Laboratories of (In)equality? Redistributive Policy and Income Inequality in the American States

Prior literature has emphasized demographic, economic, and political explanations for increasing income inequality in the United States, with little attention paid to the role of state‐level policy. This is despite great variation across states in both the level of inequality and the rate at which it is rising. This paper asks whether differences in state policy choices can help explain this variation; specifically, we examined a range of state redistributive policies enacted between 1980 and 2005 and identified four common approaches likely to impact inequality: taxes on the wealthy, taxes on the poor, spending on the poor, and labor market policies. We used pooled cross‐sectional time‐series data and a fixed‐effects model to assess the relationship between states’ use of each policy approach and two measures of market income inequality: the Gini coefficient and the income share of the top 1 percent. We find policies played a significant role in shaping income inequality in the states. For three of these four policy approaches, we found less inequality following expansions of state redistributive policy. Yet, for another, we identified the opposite pattern. These findings highlight the importance of state policy choices in shaping market inequality, and have implications for designing state policies to reduce income inequality since the success of these efforts depends on the policy approach used to redistribute income and wealth.     

Behind the Seven Veils of Inequality. What if it's all about the Struggle within just One Half of the Population over just One Half of the National Income?

This article addresses three main issues: why there is such a huge diversity of disposable income inequality across the world, why there is such a deterioration of market inequality among countries of the Organization for Economic Cooperation and Development (OECD), and why inequality seems to move in ‘waves’. There are many underlying questions: does diversity reflect a variety of fundamentals, or a multiplicity of power structures and choice? Is rising market inequality the product of somehow ‘exogenous’ factors (e.g., r>g), or of complex interactions between political settlements and market failures? How do we get through the veils obscuring these interactions and distorting our vision of the often self‐constructed nature of inequality? Has neoliberal globalization broadened the scope for ‘distributional failures’ by, for example, triggering a process of ‘reverse catching‐up’ in the OECD, so that highly unequal middle‐income countries like those in Latin America now embody the shape of things to come? Are we all converging towards features such as mobile élites creaming off the rewards of economic growth, and ‘magic realist’ politics that lack self‐respect if not originality? Should I say, ‘Welcome to the Third World’? In this paper I also develop a new approach for examining and measuring inequality (distance from distributive targets), and a new concept of ‘distributional waves’. The article concludes that, to understand current distributive dynamics, what matters is to comprehend the forces determining the share of the rich — and, in terms of growth, what they choose to do with it (and how they are allowed do it).     

INEQUALITY IN CITIES*

ABSTRACT Much of the inequality literature has focused on national inequality, but local inequality is also important. Crime rates are higher in more unequal cities; people in unequal cities are more likely to say that they are unhappy. There is a negative association between local inequality and the growth of city‐level income and population, once we control for the initial distribution of skills. High levels of mobility across cities mean that city‐level inequality should not be studied with the same analytical tools used to understand national inequality, and policy approaches need to reflect the urban context. Urban inequality reflects the choices of more and less skilled people to live together in particular areas. City‐level skill inequality can explain about one‐third of the variation in city‐level income inequality, while skill inequality is itself explained by historical schooling patterns and immigration. Local income also reflects the substantial differences in the returns to skill across, which are related to local industrial patterns.     

Metropolitan Income Inequality During the 1980s: The Impact of Urban Development, Industrial Mix, and Family Structure

The empirical analysis in this paper explores the interurban variation in family income distribution. The results point to increasing urban development, rising female-headship, a widening educational distribution, and changes in the industrial and occupational mix as major contributing factors to rising inequality. However, the increase in the relative number of multiple worker families was a significant mitigating force to rising inequality. A decomposition of 1979 and 1989 cross-sectional models revealed that while changes in urban family and industrial characteristics have been sources of rising inequality, there has been significant structural change in the urban models acting to decrease inequality.     

EDUCATION AND INCOME INEQUALITY IN THE REGIONS OF THE EUROPEAN UNION*

ABSTRACT This paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel dataset for 102 regions over the period 1995–2000, it analyses how microeconomic changes in human capital distribution affect income inequality for the population as a whole and for normally working people. The different static and dynamic panel data analyses conducted reveal that the relationship between income per capita and income inequality, as well as between a good human capital endowment and income inequality is positive. High levels of inequality in educational attainment are also associated with higher income inequality. The above results are robust to changes in the definition of income distribution and may be interpreted as a sign of the responsiveness of the EU labor market to differences in qualifications and skills. Other results indicate that population ageing, female participation in the labor force, urbanization, agriculture, and industry are negatively associated to income inequality, while unemployment and the presence of a strong financial sector positively affect inequality. Finally, income inequality is lower in social‐democratic welfare states, in Protestant areas, and in regions with Nordic family structures.     

