State-level Income Inequality Research Articles

Income Inequality and Class Divides in Parental Investments

Historic increases in income inequality have coincided with widening class divides in parental investments of money and time in children. These widening class gaps are significant because parental investment is one pathway by which advantage is transmitted across generations. Using over three decades of micro-data from the Consumer Expenditure Survey and the American Heritage Time Use Survey linked to state-year measures of income inequality, we test the relationship between income inequality and class gaps in parental investment. We find robust evidence of wider class gaps in parental financial investments in children—but not parental time investments in children—when state-level income inequality is higher. We explore mechanisms that may drive the relationship between rising income inequality and widening class gaps in parental financial investments in children. This relationship is partially explained by the increasing concentration of income at the top of the income distribution in state-years with higher inequality, which gives higher-earning households more money to spend on financial investments in children. In addition, we find evidence for contextual effects of higher income inequality that reshape parental preferences toward financial investment in children differentially by class.

Less equal, less trusting? Longitudinal and cross-sectional effects of income inequality on trust in U.S. States, 1973–2012

Does income inequality reduce social trust? Although both popular and scholarly accounts have argued that income inequality reduces trust, some recent research has been more skeptical, noting these claims are more robust cross-sectionally than longitudinally. Furthermore, although multiple mechanisms have been proposed for why inequality could affect trust, these have rarely been tested explicitly. I examine the effect of state-level income inequality on trust using the 1973–2012 General Social Surveys. I find little evidence that states that have been more unequal over time have less trusting people. There is some evidence that the growth in income inequality is linked with a decrease in trust, but these effects are sensitive to how time is accounted for. While much previous inequality and trust research has focused on status anxiety, this mechanism receives the little support, but mechanisms based on social fractionalization and on exploitation and resentment receive some support. This analysis improves on previous estimates of the effect of state-level inequality on trust by using far more available observations, accounting for more potential individual and state level confounders, and using higher-quality income inequality data based on annual IRS tax returns. It also contributes to our understanding of the mechanism(s) through which inequality may affect trust.

Bring out your dead!: A study of income inequality and life expectancy in the United States, 2000–2010

We test whether income inequality undermines female and male life expectancy in the United States. We employ data for all 50 states and the District of Columbia and two-way fixed effects to model state-level average life expectancy as a function of multiple income inequality measures and time-varying characteristics. We find that state-level income inequality is inversely associated with female and male life expectancy. We observe this general pattern across four measures of income inequality and under the rigorous conditions of state-specific and year-specific fixed effects. If income inequality undermines life expectancy, redistribution policies could actually improve the health of states.

State-level income inequality and meeting physical activity guidelines; differential associations among US men and women.

Previous work has identified a relationship between income inequality and risk for obesity and heart attack. We investigated the relationship between state-level income inequality and physical activity among US adults. We used Behavioral Risk Factor Surveillance System (BRFSS) cross-sectional data from a population based and representative sample of n = 428 828 US adults. Multilevel models were used to determine the association between state-level income inequality and participation in physical activity and strengthening exercises in the previous month. In comparison to males, females were significantly more likely to report being physically inactive (OR = 1.07, 95% CI = 1.04, 1.11), and less likely to meet aerobic activity requirements (OR = 0.90, 95% CI = 0.88, 0.93), meet strengthening activities (OR = 0.71, 95% CI = 0.69, 0.74), and meet overall physical activity recommendations (OR = 0.91, 95% CI = 0.88, 0.94). Cross-level Gini × sex interactions indicated that income inequality was associated with increased odds for participating in no physical activity (OR = 1.08, 95% CI = 1.05, 1.12), decreased odds in participating in strengthening physical activity (OR = 0.92, 95% CI = 0.89, 0.96), aerobic activity (OR = 0.96, 95% CI = 0.93, 0.99), and in meeting overall physical activity recommendations (OR = 0.93, 95% CI = 0.91, 0.95) among women only. Future studies are needed to identify mechanisms in which income inequality leads to physical activity behavior among US women.

