Recovering the Missing Middle:Within-Group Inequality, Place Effects, and the Volatility Curve

• In Event: 212 - Section on Inequality, Poverty and Mobility Roundtables (one-hour)
  In Refereed Roundtable: Table 03. Place and Space

Abstract

This research examines a dimension of inequality central to the recent upswing of American wage and income inequality: within-group inequality, or inequality occurring among individuals otherwise similar on observed characteristics. Specifically, this research locates within-group inequality in relation to economic and political characteristics of the local labor market, or “place effects.” A unique dataset is constructed locating the within portion of wages and income from 9 waves of public use microdata series from the US Census in 722 temporally stable geographical units, commuting zones, which cover the population of the entire contiguous United States. Results from heteroscedastic and multilevel repeated measures regression models on male and female wages and household income reveal that within-group inequality is structured primarily by the uneven geographical and temporal distribution of economic development and to a lesser extent, politics, policy, and institutional factors. Importantly, this research finds a ``volatility curve'' that mimics the Kuznets and great U-turn problematic, in which within-group inequality initially declines, and then rapidly increases, with economic development. Fundamentally, findings reveals that within-group inequality is structured by characteristics of where one lives, challenging standard individual-centered approaches.

Author

• Tom VanHeuvelen, Indiana University