Has the Income Share of the Middle and Upper‐middle Been Stable around the ‘50/50 Rule’, or Has it Converged towards that Level? The ‘Palma Ratio’ Revisited

In an article published in this journal in 2011, an alternative measure of inequality was suggested, which has subsequently become known as ‘the Palma Ratio’. In this new article, the author of the original proposal revisits the argument for such a measure. Using new data, he examines whether the current remarkable homogeneity in the income share of the middle and upper‐middle around the world — the foundation of the so‐called ‘Palma Ratio’ — is an historically stable stylized fact, or whether it is a new phenomenon, the outcome of a process of convergence towards the current ‘50/50 Rule’ (in which half of the population in each country located within deciles 5 to 9 tends to appropriate about 50 per cent of the national income, or just above). Although partly written in response to a comment on the 2011 paper (published in this issue), the article also makes a substantive further contribution to the literature on inequality and the statistics to measure it.     

A NOTE ON THE DIFFERENTIAL REGIONAL EFFECTS OF INCOME INEQUALITY: EMPIRICAL EVIDENCE USING U.S. COUNTY‐LEVEL DATA

This note examines the correlation between income inequality and economic growth using a panel of income distribution data for 3,109 counties of the U.S. Using the System Generalized Method of Moments (GMM) approach, we find that for the entire sample of 3,109 counties, an increase in a county's level of inequality has a significant negative relationship with future economic growth. In reality, however, the magnitude, sign, and significance of this relationship is not necessarily uniform across all regions of the U.S., motivating the need to examine regional differentials in the relationship between inequality and growth. Consequently, we split our dataset into metropolitan and nonmetropolitan counties, into the eight Bureau of Economic Analysis regions, and into regions of different political affiliation and economic‐dependence typology. Our results show considerable heterogeneity in the relationship between inequality and growth across these regions.     

Market size,occupational self‐selection,sorting, and income inequality

We develop a monopolistic competition model with heterogeneous agents who self‐select into occupations (entrepreneurs and workers) depending on innate ability. The effect of market size on the equilibrium occupational structure crucially hinges on properties of the lower tier utility function—its scale elasticity and relative love‐for‐variety. When combined with the underlying ability distribution, the share of entrepreneurs and income inequality can increase or decrease with market size. When extended to allow for the endogenous sorting of mobile agents between cities, numerical examples suggest that sorting may increase inequality within and between cities.     

通勤时间的幸福绩效——基于中国家庭追踪调查的实证研究

幸福不仅是个人的心愿,也是城市管理者的执政目标之一,因此,对于城市中普遍存在的通勤时间过长所带来的心理影响研究十分必要。本文采用中国家庭追踪调查(CFPS)数据,考察了通勤时间对于个人主观幸福感的影响。实证结果显示,通勤时间对于个人幸福感存在显著的负向影响,随着个人通勤时间的增加,个人幸福感也随之降低。通勤时间与生活满意度也同样呈现显著的负相关,这也证明了结论的稳健性。通过进一步考察通勤时间负面影响的异质性发现,通勤时间对幸福感的影响在不同社会群体间存在差异,对于个人收入高、教育程度高、家庭收入高的居民而言,通勤时间所造成的负面心理影响更大。因此,政府应重视通勤对居民幸福感的影响,并致力于提高交通效率。     

Does the Centre Hold? Testing Palma's Proposition (A Comment)

This Comment tests empirically the important proposition made by Palma in this journal (Development and Change, 2011) that deciles 5 to 9 of the income distribution across developing economies have been able to secure and defend a stable share (around 50 per cent) of the total available income, so that changes in income inequality are now a matter of struggle between the top 10 per cent and the bottom 40 per cent of the population, ranked by income. The author finds that the proposition does not hold: changes in top 10 per cent shares are matched by changes in the shares of both the other cohorts.     

INFLATION, PROGRESSIVITY, AND STATE INCOME TAX REVENUES

The combination of progressive income tax structures and inflation has led to significant increases in state income tax revenues. While the federal government has de facto indexed the federal personal income tax, states have generated large relative and absolute increases in their income tax revenues. This paper shows that the ratio of income tax revenues to personal income has grown significantly more in states with progressive income tax structures than those with proportional tax structures. Almost half of such increases may be attributed to inflation. The increase in the relative share of income tax as a source of state revenues has recently run into resistance in some states which have installed income tax indexation measures. This may suggest that the marginal cost of raising revenue through inflation, relative to other means (taxes), is reaching its limits.     

