Percentiles
Who Gives, Who Gains? Progressivity and Preferences
Pablo Beramendi & Philipp Rehm
Comparative Political Studies, March 2016, Pages 529-563
Abstract:
The extent to which popular support for the welfare state depends on income varies greatly across nations and policy domains. We argue and show formally that these variations — largely overlooked yet essential to understanding the politics of redistribution — reflect in part the design of tax and transfer policies in terms of progressivity. When progressivity is high, politics is perceived by income groups as a zero sum game and conflicts over who gets what intensify. When progressivity is low, and tax contributors and benefit recipients overlap, redistributive struggles become politically less salient. We test these predictions both across nations and across policy domains within a sample of advanced industrial democracies. Our findings indicate that the progressivity of the tax and transfer system is a major determinant of the predictive power of income on preferences for redistribution.
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Economic Opportunity, Health Behaviors, and Mortality in the United States
Atheendar Venkataramani et al.
American Journal of Public Health, forthcoming
Objectives: We assessed whether economic opportunity was independently associated with health behaviors and outcomes in the United States.
Methods: Using newly available, cross-sectional, county-level data from the Equality of Opportunity Project Database and vital statistics, we estimated associations between all-cause mortality rates (averaged over 2000-2012) and economic opportunity, adjusting for socioeconomic, demographic, and health system covariates. Our measure of economic opportunity was the county-average rank in the national income distribution attained by individuals born to families in the bottom income quartile. Secondary outcomes included rates of age- and race-specific mortality, smoking, obesity, hypertension, and diabetes.
Results: An increase in economic opportunity from the lowest to the highest quintile was associated with a 16.7% decrease in mortality. The magnitudes of association were largest for working-age adults and African Americans. Greater economic opportunity was also associated with health risk factors and behaviors.
Conclusions: Economic opportunity is a robust, independent predictor of health. Future work should investigate underlying causal links and mechanisms.
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The Welfare Costs of Well-being Inequality
Leonard Goff, John Helliwell & Guy Mayraz
NBER Working Paper, January 2016
Abstract:
If welfare is measured using satisfaction with life (SWL), its variance is a natural measure of inequality that incorporates all the determinants of well-being with the same weights that determine welfare itself. In this paper we explore this possibility empirically in three different ways. First we show that inequality of subjective well-being has a negative effect on life satisfaction considerably greater than does income inequality. Second, we show that this comparative result is stronger for those who report themselves as valuing equality. Finally we show that social trust, which has been shown to support subjective well-being both directly and indirectly, is more fully explained by well-being inequality than by income inequality.
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Income Redistribution in Open Economies
Áron Tóbiás
Journal of Public Economics, February 2016, Pages 19–34
Abstract:
I propose a model of income redistribution in an open-economy environment. The world consists of a finite number of countries whose governments seek to maximize the welfare of their low-skilled populations by taxing skilled workers’ labor income. While tax competition limits the extent to which redistribution is possible — as compared to the closed-economy outcome — when skilled people are internationally mobile, I argue that race to the bottom does not necessarily occur, even if the number of countries becomes arbitrarily large. The asymptotic sustainability of the welfare state crucially depends on the statistical properties of the probability distribution of skilled people’s location preferences.
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Inequality and crime revisited: Effects of local inequality and economic segregation on crime
Songman Kang
Journal of Population Economics, April 2016, Pages 593-626
Abstract:
Economic inequality has long been considered an important determinant of crime. Existing evidence, however, is mostly based on inadequately aggregated data sets, making its interpretation less than straightforward. Using tract- and county-level U.S. Census panel data, I decompose county-level income inequality into its within- and across-tract components and examine the extent to which county-level crime rates are influenced by local inequality and economic segregation. I find that the previously reported positive correlation between violent crime and economic inequality is largely driven by economic segregation across neighborhoods instead of within-neighborhood inequality. Moreover, there is little evidence of a significant empirical link between overall inequality and crime when county- and time-fixed effects are controlled for. On the other hand, a particular form of economic inequality, namely, poverty concentration, remains an important predictor of county-level crime rates.
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Is solidarity less important and less functional in egalitarian contexts?
Marii Paskov
Acta Sociologica, February 2016, Pages 3-18
Abstract:
Solidarity refers to a willingness to contribute to the welfare of other people. This study builds on the idea that not only the value of solidarity (i.e. whether people find solidarity important) but also the function of solidarity (i.e. whether solidarity results in reputational gains) can differ across societies. According to the literature, egalitarian contexts can either have a normative effect by promoting the value of solidarity and increasing the reputational gains of solidarity, or they can have a crowding-out effect by diminishing the value of solidarity and weakening the reputational gains resulting from solidarity. The current study investigates these conflicting ideas using individual-level data (N = 195,024) from the European Social Survey (ESS), which combines six waves of cross-sectional studies collected in 28 countries from 2002 to 2012. The results show that both the value of solidarity and the function of solidarity are weaker in egalitarian contexts, supporting the crowding-out hypothesis. In inegalitarian contexts individual solidarity is more valued and it serves more as a function for promoting higher reputational gains as compared to egalitarian contexts. The combination of between- and within-country over-time empirical evidence adds to the strength of these findings.
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Income Inequality and Stock Market Volatility
Benjamin Blau
Utah State University Working Paper, December 2015
Abstract:
This study tests whether income inequality creates greater volatility in stock prices across a broad sample of countries. Contrary to the idea that inequality creates social and political uncertainty that is reflected in higher volatility, we instead find a negative association between inequality and volatility. To make stronger causal inferences, we use the passing of the French “Millionaire Tax” as a natural experiment. Results show that volatility of French stocks increases after the Tax implementation. Besides finding that inequality stabilizes stock prices, we also find that countries with greater inequality also have stocks with more normal return distributions.
