Inequality, Mobility and Segregation: Essays in Honor of Jacques Silber: Volume 20

It is our pleasure as editors to dedicate Research on Economic Inequality, Volume 20 to Professor Jacques Silber. Jacques is a long-time friend of the series and has kindly functioned as a mentor and advisor to us.

In a recent paper entitled “On Lateral Thinking,” Atkinson (2011) argued that Economics has benefited not only from borrowing ideas from other disciplines such as physics (e.g., Samuelson's Foundations of Economic Analysis, 1947) or psychology (e.g., the growing importance of behavioral economics) but also from applying ideas that appeared in one subfield of Economics to another domain of Economics. As examples of such a cross-fertilization, Atkinson cites duality theory where cost functions were applied to consumer theory or Harberger's (1962) model of tax incidence that was borrowed from international trade theory. Atkinson in fact cited a sentence from his famous 1970 (Atkinson, 1970) article: “My interest in the question of measuring inequality was originally stimulated by reading an early version of the paper by Rotschild and Stiglitz (1970, 1971)” The same parallelism between uncertainty and inequality had been drawn previously by Serge Kolm in his well-known presentation at the meeting of the International Economic Association in Biarritz, France (see Kolm, 1969), which was inspired by his previous work on uncertainty (Kolm, 1966). Atkinson, however, stressed also the need for care in drawing parallels.

This paper defines local segregation measures that are sensitive to status differences among organizational units. So far as we know, this is the first time that status-sensitive segregation measures have been offered in a multigroup context with a cardinal measure of status. These measures allow researchers to aggregate employment gaps of a target group by penalizing its concentration in low-status occupations. They are intended to complement rather than substitute for previous local segregation measures. The usefulness of these tools is illustrated in the case of occupational segregation by race and ethnicity in the United States.

The goal of this study was to use census information to measure the level of occupational segregation of workers of African descent with respect to whites in various Latin American countries. I further investigated the extent to which segregation levels can be accounted for by different workers’ characteristics. The results show that Afro-Latinos are generally highly segregated across occupations but with high heterogeneity across countries. A large proportion of this segregation would not exist if Afro-Latinos had attained the same education as whites in Brazil and Ecuador, where most segregation occurs across major occupational categories. However, the proportion of occupational segregation explained by educational inequalities is much lower in other countries, where most segregation occurs within the major occupational groups. Further, occupational segregation would be even higher, especially in Costa Rica, if the geographical distribution of black and white populations were similar across these countries.

Models of race-based segregation establish that individual characteristics or housing market attributes are complementary causes of the observed level of races’ concentration inside an urban space. The goal of this work is to establish which variables, and in which order of magnitude, among individual characteristics, housing features, and local amenities correlate with immigrants’ segregation, in the case of consistent within-city immigrants’ mobility. We capture the degree of segregation for different immigration groups by a local concentration statistics that is directly obtained from segregation curves, and we use data on the Verona Municipality as a case study. We find strong evidence in favor of the role of the housing market and housing ownership distribution across city areas.

The concepts of the “equal-equivalents” permit the definition of one-dimensional and multidimensional inequalities, of individual “welfare” (the same function for all individuals) and, as a result, of classical inequality properties and of the optimal allocation in “macrojustice” (optimum income taxation and transfers, amounting in particular to equal liberty of choice in different domains).

Social evaluation functions used in policy impact analysis can be viewed as real-valued functionals of the underlying outcome distributions. Influence functions may be used to identify the sources of variation in social outcomes in terms of individual or household characteristics. This chapter sets forth in clear terms the definition of the influence function and recentered influence function, and catalogs these functions for a wide range of distributional statistics, including measures of central tendency, inequality, and poverty and also measures of the degree of pro-poorness of a shock- or policy-induced change in income levels.

In the unidimensional poverty field, a number of axioms capture the distribution sensitivity among the poor. One of them is the monotonicity sensitivity axiom that demands that a poverty measure should be more sensitive to a reduction in the income of a poor person, the poorer that person is. On the other hand, the minimal transfer axiom requires poverty to decrease when a transfer of income is made from a poor person to a poorer one. These axioms turn out to be identical, but they provide different and interesting interpretations. Both of them rely deeply on the income-ranking of the poor.

Some generalizations of the minimal transfer axiom and its variations have been proposed in the multidimensional framework. In none of them the partial ordering of the poor is taken into account. No counterpart of the monotonicity sensitivity axiom exists.

This note introduces multidimensional generalizations of the two mentioned axioms, keeping the crucial assumption that only when the poor involved are unambiguously ranked are the axioms uncontroversial. We show that the two generalizations proposed are also identical in the multidimensional setting although offering different interpretations. Relationships between the new properties and those existing in the literature are analyzed.