Income inequality among American states and the conditional risk of post-traumatic stress disorder

Vulnerability to post-traumatic disorder (PTSD) following a traumatic event can be influenced by individual-level as well as contextual factors. Characteristics of the social and economic environment might increase the odds for PTSD after traumatic events occur. One example that has been identified as a potential environmental determinant is income inequality. The purpose of this study is to investigate the association between State-level income inequality and PTSD among adults who have been exposed to trauma. We used data from the National Epidemiologic Survey on Alcohol and Related Conditions (n=34,653). Structured diagnostic interviews were administered at baseline (2001-2002) and follow-up (2004-2005). Weighted multi-level logistic regression was used to determine if US State-level income inequality, as measured by the Gini coefficient, was associated with incident episodes of PTSD during the study's 3-year follow-up period adjusting for individual and state-level covariates. The mean Gini coefficient across states in the NESARC was 0.44 (SD=0.02) and ranged from 0.39 to 0.53. Of the respondents, 27,638 reported exposure to a traumatic event. Of this sample, 6.9 and 2.3% experienced persistent or recurrent and incident PTSD, respectively. State-level inequality was not associated with increased odds for persistent or recurrent PTSD (OR=1.02; 95% CI 0.85, 1.22), but was associated with incident PTSD (OR=1.30, 95% CI 1.04, 1.63). The degree of income inequality in one's state of residence is associated with vulnerability to PTSD among individuals exposed to traumatic events. Additional work is needed to determine if this association is causal (or alternatively, is explained by other socio-contextual factors associated with income inequality), and if so, what anxiogenic mechanisms explain it.

The rich get richer and the poor get poorer: Country- and state-level income inequality moderates the job insecurity-burnout relationship.

Despite the prevalence of income inequality in today's society, research on the implications of income inequality for organizational research is scant. This study takes the first step to explore the contextual role of national- and state- level income inequality as a moderator in the relationship between individual-level job insecurity (JI) and burnout. Drawing from conservation of resource (COR) theory, we argue that income inequality at the country-level and state-level threatens one's obtainment of object (i.e., material coping) and condition (i.e., nonmaterial coping) resources, thus serving as an environmental stressor exacerbating one's burnout reactions to JI. The predicted cross-level interaction effect of income inequality was tested in 2 studies. Study 1 consisting of 23,778 individuals nested in 30 countries explored the moderating effect of country-level income inequality on the relationship between individual JI and exhaustion. Study 2 collected data from 402 employees residing in 48 states in the United States, and tested the moderating effect of state-level income inequality on the relationship between JI and burnout (i.e., emotional exhaustion and cynicism). Results of both studies converge to support the exacerbating role of higher-level income inequality on the JI -burnout relationship. Our findings contribute to the literature on psychological health disparities by exploring the contextual role of income inequality as a predictor of differential reactions to JI. (PsycINFO Database Record

Do racial inequities in infant mortality correspond to variations in societal conditions? A study of state-level income inequality in the U.S., 1992–2007

BackgroundPrior studies have examined the association between income inequality and overall infant mortality rates (IMR). We examine effects of income inequality on racial inequities in IMR over the period 1992–2007 in the U.S. MethodsRace-specific state IMR data were obtained from 1992 to 2007, from which absolute and relative IMR inequities were calculated. Fixed and random effects models, adjusted for state-level median income, percent poverty, percent high school graduates, and unemployment rate, were used to determine contemporaneous and lagged state-level associations between income inequality and racial IMR inequities. ResultsRacial IMR inequities varied significantly across the U.S. Contemporaneous income inequality was negatively associated with white IMR only. Two-year lagged income inequality was negatively associated with black IMR and had the most pronounced effect on racial inequities in IMR. DiscussionFuture studies should consider lagged effects of income inequality on IMR and other health outcomes, and should examine other potential societal conditions that may account for state-level variations in racial IMR inequities.

