Having what it takes
Michael Bang Petersen et al.
Psychological Science, forthcoming
Abstract:
Over human evolutionary history, upper-body strength has been a major component of fighting ability. Evolutionary models of animal conflict predict that actors with greater fighting ability will more actively attempt to acquire or defend resources than less formidable contestants will. Here, we applied these models to political decision making about redistribution of income and wealth among modern humans. In studies conducted in Argentina, Denmark, and the United States, men with greater upper-body strength more strongly endorsed the self-beneficial position: Among men of lower socioeconomic status (SES), strength predicted increased support for redistribution; among men of higher SES, strength predicted increased opposition to redistribution. Because personal upper-body strength is irrelevant to payoffs from economic policies in modern mass democracies, the continuing role of strength suggests that modern political decision making is shaped by an evolved psychology designed for small-scale groups.
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Financialization and U.S. Income Inequality, 1970-2008
Ken-Hou Lin & Donald Tomaskovic-Devey
American Journal of Sociology, March 2013, Pages 1284-1329
Abstract:
Focusing on U.S. nonfinance industries, we examine the connection between financialization and rising income inequality. We argue that the increasing reliance on earnings realized through financial channels decoupled the generation of surplus from production, strengthening owners' and elite workers' negotiating power relative to other workers. The result was an incremental exclusion of the general workforce from revenue-generating and compensation-setting processes. Using time-series cross-section data at the industry level, we find that increasing dependence on financial income, in the long run, is associated with reducing labor's share of income, increasing top executives' share of compensation, and increasing earnings dispersion among workers. Net of conventional explanations such as deunionization, globalization, technological change, and capital investment, the effects of financialization on all three dimensions of income inequality are substantial. Our counterfactual analysis suggests that financialization could account for more than half of the decline in labor's share of income, 9.6% of the growth in officers' share of compensation, and 10.2% of the growth in earnings dispersion between 1970 and 2008.
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Family, Education, and Sources of Wealth among the Richest Americans, 1982-2012
Steven Kaplan & Joshua Rauh
American Economic Review, May 2013, Pages 158-162
Abstract:
We examine characteristics of the 400 wealthiest individuals in the United States over the past three decades as tabulated by Forbes Magazine, and analyze which theories of increasing inequality are most consistent with these data. The people of the Forbes 400 in recent years did not grow up as advantaged as in decades past. They are more likely to have started their businesses and to have grown up upper-middle class, not wealthy. Today's Forbes 400 were able to access education while young, and apply their skills to the most scalable industries: technology, finance, and mass retail. Most of the change occurred by 2001.
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The Top 1 Percent in International and Historical Perspective
Facundo Alvaredo et al.
NBER Working Paper, May 2013
Abstract:
The top 1 percent income share has more than doubled in the United States over the last thirty years, drawing much public attention in recent years. While other English speaking countries have also experienced sharp increases in the top 1 percent income share, many high-income countries such as Japan, France, or Germany have seen much less increase in top income shares. Hence, the explanation cannot rely solely on forces common to advanced countries, such as the impact of new technologies and globalization on the supply and demand for skills. Moreover, the explanations have to accommodate the falls in top income shares earlier in the twentieth century experienced in virtually all high-income countries. We highlight four main factors. The first is the impact of tax policy, which has varied over time and differs across countries. Top tax rates have moved in the opposite direction from top income shares. The effects of top rate cuts can operate in conjunction with other mechanisms. The second factor is indeed a richer view of the labor market, where we contrast the standard supply-side model with one where pay is determined by bargaining and the reactions to top rate cuts may lead simply to a redistribution of surplus. Indeed, top rate cuts may lead managerial energies to be diverted to increasing their remuneration at the expense of enterprise growth and employment. The third factor is capital income. Overall, private wealth (relative to income) has followed a U-shaped path over time, particularly in Europe, where inherited wealth is, in Europe if not in the United States, making a return. The fourth, little investigated, element is the correlation between earned income and capital income, which has substantially increased in recent decades in the United States.