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Gautam Nair
Yale Working Paper, December 2015
Abstract:
Against a backdrop of vast income disparities across countries, this paper develops a theory of how misperceptions of individuals’ relative international income shape mass preferences for cross-national redistribution in the developed world. It tests this theory using a real-stakes experiment implemented on a nationally representative survey in the United States. I find that participants underestimate their percentile rank in the global income distribution by twenty-seven percentage points on average, and overestimate the global median income by a factor of ten. Respondents who were randomly assigned to information on the global income distribution supported higher spending on foreign aid and cuts in agricultural trade protections at larger rates. These respondents also made donations to charities abroad that were 55% larger relative to control group respondents. These findings contribute to our understanding of subjective perceptions, preferences for redistribution, and the conditions under which information can shape opinion and behavior.
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Kaspar Burger
Research in Social Stratification and Mobility, forthcoming
Abstract:
Research has examined how education systems affect student achievement. Much of this research has compared comprehensive systems of schooling with tracked (selective) systems with regard to the degree to which they influence social class gradients in educational achievement. This study looks at comprehensive schooling in a broader way. Using standardised cross-national data for 31 European countries, it examines whether the comprehensiveness of education systems – in terms of pre-primary education, public/private sectors, educational tracking, and annual instruction time – contributes to explain the transmission of educational advantage from parents to children. Results suggest that the effect of parental education on a child's educational achievement is stronger in highly tracked education systems and in systems with a shorter annual instruction time. However, the social composition of a school's student population also affects the intergenerational transmission of education, and it interacts with the annual instruction time, such that the effect of school social composition on a child's achievement is stronger in education systems with a longer instruction time. This challenges the theory that by extending the school year policymakers could minimise social inequality in education (a theory that would be confirmed if we looked only at micro-level data). The findings inform debates about the influence of education policies on social stratification and mobility in Europe.
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How do Average Hours Worked Vary with Development? Cross-Country Evidence and Implications
Alexander Bick, Nicola Fuchs-Schündeln & David Lagakos
NBER Working Paper, January 2016
Abstract:
How do average hours worked vary across the world income distribution? To answer this question, we build a new internationally comparable database of hours worked covering countries of all income levels. We document that average hours worked per adult are substantially higher in low-income countries than in high-income countries. This pattern holds for both men and women, for adults of all ages and education levels, and along both the extensive margin (employment rates) and intensive margin (hours per worker). Our results imply that labor productivity and welfare differences across countries are larger than suggested by differences in consumption per capita.
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Inequalities of Income and Inequalities of Longevity: A Cross-Country Study
Eric Neumayer & Thomas Plümper
American Journal of Public Health, January 2016, Pages 160-165
Objectives: We examined the effects of market income inequality (income inequality before taxes and transfers) and income redistribution via taxes and transfers on inequality in longevity.
Methods: We used life tables to compute Gini coefficients of longevity inequality for all individuals and for individuals who survived to at least 10 years of age. We regressed longevity inequality on market income inequality and income redistribution, and we controlled for potential confounders, in a cross-sectional time-series sample of up to 28 predominantly Western developed countries and up to 37 years (1974–2011).
Results: Income inequality before taxes and transfers was positively associated with inequality in the number of years lived; income redistribution (the difference between market income inequality and income inequality after taxes and transfers were accounted for) was negatively associated with longevity inequality.
Conclusions: To the extent that our estimated effects derived from observational data are causal, governments can reduce longevity inequality not only via public health policies, but also via their influence on market income inequality and the redistribution of incomes from the relatively rich to the relatively poor.
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Emily Rauscher & William Elliott
Journal of Poverty, forthcoming
Abstract:
Is there a reciprocal relationship between household income and net worth and does that relationship depend on initial income? Using cross-lagged panel models of household income and net worth data from the Panel Study of Income Dynamics, the authors compare the income-wealth relationships of high- and low-income households from 1989 to 2011. Adjusting for demographic differences, the authors find a reciprocal relationship between income and wealth for high-, but not low-, income households. Results suggest intragenerational mobility works differently by initial income, which could partially explain the difficulty of escaping poverty and low U.S. support for liberal social welfare policy.
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Testing for changes in the SES-mortality gradient when the distribution of education changes too
Thomas Goldring, Fabian Lange & Seth Richards-Shubik
Journal of Health Economics, forthcoming
Abstract:
We develop a flexible test for changes in the SES-mortality gradient that accounts for changes in the distribution of education, the most commonly used marker of SES. We implement the test for the period between 1984 and 2006 in the United States using microdata from the Census and other surveys linked to death records. Using our flexible test, we find that the evidence for a change in the SES-mortality gradient is not as strong as previous research has suggested. Our results indicate that the gradient increased for females during this time period, but we cannot rule out that the gradient among males has not changed. Informally, the results suggest that the changes for females are mainly driven by the bottom of the education distribution.
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The Long-Run Effects of Attending an Elite School: Evidence from the United Kingdom
Damon Clark & Emilia Del Bono
American Economic Journal: Applied Economics, January 2016, Pages 150-176
Abstract:
This paper estimates the impact of elite school attendance on long-run outcomes including completed education, income, and fertility. Our data consist of individuals born in the 1950s and educated in a UK district that assigned students to either elite or non-elite secondary schools. Using instrumental variables methods that exploit the school assignment formula, we find that elite school attendance had large impacts on completed education. Surprisingly, there are no significant effects on most labor market outcomes except for an increase in female income. By contrast, we document a large and significant negative impact on female fertility.