Poverty and income inequality

Kevin Corinth, Bruce Meyer, Angela Wyse, 25 July 2021

Data on the US homeless population are sorely lacking, leaving key questions about their number, deprivation and mobility unanswered. This column introduces a new dataset that sheds new light on these questions by linking a census of the entire US homeless population with administrative tax and government programme data. One finding the data reveal is that while many homeless individuals work and the vast majority are connected to the social safety net, they nonetheless fail to see improvements in economic wellbeing over more than a decade. 

Alessandra Bonfiglioli, Federica De Pace, 25 June 2021

The rise in income inequality and, more prominently, in the wage gap between men and women has been one of the major concerns among policymakers and the public in recent years. This column presents new evidence from Germany on the impact of exports on the gender wage gap which shows that an increase in a plant’s exports significantly reduces the wage gap between male and female co-workers in white-collar occupations, but widens it for employees in blue-collar occupations. The findings suggest that designing policies that support women taking part in trade, especially in positions in which they would benefit from their comparative advantage, is crucial to maximise the potential benefits from globalisation.    

Martin Ravallion, 24 June 2021

Surveys are an often unreliable method for measuring top incomes, due largely to low compliance rates among rich households. This column proposes a way to correct for selective compliance. Using the geographic distribution of survey-response rates to calculate how the household-level probability of agreeing to be interviewed varies with own-income and other covariates, the method improves on ad hoc approaches to reweighting survey data. A behavioural micro model of compliance can more accurately reveal top income recipients, thereby updating tax records and refining redistributive policies.

Niklas Engbom, Gustavo Gonzaga, Christian Moser, Roberta Olivieri, 07 June 2021

Relatively little is known about the patterns of inequality in developing countries, despite their importance for designing social and economic policies. This column analyses administrative and household data to describe the trends in earnings inequality and dynamics in Brazil since late 1980s. The findings suggest that the observed fall in earnings inequality and volatility may have been driven by the process of formalisation and other changes within the informal sector. 

Martha J. Bailey, Shuqiao Sun, Brenden Timpe, 06 June 2021

Preschool attendance in the US is largely funded by parents, which means that the children of more affluent and educated parents are more likely to attend.  This column looks at the impact of Head Star, a large-scale preschool programme that serves roughly 1 million children annually in the US. The results show that children age-eligible for Head Start went on to achieve substantially higher levels of education. Head Start also led to improvements in adult economic self-sufficiency. Overall, the findings suggest that a large-scale preschool programme – even one with less per-child expenditures than model preschools – can deliver long-run benefits to students.

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