6/10/20

Race and gender income inequality in the USA: black women vs. white men


I wrote this paper five years ago and forgot about it because of the priority to work with the DPRK nuclear tests in 2016. Now it looks like an appropriate time to make it available for a broader audience and I published it on SSRN.  A larger part of this paper is devoted to modeling based on a mechanical model of income distribution and this part can be omitted by the reader as extremely specialized. There are important policy recommendations based on the facts of dramatic income inequality between white men and black women. The principal result - all people have the same capabilities, and the observed income disparity comes from the inadequate "frozen" socioeconomic structure of the US society. 


Abstract


Income inequality between different races in the U.S. is especially large. This difference is even larger when gender is involved. In a complementary study, we have developed a dynamic microeconomic model accurately describing the evolution of male and female incomes since 1930. Here, we extend our analysis and model the disparity between black and white populations in the U.S., separately for males and females. Unfortunately, income microdata provided by the U.S. Census Bureau for other races and ethnic groups are not time compatible or too short for modeling purposes. We are forced to constrain our analysis to the black and white population, but all principal results can be extrapolated to other races and ethnicities. Our analysis shows that black females and white males are two poles of the overall income inequality. The prediction of income distribution for two extreme cases with one model is the main challenge of this study. 


Link to the full (pdf) paper at SSRN 


Some policy recommendations
As a principal result of this study, we propose to develop a responsible social policy aimed at the acceleration of real economic growth. Equal opportunity for genders and races to use the largest instruments of working capital will bring an immediate increase in real Gross Domestic Income, i.e. in Gross Domestic Product. The effect of this social policy will be also observed in the long-run before the distribution of instrument sizes over genders and race becomes even. Here we do not even say about the resulting social equality which will be the outcome of income equality between races and genders. This does not imply income equality between people, however.

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