Residential property disparities in city districts in Prague,Czech Republic

City districts are often classified as ‘rich’ or ‘poor,’ a phenomenon that occurs within cities all over the world. While income inequality, wealth inequality, and other kinds of social inequality are frequently tracked, there is a surprising lack of research concentrating on how social inequality manifests as differences between parts of cities, especially outside of the U.S. That is mostly due to insufficient available data. In this paper, we propose a methodology for measuring the relative inequality between city districts by using the average prices of residential properties in various parts of the city, and assessing their relative difference. This approach has several advantages, as property listings are often readily available even in cities where income data is not. This methodology has potential for measuring developments in inequality in a much wider range of cities. As a proof of concept, we apply this methodology to property prices in Prague during the period 2003–2012 to identify a trend of either growing or decreasing inequality among individual parts of the city. We have found that during this period the disparity has grown only 5.97%, which means the overall growth of disparity between the city districts was negligible.     

Inter- and intraregional inequality in a spatial economy

In this paper, we develop a three-region economic geography model with workers of heterogeneous skills and mobility rates to consider how first-nature, regional differences impact both inter- and intraregional inequality. In our model, the skill premium within a region summarizes both the degree of intraregional inequality between mobile, skilled workers and immobile, unskilled workers and the interregional inequality through differences in the welfare of unskilled workers across regions. Regions with the highest skill premium have the greatest degree of intraregional inequality and provide the lowest level of welfare to unskilled workers, relative to other regions. We find that the skill premium will be higher in regions with a greater supply of unskilled labor, lower supply of housing, or are more remote. An increase in a region's housing supply or centrality will lower intraregional inequality and raise the welfare of the local, unskilled workforce. However, the magnitude of these changes are declining in the initial number of skilled workers in the region. The model is extended to consider imperfectly elastic housing supply. The larger the price elasticity of housing, the larger the range of values, such that more populated regions will host a disproportionate share of skilled workers, have lower levels of intraregional inequality, and provide higher levels of welfare for unskilled workers.     

Spatial variation in populist right voting in Austria, 2013–2017

The recent wave of populism sweeping Europe and the Americas generated considerable interest among political scientists, economists, sociologists and to some extent, geographers. The vast majority of these studies focuses on individual voter decisions or national comparisons over time but neglects the within-country spatial variation of the populist vote. This paper addresses this shortcoming and applies spatial econometric techniques to explore possible explanations for spatial variation in the increase of the populist right vote between the 2013 and 2017 national elections in Austria for 2118 municipalities. Spatial variation in voting shares can result from (1) compositional effects, regional differences in the composition of voters with different characteristics, (2) broad spatial, historically evolved institutional differences, such as membership to one of the nine states, (3) unequal integration of different types of regions into the global economy, such as peripheral regions, central urban regions, old industrial regions or tourist areas, (4) spatial vote spillovers due to localized social networks, and (5) unobserved spatial processes. We find that the populist right vote gains in Austrian municipalities are affected by all processes, but that the type of regions becomes insignificant once we correct for unobservable spatial structures in the regression framework. The increase in the share of foreigners, the share of foreigners, income and inequality levels, educational differences, selected state membership, as well as spatial spillovers of populist right voting are all important to explain spatial variation in the rise of the populist right vote.     

Dimensions and dynamics of residential segregation by income in urban Canada, 1991–1996

This paper examines the trends in residential segregation by income (post-transfer, pretax income) in the thirty-nine largest Canadian urban areas between 1991 and 1996. The study is motivated by the relative lack of attention paid to residential segregation by income in the Canadian context and by conceptual arguments linking compromised life chances and increased social tensions for the populations of highly segregated cities. We investigated several dimensions of segregation using five different measures (we focus on three of these here given the correlation structure of the measures) to examine changes in segregation between 1991 and 1996, a period characterised by economic recession, cutbacks in social programs and a widening of inequality in market incomes at the national scale. Overall, income segregation increased in most urban areas across all dimensions of segregation during the time period, with particularly high degrees of segregation observed in prairie cities (Winnipeg, Saskatoon and Regina). Of the three largest metropolitan areas (Vancouver, Toronto and Montréal), Montréal was the most consistently segregated. We also find that increases in spatial separation and spatial concentration by income occurred despite the fact that at the national scale, the tax and transfer system appeared to be adequately redressing a rise in inequality in labour and market incomes (as demonstrated by the lack of change in post-transfer national income inequality measures during a period when inequality in market and labour incomes rose sharply). This implies that the lived experience of changes in income distribution are unlikely fully captured by aspatial, national-scale measures and that intra-urban measures with a spatial dimension are an important indicators of inequality in Canadian society.     

