Dimensions of Inequality in the United States

Paper Session

Friday, Jan. 6, 2017 2:30 PM – 4:30 PM

Hyatt Regency Chicago, Columbian
Hosted By: Labor and Employment Relations Association
  • Chair: Heather Boushey, Washington Center for Equitable Growth

Trends in Income Inequality and Disability

Katie Jajtner
,
Fordham University
Sophie Mitra
,
Fordham University

Abstract

Income inequality has been rising in the United States since the 1970s. Little is known about how persons with disabilities have fared in this context. This paper studies trends in income inequality across and within disability status and will attempt to assess determinants of such trends, including changing roles of the labor market and disability programs. The objective is to examine income inequality as it relates to individuals and families with disabilities.

We use data from the March supplement of the Current Population Survey (CPS) from 1980 to 2015 using the work limitation disability measure of the CPS and from 2007 to 2015 using a disability measure based on six questions on functional limitations. We supplement these findings with data from the Survey of Income and Program Participation (SIPP) for 1984 to 2013 using work limitation and impairment measures.

We construct annual time series of shares of total income accruing to persons with and without disabilities within each decile of the income distribution, and construct measures of progressivity of Disability Insurance and Supplemental Security Income benefits and other relevant benefits (Kakwani 1977). We compute additional measures of income inequality, such as generalized entropy indexes for persons with and without disabilities, which are decomposable across population subgroups (Shorrocks 1984) and by factors or income sources (Fields 2003). We can thus measure the contribution of disability to income inequality across persons and households, and also measure the offsetting impact of disability benefits. We also investigate the effects of disability not just for disabled workers, but for workers with a family member with a disability.

The contribution is to examine for the first time income inequality as it relates to disabled workers, and more generally individuals and families with disabilities, which has been an under researched area.

One Step Forward, One Step Back? Labor Supply Effects of Minimum Wage on Single Parents with Public Supports

Randy Albelda
,
University of Massachusetts-Boston
Michael Carr
,
University of Massachusetts-Boston

Abstract

Inaction on minimum wage legislation at the federal level has made it increasingly common for states and localities to enact their own minimum wage levels above the federal minimum. For most low-wage workers this is an overdue and welcome raise. However, for some low-wage workers that receive public supports like SNAP, child-care assistance, Medicaid, or housing assistance, an increase in earnings brings a reduction in supports. This results in very high marginal tax rates (or cliff effects). Higher earnings can jeopardize receipt of family stabilizing, but hard-to-get supports like housing and child-care assistance. Employed single parents are most likely to receive public supports, so much more likely to be affected. Much of minimum wage research focuses on aggregate employment effects, overall poverty reduction, and/or reduction in use of public supports. There is almost no attention paid to the interaction between labor supply decisions and benefits receipt for individuals covered by both a minimum wage increase and means-tested supports. Using the pooled 2004 and 2008 SIPP panels, we will estimate the effect of an increase in the minimum wage on work hours for parents who receive two critical public supports: housing and childcare assistance. We will rely on a difference-in-differences strategy, using parents who should be eligible for a given benefit but do not report receiving the benefit as a base group against which parents who receive a given benefit at the time of the minimum wage increase will be compared. We will investigate the feasibility of state and individual level panel estimation techniques, relying on state by time variation in the minimum wage.

Bargaining Power and Inequality in U.S. States with Globally Exposed Economies

Liam C. Malloy
,
University of Rhode Island
Bret Anderson
,
Southern Oregon University

Abstract

Inequality continues to increase in the United States. At the same time, the nature of international trade has evolved to include a greater proportion of North-South and intra-industry trade. Though this can be positive in may respects, our argument in this paper is that the contemporary international trade landscape has further eroded laborers' relative bargaining power in the U.S., which has tightened the trade-inequality linkage. We exploit the variation in global trade exposure across the American states in order to test how import competition has correlated with state-level income inequality since 1987. We find that the states that were more exposed to the global marketplace, in that they produced more that was competing with imports, did see an increase in inequality, but that this varies by industry. We find that this measure of globalization is also associated with a lower rate of poverty at the state level.

Executive Pay and Intra-Firm Inequality

Paul Willman
,
London School of Economics and Political Science

Abstract

The paper examines the role of the modern firm in the creation of inequality of income. Specifically, it examines the growth in the use of asset based rewards for senior executives, combined with continued use of salaried rewards for other employees, and the impact this has on measures of inequality both within the firm and society. If Piketty is correct that asset values tend to outstrip GDP then, other things equal, policies that reward one group with assets and others with wages will increase income inequality within the firm over time. Section 1 of the paper elaborates the conceptual links between intra firm and social inequality. Several of the commonly used measures of intra-firm inequality (such as earnings multiples) are easily gamed and we will examine some of the vulnerabilities of such measures to gaming behaviour. Section 2 reviews the literature on the spread of asset backed rewards for senior management since the 1986 big bang; it argues that capital market oversight is a crucial factor in the spread. Section 3 presents data on intra firm inequality for the UK. Both commercial and government data indicate that some measures of intra-firm inequality have increased substantially since big bang. Section 4 uses the data set to address key questions.
The paper argues that the collapse of two pay setting processes is crucial to an understanding of inequality growth. First executive pay is no longer coupled to job evaluation processes that set middle and lower management pay, but is set on capital market measures. Second, the collapse of collective bargaining leaves low paid employees dependent on movements in national minimum or living wages that are dependent on inflation.
Discussant(s)
Arindrajit Dube
,
University of Massachusetts-Amherst
Oliver Denk
,
OCDE
JEL Classifications
  • J0 - General