Angle, John (2006): Not a Hollowing Out, a Stretching: Trends in U.S. Nonmetro Wage Income Distribution, 1961-2003.
Download (3MB) | Preview
Much of the U.S. labor economics literature asserts that U.S. wage income inequality increased in the last half of the 20th century. These papers point to two trends: 1) the increasing dispersion in U.S. wage incomes, and 2) the rapid growth in the relative frequency of large wage incomes of fixed size in constant dollar terms. A subset of the labor economics literature interprets these trends as a hollowing out of the wage income distribution. A hollowing out would yield fewer middling wage incomes. Since nonmetro wage incomes have, historically, been smaller than metro wage incomes, a hollowing out might disproportionately displace nonmetro wage incomes into the left mode of the hollowed out distribution, that of small wage incomes. However, there was no hollowing out of the nonmetro wage income distribution between 1961 and 2003. While trends #1 and #2 exist in U.S. nonmetro wage income data, they are aspects of the stretching of the distribution of nonmetro wage incomes to the right over larger wage incomes as all its percentiles increased between 1961 and 2003. This stretching means that all nonmetro wage income percentiles increase simultaneously with greater proportional growth in the smaller percentiles. The literature focused on the greater absolute gains of the larger percentiles and took them as evidence of growing inequality. This paper shows for nonmetro wage incomes in the U.S. that those gains are but one aspect of the stretching of the distribution and that other aspects of this transformation might as easily be taken as evidence of growing equality.
|Item Type:||MPRA Paper|
|Original Title:||Not a Hollowing Out, a Stretching: Trends in U.S. Nonmetro Wage Income Distribution, 1961-2003|
|Keywords:||distribution dynamics; hollowed out distribution; inequality; nonmetropolitan; wage income; wage inequality|
|Subjects:||D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions|
|Depositing User:||John Angle|
|Date Deposited:||21. Aug 2008 01:09|
|Last Modified:||12. Feb 2013 03:23|
Angle, John. 1983. "The surplus theory of social stratification and the size distribution of Personal Wealth." 1983 Proceedings of the American Statistical Association, Social Statistics Section. Pp. 395 400. Alexandria, VA: American Statistical Association.
_____. 1986. "The surplus theory of social stratification and the size distribution of Personal Wealth." Social Forces 65:293 326.
_____, 1992. "The Inequality Process and the distribution of income to blacks and whites". Journal of Mathematical Sociology 17:77 98.
_____. 1993. "Deriving the size distribution of personal wealth from 'the rich get richer, the poor get poorer'". Journal of Mathematical Sociology 18:27-46.
_____. 1994. "Frequency spikes in income distributions". 1994 Proceedings of the American Statistical Association, Business and Economic Statistics Section . Pp. 265-270. Alexandria, VA: American Statistical Association.
_____. 1996. "How the gamma law of income distribution appears invariant under aggregation". Journal of Mathematical Sociology. 21:325-358.
_____. 2002. "The statistical signature of pervasive competition on wages and salaries". Journal of Mathematical Sociology. 26:217-270.
_____. 2003. “The dynamics of the distribution of wage and salary income in the nonmetropolitan U.S.”. Estadistica.55: 59-93.
_____. 2006a. “A comment on Gallegati et al.’s “Worrying Trends in Econophysics” “. Pp. 250-253 in A. Chatterjee and B.K. Chakrabarti, (eds.), The Econophysics of Stocks and Other Markets (Proceedings of the Econophys Kolkata II Conference, February, 2006 [ http://www.saha.ac.in/cmp/econophys2.cmp/ ] ). Milan: Springer.
_____. 2006b (received 8/05; electronic publication: 12/05; hardcopy publication 7/06). “The Inequality Process as a wealth maximizing algorithm”. Physica A: Statistical Mechanics and Its Applications 367:388-414 (DOI information: 10.1016/j.physa.2005.11.017). A draft version of the paper can be downloaded from the Luxembourg Income Study website: [http://www.lisproject.org/publications].
_____. 2007a. “The Inequality Process is an evolutionary process” in The Constructal Theory of Social Dynamics. Adrian Bejan and Gilbert Merkx, eds. New York: Springer.