The distribution dynamics of incomes across Indian states are examined using the entire income distribution. Unlike standard regression approaches, this approach allows us to identify specific distributional characteristics such as polarisation and stratification. The period between 1965 and 1997 exhibits the formation of two convergence clubs: one at 50% and another at 125% of the national average income. Income disparities across the states declined over the sixties and then increased from the seventies to the nineties. Conditioning exercises reveal that the formation of the convergence clubs is associated with the disparate distribution of macro-economic factors such as capital expenditure and fiscal deficits. In particular, capital expenditure, fiscal deficits and education expenditures are found to be associated with the formation of the upper convergence club.

This chapter studies the distribution of labour earnings among employees within the EU using data from Wave 2007-1 of the EU-SILC. The ranking of countries by median full-time equivalent monthly gross earnings shows Eastern European nations at the bottom and Luxembourg at the top; earnings differences are sizeable, both across and within countries. Taking the euro area and the EU-25 as a whole, inequality is higher when earnings are measured in euro at market exchange rates than at purchasing power parities. Unsurprisingly, the wage distribution is narrower in the euro area than in the EU-25, which includes the poorer Eastern European countries joining the Union in 2004. The higher inequality observed for the EU-25 is largely attributable to between-country differences, which in turn reflect differences in returns to individual attributes more than in workforce composition.

The economic reality of the 1990s in Europe forced the labor markets to become more flexible. Using a consistent comparative dataset for 14 countries, the European Community Household Panel (ECHP), we explore the degree of earnings mobility and inequality across Europe, and the role of labor market institutions in understanding the cross-national differences in earnings mobility. We study the degree of rank mobility and the degree of mobility as equalizer of long-term earnings. The country ranking in long-term earnings inequality is similar with the country ranking in annual inequality, which is a sign of limited long-term equalizing mobility within countries with higher levels of annual inequality. In long-term earnings inequality, Denmark renders the most mobile earnings distribution with the second highest equalizing effect. The only disequalizing mobility in a lifetime perspective is found in Portugal. With respect to the relationship between earnings mobility and earnings inequality, we find a significant negative association both in the short and the long run. Based on the rankings in long-term Fields mobility and long-term inequality, Denmark is expected to have the lowest lifetime earnings inequality in Europe, followed by Finland, Austria, and Belgium. The Mediterranean countries (Spain and Portugal) are expected to have the highest long-term inequality. With respect to the institutional factors that may be related to earnings mobility, we bring evidence that the deregulation in the labor and product markets, the degree of unionization, the degree of corporatism and the spending on ALMPs are positively associated with earnings mobility.

This paper analyzes the impact of family background characteristics and social exclusion features on the intergenerational transmission of educational attainment and income positions, and the relative poverty risk in Germany and the United States. These countries vary widely by welfare regime, family role patterns, and labor market settings. From these differences we predict higher intergenerational income elasticities in the United States and higher intergenerational educational elasticities in Germany. Using longitudinal data from the Cross-National Equivalent File (CNEF) 1980–2008, we find some empirical support for these hypotheses. In both countries, parental educational attainment stimulates intergenerational economic and social mobility, which accentuates the importance of promoting human capital accumulation.

This paper examines the impact on German personal income distribution of income-dependent (variable) equivalence scales. The use of variable equivalence scales causes distinctive increases in income inequality compared with income-independent, constant equivalence scales. The narrowing of income limits between the upper and lower income regions also leads to an increase in income inequality.

This paper introduces a new quinquennial dataset of educational inequality disaggregated by age group for 146 countries, from 1950 to 2010, by using the Gini index of education as a measure of the distribution of years of schooling. Based on recent estimates of average years of schooling from Barro and Lee (2010), our calculations take into consideration, for the first time, the changes over time in the duration of educational stages, in each country and for each age group. The downward trends in educational inequality observed during the last decades depend on age group, gender, and development level.

We analyse the determinants of poverty transitions, defined as movements across a low-income threshold, in Luxembourg. Data used are those from the Luxembourg socio-economic panel ‘Liewen zu Lëtzebuerg’ (PSELL3) running from 2003 to 2009. Using an endogenous switching first-order Markov model, we control for potential endogeneity to low-income transitions due to both initial conditions and non-random attrition. We find that employment protects from both remaining poor and entering poverty while several characteristics of the head of the household, such as low education or citizenship, and also household composition and housing tenure status are correlated to poverty entry but not to poverty persistence. In addition, attrition and initial low income are found to be endogenous processes with respect to low-income transitions. Finally, genuine state dependence accounts for a substantial level of aggregate state dependence.

This paper examines the effect of welfare reform policies on changes in poverty in the United States during 1992–2005. Using state-level panel data we estimate latent trajectory models to determine if welfare reform has contributed to changes in the trajectories of poverty growth (decline) beyond what would have naturally occurred through the passage of time. Our results show that (a) states vary considerably in both their mean initial level as well as trajectories of poverty; (b) welfare reform was responsible for nearly 27% of the decline in poverty during the study period; (c) the economy played a secondary role, responsible for a 10% reduction in poverty; and (d) income support policies like minimum wage and child support collection also had an important role to play, with the latter contributing as much as welfare reform to poverty reduction. Our estimates remain robust against changes in modeling strategies and methods.