Poverty and Income Distribution

Transcription

1 Poverty and Income Distribution SECOND EDITION EDWARD N. WOLFF WILEY-BLACKWELL A John Wiley & Sons, Ltd., Publication

2 Contents Preface * xiv Chapter 1 Introduction: Issues and Scope of Book l 1.1 Recent trends in living standards Income and earnings stagnate while poverty remains unchanged Inequality rises sharply Middle-class debt explodes What has happened to tax rates? Rising profits is the key Yet schooling has continued to rise Some conclusions Causes of rising inequality Skill-biased technology change The shift to services Declining unionization Globalization Downsizing and outsourcing Public policy changes General description of the textbook 14 Notes 17 Part I Inequality, Poverty, and Mobility: Measurement and Trends 19 Chapter 2 Income, Earnings, and the Standard of Living Introduction The composition of personal income in the United States The standard of living Real versus nominal Trends in living standards in the United States Factor shares Historical studies on factor shares* 31

3 vi Contents 2.5 International comparisons of living standards Per capita income The Human Development Index Household production and well-being Defining household work The market cost approach The opportunity cost approach Empirical work on household production Summary References, bibliography, and data sources Discussion questions and problem set 42 Appendix 2.1 An introduction to the National Income and Product Accounts* 44 A2.1.1 The relation to the national accounts 46 A2.1.2 The sources of personal income 47 A2.1.3 The derivation of factor shares 48 A2.1.4 Miscellaneous issues in national accounting 49 A Treatment of international trade 49 A National income at factor costs * 51 A The treatment of capital gains 51 Notes 52 Chapter 3 Income Inequality: Its Measurement, Historical Trends, and International Comparisons Introduction A review of basic statistics Mean, variance, and standard deviation Distributions Percentile ranking Inequality measures Concentration measures Coefficient of variation The Lorenz curve Gini coefficient Log variance of income* The Theil entropy index* Atkinson's measure* Lorenz dominance* Time trends in income inequality in the United States International comparisons of inequality Inequality comparisons among high-income countries The Kuznets curve The world distribution of income* Summary References and bibliography Discussion questions and problem set 90 Notes 91

4 Contents vii Chapter 4 Poverty: Definitions and Historical Trends Introduction The measurement of poverty The official U.S. poverty standard, Absolute versus relative poverty thresholds Subjective poverty lines Other concepts of poverty Measurement of poverty incidence The poverty rate and the poverty gap ratio Composite measures of poverty* Poverty trends in the United States Composition of the poor Other dimensions of poverty Poverty spells and the permanence of poverty The underclass International comparisons of poverty rates Other issues in the measurement of poverty Equivalence scales Choice of a price index The treatment of taxes The treatment of noncash government benefits The role of household wealth r Consumption-based measures of poverty The accounting period Other issues Summary References and bibliography Discussion questions and problem set 130 Notes 132 Chapter 5 Household Wealth Introduction What is household wealth? Wealth and well-being Marketable wealth Other definitions of household wealth Historical time-series data on household wealth and its composition Trends in average wealth Changes in wealth composition Homeownership rates Wealth inequality in the United States Methods used to estimate wealth inequality Long-term trends in household wealth inequality in the United States Changes in wealth inequality, The Forbes

5 viii Contents 5.5 International comparisons of household wealth distribution Comparisons of long-term time trends Comparisons of recent trends Summary References and bibliography Discussion questions and problem set 176 Notes 177 Chapter 6 Economic Mobility Introduction Mobility measures Measuring intergenerational mobility The Shorrocks measure and other measures of lifetime mobility Mobility over the time Income mobility Earnings mobility Other dimensions of mobility Intergenerational mobility Results for the United States Mechanisms of transmission International comparisons Wealth mobility Summary References and bibliography 200 Notes 204 Part II Explanations of Inequality and Poverty 205 Chapter 7 The Labor Force, Employment, and Unemployment Introduction Basic concepts of the labor force, employment, and unemployment Employment Unemployment The labor force Estimating employment statistics Labor force participation rates LFPR by gender, race, and age Two-earner households Educational attainment of the labor force The industrial and occupational composition of employment Measures of unemployment and historical trends The incidence of unemployment Jobless rates by demographic characteristic Unemployment by industry, occupation, and region Types of unemployment Frictional unemployment Seasonal unemployment 233