Lagged Associations of Metropolitan Statistical Area- and State-Level Income Inequality with Cognitive Function: The Health and Retirement Study.

PurposeMuch variation in individual-level cognitive function in late life remains unexplained, with little exploration of area-level/contextual factors to date. Income inequality is a contextual factor that may plausibly influence cognitive function.MethodsIn a nationally-representative cohort of older Americans from the Health and Retirement Study, we examined state- and metropolitan statistical area (MSA)-level income inequality as predictors of individual-level cognitive function measured by the 27-point Telephone Interview for Cognitive Status (TICS-m) scale. We modeled latency periods of 8–20 years, and controlled for state-/metropolitan statistical area (MSA)-level and individual-level factors.ResultsHigher MSA-level income inequality predicted lower cognitive function 16–18 years later. Using a 16-year lag, living in a MSA in the highest income inequality quartile predicted a 0.9-point lower TICS-m score (β = -0.86; 95% CI = -1.41, -0.31), roughly equivalent to the magnitude associated with five years of aging. We observed no associations for state-level income inequality. The findings were robust to sensitivity analyses using propensity score methods.ConclusionsAmong older Americans, MSA-level income inequality appears to influence cognitive function nearly two decades later. Policies reducing income inequality levels within cities may help address the growing burden of declining cognitive function among older populations within the United States.

Imported Inequality? Immigration and Income Inequality in the American States

AbstractIn this article, we use data from the American states from 1996 to 2008 to explore the effects of immigration on income inequality. Empirical evidence from both static and dynamic models shows that the foreign-born population has a strong positive effect on state-level income inequality, even when we control for a range of federal and state political and economic contextual variables. We also find that the positive relationship between immigration and state income inequality is driven primarily by low-skill immigrants (rather than high-skill immigrants), and we provide some evidence that high-skill immigrants lower income inequality for some segments of the income distribution. We conclude that immigration—particularly low-skilled immigration—has an important effect on income inequality in the American states.

The Economic Roots of External Efficacy: Assessing the Relationship between External Political Efficacy and Income Inequality

AbstractExternal political efficacy, the belief that government is responsive to the demands of its citizens, has been declining in the United States since the 1960s. However, scholars do not yet fully understand the reasons for its decline. Nor have they found suitable explanations for why it fluctuates within the electorate. Drawing on the growing literature on the effects of income inequality on public policy, I posit that increasing income inequality factors into the decline of external political efficacy. Using multilevel regression models accounting for individual and contextual factors, I find increasing state-level income inequality has a substantial negative effect on external political efficacy. It is greater than most state and national-level economic measures or individual-level variables on external political efficacy. These results have important implications both for research on income inequality and political participation and also for research on income inequality and distributional public policy.

The associations between US state and local social spending, income inequality, and individual all-cause and cause-specific mortality: The National Longitudinal Mortality Study

ObjectiveTo investigate government state and local spending on public goods and income inequality as predictors of the risks of dying. MethodsData on 431,637 adults aged 30–74 and 375,354 adults aged 20–44 in the 48 contiguous US states were used from the National Longitudinal Mortality Study to estimate the impacts of state and local spending and income inequality on individual risks of all-cause and cause-specific mortality for leading causes of death in younger and middle-aged adults and older adults. To reduce bias, models incorporated state fixed effects and instrumental variables. ResultsEach additional $250 per capita per year spent on welfare predicted a 3-percentage point (−0.031, 95% CI: −0.059, −0.0027) lower probability of dying from any cause. Each additional $250 per capita spent on welfare and education predicted 1.6-percentage point (−0.016, 95% CI: −0.031, −0.0011) and 0.8-percentage point (−0.008, 95% CI: −0.0156, −0.00024) lower probabilities of dying from coronary heart disease (CHD), respectively. No associations were found for colon cancer or chronic obstructive pulmonary disease; for diabetes, external injury, and suicide, estimates were inverse but modest in magnitude. A 0.1 higher Gini coefficient (higher income inequality) predicted 1-percentage point (0.010, 95% CI: 0.0026, 0.0180) and 0.2-percentage point (0.002, 95% CI: 0.001, 0.002) higher probabilities of dying from CHD and suicide, respectively. ConclusionsEmpirical linkages were identified between state-level spending on welfare and education and lower individual risks of dying, particularly from CHD and all causes combined. State-level income inequality predicted higher risks of dying from CHD and suicide.