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The Grandparents Effect in Social Mobility: Evidence from British Birth Cohort Studies
Tak Wing Chan & Vikki Boliver
American Sociological Review, forthcoming
Abstract:
Using data from three British birth cohort studies, we examine patterns of social mobility over three generations of family members. For both men and women, absolute mobility rates (i.e., total, upward, downward, and outflow mobility rates) in the partial parents-children mobility tables vary substantially by grandparents' social class. In terms of relative mobility patterns, we find a statistically significant association between grandparents' and grandchildren's class positions, after parents' social class is taken into account. The net grandparents-grandchildren association can be summarized by a single uniform association parameter. Net of parents' social class, the odds of grandchildren entering the professional-managerial class rather than the unskilled manual class are at least two and a half times better if the grandparents were themselves in professional-managerial rather than unskilled manual-class positions. This grandparents effect in social mobility persists even when parents' education, income, and wealth are taken into account.
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Michaela Benzeval, Michael Green & Sally Macintyre
PLoS ONE, May 2013
Abstract:
There is believed to be a ‘beauty premium' in key life outcomes: it is thought that people perceived to be more physically attractive have better educational outcomes, higher-status jobs, higher wages, and are more likely to marry. Evidence for these beliefs, however, is generally based on photographs in hypothetical experiments or studies of very specific population subgroups (such as college students). The extent to which physical attractiveness might have a lasting effect on such outcomes in ‘real life' situations across the whole population is less well known. Using longitudinal data from a general population cohort of people in the West of Scotland, this paper investigated the association between physical attractiveness at age 15 and key socioeconomic outcomes approximately 20 years later. People assessed as more physically attractive at age 15 had higher socioeconomic positions at age 36 - in terms of their employment status, housing tenure and income - and they were more likely to be married; even after adjusting for parental socioeconomic background, their own intelligence, health and self esteem, education and other adult socioeconomic outcomes. For education the association was significant for women but not for men. Understanding why attractiveness is strongly associated with long-term socioeconomic outcomes, after such extensive confounders have been considered, is important.
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Income Inequality, Mobility, and Turnover at the Top in the US, 1987-2010
Gerald Auten, Geoffrey Gee & Nicholas Turner
American Economic Review, May 2013, Pages 168-172
Abstract:
While cross-sectional data show increasing income inequality in the United States, it is also important to examine how incomes change over time. Using income tax data, this paper provides new evidence on long-term and intergenerational mobility, and persistence at the top of the income distribution. Half of those aged 35-40 in the top or bottom quintile in 1987 remain there in 2007; the others have moved up or down. While 30 percent of dependents aged 15-18 from bottom quintile households are themselves in the bottom quintile after 20 years, most have moved up. Persistence is lower in the highest income groups.
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Philip Armour, Richard Burkhauser & Jeff Larrimore
NBER Working Paper, June 2013
Abstract:
Recent research on United States levels and trends in income inequality vary substantially in how they measure income. Piketty and Saez (2003) examine market income of tax units based on IRS tax return data, DeNavas-Walt, Proctor, and Smith (2012) and most CPS-based research uses pre-tax, post-transfer cash income of households, while the CBO (2012) uses both data sets and focuses on household size-adjusted comprehensive income of persons, including taxable realized capital gains. This paper provides a crosswalk of income growth across these common income measures using a unified data set. It then uses a more consistent Haig-Simons income definition approach to comprehensive income by incorporating yearly-accrued capital gains to measure yearly changes in wealth rather than focusing solely on the realized taxable capital gains that appear in IRS tax return data. Doing so dramatically reduces the observed growth in income inequality across the distribution, but most especially the rise in top-end income since 1989.
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Tali Kristal
American Sociological Review, June 2013, Pages 361-389
Abstract:
This article addresses an important trend in contemporary income inequality - a decline in labor's share of national income and a rise in capitalists' profits share. Since the late 1970s, labor's share declined by 6 percent across the U.S. private sector. As I will show, this overall decline was due to a large decline (5 to 14 percent) in construction, manufacturing, and transportation combined with an increase, albeit small (2 to 5 percent), in labor's share within finance and services industries. To explain the overall decline and the diverse trends across industries, I argue that the main factor leading to the decline in labor's share was the erosion in workers' positional power, and this erosion was partly an outcome of class-biased technological change, namely computerization that favored employers over most employees. I combine data from several sources to test for the independent effects of workers' positional power indicators (i.e., unionization, capital concentration, import penetration, and unemployment) and the direct and indirect effects of computer technology on changes in labor's share within 43 nonagricultural private industries and 451 manufacturing industries between 1969 and 2007. Results from error correction models with fixed-effect estimators support the study's arguments.
