Secrets of success
Lauren Rivera & András Tilcsik
American Sociological Review, forthcoming
Abstract:
Research on the mechanisms that reproduce social class advantages in the United States focuses primarily on formal schooling and pays less attention to social class discrimination in labor markets. We conducted a résumé audit study to examine the effect of social class signals on entry into large U.S. law firms. We sent applications from fictitious students at selective but non-elite law schools to 316 law firm offices in 14 cities, randomly assigning signals of social class background and gender to otherwise identical résumés. Higher-class male applicants received significantly more callbacks than did higher-class women, lower-class women, and lower-class men. A survey experiment and interviews with lawyers at large firms suggest that, relative to lower-class applicants, higher-class candidates are seen as better fits with the elite culture and clientele of large law firms. But, although higher-class men receive a corresponding overall boost in evaluations, higher-class women do not, because they face a competing, negative stereotype that portrays them as less committed to full-time, intensive careers. This commitment penalty faced by higher-class women offsets class-based advantages these applicants may receive in evaluations. Consequently, signals of higher-class origin provide an advantage for men but not for women in this elite labor market.
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Politics and Economic Stratification: Power Resources and Income Inequality in the United States
David Jacobs & Jonathan Dirlam
American Journal of Sociology, September 2016, Pages 469-500
Abstract:
What factors best explain the U.S. growth in economic stratification since the late 1970s? This research tests the power resource hypothesis with a pooled time-series analysis of income inequality. In a departure from prior research, the explanatory power of both national- and state-level political accounts is evaluated. By analyzing tax statistics, the authors isolate the factors that produce the largest gap in U.S. income distributions. Findings indicate that increases in the political strength of neoliberal national administrations and skill-biased technical change (SBTC) are the most influential determinants — although the SBTC account became much less influential after the 1980s. Other accounts have considerable explanatory power, as the results show that inequality grew after decreases in manufacturing and expansions in minority populations. But these findings show that national-level neoliberal political determinants best explain the extraordinary increase in U.S. income inequality.
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Social Class and the Motivational Relevance of Other Human Beings: Evidence From Visual Attention
Pia Dietze & Eric Knowles
Psychological Science, forthcoming
Abstract:
We theorize that people’s social class affects their appraisals of others’ motivational relevance — the degree to which others are seen as potentially rewarding, threatening, or otherwise worth attending to. Supporting this account, three studies indicate that social classes differ in the amount of attention their members direct toward other human beings. In Study 1, wearable technology was used to film the visual fields of pedestrians on city streets; higher-class participants looked less at other people than did lower-class participants. In Studies 2a and 2b, participants’ eye movements were tracked while they viewed street scenes; higher class was associated with reduced attention to people in the images. In Study 3, a change-detection procedure assessed the degree to which human faces spontaneously attract visual attention; faces proved less effective at drawing the attention of high-class than low-class participants, which implies that class affects spontaneous relevance appraisals. The measurement and conceptualization of social class are discussed.
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Inherited Prestige: Intergenerational Access to Selective Universities in the United States
Karly Sarita Ford & Jason Thompson
Research in Social Stratification and Mobility, December 2016, Pages 86–98
Abstract
Given the many economic and social benefits conferred upon the graduates of selective universities, it is important to understand the avenues through which socioeconomically advantaged students access selective postsecondary institutions. Prior research documents that parental level of education, occupation, and income are associated with the likelihood that a child will attend a selective university. Our study builds upon this literature in examining whether the selectivity of a parent’s undergraduate degree contributes to a child enrolling in a selective university, independent of family income, ascriptive characteristics, and child academic ability. We find that having a parent who graduated from a selective university is associated with a three-fold increase in the likelihood that a child will attend a selective university, even when we control for a variety of family advantages. These findings shed further light on the role of education in processes of social mobility and intergenerational inequality by showing that elites transmit status to their children through the type of institutions accessed in addition to the level of education attained.
