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Inequality and Fairness

Paper Session

Friday, Jan. 3, 2020 10:15 AM - 12:15 PM (PDT)

Manchester Grand Hyatt, Cove
Hosted By: Association for Social Economics
  • Chair: Anita Pena, Colorado State University

Local Labor Market Inequality in the Age of Mass Incarceration

Luke Petach
Belmont University
Anita Pena
Colorado State University


This paper builds on the understanding of mass incarceration as a system of racialized social control described by Alexander (2013). We show that this perspective on mass incarceration can be framed through the lens of stratification economics, which views both race- and class-based discrimination as a rational attempt on behalf of a privileged group to preserve its relative status and the material benefits which that status confers. Using the first (to our knowledge) local-level data set on incarceration rates by race for the United States, we explore the relationship between income inequality, poverty, and incarceration at the commuting zone level from 1950 to the present. We examine if—and to what extent—the expansion of incarceration in the post-1970 period was larger in areas with greater local labor market inequality. Consistent with Alexander’s (2013) hypothesis that expansion of the penal system and the concomitant rise of “tough on crime” policy were an effort by privileged groups to drive a wedge into working class political coalitions formed out of the Civil Rights Movement, we find that labor markets with high levels of poverty and inequality experienced larger increases in the overall incarceration rate. Further, we find that relative rates of poverty play a key role in explaining the differential effects of mass incarceration across race. Areas where white poverty rates were large relative to non-white poverty rates experienced a decline in white incarceration after 1970, despite the expansion of non-white incarceration in those same areas.

Transitioning Towards More Equality? Wealth Gender Differences and the Changing Role of Explanatory Factors over Time

Eva Sierminska
Markus Grabka
DIW Berlin
Daniela Piazzalunga
University of Verona


We investigate the changing role of explanatory factors that have contributed to wealth levels and the gender wealth gap in Germany over the period 2002-2012. In particular, we analyze the role of changes in labor supply, permanent income, portfolio composition, and marital status on wealth accumulation. Using individual level micro data from the German Socio-Economic Panel results show that real mean wealth levels for the working age population have been decreasing for both women and men since 2002 and that the wealth gap has decreased by 13.5% to 30.700€. We show that the increased participation of women in the labor market and their occupational structure had an increasing positive role on women’s wealth accumulation. Making use of the panel dimension in the data and of Oaxaca-Blinder and Firpo, Fortin, Lemieux decompositions, in comparison to previous analyses, a diminishing role of permanent income is observed, due both to a reduction in the gender difference in permanent income and in gender differences in its returns. Overall, the evidence points to more equal wealth accumulation both in terms of characteristics and returns.

Relative Fairness and Quasifairness

Roger A. McCain
Drexel University


Fairness has been an important topic of the philosophic literature in recent decades, with John Rawls’ (1971 1993), ideas at the center. It is less well known that there is a literature on fairness (or equity) in neoclassical economics, which shows the influence, at least, of Rawls’ difference principle, and that that literature has in turned influenced philosophical writing, principally through the work of Robert Dworkin (1981). Dworkin designates his view as “resource equalitarianism” and essentially adopts Varian’s (1973) ideas from the neoclassical literature in order to define equal access to resources. In this paper, the first section will outline concepts of relative fairness and quasifairness in the comparison of social situations; the second will offer an argument for their representation of fairness based on an adaptation of the veil of ignorance, and the third will argue that relative quasifairness, in particular, addresses what has been an unsolved problem: intergenerational fairness.

Firms Resistance to Unionism and Its Determinants: Evidence from a Field Experiment

Patrick Nüß
Macroeconomic Policy Institute (IMK) and Christian Albrechts University of Kiel


The basic principle of unions is to organize workers to improve wages and general working conditions, with their key tools are collective bargaining and strikes. But unions are almost everywhere on retreat with the consequence of increasing inequality (Card, 2001; Dustmann et al., 2009; Western and Rosenfeld, 2011; Farber et al., 2018) and increasing degree of monopsonistic competition (Erickson and Mitchell, 2007). Does union membership decline due to firms distaste against unions and if so, what is the role of labor disputes? Despite bargaining and strikes are at the core of unions activity and an extensive literature on management opposition and labor disputes exists, to the best of our knowledge, ours is the first study that tried to consider the effect of labor disputes on union distaste. To answer the question of union distaste and its link to labor disputes we submit 5200 fictitious job applications to real vacancies in the German labor market, revealing union membership in the résumé.
Firms resistance against trade union members in Germany exists for all tested occupations and regions with a decline in job invitations of up to 50%. Preliminary results provide evidence for union distaste related to the presence of a collective agreement, firm size and union density. This suggest, that union distaste is partly based on the threat of unions strike activity. However, the most powerful explanatory variable for union distaste is not current union density but the share of previous union members in a sector. This indicates union distaste has been an important driver for decreasing union density in Germany.

Justifying Income Inequality (or not): Does Subjective Well-Being Matter?

Nabamita Dutta
University of Wisconsin-La Crosse
Daniel Meierrieks
WZB Berlin Social Science Center


As stated by Headey (1991), “perceptions of justice determine perceptions of fact”. In a broader sense values held by individuals and how they perceive the world (Aalberg, 2003; Hochschild, 2001) can largely affect actual economic outcomes. Perceptions as well as ideas of fairness of individuals about factors like income inequality become a bigger topic of conversation in the face of globalization affecting world distribution of income significantly. While literature has extensively studied the relationship between income inequality and subjective well-being, what is missing from the literature is how such subjective well-being affect justifiability of income inequality (or not). As Zmerli and Castillo (2015) state, what individuals perceive as fair distribution of income on a macro level is contingent on a person’s perception of fairness of her own economic standing. Such perceptions of economic standing has hugely shifted in recent decades with globalization, immigration, job losses and rapid technological growth significantly affecting people’s lives. Using an extensive individual level survey data spanning across countries over time, we explore the following - as subjective wellbeing changes, do individuals justify the presence of income inequality or not? Our findings so far suggest that as satisfaction of individuals rise over factors like jobs, financial situation and life in general, people justify the presence of greater income inequality. We establish robustness of our findings by taking into account endogeneity and sample selection bias via fixed effect probit estimators, instrumental variable probit models and inverse probability weight regression adjustment models.
JEL Classifications
  • B5 - Current Heterodox Approaches