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Inequality of opportunity and growth
Gustavo Marrero & Juan Rodríguez
Journal of Development Economics, forthcoming
Abstract:
Theoretical and empirical studies exploring the effects of income inequality upon growth reach a disappointing inconclusive result. This paper postulates that one reason for this ambiguity is that income inequality is actually a composite measure of inequality of opportunity and inequality of effort. They may affect growth through opposite channels, thus the relationship between inequality and growth depends on which component is larger. Using the PSID database for U.S. in 1970, 1980 and 1990 we find robust support for a negative relationship between inequality of opportunity and growth, and a positive relationship between inequality of effort and growth.
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Consumption and Income Inequality and the Great Recession
Bruce Meyer & James Sullivan
American Economic Review, May 2013, Pages 178-183
Abstract:
We examine changes in consumption and income inequality between 2000 and 2011. During the most recent recession, unemployment rose and asset values declined sharply. We investigate how the recession affected inequality while addressing concerns about underreporting in consumption data. Income inequality rose throughout the period from 2000 to 2011. The 90/10 ratio was 19 percent higher at the end of this period than at the beginning. In contrast, consumption inequality rose during the first half of this period but then fell after 2005. By 2011, the 90/10 ratio for consumption was slightly lower than it was in 2000.
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Measuring the Trends in Inequality of Individuals and Families: Income and Consumption
Jonathan Fisher, David Johnson & Timothy Smeeding
American Economic Review, May 2013, Pages 184-188
Abstract:
We present evidence on the level of and trend in inequality from 1985-2010 in the United States, using disposable income and consumption for a sample of individuals from the Consumer Expenditure (CE) Survey. Differing from the findings in other recent research, we find that the trends in income and consumption inequality are broadly similar between 1985 and 2006, but diverge during the Great Recession with consumption inequality decreasing and income inequality increasing. Given the differences in the trends in inequality in the last four years, using both income and consumption provides useful information.
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Perceived system longevity increases system justification and the legitimacy of inequality
John Blanchar & Scott Eidelman
European Journal of Social Psychology, forthcoming
Abstract:
In two studies, we test the prediction that perceived longevity increases system justification and the legitimacy of inequality. In Study 1, the foundations of the capitalist system were portrayed as younger or older on a timeline. Participants scored higher on economic system justification and perceived capitalism as more legitimate when they were led to believe that this economic system was older. In Study 2, we manipulated the longevity of the Indian caste system and recruited both Indians and Americans. Both groups judged the caste system as more justifiable and legitimate when it was described as more longstanding. In addition, Indians reported more system dependence and judged the caste system as more justifiable and legitimate than Americans. Feelings of system dependence explained the effects of nationality, but not the effects of longevity, on the justification and legitimacy of the caste system. Perceived longevity is a novel contributor to system justification.
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The Payoff to Skill in the Third Industrial Revolution
Yujia Liu & David Grusky
American Journal of Sociology, March 2013, Pages 1330-1374
Abstract:
Is the third industrial revolution indeed driven by rising payoffs to skill? This simple but important question has gone unanswered because conventional models of earnings inequality are based on exceedingly weak measurements of skill. By attaching occupational skill measurements to the 1979-2010 Current Population Surveys, it becomes possible to adjudicate competing accounts of the changing returns to cognitive, creative, technical, and social skill. The well-known increase in between-occupation inequality is fully explained when such skills are taken into account, while returns to schooling prove to be quite stable once correlated changes in workplace skills are parsed out. The most important trend, however, is a precipitous increase in the wage payoff to synthesis, critical thinking, and related "analytic skills." The payoff to technical and creative skills, often touted in discussions of the third industrial revolution, is shown to be less substantial.
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Rowena Gray
Explorations in Economic History, forthcoming
Abstract:
This paper uses new data on the task content of occupations to present a new picture of the labor market effects of technological change in pre-WWII United States. I show that, similar to the recent computerization episode, the electrification of the manufacturing sector led to a "hollowing out" of the skill distribution whereby workers in the middle of the distribution lost out to those at the extremes. OLS estimates show that electrification increased the demand for clerical, numerical, planning and people skills relative to manual skills while simultaneously reducing relative demand for the dexterity-intensive jobs which comprised the middle of the skill distribution. Thus, early twentieth century technological change was unskill-biased for blue collar tasks but skill-biased on aggregate. These results are in line with the downward trend in wage differentials within U.S. manufacturing up to 1950.
