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Income Inequality

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A Teaching Topic in Socioeconomic and Political Context

Income Inequality

This topic explores social inequality and its application in social policy. It is important to examine the institutions that mediate the transmission and reproduction of inequality, including families, schools, neighborhoods, labour markets, the social welfare system, and the criminal justice system. This topic looks at recent empirical trends and theories about the causes and consequences of inequality (Harvard SUP 205).

It is important to understand what inequality means, the arguments on why it matters, and to compare inequality between countries of similar wealth. Structural shifts in labour markets have consequences for wage and employment inequality (Harvard SUP 205).

On a community level, this topic examines neighbourhood change, the dynamics of priority neighbourhoods, and the divergence of 'cities within cities'. It explores the trade-offs between policy interventions that aim to reduce the social problems associated with inequality. The Regent Park Revitalization Plan in Toronto provides one example of a policy intervention relevant to inequality (Toronto PPG 1005H).

Topic Learning Outcome: Students will be knowledgeable about recent trends surrounding income inequality in advanced economies and will be familiar with the contours of the policy debates about the appropriate response to these trends.

Core Concepts associated with this Topic: Absolute Inequality; Distributive-Redistributive Policies; Digital Divide; Generational Income Mobility; Gini Coefficient; Human Development Index (HDI); Identity Groups; Income Inequality; Inequality; Intra-Generational Mobility; Partial-coverage Program; Poverty; Quality of Life (QoL) Indicators; Social Indicators; Social Mobility; Stratification; Welfare Regimes; Welfare State.

Recommended Reading

Harvard SUP 205 Inequality and Social Policy

Jencks, Christopher. 2002. "Does Inequality Matter?" Daedalus131: 49-65.

Sen, Amartya. 2008. "From Income Inequality to Economic Inequality." In Grusky, David, Social Stratification: Class, Race, and Gender in Sociological Perspective

Smeeding, T. 2006. "Poor people in rich nations: The United States in comparative perspective." Journal of Economic Perspectives20:69–90.  

Autor, D. H. (2014). "Skills, education, and the rise of earnings inequality among the ‘other 99 percent’." Science, 344(6186), 843-851.

Borjas, G. J., Freeman, R. B., Katz, L. F., DiNardo, J., & Abowd, J. M. (1997). "How much do immigration and trade affect labor market outcomes?" Brookings papers on economic activity, 1-90.

Fortin, N. M., & Lemieux, T. (1997). "Institutional changes and rising wage inequality: is there a linkage?" Journal of Economic Perspectives75-96.

Mishel, L., & Sabadish, N. (2012) "CEO Pay and the Top 1% -- How Executive Compensation and Financial-sector Pay have fueled Income Inequality." Economic Policy Institute Issue Brief #331.

Thomas Piketty and Emmanuel Saez. 2007. "How Progressive is the U.S. Federal Tax System?" Journal of Economic Perspectives, 21(1): 3-24.

Toronto PPG 1005H The Social Context of Policy-Making

Fortin, Nicole, David A Green, Thomas Lemieux, Kevin Milligan, and W. Craig Riddell (2012) Canadian Inequality: Recent Developments and Policy Options Canadian Public Policy 38(2): 121-145

Chen, Wen-Hao, John Myles, Garnet Picot (2011) “Why Have Poorer Neighbourhoods Stagnated Economically while the Richer Have Flourished? Neighbourhood Income Inequality in Canadian Cities?” Urban Studies.

Ontario Common Front. (2012) “Falling Behind: Ontario’s Backslide into Widening Inequality, Growing Poverty, and Cuts to Social Programs”: http://www.weareontario.ca/wp-content/uploads/OCF-RPT-FallingBehind-20120829.pdf

Hulchanski, J. David. (2012) “The Three Cities Within Toronto: Income Polarization Among Toronto Neighbourhoods” http://neighbourhoodchange.ca/

John Stapleton, Brian Murphy, Yue Xing (2012) “The ‘Working Poor’ in the Toronto Region: Who They Are, Where They Live, and How Trends are Changing” http://metcalffoundation.com/publications-resources/view/the-working-poor-in-the-toronto-region-who-they-are-where-they-live-and-how-trends-are-changing-2/

Oreopoulos, Philip. (2008) “Neighbourhood Effects in Canada: A Critique” Canadian Public Policy, University of Toronto Press, vol. 34(2), pages 237-258, June.

Jackson, Lois, Lynn Langille, Renee Lyons, Jean Hughes, Debbie Martin, and Viola Winstanley. (2009) “Does moving from a high-poverty to lower-poverty neighbourhood improve mental health? A realist review of Moving to Opportunity.” Health & Place 15: 961–970.

United Way Report: Poverty by Postal Code 2: Vertical Poverty: Declining Income, Housing Quality and Community Life in Toronto’s Inner Suburban High-Rise Apartments (2011). Executive Summary: http://www.unitedwaytoronto.com/whatWeDo/reports/verticalPovertyReport.php

Rank, Mark Robert. (2005) Chapter 2: “Below the Line”. One Nation, Underprivileged: Why American Poverty Affects Us All. New York: Oxford University Press.

Interview by Alan Gregg with Linda McQuaig on "The trouble with billionaires.” 28 minutes. http://www.youtube.com/watch?v=HwuBs5Q6PHw

Sample Assessment Questions:

1.) What is the gini coefficient, and why is it important to understand this indicator for the analysis of income inequality.

2.) Some commentators suggest that a focus on income inequality is misguided, and that policy discourse should be focused on the measurement and alleviation of material poverty without reference to the gap between rich and poor. On a 2-3 page paper, discuss these arguments, either supporting or refuting them using real world evidence.

3.) Economists have identified a number of potential explanations for increasing income inequality in developed countries. Identify two of these explanations, and discuss how they may contribute to growing income inequality

Page created by Sean Goertzen and Ben Eisen, last edited on May 13, 2015. Drawn from a page created by Ian Clark on January 20, 2014.


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School of Public Policy and Governance