Race and income distribution: Evidence from the US, Brazil and South Africa

January 31, 2011

By:Carlos Gradín (Universidade de Vigo)
The aim of this paper is to provide some empirical evidence about black-white differentials in the distribution of income and wellbeing in three different countries: Brazil, US and South Africa. In all cases, people of African descent are in a variety of ways socially disadvantaged compared with the relatively more affluent whites. We investigate the extent of these gaps in comparative perspective, and analyze to what degree they can be explained by differences in the observed characteristics of races, such as where they live, the types of household they have, or their performance in the labor market. We undertake this analysis with the Oaxaca-Blinder approach at the means and with the DiNardo-Fortin-Lemieux approach at the entire distribution. Our results show how the factors underlying the racial divide vary across countries and income quantiles.
Keywords:racial inequalities, income distribution, United States, Brazil, South Africa.

The contribution of the minimum wage to U.S. wage inequality over three decades: a reassessment

January 19, 2011


By: David Autor

Alan Manning

Christopher L. Smith

URL: http://d.repec.org/n?u=RePEc%3Afip%3Afedgfe%3A2010-60&r=ltv

We reassess the effect of state and federal minimum wages on U.S. earnings inequality, attending to two issues that appear to bias earlier work: violation of the assumed independence of state wage levels and state wage dispersion, and errors-in-variables that inflate impact estimates via an analogue of the well known division bias problem. We find that erosion of the real minimum wage raises inequality in the lower tail of the wage distribution (the 50/10 wage ratio), but the impacts are typically less than half as large as those reported in the literature and are almost negligible for males. Nevertheless, the estimated effects of the minimum wage on points of the wage distribution extend to wage percentiles where the minimum is nominally non-binding, implying spillovers. We structurally estimate these spillovers and show that their relative importance grows as the nominal minimum wage becomes less binding. Subsequent analysis underscores, however, that spillovers and measurement error (absent spillovers) have similar implications for the effect of the minimum on the shape of the lower tail of the measured wage distribution. With available precision, we cannot reject the hypothesis that estimated spillovers to non-binding percentiles are due to reporting artifacts. Accepting this null, the implied effect of the minimum wage on the actual wage distribution is smaller than the effect of the minimum wage on the measured wage distribution.


Economic Preferences and Attitudes of the Unemployed: Are Natives and Second Generation Migrants Alike?

January 6, 2011
By: Amelie F. Constant
Annabelle Krause
Ulf Rinne
Klaus F. Zimmermann
URL: http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1088&r=ltv
In this paper we study the economic effects of risk attitudes, time preferences, trust and reciprocity while we compare natives and second generation migrants. We analyze an inflow sample into unemployment in Germany, and find differences between the two groups mainly in terms of risk attitudes and positive reciprocity. Second generation migrants have a significantly higher willingness to take risks and they are less likely to have a low amount of positive reciprocity when compared to natives. We also find that these differences matter in terms of economic outcomes, and more specifically in terms of the employment probability about two months after unemployment entry. We observe a significantly lower employment probability for individuals with a high willingness to take risks. Some evidence suggests that this result is channeled through reservation wages and search intensity.
Keywords: Unemployment; Migration; Personality Traits; Risk Attitudes; Time Preferences; Trust; Reciprocity
JEL: F22