Rising Earnings Inequality in the United States: Determinants, Divergent Paths, and State Experiences

Abstract

Earnings inequality had been rising in the United States since the late 1970s. However, at the level of individual states earnings inequality has been rising, stable, and even falling in some states at different points in time. States vary in both the degree and character of change in earnings inequality, the extent to which they have experienced various inequality-increasing developments, and their institutional capacity to mediate these developments. I argue in this dissertation that this variation offers a rich opportunity for comparative analysis and an excellent lens for exploring the dynamics of the recent rise in earnings inequality.In this dissertation I utilize multiple methods and a state-level analysis to explore a number of research questions. What are the major factors driving rising state earnings inequality between 1980 and 2007? To what extent have states taken distinct causal paths to higher levels of inequality? How have states differed in terms of the types of wage growth that have result in rising, stable, or falling inequality? Throughout, special attention is paid to the manner in which state institutional arrangements, such as union strength and minimum wage rates, may mediate various inequality-increasing developments. Additionally, there is a focus on the contribution of industry flows, specifically losses of manufacturing employment and increasing employment in financial, technology and health-related occupations, to regional patterns of change in inequality.Overall, the intensity, timing, and number of factors that have converged upon any particular state vary substantially between regions and over time. A broad finding of this dissertation is that the net impact of many inequality-increasing factors is contingent upon a state's economic condition and institutional character. In particular, state institutional arrangements have powerfully mediated the impact of various inequality-increasing developments. Also, these analyses suggest that industry shifts have substantially impacted state earnings distributions and are critical to understanding regional patterns of change in earnings inequality. In closing, I suggest that much research on rising inequality at the national-level does not fully capture the substantial diversity of state experiences with rising inequality or the complexity of the interactions between the various factors producing those distinct experiences.