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Title: Investigating the Impact of Historical Factors on the Present Level of Income Inequality in the United States

Citation Type: Miscellaneous

Publication Year: 2016

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Abstract: Recently, income inequality has been rising in many parts of the world. This is creating some serious concerns among policymakers, as higher levels of income inequality can lead to various social ills. However, little is known about the role of historical factors in explaining the current level of inequality. I use the model of Durlauf (1996) as reference to create an econometric model to estimate this impact. I use current and historical data of US states to study the effect of different socio-economic factors on inequality, and I find that illiteracy rate in 1920 has a strong positive influence on current level of inequality. Higher illiteracy indicates a lower level of human capital, and that can affect income distribution. Through the intergenerational transmission of income, this income distribution is exacerbated in the future, leading to higher levels of inequality.

Url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2524616

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Authors: Islam, T M Tonmoy

Publisher: Elon University

Data Collections: IPUMS NHGIS

Topics: Other

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