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The Care Economy? Gender, Economic Restructuring, and Job Polarization in the U.S. Labor Market
Rachel Dwyer
American Sociological Review, June 2013, Pages 390-416
Abstract:
The U.S. job structure became increasingly polarized at the turn of the twenty-first century as high- and low-wage jobs grew strongly and many middle-wage jobs declined. Prior research on the sources of uneven job growth that focuses on technological change and weakening labor market institutions struggles to explain crucial features of job polarization, especially the growth of low-wage jobs and gender and racial differences in job growth. I argue that theories of the rise of care work in the U.S. economy explain key dynamics of job polarization - including robust growth at the bottom of the labor market and gender and racial differences in job growth - better than the alternative theories. By seeing care work as a distinctive form of labor, care work theories highlight different dimensions of economic restructuring than are emphasized in prior research on job polarization. I show that care work jobs contributed significantly and increasingly to job polarization from 1983 to 2007, growing at the top and bottom of the job structure but not at all in the middle. I close by considering whether the care economy will continue to reinforce job polarization, or whether it will provide new opportunities for revived growth in middle-wage jobs.
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The Estate Tax and Inter Vivos Transfers over Time
Kathleen McGarry
American Economic Review, May 2013, Pages 478-483
Abstract:
The strong dislike evidenced by the American public towards the estate tax suggests that the wealthy wish to transfer resources to their heirs tax-free and would thus exploit mechanisms allowing them to reduce the tax burden whenever possible. However, I find strong evidence that the wealthy fail to utilize what is perhaps the simplest method of tax avoidance -- that of making transfers to eventual heirs up to the annual exclusion. Instead they transfer far less than the amount permitted by the tax code, whether measured in cross-section or over time. In failing to give more, they forgo significant tax savings.
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Income and Substitution Effects of Estate Taxation
James Hines
American Economic Review, May 2013, Pages 484-488
Abstract:
This paper evaluates the effect of estate taxes on labor supply. The analysis decomposes the effect of estate taxation into the substitution effect of relative price changes and the two income effects for which the estate tax is responsible. These two income effects arise from tax burdens on those who leave estates plus tax burdens on those who receive them. Despite the double income burden of the estate tax, existing empirical evidence suggests that the net effect of estate taxation on aggregate labor supply is uncertain.
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Earnings inequality and skill mismatch in the U.S.: 1973-2002
Fabián Slonimczyk
Journal of Economic Inequality, June 2013, Pages 163-194
Abstract:
This paper shows that skill mismatch is a significant source of inequality in real earnings in the U.S. and that a substantial fraction of the increase in wage dispersion during the period 1973-2002 was due to the increase in mismatch rates and mismatch premia. In 2000-2002, surplus and deficit qualifications taken together accounted for 4.3 and 4.6% of the variance of log earnings, or around 15% of the total explained variance. The dramatic increase in over-education rates and premia accounts for around 20 and 48% of the increase in the Gini coefficient during the 30 years under analysis for males and females respectively. The surplus qualification factor is important in understanding why earnings inequality polarized in the last decades.
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Socio-Economic Inequalities in Happiness in China and U.S.
Kit-Chun Joanna Lam & Pak-Wai Liu
Social Indicators Research, forthcoming
Abstract:
Our paper studies the determinants of happiness in China and U.S. and provides a better understanding of the issue of inequalities in happiness beyond income inequality. Based on the two waves of nation-wide survey data on happiness collected by World Values Survey in 1995 and 2007, Probit and ordinary least square methods are used to estimate effects of various factors on happiness. Our findings show that socio-economic inequalities increase inequalities in happiness in China. The poor are the least happy even though the income effect flats out at the high end. Individuals with below high school education attainment are less happy than those with more education. Agricultural workers are the most unhappy and are becoming even more unhappy over time. However, in U.S., there is no systematic difference in happiness across income and education groups and between agricultural and non-agricultural workers. In both countries health is a major factor contributing to happiness. Our study implies that adequate provision of national health care services should be an effective way to improve social welfare. Besides, since the probability of being happy for agricultural workers is still considerably less after controlling for income in China, policies to improve their welfare should not be limited to enhancing current income.
