Category Archives: Income Inequality/Gap

The Motherhood Wage Penalty and its Determinants: A Public–Private Comparison

Source: Chloé Duvivier, Mathieu Narcy, Labour: Review of Labour Economics and Industrial Relations, Vol. 29 Issue 4, December 2015
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From the abstract:
We investigate whether public and private sector employees bear a different wage penalty for having children. According to our estimates, the total motherhood wage penalty is much larger in the private than in the public sector. Nevertheless, in both sectors, we find no unexplained penalty once we control for potential determinants of the family pay gap, namely, a reduced labour supply of mothers, child‐related career interruptions, less access to management positions, and adjustments in working conditions. Finally, only child‐related career interruptions play a different role in explaining the motherhood wage penalty in each sector.

The Decline of Labor, the Increase of Inequality

Source: Rich Yeselson, TPM Features, November 9, 2015

….America’s labor unions, once a stalwart of the American economy, are now in similar danger of fading into oblivion, and with them, America’s defense against increasing income inequality….

….This is a brief summary of the narrative of labor’s modern declension. But why did this happen? Broadly, unionization diminished in the US for some of the same structural, macro-economic reasons it has declined in almost every advanced country in the world. But the decline also occurred for reasons intrinsic to the American political economy—in other words because of the vastly unequal power relationships between corporations and their political allies, and unions and their less reliable political allies. As the influence that labor had on the Democratic Party frayed with its shrinking size, the first order economic effects of inequality were compounded by the second order disappearance of a countervailing political alternative to business elites and their advocates in the Republican Party….

Income Inequality, Intergenerational Mobility, and the Great Gatsby Curve: Is Education the Key?

Source: John Jerrim and Lindsey Macmillan, Social Forces, Volume 94, Issue 2, December 2015
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From the abstract:
It is widely believed that countries with greater levels of income inequality also have lower levels of intergenerational mobility. This relationship, known as the Great Gatsby Curve (GGC), has been prominently cited by high-ranking public policymakers, bestselling authors, and Nobel Prize–winning academics. Yet, relatively little cross-national work has empirically examined the mechanisms thought to underpin the GGC—particularly with regard to the role of educational attainment. This paper uses the cross-nationally comparable Programme for International Assessment of Adult Competencies (PIAAC) data set to shed new light on this issue. We find that income inequality is associated with several key components of the intergenerational transmission process—including access to higher education, the financial returns on education, and the residual effect of parental education upon labor-market earnings. Thus, consistent with theoretical models, we find that educational attainment is an important driver of the relationship between intergenerational mobility and income inequality. We hence conclude that unequal access to financial resources plays a central role in the intergenerational transmission of advantage.

The march to inequality: how did we get here?

Source: Josh Marshall, TPM Features, November 2015

On the leftward side of America’s political spectrum and even creeping into some warrens of the right, wealth and income inequality is the issue of the day. That is hardly surprising since the bare numbers, compiled over decades, tell us how a tiny fraction of the population is leaving the great mass of Americans behind. Occupy Wall Street helped give the debate a vocabulary – the 1% vs the 99%. New Court rulings like Citizens United have expanded the prerogatives of extreme wealth. The scale of interest has even taken what was destined to be a thick tome on capitalism and inequality – Thomas Piketty’s Capital in the Twenty-First Century – read only by specialists and economists and transformed it into an international bestseller.

So with that interest, this consequence and the centrality of the issue for our time, we at TPM decided to commission a four part series on the topic – the first time we’ve ever done such a project. The four pieces come from different authors, each coming from a different angle, with a different sort of expertise. The aim of the series is to pose a simple question: How did we get here?

Public Sector Unions Promote Economic Security and Equality for Women

Source: Andrea Johnson, Katherine Gallagher Robbins, National Women’s Law Center, November 2015

From the blog post:
At a time when women make up two-thirds of the low-wage workforce and the gender wage gap refuses to die, public sector unions are a beacon of hope for working women. As our new analysis, “Public Sector Unions Promote Economic Security and Equality for Women,” reveals, public sector unions provide much-needed economic security and equality for working women.

Women make up a majority of the public sector workforce, which includes nurses, first responders, teachers, and many other employees whose work is crucial to the health, safety, and prosperity of our communities. Women also make up a majority of union-represented public sector workers. We show that these union-represented women have higher wages and increased participation in employer-based health insurance plans, compared to their non-union-represented counterparts. These women also experience greater equality in wages and health benefits with their male counterparts.