Does Income Distribution Affect U.S. State Economic Growth?*

Abstract. Numerous models propose an income‐distribution/growth linkage, but the empirical evidence is ambiguous and depends on the regression approach. Mixed findings are not unexpected if there are differing short‐ and long‐term responses. Approaches utilizing cross‐sectional variation primarily reflect long‐run effects, whereas those using time‐series variation primarily reveal short‐run effects. This study reconciles these issues using U.S. state data. After allowing for short‐ and long‐run responses and for separate effects between the tails and middle of the distribution, the consistent pattern is the middle‐class share and overall inequality are positively related to long‐run growth. However, the short‐run income‐distribution response is less clear.     

中国制造业重心的空间分布变化特征与趋势研究——基于2001年和2009年数据的实证分析

中国东部地区向中国内陆及周边国家的产业转移方兴未艾,很有可能发展成为全球第四次产业转移浪潮,而制造业的区域转移是该过程的主体。本文对中国制造业不同尺度的份额变化及其影响因素进行讨论并对二者关系进行计量分析,得出以下结论:第一,制造业重心基本空间格局未发生变化,但已发生明显的份额变化;第二,制造业份额变化涉及多个空间层面,并遵循随经济发展水平增长而降低的梯度原则;第三,根据2001年和2009年中国地市级尺度制造业份额变化及其影响要素间关系的理论分析和计量研究结果,中国区域制造业份额与经济发展水平呈现倒U型关系,且仍对低成本劳动力具有一定的依赖性,而交通设施改善对于制造业份额的增长具有显著的正向效应。     

DETERMINANTS OF IMMIGRANTS’ ENTRY TO HOMEOWNERSHIP IN THREE NORDIC CAPITAL CITY REGIONS

The extent of homeownership among immigrants may be seen as an indicator of integration and as a determinant of ethnic residential segregation. Studies have shown differences in the determinants of homeownership between immigrants and natives, indicating that variation in homeownership is not only a function of differences in economic resources. These studies have largely focused on Anglo‐American contexts, using mostly cross‐sectional data. We apply survival analysis methods to analyse the determinants of entry to homeownership in the capital regions of three Nordic countries – Denmark, Finland and Sweden – utilizing longitudinal individual‐level register‐based datasets. We find that differences in entry to homeownership between natives and different immigrant groups cannot be explained by differences in socio‐economic background factors. We also find differences in the effects of these factors. Effects of income are generally weaker among non‐Western immigrants and immigrants are less responsive to changes in household composition. The share of non‐Western immigrants in the neighbourhood is only weakly related to entry to homeownership, while immigrants and natives living in public rental housing tend to be slightly less inclined to move to homeownership. Weaker income effects among immigrants, weak effects of ethnic segregation and the importance of the public rental sector differentiate our results from earlier findings. Weaker income effects may indicate that uncertainty about the future also affects middle‐income immigrants. Differences between the three contexts in housing markets and policies do not seem to matter much, although the results indicate that difficult access to the private rental sector may push immigrants to homeownership.     

Income Inequality and Wealth Concentration in the Recent Crisis

This article shows that the increase of income inequality and global wealth concentration was an important driver for the financial and Eurozone crisis. The high levels of income inequality resulted in balance of payment imbalances and growing debt levels. Rising wealth concentration contributed to the crisis because the increasing asset demand from the rich played a key role in the growth of the structured credit market and enabled poor and middle‐income households to accumulate increasing amounts of debt. This analysis thereby puts both income and wealth inequality at the epicentre of the recent crisis, and as crucial for social scientists analysing the causes of the crisis. The authors’ findings suggest that the policy response to the crisis should not be limited to financial regulation but must involve policies to address inequality by increasing the bargaining power of labour as well as redistributive tax policies.     

Inclusive growth from an urban perspective: a challenge for the metropolis of the twenty-first century

This paper addresses the study of inclusive growth from an urban perspective. It proposes to focus the relationship between urban economic growth and income distribution in cities in which manufacturing production and external demand play a central role. Opposed to the literature that considers economic growth leads to an increase in inequality in income distribution, we present some operative economic tools from Marshallian Industrial Districts theory and from urban economic theory with which to develop an economic strategy for inclusive urban growth, making possible to achieve simultaneously economic growth and improvements in income distribution. An interesting example of a metropolis with a dynamic of economic and employment growth compatible with a reduction in income inequality is provided by Barcelona. This metropolis disposes a Survey of living conditions and habits of the population since 1986 that allows an analysis in terms of inclusive urban growth.