Title

Three essays in inequality

Date of Award

2003

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

Advisor(s)

Thomas Knicsner

Keywords

Inequality, Welfare, Compensating differentials, Gender differences, Wage elasticity

Subject Categories

Economics | Labor Economics | Social and Behavioral Sciences

Abstract

This dissertation is a collection of three essays, each of which examines different aspects of inequality. The different analyses use different sources of data and various econometric techniques to develop and test issues related to inequality, nonwage forms of compensation and public social expenditures. In the first, I use two data sets and four models to estimate and track wage elasticities for men and women over time. I estimate gross elasticities for both genders and then use an ex ante Slutsky decomposition to estimate income and substitution effects. I then repeat this exercise to include nonworkers as well, essentially combining a three-step Heckit with the Slutsky decomposition. Then, using two separate tests, I check whether the two series converge over the period but find weak evidence for this hypothesis. I do find, however, that female elasticities are falling over the period and are generally larger than the male elasticities. In the second, I use Surface provides description only. Full text is available to ProQuest subscribers. Ask your Librarian for assistance. fringe benefit data from the Bureau of Labor Statistics to examine inequality in nonwage forms of compensation. This data is taken from the survey behind the Employer Cost Index and contains dollar costs of fringe benefits. I calculate the mean fringe benefit value by industry occupation cell and then impute these values onto two household data sets. I then estimate the hedonic model via OLS, Fixed Effects and quantile regression analysis but, as in the previous literature, find no substantial trade-off between wages and fringes. I do find some evidence that workers in the 90th percentile of the wage distribution do trade higher health and life insurance for lower wages. In the final essay, which is co-written with Timothy Smeeding and Lars Osberg, we look at what effects inequality has on government social expenditures. Our hypothesis is that high levels of income inequality reduce public support for publicly provided goods (such as health care and education) which especially benefit the poor. The results suggest that as the "rich" become more distant from the middle and lower classes, they find it easier to opt out of public programs and to buy substitutes in the private market. Hence, over time, support for those social institutions and goods, which provide upward mobility and equal opportunity for all, such as public health insurance and public education, are eroded. The bottom line is that higher economic inequality has a cost in that it produces lower levels of those publicly shared goods which foster greater upward mobility.

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