educational expansion as a driver of social mobility may warrant renewed attention.
Exposure to Generative AI and Expectations About Inequality
Natalia Emanuel & Emma Harrington
Federal Reserve Working Paper, October 2024
Abstract:
With the rise of generative AI (genAI) tools such as ChatGPT, many worry about the tools’ potential displacement effects in the labor market and the implications for income inequality. In supplemental questions to the February 2024 Survey of Consumer Expectations (SCE), we asked a representative sample of U.S. residents about their experience with genAI tools. We find that relatively few people have used genAI, but that those who have used it have a bleaker outlook on its impacts on jobs and future inequality.
Where Did the Global Elite Go to School? Hierarchy, Harvard, Home and Hegemony
Ricardo Salas-Díaz & Kevin Young
Global Networks, January 2025
Abstract:
We examine the educational backgrounds of the global elite, using new data on a diversity of organizational leadership roles as well as the population of the super-rich across the world. Four trends emerge when examining the university education of the global elite. First, we find a small number of globally prestigious universities to take on super prominent roles, suggesting a strongly hierarchical distribution of credentials among the global elite. Second, we find a consistent and unique place for Harvard University within this system. Third, we find evidence for a significant yet variable ‘home-bias’ in the education of the global elite. This is moderated by the fourth regularity, the hegemony of Anglo-American credentials. These four global regularities can enhance ongoing research on global elite populations. Our findings are robust to both the removal of all American elites in the sample, to dynamic stratified sampling of the network boundary and to disaggregating the sample into different elite roles. The analysis of this article is the first of its kind to offer a large-scale descriptive mapping of central tendencies in global elite university education.
Income Inequality and Job Creation
Sebastian Doerr, Thomas Drechsel & Donggyu Lee
NBER Working Paper, November 2024
Abstract:
We propose a novel channel through which rising income inequality affects job creation and macroeconomic outcomes. High-income households save relatively more in stocks and bonds but less in bank deposits. A rising top income share thereby increases the relative financing cost for bank-dependent firms, which in turn create fewer jobs. Exploiting variation in top income shares across US states and an instrumental variable strategy, we provide evidence for this channel. We then build a general equilibrium macro model with heterogeneous households and heterogeneous firms and calibrate it to our empirical estimates. The model shows that the secular rise in top incomes accounts for 13% of the decline in the employment share of small firms since 1980. Through the new channel, rising inequality also reduces the labor share and aggregate output. Model experiments show that ignoring the link between inequality and job creation understates welfare effects of income redistribution.
Does entrepreneurship really reduce income inequality?
Yosef Bonaparte & Naman Kumar
Finance Research Letters, November 2024
Abstract:
This paper examines whether entrepreneurial activities reduce social inequality. Using data from 62 countries, we find that countries with higher levels of entrepreneurship have lower income inequality. We also find that various cultural factors including gender wage gap and diversity indicators influence country-level entrepreneurship. When we use gender wage gap as an instrument to account for potential endogeneity in the decision to become an entrepreneur, the entrepreneurship-inequality relation becomes stronger. In economic terms, one standard deviation in entrepreneurship reduces income inequality by 6–11%, relative to the mean. Together, these findings suggest that entrepreneurial activities can be an effective strategy for mitigating income disparities and promoting economic inclusivity.
Access to Opportunity in the Sciences: Evidence from the Nobel Laureates
Paul Novosad et al.
Dartmouth Working Paper, October 2024
Abstract:
Unequal opportunity in the sciences reduces scientific contributions from the most talented individuals and limits the rate of human progress. We study unequal opportunity by collecting data on the childhood SES of Nobel laureates in the sciences. The average laureate grew up in an 87–90th percentile household. Access to opportunity doubled from 1901–2023, but remains highly unequal. Barriers are higher for women, but lower for Americans. Access to opportunity across countries is much less equal, and has barely improved at all. Cities with more intergenerational mobility produce more laureates from non-elite families, and more laureates overall.
The drivers of sustainable homeownership
Liyi Liu
Real Estate Economics, November 2024, Pages 1379-1413
Abstract:
This article introduces a novel measure of homeownership sustainability -- homeownership longevity -- and examines patterns of sustainable homeownership across multiple mortgage characteristics from 2012 onward, using a unique and nationally representative data set of first-time homeowners, the National Mortgage Database borrower sample. Importantly, the unit of observation is the individual borrower and the data track how long each borrower remains a homeowner throughout the sample period. The results show that first-time homebuyers have remained homeowners at high rates since 2012 with over 60% maintaining homeownership throughout the entire sample period. Although there are statistically significant differences in expected homeownership longevity by loan origination characteristics, the absolute magnitudes of these differences are small. Notably, the disparity among racial and ethnic groups in terms of homeownership longevity is small. The high rates and relative uniformity of homeownership longevity for this population suggest that self-selection into homeownership and existing underwriting standards have allocated mortgage credit to households highly likely to maintain homeownership.