Précis
Inequality update
Telecommuting and home life
Economic importance of good schools
Consumer confidence post-September 11
Earnings, income, and wealth are unequally distributed among American households and, according to Santiago Budria Rodriguez, Javier Diaz-Gimenez, Vincenzo Quadrini, and Jose-Victor Rios-Rull writing in the Federal Reserve Bank of Minneapolis Quarterly Review, the basic facts about those inequalities did not change much in the 1990s.
Wealth is the most concentrated of the three variables in 1998. Statistics such as the Gini index show that labor earnings are somewhat more concentrated than income in aggregate, but there is a twist to these distributions at the top of the scale. The authors write, "The Lorenz curve for earnings lies below the Lorenz curve for income in the bottom part of the distribution, and these roles are reversed after approximately the 87th percentile. This implies that income is more equally distributed than earnings except in the top tail of the distribution." They attribute this to income transfers to lower income households.
To measure changes in concentration, Rodriguez and his colleagues compared the 1998 results of the 1998 Survey of Consumer Finances (SCF) to those of the 1992 SCF, adjusting the latter for changes in variable definition. They found small changes between the two surveys. Earnings inequality, as measured by the Gini index, edged down from 0.629 in 1992 to 0.611 in 1998. Over the same interval, the Gini index for income decreased from 0.574 to 0.533, while the Gini index for wealth inched up from 0.791 to 0.803.
Using these distributions of inequality, Rodriguez and his colleagues define rich and poor subgroups in terms of wealth, income, and earnings. They found, "The rich tend to be rich in all three dimensions. This is not the case for the poor." Specifically, the earnings-poor had a fair amount of wealth. Part was accounted for by the presence in the lower earnings group of retired households with some accumulated wealth and business owners with negative labor earnings due to financial distress in the business, but significant wealth and capital income. Conversely, the wealth-poor, who tended to be young and single, were often reasonably well off in terms of earnings and income.
Wide-scale working from home with the support of computers and telecommunications tolls has been forecast as next year’s big thing for the past couple of decades. "Yet," writes British sociologist Susan Baines in the journal New Technology, Work and Employment, "the uptake of telework has persistently lagged behind expectations."
One of the barriers to its adoption Baines examines is the stress that results from blurring the boundaries between work and home. In general, the discomfort involved trying to fit work into the physical and, more importantly, the emotional space of a worker’s home has been under-recognized. Several teleworkers interviewed by Baines reported feeling either physically cramped by the additional paraphernalia of an at-home workspace or emotionally stressed from domestic conflict over the use of space, or both.
Some of this tension may reflect the fact that the study was conducted in Great Britain and Baines cites other papers that suggest that housing there is poorly designed for working in. However, Baines’ point that "the home can be an awkward and inflexible place to work, a place where space is often not adequate for the competing demands of domestic life and work," may well be more universal. See, for a complementary example, the Stanford University study which characterized telework as "invading" the home and intruding into many other aspects of life as well. (The Précis in the March 2000 Review summarized this report.)
Economic importance of good schools
"There is," according to Eric A Hanushek in a recent NBER Working Paper, "mounting evidence that quality [of schooling]—generally measured by test scores—is positively related to individual earnings, productivity, and economic growth." Early studies of education and wages focused on the return to an undifferentiated year of schooling and suggested little effect of differences in cognitive ability if quantity of education was held constant. More recent studies surveyed by Hanushek indicate that higher quality of education, as measured by standard tests, is linked to individual productivity and earnings. Also, higher individual achievement scores are correlated with the probability of continued school attendance— a sort of quality-leads-to-quantity effect.
Consumer confidence post-September 11
The events of September 11th had significant effects on the U.S. economy beyond the loss of human life and destruction of property. According to C. Alan Garner, in the Federal Reserve Bank of Kansas City Economic Review, consumer confidence, which many expected to be hugely impacted in the aftermath of the attacks, proved to be "surprisingly resilient."
Both major private surveys of consumers (one by the Conference Board and one by the University of Michigan) fell sharply in the autumn of 2001. Garner’s research, however, shows that some decline occurred before September 11 and that the impacts of the terrorist attacks were not statistically significant once already deteriorating conditions were taken into account. By the end of 2001, both indexes of consumer attitudes had started to recover and seemed to be maintaining their usual relationships to other economic indicators.
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