Changing Patterns of Income Inequality in U.S. Counties, 1970–2000

TLDR

The upswing in economic inequality that has affected advanced industrial societies in the late 20th century has been particularly conspicuous in the United States. The study investigates the causes of rising income inequality using family income data from 3,098 U.S. counties across 1970–2000. The authors model county‑level income inequality by attributing labor‑market and sociodemographic factors to counties and political‑institutional factors to states, and apply multilevel analysis to separate cross‑sectional and longitudinal effects.

Abstract

The upswing in economic inequality that has affected a number of advanced industrial societies in the late 20th century has been particularly conspicuous in the United States. The authors explore its causes using data on the distribution of family income in 3,098 U.S. counties in 1970, 1980, 1990, and 2000. The authors build a model of within-county income inequality that assumes that distribution processes involving labor market and sociodemographic variables operate primarily at the county level and those involving the political and institutional context operate primarily at the state level. Multilevel methods are used to distinguish county cross-sectional, state cross-sectional, and longitudinal effects on inequality. The authors find that, when features of the state-level institutional and political context are associated with inequality, these effects are larger longitudinally than cross-sectionally. A range of other factors, including economic development, labor force changes, shifts in the racial/ethnic and gender composition of the labor force, educational expansion, and urbanization are found to have comparatively large effects, both longitudinally and cross-sectionally.