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And Their Children after Them? The Effect of College on Educational Reproduction
Matthew Lawrence & Richard Breen
American Journal of Sociology, September 2016, Pages 532-572
Abstract:
Conventional analyses of social mobility and status reproduction retrospectively compare an outcome of individuals to a characteristic of their parents. By ignoring the mechanisms of family formation and excluding childless individuals, conventional approaches introduce selection bias into estimates of how characteristics in one generation affect an outcome in the next. The prospective approach introduced here integrates the effects of college on marriage and fertility into the reproduction of educational outcomes. Marginal structural models with inverse probability of treatment weighting are used with data from the Wisconsin Longitudinal Study to estimate the causal effect of pathways linking graduating from college with having a child who graduates from college. Results show that college increases male graduates’ probability of having a child who completes college; for female graduates there is no effect. The gender distinction is largely explained by the negative effects of college on women’s likelihood to marry and have children.
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The Equality Multiplier: How Wage Compression and Welfare Empowerment Interact
Erling Barth & Karl Ove Moene
Journal of the European Economic Association, October 2016, Pages 1011–1037
Abstract:
We explore how more wage equality fuels the generosity of the welfare state via political competition in elections, and how a more generous welfare state fuels wage equality via empowerment of weak groups in the labor market. Together the two mechanisms may generate a cumulative process that explains how equality multiplies, and why countries with more equal distributions of market outcomes also have stronger welfare states. The complementarity between wage setting and welfare spending can explain why almost equally rich countries differ so much in economic and social equality among their citizens.
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Do Grandparents and Great-Grandparents Matter? Multigenerational Mobility in the US, 1910-2013
Joseph Ferrie, Catherine Massey & Jonathan Rothbaum
NBER Working Paper, September 2016
Abstract:
Studies of US intergenerational mobility focus almost exclusively on the transmission of (dis)advantage from parents to children. Until very recently, the influence of earlier generations could not be assessed even in long-running longitudinal studies such as the Panel Study of Income Dynamics (PSID). We directly link family lines across data spanning 1910 to 2013 and find a substantial “grandparent effect” for cohorts born since 1920, as well as some evidence of a “great-grandparent effect.” Although these may be due to measurement error, we conclude that estimates from only two generations of data understate persistence by about 20 percent.
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Minimum Wage and Real Wage Inequality: Evidence from Pass-Through to Retail Prices
Justin Leung
University of Chicago Working Paper, May 2016
Abstract:
Minimum wage policies are frequently cited by advocates as an anti-poverty tool. Essential to assessing this claim is to find out who benefits and who bears the costs of minimum wage changes. While a longstanding debate over the employment effects of the minimum wage has yet to reach a consensus, a smaller literature on its effect on prices has generally found small but positive effects. This paper adds to the existing literature by jointly considering the impact of the minimum wage on both labor and product markets, using detailed scanner data on purchase transactions of retail goods at the store level to overcome data problems in the previous literature. I provide empirical evidence that the minimum wage pass-through to retail prices in grocery stores is larger than expected because the minimum wage not only raised labor costs but also increased product demand, especially in poorer regions. This points to novel channels of heterogeneity in pass-through that have distributional consequences, with key implications for real wage inequality, residential segregation, and future minimum wage increases.
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Income Polarization in the United States
Ali Alichi, Kory Kantenga & Juan Sole
IMF Working Paper, June 2016
Abstract:
The paper uses a combination of micro-level datasets to document the rise of income polarization — what some have referred to as the “hollowing out” of the income distribution — in the United States, since the 1970s. While in the initial decades more middle-income households moved up, rather than down, the income ladder, since the turn of the current century, most of polarization has been towards lower incomes. This result is striking and in contrast with findings of other recent contributions. In addition, the paper finds evidence that, after conditioning on income and household characteristics, the marginal propensity to consume from permanent changes in income has somewhat fallen in recent years. We assess the potential impacts of these trends on private consumption. During 1998-2013, the rise in income polarization and lower marginal propensity to consume have suppressed the level of real consumption at the aggregate level, by about 3½ percent — equivalent to more than one year of consumption.