Where Have the Middle-Wage Workers Gone? A Study of Polarization Using Panel Data

Source: Guido Matias Cortes, Journal of Labor Economics, January 2016
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From the abstract:
This paper presents a theoretical and empirical analysis of the effects of routine-biased technical change on occupational transition patterns and wage changes of individual workers using a general equilibrium model with endogenous sorting of workers into occupations. Consistent with the predictions of the model, data from the Panel Study of Income Dynamics show strong evidence of selection on ability in the occupational mobility patterns of routine workers, a significant fall in the wage premium in routine occupations, and faster wage growth over long-run horizons for workers switching out of routine jobs relative to those who stay.

The Minimum Wage and Inequality: The Effects of Education and Technology

Source: Zsófia L. Bárány, Journal of Labor Economics, January 2016
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From the abstract:
In the past 30 years, wage inequality has increased steeply while real minimum wages have fallen. This paper demonstrates that a general equilibrium model with endogenous skill choice is required to correctly evaluate the implications of minimum wage changes. The minimum wage not only truncates the wage distribution but also affects skill prices and therefore changes the incentives that people face when making educational decisions. The calibrated model suggests—in line with recent empirical literature—that even though minimum wages affect the bottom end of the wage distribution more, their impact on the top end is significant as well.

A Guide to Statistics on Historical Trends in Income Inequality

Source: Chad Stone, Danilo Trisi, Arloc Sherman, and Brandon DeBot, Center on Budget and Policy Priorities, Updated: October 26, 2015

From the summary:
….Data from a variety of sources contribute to this broad picture of strong growth and shared prosperity for the early postwar period, followed by slower growth and growing inequality since the 1970s. Within these broad trends, however, different data tell slightly different parts of the story (and no single source of data is better for all purposes than the others).

This guide consists of four sections. The first describes the commonly used sources and statistics on income and discusses their relative strengths and limitations in understanding trends in income and inequality. The second provides an overview of the trends revealed in those key data sources. The third and fourth sections supply additional information on wealth, which complements the income data as a measure of how the most well-off Americans are doing, and poverty, which measures how the least well-off Americans are doing…..

Government’s Unequal Attentiveness to Citizens’ Political Priorities

Source: Patrick Flavin – Baylor University, William W. Franko – Auburn University, This draft: August 6, 2015

An accumulation of evidence suggests upper-class citizens have a disproportionate influence over the policy decisions made by lawmakers in the United States. However, long before elected officials are asked to cast a final vote on a bill’s passage, an equally important decision has already been made: the decision for government to focus its limited attention and agenda space on the issue at all. Therefore, it is possible that political inequality is infused earlier in the policymaking process if the issues held important by some citizens are given attention while the issues held important by others are not. To investigate this question, we develop novel state-level measures of citizens’ issue priorities and find sizable differences in which issues rich and poor citizens think are most important and deserving of government attention. We then use bill introduction data from state legislatures to measure government action and uncover evidence that state legislators are more likely to act on an issue when it is prioritized by affluent citizens as compared to citizens with low incomes. These findings have important implications for our understanding of political equality and the functioning of American democracy.
Opinion: The more unequal the country, the more the rich rule
Source: Sean McElwee, Al Jazeera America, October 27, 2015
New evidence shows that inequality undermines democracy. … In a recent working paper, political scientist Larry Bartels finds the effect of politician’s bias toward the rich has reduced real social spending per capita by 28 percent on average. Studying 23 OECD countries, Bartels finds that the rich are more likely to oppose spending increases, support budget cuts and reject promoting the welfare state — the idea that the government should ensure a decent standard of living. … The same tendencies occur at the state level. Patrick Flavin, a political scientist at Baylor University, examined political responsiveness in the U.S. at the state level. He found that inequality in a state strongly correlates with political representation: More unequal states tend to be less representative. ….

Underpaid Workers Overwhelmingly Support A $15 Minimum Wage And Unions, Survey Finds

Source: Mitchell Hirsch, National Employment Law Project (NELP) blog, October 6, 2015

A first-ever national poll of workers who are paid less than $15 per hour shows 72 percent approve of labor unions, and 75 percent support $15 and a union, the goals of the Fight for $15 movement. …

…. Key findings from the poll include the following:
• 72 percent approve of labor unions;
• 75 percent support $15 and a union;
• 69 percent say it should be easier for workers like themselves to form and join a union;
• 72 percent believe that unions can make a real difference in their ability to obtain raises;
• 69 percent support raising the minimum wage to $15;
• 66 percent say they would have a better chance of making $15 an hour if they could join a union; and • Support for $15 and a union is particularly strong in the South at 77 percent.

Among the respondents who were not registered to vote, 69 percent said they would be more likely to register if there were a presidential candidate who supports raising the minimum wage to $15 and making it easier to join a union. And among registered voters, 65 percent said they would be more likely to vote if there were such a presidential candidate……