The differing wage levels and income inequality in the US is a topic that has been studied extensively. However the factors that influence the wage rate and the relative importance of each of the variables remains unclear. This paper will conduct a study using regression analysis of cross sectional data to examine various different factors that affect wages considering education, marital and family status, gender, a number of control variables and how they are all connected.
Review of Literature
Education
It is commonly accepted in theory and in empirical results, that in general, a higher level of education will yield a higher wage (Acemoglu and Autor 2011). In recent years there are studies to suggest that the importance of education has increased (Atkinson 2008). Goldin and Katz (2007) found that the economic returns of completing high school today appear substantial and the economic benefits to college and post-college schooling are at historically high levels. Additionally, the wages of US individuals that have a postgraduate degree have increased significantly since 1979. Although a number of studies points towards education in itself not being relevant to the wage level but that education acts as a signal of ability to employers (Jeager and Page 1996).
Marriage
Historically, literature finds that married men generally earn more than their single counterparts with Antonovics and Town (2004) providing evidence that the marital wage premium is 19%. Using a similar
Murray, Harry. "Deniable Degradation: The Finger-Imaging Of Welfare Recipients." Sociological Forum 15.1 (2000): 39. Academic Search Premier. Web. 28 May 2013.
Supporters of getting a college degree often point to the statistics that college graduates earn more than their high school educated peers over a lifetime. Statistics by the U.S. Census Bureau reports that since 1977, “Adults with bachelor's degrees in the late 1970s earned 55 percent more than adults who had not advanced beyond high school. That gap grew to 75 percent by 1990 -- and is now at 85 percent.” A gap of an 85% pay difference is a huge figure and a clear reason why college is a great option for some people. But there are problems with that figure because when the number of college graduates who are either unemployed or underemployed is taken into account it changes the value of the statistic. In an article by Businessweek’s Richard Vedder we get statistics to counter that argument. He tells of how the number of new college graduates far exceeds job growth in technical, managerial, and professional jobs where graduates traditionally have searched for employment. As a consequence, we have underemployed college graduates doing jobs historically performed by those with just a highschool education. He says we have “more than 100,000 janitors with
Each year income increases in the United States. Economic inequality and political inequality may have a connection where our democracy could be affected but americans have the ability to solve this problem. Economic inequality refers to wealth or income between different groups or a society as a whole. There have been past social movements that have tried to improve this problem such as women's suffrage and more. We are still trying to resolve this issue of economic inequality.
Income Inequality in America is a problem that’s been going on for decades, and many feel that it hardly exists, the many people that feel that way are highly uneducated, and seem to not really care about this tremendous problem that in one’s eyes really has no end in the near future, in fact it has been gradually rising and one feels that it’s just not fair. Unfortunately, there’s not much that can be done, only of course if the poor class of people decide to actually educate themselves and get a higher education. One says poor class, simply because that’s how they’re classified. There are five types of levels that Americans are classified as, and they are: 1. Upper Class, 2. Upper Middle Class, 3. Middle Class, 4. Working Class, 5. Poor.
America prides itself on being one of the most successful democratically governed counties. The idea of the American dream is that all citizens have equal civil liberties and a responsive government. However the effectiveness of democracy is being threatened by increasing inequality in the United States. “The dominant view holds that economic development and modernization are the key to the continued growth of democracy” (Snider and Faris 2001; United Nations, 2011). In the last decade especially the American Society has had significant moments of increasing equality. In 1960 the Civil Rights Movement changed how different races were viewed. Also in the 1960s the Women’s Right Movement push for equal rights between genders. Both of these
Income Inequality in the United States has been a problem for decades. Since the year 1913 the gap in income inequality between the rich and poor in the U.S. has widened and has been a hot topic for debate. The rich keep getting richer and the poor are getting poorer. Thomas Pogge a German philosopher and a professor at Yale University argue that we live in a world where income and wealth are very unevenly distributed throughout society, thus leading to widespread poverty. Amartya Sen an Indian economist and philosopher of Bengali ethnicity argues that really freedoms should be both the ends and means of human development. Robert Reich a professor at Berkeley University and former secretary of labor under Bill Clinton, makes an fluent and impassioned
The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.
One of the social issues concerning power, status, and class in American society today is income inequality. The income gap between the social classes has increased drastically throughout the last few decades, creating a significant gap between the wealthy and the poor. This gap has become so large that the middle class has nearly diminished, creating a social class comprised of the rich and the poor. The significant gap between the two social classes is unhealthy for the economy because it provides too much power in the hands of those with high social status.
Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The
Currently there are many problems and flaws with the way the Canadian government’s policies deal with healthcare, income inequality and poverty. Time to time changes in policies have been made, perhaps to improve these issues, however, the gap between rich and poor keeps increasing and there is very little improvement in healthcare and the economy. In fact, healthcare keeps on becoming costly. Major issues like income inequality and poverty are not being taken care of by the government. According to Dr. Raphael (2002) poverty is caused by several reasons such as inequality in people’s income, weak social services and lack of other social supports (p.VI). He states, “Poverty directly harms the health of those with low incomes while income
A major social problem in America today is its inequality of the distribution of income. "Income inequality refers to the gap between the rich and the poor. The United States has the most unequal income distribution in the industrialized world, and it is growing at a faster rate than any other industrialized country" (Eitzen & Leedham, pg. 37). The main reason as to why income is distributed so unequally is because of the gap between social classes.
%This paper investigates the influence of income inequality aversion on labor hours supplied, tax preference, efficiency, and the income share of high-skilled workers in a redistribution game. The redistribution game represents a two-stage game where workers vote for a flat income tax rate in the first stage and provide their labor supplied in the second stage given the former income tax. Consequently, workers adjust their labor supplied to a way of reducing income inequality. This adjustment mainly caused by decrease in the labor supplied of the high-skilled workers results in decrease in total income and the income share of the high-skilled workers. Furthermore, regarding preferences on the tax rate, the higher tax rate is not necessarily
Income inequality is a phenomenon that is undeniably real in our current world, and more specifically, the present United States. Canon describes how the gap between the elite and the poor has been consistently growing for many years and continues to widen (189). Whether the differences between the top and the bottom are a threat to current society is another story. Does income inequality undermine a democracy? Ray Williams argues that societies are strongest when they have a higher rate of equality while George Will challenges that inequality is the very basis of what make democratic processes. A. Barton Hinkle takes a Libertarian approach to the idea that inequality is threatening to democracy and how it can be fixed. Some threats that each article addressed were economic impacts, civility, and fairness. Overall, there is a definite need to evaluate whether the United States democracy is being threatened due to the continuous rise of the elites and the fall of the working class.
In terms of attributing to the wage gap, worker discrimination and varying preferences occurs largely based on views surrounding what jobs are male or female dominated. Although worker discrimination and wage discrepancies are a reality in Brazil, the labor market conditions for women are becoming better over time. Despite gender segregation in the labor market, the wages of women are sometimes evenly or positively affected. For instance, “For industries and occupations where women receive higher remuneration than men, we observe that women have higher education levels, indicating that their higher remuneration is due to individual characteristics” (Madalozzo 165). Even though a positive correlation has been observed regarding women’s education level and wage, in general, men still benefit more based on their individual characteristics, which is why they are generally paid more. According to Madalozzo, “This difference in pay is decreasing but was still a significant 15.4 percent, on average, in 2007,” and “…the present study improves the quantification of this wage gap, showing that the trend of a decreasing gap remains, but is losing pace overtime” (165-66). In order to combat the presence of the wage gap, policies regarding bettering women’s education and incentivizing women to enter the labor market should be implemented because the current system discourages women to enter the market. According to Galor and Weil, “…increasing women’s relative wages reduces fertility by
Our question is, “Does the level of education you receive affect the amount of income you will earn?” Currently, it is said that you need at least a college degree to earn a decent income. This question is often important because in todays society, the amount of money one makes is important to the quality in which one wishes to live. By looking at data we have found through our research it seems as if the higher your level of schooling, reaching anywhere from a high school diploma to a phD, generally leads to a higher average income. In an online article posted on dailyedventures, a close look is taken at five different segments which include, high school diploma or GED, high school diploma, training in vocational schools or associates degree, bachelors degree, and lastly a graduate degree, and specific occupations within those segments. The lowest reported salary came from the first segment, high school diploma or GED. At an average income of only $17,700 a year were waiters/waitresses. The average income increased with the amount of school and the occupation in which you chose, yet this article proved just what we were looking to prove. At an average income of $166,400+ surgeons chimed in, proving that the longer you go to school, the more money you are likely to make. Another article looked at similar information, this time it was against the unemployment rates in the United States. In March 2014 the Bureau of Labor Statistics looked at the earnings and unemployment rate