Spatial and Labor Market Contributions to Earnings Inequality

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Spatial and Labor Market Contributions to
Earnings Inequality

• JK Perry
• Dept. of Geography
• Texas AM University
• http//geog.tamu.edu/jperry/index.htm

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Increase in Earnings Inequality
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Table of Contents

• Spatial Contributions to Earnings Inequality
• Labor Market Contributions to Earnings
  Inequality
• Does Location Matter?
• Family Inequality

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Spatial Contributions to Earnings Inequality

• How residential location matters
• Employers and Location
• Inequality in Local Schools

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How Residential Location MattersKains Spatial
Mismatch Hypothesis
"Stated most simply, the spatial mismatch
hypothesis argues that limitations on the
residential choices of minorities, particularly
the almost total exclusion of African Americans
from white suburban areas, inhibit minority
access to jobs -- especially low-skill jobs,
which have been steadily dispersing from central
cities to the suburbs of most metropolitan areas
for the past 30 years. The best evidence in this
area suggests that spatial mismatch has
significant impacts on minority employment."
Roberto M. Fernandez
What devices could mass transportation utilize to
counter the effects of Spatial Mismatch?
Other than mass transportation, what are some
possible solutions to Spatial Mismatch?
Is Spatial Mismatch historical? Can you think of
any historical examples?
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Employers and Location

• The Gautreaux Housing Project
• Chicago
• Inner-city and Suburb
• Moving to Opportunity
• Baltimore, Boston, Chicago, Los Angeles, New York
• Random assignment

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Moving to Opportunity
After a few years the families appear to be
adapting to their new communities by learning a
new set of values and choices associated with
upward mobility for themselves and their
families. Early research findings suggest that
the move to low-poverty communities quickly
results in lower levels of violent crime and
lower levels of medical care needed in such areas
as asthma-related complaints.
Goering and Kraft
Why do you suppose these changes occurred so
quickly?
What other changes would you expect in the future?
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Inequality in Local Schools
In the 20 or so years before the state adopted
the TAAS exit test in the early 1990s, six in 10
African American and Hispanic students made it
from 9th grade to high school graduationaccording
to recent data compiled by Walter HaneyThat
figure has dwindled to 50 percent since the
introduction of the graduation test, meaning that
as many as 200,000 minority students have left
schoolvery likely due to the TAAS roadblock. By
contrast, the proportion of white 9th graders
staying in school through graduation has remained
steady at 70 percent.
Do standardized tests really help reduce
inequality? Why would John Bishop (p5) recommend
raising high school standards?
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Labor Market Contributions to Earnings
Inequality

• Responses to the Rising College Wage Premium
• Technology in the Workplace
• Influences of Labor Market Institutions

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Responses to the Rising College Wage Premium
Bishop and Murnane agree there is a raising
college wage premium.
John Bishop suggests raising high school
standards, increasing student financial aid,
making tuition tax-deductible and halting tuition
increases at public institutions.
Richard Murnane argues that states should allow
tuition at public institutions to continue
rise, but they should allocate more funds to
need-based financial aid.
Why is tuition so integral?
Why do they seem to focus on public institutions
and omit private institutions if the focus is on
inequality?
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Technology in the Workplace
Peter Capelli studied work establishments and
tried to make conclusions regarding regional
agents of inequality. Unit of Analysis
The relative utilization of skilled labor has
been rising despite increases in its relative
cost. There has also been a reduction in the
fraction of the work force in production jobs.
How does this affect inequality?
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Influences of Labor Market Institutions
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Influences of Labor Market Institutions
Discussion Questions
Why would inequality in earnings lead to
inequality in living standards?
What do you believe is the role of labor unions
in inequality?
Kodrzycki concludes with the following statement,
the US cannot remain competitive if
college-educated workers continue to command
higher and higher pay. Do you agree with this
statement?
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Does Location Matter?

• Changes in Segregation by Race and Income
• Does Location Matter and if so Why?

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Changes in Segregation by Race and Income
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Does Location Matter and if so Why?
Decreased relative incomes combined with rising
segregation.
Do you agree with Wilson that that low-income
blacks have been negatively influenced by the
exodus of middle-class blacks from the ghettos
since the 1970s? What do you suppose are some of
the reasons individuals left while other
individuals chose to stay?
Does location matter more in the US than other
developed countries? What about under-developed
countries?
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Family Inequality
faster growth in the demand for college-educated
workers than in the supply in regions with a more
educated population. What does college-educated
mean here? What steps can be taken to increase
the supply?