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Political Capitalism: The Interaction between Income Inequality, Economic Freedom and Democracy
Tim Krieger & Daniel Meierrieks
European Journal of Political Economy, forthcoming
Abstract:
We study the relationship between income inequality and economic freedom for a panel of 100 countries for the 1971–2010 period. Using a panel Granger non-causality approach, we reject the null hypothesis of Granger non-causality running from income inequality to economic freedom, but not vice versa. From a series of dynamic panel estimations we show that the effect of income inequality on economic freedom is negative and robust to the inclusion of additional controls. In particular, inequality is negatively associated with those components of economic freedom related to international trade, domestic market regulation as well as the rule of law and property rights protection. We argue that the negative effect of inequality on economic freedom is due to the economic elite converting its economic power into de facto political power to defend its economic interests; these interests run counter to economic freedom, discouraging innovation and competition as well as protecting the elite's rents. Finally, we show that economic freedom decreases with income inequality even in democratic countries, suggesting that democratic institutions do not prevent economic freedom from eroding. We argue that the latter finding corresponds to a system of political capitalism or captured democracy, where a powerful economic elite can nevertheless exercise de facto political power by cooperating with politicians and other decision-makers for their mutual benefit.
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Renaud Massart et al.
Child Development, forthcoming
Abstract:
The effects of social status on human health can be modeled in captive cohorts of nonhuman primates. This study shows that maternal social rank is associated with broad changes in DNA methylation in placentae of rhesus monkeys (N = 10). Differentially methylated genes between social ranks are enriched in signaling pathways playing major roles in placenta physiology. Moreover, the authors found significant overlaps with genes whose expression was previously associated with social rank in adult rhesus monkeys (Tung et al., 2012) and whose methylation was associated with perinatal stress in newborn humans and rhesus monkeys (Nieratschker et al., 2014). These results are consistent with the hypothesis that system-wide epigenetic changes in multiple tissues are involved in long-term adaptations to the social environment.
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A Model of Economic Mobility and the Distribution of Wealth
Ricardo Fernholz
Journal of Macroeconomics, December 2016, Pages 168–192
Abstract:
This paper introduces new techniques to obtain a closed-form rank-by-rank characterization of the equilibrium distribution of wealth in a model in which finitely lived households face uninsurable idiosyncratic investment risk. A central result is that the extent of inequality is determined entirely by two factors. The first factor, household exposure to idiosyncratic investment risk, increases inequality. The second factor, cross-sectional mean reversion of household wealth, decreases inequality. We show that economic mobility is decreasing in inequality and increasing in mean reversion, a result that is consistent with recent empirical observations about the geographic variation in mobility that exists both domestically and internationally. Our approach allows us to examine the implications of increased market completeness in the form of a risk-sharing subgroup of households. We show that a risk-sharing subgroup rises or falls in the equilibrium wealth distribution depending on the level of inequality, and that its presence raises welfare and the rate of wealth accumulation for all households in the economy.
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The Distribution of Talent across Contests
Ghazala Azmat & Marc Möller
Economic Journal, forthcoming
Abstract:
Do the contests with the largest prizes attract the most-able contestants? To what extent do contestants avoid competition? We show that the distribution of abilities is crucial in determining contest choice. Complete sorting exists only when the proportion of high-ability contestants is small. As this proportion increases, high-ability contestants shy away from competition and sorting decreases, making reverse sorting a possibility. We test our theoretical predictions with a large panel data set containing contest choice over twenty years. We use exogenous variation in the participation of highly-able competitors to provide evidence for the relationship among prizes, competition, and sorting.
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Economic inequality and belief in meritocracy in the United States
Frederick Solt et al.