6 Contents ix Structural unemployment Deficient demand (Keynesian) unemployment The debate over the causes of unemployment Summary References and bibliography Discussion questions 243 Notes 243 Chapter 8 The Role of Education and Skills Introduction The human capital model The rate of return to human capital On-the-job training Additional implications of the human capital model Earnings, schooling, and experience Rates of return to schooling Lifetime earnings The schooling-earnings function* The extended earnings function* Ability and earnings Estimates of the ability effect* The nature vs. nurture controversy Productivity and earnings Experience, productivity, and earnings Other interpretations of the relation between schooling and earnings Earnings inequality and human capital* Summary and concluding remarks References and bibliography Discussion questions and problem set 296 Notes 297 Chapter 9 Unions, Dual Labor Markets, and Structural Models of Earnings Introduction The-role of labor unions A brief history of trade unionism in the United States Trends in union membership The economic role of labor unions The effect of unions on wages: The evidence Segmented labor markets Internal labor markets The dual labor market model An evaluation of labor market segmentation Industrial composition and earnings inequality* State and regional differences in inequality Regional differences in income levels Industrial composition and rising earnings inequality of the 1980s 329

7 x Contents 9.5 Industry wage differentials* Explanations of inter-industry wage differences Recent trends and efficiency wage theory Occupational wage differentials Historical studies Trends in the United States in the twentieth century Rising skewness at the top Summary and concluding remarks References and bibliography Discussion questions 352 Notes 353 Chapter 10 The Role of Savings and Intergenerational Transfers in Explaining Wealth Inequality Introduction The basic lifecycle model Age-wealth profiles Longitudinal analyses* Simulation and regression analysis* Extensions of the lifecycle model The role of uncertainty about death and lifetime annuities The role of pension and social security wealth The bequest motive Precautionary savings and liquidity constraints Intergenerational equity Social security annuity and transfer wealth Private intergenerational transfers Generational accounting Summary and overall assessment References and bibliography Discussion questions 385 Notes 385 Chapter 11 Sources of Rising Earnings Inequality* Introduction Skill-biased technological change The IT "revolution" Growing international trade and immigration The shift to services Institutional factors Outsourcing and downsizing Changes in the distribution of schooling and ability Time trends in key explanatory variables Econometric results Summary and concluding remarks References and bibliography 410 Appendix 11.1 Data sources and methods 416 Notes 417

8 Contents xi Part III Discrimination 419 Chapter 12 Discrimination: Meaning, Measurement, and Theory Introduction The meaning of discrimination The Blinder-Oaxaca decomposition* Pre-labor market discrimination Theories of discrimination: an overview Taste for discrimination Statistical discrimination The racial stigma model The Marxian model Overcrowding model of occupational segregation Summary References and bibliography 441 Notes 443 Chapter 13 Racial Discrimination: Progress and Reversal for Black Americans Introduction Trends and status report on racial inequality The earnings gap: have African American workers made gains on whites? Labor force participation and unemployment , Family income, poverty, and wealth Hispanics Migration from the South Progress in educational attainment The role of educational gains on the earnings gap* Quality of schooling* Returns to schooling for blacks and whites Hispanic Americans Changes in family structure among black Americans Public policy and discrimination Public policy programs The effectiveness of the anti-discrimination programs Summary and conclusion References and bibliography Discussion questions and problem set 485 Notes 486 Chapter 14 The Gender-Wage Gap and Occupational Segregation Introduction, The wage gap and labor force participation trends Time trends Labor force participation patterns Explanations of the rising LFPR of women* Explanations of the wage gap Human capital differences Occupational segregation 503

9 xii Contents 14.4 The role of public policy The effectiveness of the anti-discrimination programs Comparable worth Other issues* Effects of wives' earnings on family income inequality The feminization of poverty International comparisons Summary References and bibliography Discussion questions and problem set 525 Notes 525 Part IV The Role of Public Policy on Poverty and Inequality 527 Chapter 15 Public Policy and Poverty Alleviation Introduction A brief history of income maintenance programs Early developments The New Deal Post-war developments Housing assistance Public expenditures on major federal programs Unemployment insurance (UI) A brief description of the UI system Time trends in UI benefits Incentive effects of the UI system The social security system Determination of the social security benefit Incentive effects on labor supply The welfare system The workings of AFDC and TANF Incentive effects of the welfare system Work programs Effectiveness of the work programs The minimum wage Conclusion and overall assessment of government programs Effects on poverty Proposals for reform References and bibliography Discussion questions and problem set 570 Notes 571 Chapter 16 The Redistributional Effects of Public Policy Introduction Equality as a social goal Arguments in favor of promoting equality Arguments against promoting equality 577

10 Contents xiii 16.3 The structure of tax systems Proportional, progressive, and regressive tax structures Inequality measures and the tax system Vertical versus horizontal equity Distributional consequences of the U.S. tax system Tax schedules for the personal income tax Effective tax rates for the personal income tax The payroll tax Other federal taxes State and local government taxes The overall tax bite? International comparisons of taxation The overall effective tax rate structure in the United States The negative income tax and the EITC The distributional effects of government expenditures Summary and conclusion References and bibliography Discussion questions and problem set 622 Notes 623 Index 627 * Section contains more advanced material or special topics that may be omitted without losing continuity in the book.