Unequal Incomes, Ideology and Gridlock: How Rising Inequality Increases Political Polarization

Income inequality and political polarization have both increased dramatically in the United States over the last several decades. A small but growing literature has suggested that these two phenomena may be related and mutually reinforcing: income inequality leads to political polarization, and the gridlock induced by polarization reduces the ability of politicians to alleviate rising inequality. Scholars, however, have not credibly identied the causal relationships. Using newly available data on polarization in state legislatures and state-level income inequality, we extend previous analyses to the US state level. Employing a relatively underutilized instrumental variables identication strategy allows us to obtain the rst credible causal estimates of the eect of inequality on polarization within states. We nd that income inequality has a large, positive and statistically signicant

US State-level income inequality and risks of heart attack and coronary risk behaviors: longitudinal findings.

To examine prospectively the association between US state income inequality and incidence of heart attack. We used data from the National Epidemiologic Survey on Alcohol and Related Conditions (n = 34,445). Respondents completed interviews at baseline (2001-2002) and follow-up (2004-2005). Weighted multilevel modeling was used to determine if US state-level income inequality (measured by the Gini coefficient) at baseline was a predictor of heart attack during follow-up, controlling for individual-level and state-level covariates. In comparison to residents of US states in the lowest quartile of income inequality, those living in the second [Adjusted Odds Ratio (AOR) = 1.71, 95 % CI 1.16-2.53)], third (AOR = 1.81, 95 % CI 1.28-2.57), and fourth (AOR = 2.04, 95 % CI 1.26-3.29) quartiles were more likely to have a heart attack. Similar findings were obtained when we excluded those who had a heart attack prior to baseline. This study is one of the first to empirically show the longitudinal relationship between income inequality and coronary heart disease. Living in a state with higher income inequality increases the risk for heart attack among US adults.

Does higher income inequality adversely influence infant mortality rates? Reconciling descriptive patterns and recent research findings

As the struggle continues to explain the relatively high rates of infant mortality (IMR) exhibited in the United States, a renewed emphasis is being placed on the role of possible 'contextual' determinants. Cross-sectional and short time-series studies have found that higher income inequality is associated with higher IMR at the state level. Yet, descriptively, the longer-term trends in income inequality and in IMR seem to call such results into question. To assess whether, over the period 1990–2007, state-level income inequality is associated with state-level IMR; to examine whether the overall effect of income inequality on IMR over this period varies by state; to test whether the association between income inequality and IMR varies across this time period. IMR data - number of deaths per 1000 live births in a given state and year - were obtained from the U.S. Centers for Disease Control Wonder database. Income inequality was measured using the Gini coefficient, which varies from zero (complete equality) to 100 (complete inequality). Covariates included state-level poverty rate, median income, and proportion of high school graduates. Fixed and random effects regressions were conducted to test hypotheses. Fixed effects models suggested that, overall, during the period 1990–2007, income inequality was inversely associated with IMR (β = −0.07, SE (0.01)). Random effects models suggested that when the relationship was allowed to vary at the state-level, it remained inverse (β = −0.05, SE (0.01)). However, an interaction between income inequality and time suggested that, as time increased, the effect of income inequality had an increasingly positive association with total IMR (β = 0.009, SE (0.002)). The influence of state income inequality on IMR is dependent on time, which may proxy for time-dependent aspects of societal context.

Do Businessmen Make Good Governors?