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The Spirit of Capitalism Among the Income Classes
H.J. Smoluk & John Voyer
Review of Financial Economics, forthcoming
Abstract:
This paper tests the consumption-based capital asset model within the context of the spirit of capitalism. The spirit of capitalism asserts that consumers gain utility not just from consumption of goods and services, but also from the social status obtained from wealth. We examine two asset pricing models developed by Bakshi and Chen (1996) that employ wealth in the utility function, for households sorted by income quintiles. In the first model, households obtain utility from both consumption and the social status that comes from their own wealth. In the second model, households gain utility from both consumption and the social status obtained from their own wealth relative to the wealth of other peer households. Our results indicate that both models are inconsistent with the data regardless of income. However, using cointegration methods as a diagnostic tool, we find that the data are "loosely" consistent with the spirit of capitalism, at least for the upper income quintiles.
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Relative Income and Job Satisfaction: Evidence from Australia
Temesgen Kifle
Applied Research in Quality of Life, June 2013, Pages 125-143
Abstract:
Using the first six waves of the Household, Income and Labour Dynamics in Australia (HILDA) Survey dataset, a linear fixed effects model is used to examine the link between relative income and overall job satisfaction in Australia. In this paper, relative income is constructed using cell average by age group, gender and education level. The findings indicate that (i) relative income has a significant negative impact on overall job satisfaction for men but not for women; and (ii) for the whole sample and for men, income comparisons are asymmetric and upwards, meaning that the loss in overall job satisfaction by the poor from having an income below that of their reference group is significantly greater than the gain by the rich from knowing that they earn above that of their reference group. Overall, the evidence found is consistent with Dueseneberry's hypothesis that relative income matters and comparison effect is asymmetric and mostly upwards.
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Dirk Krueger & Alexander Ludwig
American Economic Review, May 2013, Pages 496-501
Abstract:
We quantitatively characterize the optimal mix of progressive income taxes and education subsidies in a model with endogenous human capital formation, borrowing constraints, income risk and incomplete financial markets. In addition to the distortions of labor supply, progressive taxes weaken the incentives to acquire education. The latter distortion can potentially be mitigated by an education subsidy. We find that the welfare-maximizing fiscal policy is indeed characterized by a substantially progressive labor income tax code and a positive subsidy for college education. Both the degree of tax progressivity and the education subsidy are larger than in the current US status quo.
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Nora Gordon
NBER Working Paper, May 2013
Abstract:
Goldin and Katz (2008) document the key role that the educational attainment of native-born workers in the U.S. has played in determining changing returns to skill and income distribution in the twentieth century, emphasizing the need to understand the forces driving the supply of educated workers. This paper examines stagnation in high school graduation rates from about 1970 to 2000, alongside dramatic changes in elementary and secondary educational institutions and income inequality over those years. I review the policy history of major changes in educational institutions, including but not limited to the massive increase in school spending, and related literature. I then present descriptive analysis of the relationships between income inequality and both graduation and school spending from 1963 to 2007. Results suggest that inequality at the top of the income distribution, which was negatively correlated with the establishment of public secondary schooling earlier in the twentieth century, was positively correlated not only with education spending levels but also with aggregate high school graduation rates at the state level in this later period.
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Josef Brada
Economic Systems, forthcoming
Abstract:
I review the literature on labor's share of national income in developed and developing countries. These shares have varied systematically over the post-World War II period, rising until the late 1970s and then falling until now. Explanations for the decline in labor's share include technical progress, globalization and a decline in labor's bargaining power, but none of these explanations can account for both the rise and decline of labor shares over time and the similar pattern in developed and developing countries. However, movements in oil prices can account for these movements if energy is included in the production function. Such an explanation has broad implications for income distribution, energy conservation and for the modern theory of growth.
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Inequality, Self-Interest and Public Support for "Robin Hood" Tax Policies
William Franko, Caroline Tolbert & Christopher Witko
Political Research Quarterly, forthcoming
Abstract:
Influential economic models predict that as inequality increases, the public will demand greater redistribution. However, there is limited research into the determinants of support for redistributive tax increases because such proposals have been so rare in America in recent decades. We use Washington State's Proposition 1098 to examine how economic self-interest, concerns about inequality, and partisanship influence support for redistributive taxation. The results show that all of these factors influenced support, with strong support among the lower income, indicating that when the distributional implications of policies are clear, citizens can translate their self-interest and broad attitudes into congruent redistributive preferences.