_____. 2007b. “The Macro Model of the Inequality Process and The Surging Relative Frequency of Large Wage Incomes”. Pp. 171-196 in A. Chatterjee and B.K. Chakrabarti, (eds.), The Econophysics of Markets and Networks Proceedings of the Econophys-Kolkata III Conference, March 2007 [ http://www.saha.ac.in/cmp/econophys3.cmp/ ] . Milan: Springer [on-line at: http://arxiv.org/abs/0705.3430 ].
Beach, Charles and George Slotsve. 1996. “Are we becoming two societies? Income Polarization and the Myth of the Declining Middle Class in Canada”. Ottawa, Ontario: C.D. Howe Institute.
Beach, Charles, Richard Chaykowski, and George Slotsve. 1997. “Inequality and polarization of male earnings in the United States, 1968-1990". North American Journal of Economics and Finance 8(2): 135-152.
Blackburn, McKinley and David Bloom. 1985. “What is happening to the middle class?”. American Demographics 7(1): 18-25.
_______________________________. 1987. “Earnings and income inequality in the United States”. Population and Development Review 13: 575-609.
Bradbury, Katharine. 1986. “The Shrinking Middle Class”. New England Economic Review September/October, pp. 41-54.
Brown, David and Thomas Hirschl. 1995. "Household poverty in rural and metropolitan-core areas of the United States". Rural Sociology 60: 44-66.
Buchinsky, Moshe. 1994. “Changes in the U.S. wage structure 1963-1987: application of quantile regression.” Econometrica 62: 405-458.
Burkhauser, Richard, Kenneth Couch, Andrew Houtenville, and Ludmila Rovba. 2004. “Income inequality in the 1990's: re-forging a lost relationship”. Journal of Income Distribution. 12: 8-35.
Burkhauser, Richard, Amy Crews Cutts, Mary Daly, and Stephen Jenkins. 1999. “Testing the significance of income distribution changes over the 1980's business cycle: a cross-national comparison”. Journal of Applied Econometrics 14(3): 253-272.
Chatterjee, A. and B.K. Chakrabarti. 2006. The Econophysics of Stocks and Other Markets (Proceedings of the Econophys Kolkata II Conference, February, 2006. [ http://www.saha.ac.in/cmp/econophys2.cmp/ ] ). Milan: Springer.
_________________________________. 2007. The Econophysics of Markets and Networks (Proceedings of the Econophys-Kolkata III Conference, March 2007 [ http://www.saha.ac.in/cmp/econophys3.cmp/ ] ). Milan: Springer.
Coder, John, Lee Rainwater, and Timothy Smeeding. 1989. “Inequality among children and elderly in ten modern nations: the United States in an international context.” American Economic Review 79(2): 320-324.
Current Population Surveys, March 1962-2004. [machine readable data files]/ conducted by the Bureau of the Census for the Bureau of Labor Statistics. Washington, DC: U.S. Bureau of the Census [producer and distributor], 1962-2004. Santa Monica, CA: Unicon Research Corporation [producer and distributor of CPS Utilities], 2004.
Dalton, Hugh. 1920. “The measurement of the inequality of incomes”. The Economic Journal 30(119): 348-361.
Danziger, Sheldon and Peter Gottshalk. 1986. “Do rising tides lift all boats? The impact of secular and cyclical changes on poverty.” American Economic Review 76: 405-410.
Davis, Bob, John Lyons, and Andrew Batson. May 24, 2007. “Wealth of Nations: Globalization’s Gains Come With a Price”. Wall Street Journal. Page A1, columns 4,5.
Dooley, Martin and Peter Gottschalk. 1984. “Earnings inequality among males in the United States: trends and the effect of labor force growth.” Journal of Political Economy. 92: 59-89.
Duclos, Jean-Yves, Joan Esteban, and Debraj Ray. 2004. “Polarization: concepts, measurement, estimation.” Econometrica 72(6): 1737-1772.
Duncan, Cynthia. 1992. Rural Poverty in America. New York: Auburn House.
Duncan, Greg, Timothy Smeeding, and Willard Rodgers. 1993. “Why is the middle class shrinking?”. In Dimitri Papadimitriou, (ed.), Poverty and Prosperity in the U.S. in the Late Twentieth Century. New York: Macmillan.