This paper empirically evaluates the economic performance of U.S. state governors who came to the position from a business background (CEO governors), focusing on the growth rate of real personal income per capita, unemployment rate, private investment, and income inequality. Methodologically, I apply a matching method to account for the endogeneity of political selection. Using entropy balancing, I identify credible counterfactuals for CEO governors, that is, governors without a business background who took office under similar economic and fiscal situations. I find, first, that businesspeople tend to take office in times of economic and fiscal strain. Second, the tenures of CEO governors are associated with a 0.6 percentage points higher annual income growth rate, a 0.4 pp higher growth rate of the private capital stock, and a 0.6 percentage points lower unemployment rate than are the tenures of non-CEO governors. Also, state-level income inequality decreases when CEO governors hold office, indicating that low-income households benefit from the economic upswing. Third, the positive effect of having a CEO governor increases with time in office. Fourth, Republican CEO governors perform slightly better than their Democratic colleagues.

Socioeconomic Status, Income Inequality, and Health Complaints: A Basic Psychological Needs Perspective

Socioeconomic status (SES) and income inequality are now recognized as important determinants of health, and there is growing interest in uncovering the intermediary psychosocial pathways through which the socioeconomic context affects physical well-being (Marmot in The status syndrome: how social standing affects our health and longevity, Henry Holt, New York, 2004; Wilkinson and Pickett in The Spirit Level: why more equal societies almost always do better, Allen Lane, London, 2009). We adopted the applied framework of self-determination theory (SDT; Deci and Ryan in Psychol Inq 11:227–268, 2000) and hypothesized that fulfillment of the basic psychological needs for autonomy, competence, and relatedness would mediate the relationships that SES and income inequality have to self-rated health. An online community sample of American participants (N = 1,139) completed a detailed demographic survey and provided self-reports of need fulfillment and health complaints. Structural equation models controlled for impression management and self-deceptive enhancement. Controlling for sex and age, need fulfillment was predicted positively by subjective SES and objective household income and negatively by state-level income inequality; in turn, need fulfillment predicted lower levels of health complaints. These findings suggest that SDT provides a useful framework for the study of SES, income inequality, and health, and that basic psychological needs are an important mechanism through which socioeconomic contexts influence health.

Income inequality among American states and the incidence of major depression

BackgroundAlthough cross-sectional and ecological studies have shown that higher area-level income inequality is related to increased risk for depression, few longitudinal studies have been conducted. This investigation examines the relationship...

Book Reviews

Branko Milanovic of World Bank reviews, “Inequality and Instability: A Study of the World Economy Just Before the Great Crisis” by James K. Galbraith. The EconLit abstract of this book begins: “Explores the relationship between the rise of inequality and the performance of the U.S. stock market and the rise of finance and of free-market policies elsewhere. Discusses the physics and ethics of inequality; the need for new inequality measures; pay inequality and world development; estimating the inequality of household incomes; economic inequality and political regimes; the geography of inequality in America, 1969-2007; state-level income inequality and American elections; inequality and unemployment in Europe—a question of levels; European wages and the flexibility thesis; globalization and inequality in China; finance and power in Argentina and Brazil; inequality in Cuba after the Soviet collapse; and economic inequality and the world crisis. Galbraith is Professor in the Lyndon B. Johnson School of Public Affairs and Lloyd M. Bentsen Jr. Chair in Government/Business Relations at the University of Texas, Austin. Index.”

Income inequality, alcohol use, and alcohol-related problems.

We examined the relationship between state-level income inequality and alcohol outcomes and sought to determine whether associations of inequality with alcohol consumption and problems would be more evident with between-race inequality measures than with the Gini coefficient. We also sought to determine whether inequality would be most detrimental for disadvantaged individuals. Data from 2 nationally representative samples of adults (n = 13,997) from the 2000 and 2005 National Alcohol Surveys were merged with state-level inequality and neighborhood disadvantage indicators from the 2000 US Census. We measured income inequality using the Gini coefficient and between-race poverty ratios (Black-White and Hispanic-White). Multilevel models accounted for clustering of respondents within states. Inequality measured by poverty ratios was positively associated with light and heavy drinking. Associations between poverty ratios and alcohol problems were strongest for Blacks and Hispanics compared with Whites. Household poverty did not moderate associations with income inequality. Poverty ratios were associated with alcohol use and problems, whereas overall income inequality was not. Higher levels of alcohol problems in high-inequality states may be partly due to social context.