Research & Politics, October 2016
Abstract:
How does the context of income inequality in which people live affect their belief in meritocracy, the ability to get ahead through hard work? A prominent recent study by Newman, Johnston, and Lown argues that, consistent with the conflict theory, exposure to higher levels of local income inequality leads lower-income people to become more likely to reject — and higher-income people to become more likely to accept — the dominant United States ideology of meritocracy. Here, we show that this conclusion is not supported by the study’s own reported results and that even these results depend on pooling three distinctly different measures of meritocracy into a single analysis. We then demonstrate that analysis of a larger and more representative survey employing a single consistent measure of the dependent variable yields the opposite conclusion. Consistent with the relative power theory, among those with lower incomes, local contexts of greater inequality are associated with more widespread belief that people can get ahead if they are willing to work hard.
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Vivekinan Ashok
Yale Working Paper, September 2016
Abstract:
Income inequality in the United States has increased in recent decades while public support for redistribution has failed to rise in the same period. These competing trends are often framed as countering a basic expectation in political economy (Metlzer and Richard, 1981). Recent work posits that citizens' lack of accurate information about inequality explains this empirical puzzle. In this paper, I argue that this explanation is insufficient as preferences for redistribution are contingent on the political process whereby taxes are collected and spent. I present evidence from a novel survey experiment where I manipulate a respondent's standing in the income distribution as well as the way in which tax revenues are transferred back to households. When transfers are made such that voters understand the consequences to their net income, they state self-interested demands for redistribution. However, this result is quickly diminished with the introduction of the real-world political process.
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Growth, Inequality, and Economic Freedom: Evidence from the U.S. States
Christian Bjørnskov
Contemporary Economic Policy, forthcoming
Abstract:
This article returns to the discussion of how income inequality affects economic growth. The main argument of the article is that economic freedom is likely to mediate the association between inequality and growth. In a panel of 300 observations from six 5-year periods across the 50 U.S. states, I employ five different measures of inequality. The results show that across measures, the growth effects of inequality turn more positive with more economic freedom. The moderating effects are mainly driven by measures of public sector consumption.
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What Skills Can Buy: Transmission of Advantage through Cognitive and Noncognitive Skills
Catherine Doren & Eric Grodsky
Sociology of Education, October 2016, Pages 321-342
Abstract:
Parental income and wealth contribute to children’s success but are at least partly endogenous to parents’ cognitive and noncognitive skills. We estimate the degree to which mothers’ skills measured in early adulthood confound the relationship between their economic resources and their children’s postsecondary education outcomes. Analyses of National Longitudinal Survey of Youth 1979 suggest that maternal cognitive and noncognitive skills attenuate half of parental income’s association with child baccalaureate college attendance, a fifth of its association with elite college attendance, and a quarter of its association with bachelor’s degree completion. Maternal skills likewise attenuate a third of parental wealth’s association with children’s baccalaureate college attendance, half of its association with elite college attendance, and a fifth of its association with bachelor’s degree completion. Observational studies of the relationship between parents’ economic resources and children’s postsecondary attainments that fail to account for parental skills risk seriously overstating the benefits of parental income and wealth.
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The Kids are All Right? Income Inequality and Civic Engagement among Our Nation’s Youth
Erin Godfrey & Hua-Yu Sebastian Cherng
Journal of Youth and Adolescence, November 2016, Pages 2218–2232
Abstract:
Prior work suggests that income inequality depresses civic participation among adults. However, associations between income inequality and youth civic engagement have not been assessed. This is true despite evidence that other features of communities influence youth civic development. To fill the gap, we examine associations between county-level income inequality and civic engagement among a nationally representative sample of 12,240 15-year-olds (50 % female). We find opposite patterns than those suggested by the adult literature. Higher county-level income inequality is associated with slightly more civic engagement (greater importance of helping others, higher rates of volunteering often), and this is particularly true for low-socioeconomic status and racial/ethnic minority youth. Potential developmental and structural explanations for these differences are offered. In addition, practical implications of these findings are drawn, and future research directions for scholars studying youth are proposed.