Esteban, Joan-Maria and Debraj Ray. 1994. “On the measurement of polarization”. Econometrica 62(4): 819-851.
Esteban, Joan and Debraj Ray. 1999. “Conflict and distribution”. Journal of Economic Theory. 87: 379-415.
Fuguitt, Glenn, David Brown and Calvin Beale. 1989. Rural and Small Town America. New York: Russell Sage.
Gallegati, Mauro, Steve Keen, Thomas Lux, and Paul Ormerod. 2006. “Worrying Trends in Econophysics” [“Worrying trends in econophysics” Physica A 370 (#1, October 1, 2006): 1 - 6 [on-line at: http://www.sciencedirect.com ] ]
Goldin, Claudia and Robert Margo. 1992. “The Great Compression: The Wage Structure in the United States at Mid-Century.” The Quarterly Journal of Economics 107:1-34.
Horrigan, Michael and Steven Haugen. 1988. “The declining middle class thesis: a sensitivity analysis”. Monthly Labor Review. 111 (May, 1988): 3-13.
Jenkins, Stephen. 1995. “Did the middle class shrink during the 1980's: UK evidence from kernel density estimates”. Economics Letters 49(October, #4): 407-413.
Jones, Arthur and Daniel Weinberg. 2000. “The Changing Shape of the Nation’s Income Distribution”. Report #P60-204 of the U.S. Bureau of the Census. Washington, DC: U.S. Bureau of the Census. http://www.census.gov/prod/2000pubs/p60-204.pdf [Accessed February 3, 2006].
Kahn, Lawrence. 1998. “Collective bargaining and the interindustry wage structure: international evidence.” Economica, New Series 65: 507-534.
Karoly, Lynn. 1992. “Changes in the distribution of individual earnings in the United States: 1967-1986.” The Review of Economics and Statistics. 74:107-115.
Karoly, Lynn and Gary Burtless. 1995. “Demographic change, rising earnings inequality, and the distribution of personal well-being”. Demography 32:379-405.
Kleiber, Christian and Samuel Kotz. 2003. Statistical Size Distributions in Economics and Actuarial Science. Pages 162, 163, 167, and 168. New York: Wiley.
Kuttner, Robert. 1983. “The Declining Middle”. Atlantic Monthly July:60-72.
Lawrence, Robert. 1984. “Sectoral Shifts in the Size of the Middle Class”. Brookings Review 3: 3-11.
Lee, David. 1999. “Wage inequality in the U.S. during the 1980's: rising dispersion or falling minimum wage?”. Quarterly Journal of Economics, 114(3): 977-1023);
Lerman, Robert. 1997. “Reassessing trends in U.S. earnings inequality”. Monthly Labor Review 120(#12): 17-25.
Levy, Frank and Richard Michel. 1991. The Economic Future of American Families: Income and Wealth Trends. Washington, DC: Urban Institute Press.
Levy, Frank and Richard Murnane. 1992. “U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations.” Journal of Economic Literature. 30 (3): 1333-1381.
Lichter, Daniel, Gail Johnston, and Diane McLaughlin. 1994. "Changing linkages between work and poverty in rural America." Rural Sociology 59: 395-415.
Lowenstein, Roger. June 10, 2007. “The Inequality Conundrum”. The New York Times Magazine. Pp. 11-14.
Lux, Thomas. 2005. “Emergent statistical wealth distributions in simple monetary exchange models: a critical review”. Pp. 51-60 in A. Chatterjee, S. Yarlagadda, and B.K. Chakrabarti, (eds.), Econophysics of Wealth Distributions, (the proceedings volume of the International Workshop on the Econophysics of Wealth Distributions, March, 2005, Kolkata, India [ http://www.saha.ac.in/cmp/econophysics/ ] ). Milan, Italy: Springer. [on-line version of paper at: [ http://arxiv.org/abs/cs/0506092 ].
___. 2007. Applications of Statistical Physics to Finance and Economics. Economics Working Paper #2007-05. Department of Economics, Christian-Albrechts-Universität Kiel. [ on line at: http://www.bwl.uni kiel.de/gwif/downloads_papers.php?lang=en ].
McCall, Leslie. 2000. “Explaining levels of within-group wage inequality in U.S. labor markets.” Demography 37: 415-430.
