The Kuznets Curve and the Great U-Turn: Income Inequality in U.S. Counties, 1970 to 1990

Abstract

The authors examine the determinants of inequality in the distribution of family income in approximately 3,100 counties of the United States in 1970, 1980, and 1990. Such a study provides a window on global trends in social inequality during the period, which spans the tail end of the Kuznets curve and the more recent upswing in income inequality. Results from random-effects regression models that control for unmeasured heterogeneity among states reveal the continued importance of the Kuznetsian pattern of declining inequality with economic development, a positive effect of urbanization on inequality, a declining positive impact of sector dualism, an increasing positive effect of educational heterogeneity, and a persistent effect of racial dualism. Several variables associated with the recent upswing in inequality have significant effects : female labor-force participation (negative), female-headed households (positive), percent of the population over age 65 (changes from positive to negative over the period), manufacturing employment (negative), and unemployment (ambiguous). They also discuss methods of estimating the Gini coefficient for income inequality at the county level and measures of sector (farm/nonfarm) dualism, racial (Black/White) dualism, and educational heterogeneity