Inequality and instability: a study of the world economy just before the Great Crisis

Chapter 1. The Physics and Ethics of Inequality 1. The Simple Physics of Inequality Measurement 2. The Ethical Implications of Inequality Measures 3. Plan of the Book References Chapter 2. The Need for New Inequality Measures 1. The Data Problem in Inequality Studies 2. Obtaining Dense and Consistent Inequality Measures 3. Grouping Up and Grouping Down 4. Conclusion References Chapter 3: Pay Inequality and World Development 1. What Kuznets Meant 2. New Data for a New Look at Kuznets' Hypothesis 3. Pay Inequality and National Income: What's the Shape of the Curve? 4. Global Rising Inequality: the Soros Super-bubble as a Pattern in the Data 5. Conclusion References Appendix: On a Presumed Link from Inequality to Growth Chapter 4. Estimating the Inequality of Household Incomes 1. Estimating the Relationship Between Inequalities of Pay and Income 2. Finding the Problem Cases: A Study of Residuals 3. Building a Deep and Balanced Income Inequality Data Set 4. Conclusion References Chapter 5. Economic Inequality and Political Regimes 1. Democracy and Inequality in Political Science 2. A Different Approach to Political Regime Types 3. Analysis and Results 4. Conclusion References Appendix I: Political Regime Data Description Appendix II: Results Using Other Political Classification Schemes Chapter 6. The Geography of Inequality in America, 1969 to 2007 1. Between-Industry Earnings Inequality in the United States 2. The Changing Geography of American Income Inequality 3. Interpreting Inequality in the United States 4. Conclusion References Chapter 7: State-Level Income Inequality and American Elections 1. Some Initial Models Using Off-the-Shelf Data for the 2000 Election. 2. New Estimates of State-Level Inequality and an Analysis of the Inequality-Elections Relationship over Time 3. Inequality and the Income Paradox in Voting 4. Conclusion References Chapter 8. Inequality and Unemployment in Europe: A Question of Levels 1. An Inequality-based Theory of Unemployment 2. Region-based Evidence on Inequality and Unemployment 3. Inequality and Unemployment in Europe and America 4. Implications for Unemployment Policy in Europe References Appendix. Detailed Results and Sensitivity Analyses Chapter 9. European Wages and the Flexibility Thesis 1. The Problem of Unemployment in Europe: A reprise 2. Assessing Wage Flexibility Across Europe 3. Clustering and Discriminating to Simplify the Picture 4. Conclusion References Appendix A: Cluster Details Appendix B: Eigenvalues and Canonical Correlations Appendix C: Correlations between Canonical Scores and Pseudoscores Chapter 10: Globalization and Inequality in China 1. The Evolution of Inequality in China through 2007 2. Finance and the export boom, 2002 to 2006 3. Trade and capital inflow in post-WTO China 4. Profit and Capital Flows into Speculative Sectors 5. Conclusion References Chapter 11. Finance and Power in Argentina and Brazil 1. The Modern Political Economy of Argentina and Brazil 2. Measuring Inequality in Argentina and Brazil 3. Sources of Data 4. Pay Inequality in Argentina 1994-2007 5. Pay Inequality in Brazil 1996-2007 6. Conclusion References Chapter 12. Inequality in Cuba After the Soviet Collapse 1. Data on Pay in Cuba 2. Evolution of the Cuban Economy 1991 - 2005 3. Cuban Pay Inequality by Sector 4. Cuban Pay Inequality by Region 5. Conclusion References Chapter 13: Economic Inequality and the World Crisis Bibliography