Morris, Martina, Annette Bernhardt, and Mark Handcock. 1994. “Economic inequality: new methods for new trends.”American Sociological Review 59: 205-219.
Nygard, Fredrik and Arne Sandstro.m. 1981. Measuring Income Inequality. Stockholm: Almquest and Wiksell International.
Pareto, Vilfredo. 1897. Cours d'Économie Politique, Professé à l'Université de Lausanne. Volume 2. F. Rouge, editor. Lausanne: Librairie de l'Université.
Patriarca, Marco, Els Heinsalu, and Anirban Chakraborti. 2006. “The ABCD’s of statistical many-agent economy models”. [ http://arxiv.org/abs/physics/0611245/ ].
Roemer, Marc. 2000. "Assessing the Quality of the March Current Population Survey and the Survey of Income and Program Participation Income Estimates, 1990-1996." Washington, DC: U.S. Census Bureau. [http://www.census.gov/hhes/www/income/assess1.pdf], accessed 11/9/04.
RUPRI Rural Welfare Reform Panel. 1999. Rural America and Welfare Reform: an Overview Assessment. RUPRI: Rural Policy Research Institute. P99-3. February 10, 1999. Columbia, Missouri: RUPRI Office, University of Missouri.
Rural Sociological Society Task Force on Persistent Rural Poverty. 1993. Persistent Poverty in Rural America. Boulder, CO: Westview Press.
Samanidou, E., E. Zschischang, D. Stauffer, and T. Lux. 2007. “Agent-based Models of Financial Markets”. [ on-line at: http://arxiv.org/abs/physics/07011140 ].
Scalas, Enrico. 2006. Abstract of “Growth and inequality processes: equilibrium and nonequilibrium models in physics and economics”. Applications of Physics to Financial Analysis 5 (June, 2006), 43. [ http://www2.polito.it/eventi/apfa5/Abstract/abstracts.pdf ].
Söderberg, Johan. 1991. “Wage differentials in Sweden, 1725-1950". Pp. 76-95 in Y.S. Brenner, Hartmut Kaelble, (eds.), Income Distribution in Historical Perspective. Cambridge, U.K.: Cambridge University Press.
Stauber, Karl. 2001. “Why Invest In Rural America - And How?”. Economic Review Second Quarter (2001): 33-63. Kansas City, Missouri: Federal Reserve Board. [ http://www.kc.frb.org/PUBLICAT/ECONREV/er01q2.htm#rural ], accessed 11/9/04.
Task Force on Inequality and American Democracy. 2004. American Democracy in an Age of Rising Inequality. Washington, DC.: American Political Science Association. http://www.apsanet.org/Inequality/generalreport.cfm [Accessed November 9, 2004].
Thurow, Lester. 1984. “The disappearance of the middle class.” New York Times. Vol.133(February 5):F3.
Unicon Research, inc. 2002. Manual for March Current Population Surveys. Santa Monica, CA: Unicon.
U.S. Bureau of Economic Analysis. 2005. National Income and Product Account Table 2.4.4, Price indexes for personal conumption expenditure by type of product [index numbers, 2000 = 100]. http://www.bea.gov/bea/dn/nipaweb/TableView.asp#Mid [Last revised on August 4, 2005].
Weinberg, Daniel, Charles Nelson, Marc Roemer, and Edward Welniak. 1999. “Fifty years of U.S. income data from the Current Population Survey.” American Economic Review vol.89, issue 2 (Papers and Proceedings of the 111th Annual Meeting of the American Economic Association), 18-22.
Weber, B., G. Duncan, and L. Whitener (eds.). 2002. Rural Dimensions of Welfare Reform. Kalamazoo, MI: Upjohn Institute.
Wolfson, Michael. 1994. “When inequalities diverge.” American Economic Review 84(#2) : 353-358.
Wolfson, Michael, and Brian Murphy. 1998. “New views on Inequality Trends in Canada and the United States”. Statistics Canada Working Paper #124. Ottawa: Statistics Canada. [on-line at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=134688 ].
Yakovenko, Victor. 2007 “Econophysics, Statistical Mechanical Approaches to”. Encyclopedia of Complexity and System Science. [ http://refworks.springer.com/complexity ]. [ on-line at http://arxiv.org/abs/0709.3662 ].