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Keeping Up with the Joneses Affects Perceptions of Distributive Justice
Tyler Burleigh & Daniel Meegan
Social Justice Research, June 2013, Pages 120-131
Abstract:
An experimental field study investigated why people of higher social standing might jump to the conclusion that an injustice has occurred when an authority implements a program that benefits some constituents but not others. High-status individuals are uniquely vulnerable to downward mobility, especially in the event that a situation does not benefit them, but does benefit their high-status peers. In our study, students in a university course were asked to judge a bonus program by which the grades for some would increase and the grades for others would remain the same. Two framing conditions were used, each providing an example in which only one of two students would benefit from the program. In the peer-gets-ahead condition, the two students were of equal status before the program acted to differentiate them, and in the inferior-catches-up condition, the two students differed in status before the program acted to equate them. A majority of students responded favorably to the program, although this number was affected strongly by framing, with almost unanimous approval in the inferior-catches-up condition and comparatively modest approval in the peer-gets-ahead condition. Objections in the latter condition were most frequent among high-status students, who were implicitly uncomfortable with the possibility that their status could decrease relative to some of their high-status peers. Explicitly, their objections used the language of social injustice, especially claims of distributive unfairness. We argue that these perceptions of injustice are a cognitive manifestation of an aversion to any situation that could result in downward mobility.
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Mads Meier Jæger
Journal of European Social Policy, May 2013, Pages 149-163
Abstract:
This paper analyses the effect of macroeconomic and social conditions on the demand for redistribution. Using a synthetic cohort design to generate panel data at the level of socio-demographic groups, analysis of fives waves of data from the European Social Survey (2002-2010) shows that differences across countries in macroeconomic and social conditions have an effect on the demand for redistribution. Consistent with theoretical expectations, economic growth generates a lower demand for redistribution, while higher income inequality generates a higher demand. By contrast, differences across countries in unemployment levels and social expenditure are unrelated to the demand for redistribution. The analysis also suggests that empirical results depend to a considerable extent on the assumptions underlying different methodological approaches.
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Beyond the Joneses: Inter-country income comparisons and happiness
Leonardo Becchetti et al.
Journal of Socio-Economics, forthcoming
Abstract:
Our paper provides novel evidence on the burgeoning literature on life satisfaction and relative comparisons by showing that in the last 30 years comparisons with the wellbeing of top income neighboring countries have generated negative feelings on a large sample of individuals in the Eurobarometer survey. The paper shows that neighboring countries, and not just our individual neighbors or peers, can be reference groups and that the above mentioned effect depends on the intensity of media exposure.
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Income, Occupation, and Preferences for Redistribution in the Developing World
Stephan Haggard, Robert Kaufman & James Long
Studies in Comparative International Development, June 2013, Pages 113-140
Abstract:
Much of the theoretical work on preferences for redistribution begins with the influential Melzer-Richard model, which makes predictions derived both from position in the income distribution and the overall level of inequality. Our evidence, however, points to limitations on such models of distributive politics. Drawing on World Values Survey evidence on preferences for redistribution in 41 developing countries, we find that the preferences of low-income groups vary significantly depending on occupation and place of residence, union members do not hold progressive views, and inequality has limited effects on demands for redistribution and may even dampen them.
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Inequality and Personal Income Taxation: The Origins and Effects of Legislative Malapportionment
Martin Ardanaz & Carlos Scartascini
Comparative Political Studies, forthcoming
Abstract:
Why does personal income taxation (PIT) remain relatively low in many developing countries despite a period of democratic advancement and rapid economic growth? This stylized fact is hard to reconcile with standard political economy models of taxation that expect democratic regimes to bring about redistribution in countries that suffer from high inequality. This article argues that the details of political institutions are key to understand why PIT remains low in many developing and unequal countries. In particular, we show how legislative malapportionment may prevent the use of personal income taxes as a major revenue source by skewing the distribution of political power across groups. Malapportionment is usually not exogenous but the result of design by those with political power at the transition or reform moment. As such, it depends on the structure of political and economic power in society. Based on a sample of more than 50 countries between 1990 and 2007, this article finds that (a) countries with historically more unequal distributions of wealth and income tend to systematically present higher levels of legislative malapportionment and (b) higher levels of malapportionment are associated with lower shares of personal income taxes in GDP.
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Jasper van Houten, Maurice Gesthuizen & Maarten Wolbers
Research in Social Stratification and Mobility, September 2013, Pages 13-26
Abstract:
In this article, we raised the question as to what extent members from higher status groups effectuated social resources, more specifically voluntary association membership, as a possible new compensatory strategy to guarantee a successful intergenerational transmission of their occupational status. For that purpose, we investigated whether voluntary association membership (of parents and their child) mediate the positive effect of parental occupational status on that of their child and whether it has become more important over time as an explanation of social reproduction. In the empirical analysis, we incorporated voluntary association membership into the classic status attainment model and estimated path models using retrospective life course data from the Family Survey Dutch Population 2000. The empirical results showed that voluntary association membership does not play a mediating role in the intergenerational transmission of occupational status for the 1916-1947 birth cohort. However, it does so for the 1948-1960 birth cohort, thereby becoming an effective compensatory strategy in the intergenerational transmission of occupation status.
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Needs versus Entitlements - An International Fairness Experiment
Alexander Cappelen et al.
Journal of the European Economic Association, June 2013, Pages 574-598
Abstract:
What is the relative importance of needs, entitlements, and nationality in people's social preferences? To study this question, we conducted a real-effort dictator experiment where students in two of the world's richest countries, Norway and Germany, were matched directly with students in two of the world's poorest countries, Uganda and Tanzania. The experimental design made the participants face distributive situations where different moral motives came into play, and based on the observed behavior we estimate a social preference model focusing on how people make trade-offs between entitlements, needs, and self-interest. The study provides four main findings. First, entitlement considerations are crucial in explaining distributive behavior in the experiment; second, needs considerations matter a lot for some participants; third, the participants acted as moral cosmopolitans and did not assign importance to nationality in their distributive choices; and, finally, the participants' choices are consistent with a self-serving bias in their social preferences.
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Tomer Blumkin, Efraim Sadka & Yotam Shem-Tov
Economics Letters, forthcoming
Abstract:
In this paper we demonstrate that supplementing the optimal non-linear income tax system with a binding maximum wage rule attains a Pareto improvement, by serving to mitigate the mimicking incentives of the high-skill individuals without entailing distortions.
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Resource allocation, affluence and deadweight loss when relative consumption matters
Curtis Eaton & Jesse Matheson
Journal of Economic Behavior & Organization, July 2013, Pages 159-178
Abstract:
We explore the link between affluence and well-being using a simple general equilibrium model with a pure Veblen good. Individuals derive utility from the pure Veblen good based solely on how much they consume relative to others. In equilibrium, consumption of the pure Veblen good is the same for everyone, so the Veblen good contributes nothing to utility. Hence, resources devoted to the Veblen good provide us with a measure of deadweight loss. We ask: Under what preference conditions does the proportion of productive capacity devoted to the pure Veblen good increase as an economy becomes more affluent? In a relatively general preference framework we derive a sufficient condition for which the Veblen good crowds out standard forms of consumption and leisure, resulting in an inverse relationship between affluence and utility. With additional structure on the model we are able to fully characterize the behavior of deadweight loss and utility as an economy becomes more affluent.
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Timing of death and the repeal of the Swedish inheritance tax
M. Eliason & H. Ohlsson
Journal of Socio-Economics, forthcoming
Abstract:
In response to the repeal of the Swedish inheritance tax people postponed death to avoid taxes. This is an example of the far-reaching behavioral effects of economic incentives and of unintended consequences of policy changes. Using individual data, including information on taxable estates, we find that deceased with, compared to those without, tax incentives to postpone death were 10 percentage points more likely to die the day after rather than the day before the repeal. An extended analysis suggests that the timing of deaths was affected not only during these two days but during a longer surrounding period.
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Estimating male and female height inequality
Matthias Blum
Economics & Human Biology, forthcoming
Abstract:
This study investigates the coefficient of variation (CV) of height of males and females as a measure of inequality. We have collected a data set on corresponding male and female height CVs from 124 populations, spanning the period between the 1840s and 1980s. The results suggest that the R2 between the two CVs is 0.39, with the male CV being greater, indicating higher plasticity.
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Socioeconomic Effects on the Stature of Nineteenth-Century US Women
Scott Alan Carson
Feminist Economics, Spring 2013, Pages 122-143
Abstract:
Using a new source of nineteenth-century state prison records and robust statistics, this study contrasts the effects of social conditions on the stature of comparable African American and white women during the economic development of the United States. Across the stature distribution, Great Lakes, Plains, and Southern women were taller than women with other US and international nativities. Women from the Northeast and Middle Atlantic were the shortest within the US, but were taller than British and European immigrants. White women were consistently taller than black women. Stature also varied over time with industrialization and emancipation. Across the stature distribution, women in outdoor, unskilled occupations were taller than women in indoor, skilled occupations. These results show that US women's average statures reflect net nutritional conditions that are not available in traditional measures of economic well-being.