"Urban Inequality"

Glaeser, Resseger, and Tobio:

Urban Inequality, by Edward L. Glaeser, Matthew G. Resseger, and Kristina Tobio, NBER Working Paper No. 14419, October 2008 [Open link]: Abstract What impact does inequality have on metropolitan areas? Crime rates are higher in places with more inequality, and people in unequal cities are more likely to say that they are unhappy. There is also a negative association between local inequality and the growth of both income and population, once we control for the initial distribution of skills. What determines the degree of inequality across metropolitan areas? Twenty years ago, metropolitan inequality was strongly associated with poverty, but today, inequality is more strongly linked to the presence of the wealthy. Inequality in skills can explain about one third of the variation in income inequality, and that skill inequality is itself explained by historical schooling patterns and immigration. There are also substantial differences in the returns to skill, related to local concentrations in different industries, and these too are strongly correlated with inequality.

The paper concludes with:

Area-level income inequality does not create the same policy implications as national income inequality. At the nation level, an egalitarian, Rawlsian social welfare function implies the need to reduce income inequality. However, egalitarianism does not provide the same implications about local inequality. Shuffling people across the country in a way that creates more homogeneity at the local level would not seem like a natural means of increasing social welfare given standard social welfare functions. Instead, such functions would instead push towards a focus on policies like human capital development that would promote equality nationwide. We concluded by noting that localities are poorly poised to reduce inequality on their own. Any attempt at local redistribution is likely to lead to out-migration of the wealthy. Poor localities don’t have the resources to improve failing schools. However, if national policies are going to try to reduce inequality by making the distribution of human capital more equal, then inevitably localities must be involved. Schools are run at the local level. The combination of national resources and local operation seems most likely to improve the quality of the poorly performing schools. Unfortunately, bringing together such different levels of government is inevitably quite difficult. Moreover, the strong correlation between human capital today and human 34 capital more than fifty years ago suggests that any change will not happen overnight.

Comments

[Jas Jain]

--
We are watching the beginnings of the Greater Depression forecast years ago by yours truly.

Bigger the "bankers' mischief" bigger the depression to follow! Bankers have never misbehaved, in all of recorded history, as much as in recent years. No? Greenspan and Bernanke head the list. Economists as central bankers?

Jas

[Denis Drew]

I am beginning to read a book called Cracks in the Pavement by a sociologist who lived for 9 years in 5 ghetto neighborhoods in NYC and LA. I was attracted to the book by a blurb portraying ghetto schools as not working because the students and teachers did not want them to work -- teachers who tried to make a difference were chased off -- all because the students knew they were not going anywhere anyway -- because the jobs open to them were only attractive to people desperately trying to escape being REALLY poor in Mexico or Slovakia or Pakistan.

Not being an economist -- or rather, being a typical Rent-A-Center wise American on economics (me until my late 50s) the sociologist did not realize that pay levels of low wage Americans are what amounts to completely arbitrary.

Today's minimum wage is ONE-QUARTER of the real average wage ("real" defined as all non-investment, personal income divided by hours -- not whatever defines the gov average wage which grew only 20% over the last 40 years while per capita income grew 100%). Ike's and LBJ's minimum wages were TWO-THIRDS of the real average wage (really pushing it; Ike's minimum was of course sneaked through the Senate by then majority leader LBJ when his "good ole boys" weren't looking).

ONE-HALF of the real average wage (today, about $25/hr) is probably a practicable "arbitrary" target. Jumping to $13/hr would add 3 to the cost of GDP output -- and presumably to inflation: about how much we grow every couple of years (talk about arbitrary!).

About half the rational decisions in the free market are about maneuvering yourself into the position of indispensable last-lot seller (who others cannot complete their business without) and maneuvering everybody else into the position of desperate last-lot sellers -- extremely rational. The way to maneuver labor into the position of equally powerful, last-lot seller is to institute as high an "arbitrary" minimum wage as practicable and (today's modern answer to the race to the bottom -- practiced around the world except in one Rent-A-Center ignorant OECD economy) legally mandated, sector-wide labor agreements.

The Crips and the Bloods could not whip a respectable paying Ronald McDonald -- and wouldn't want to. Keep the minimum wage at $1.50/hr below the 1956 level (at 250% of 1956's per capita income -- last years minimum wage matched 1939's, $4.65/hr w/no tax!) and keep a self destructive prohibition (a million drug offenders doing hard time at any one time -- millions more have and now can't get a respectable job -- 10 million more with job ruining probationary felony convictions: 100 million addicts saved?): and you get the same gangs you had during Prohibition, just a different ethnic makeup.

[Equality]

If inequality is a problem, then stop making the problem worse with regressive redistribution schemes. Property taxes, sales taxes, and above all the inflation tax make inequality greater. Get rid of them.

[anne]

http://angryarab.blogspot.com/2008/10/levels-of-economic-disparity-in-major.html

October 24, 2008

"Levels of economic disparity in major US cities, including New York and Washington DC, are comparable to those of African cities, a United Nations report has concluded." *

* http://english.aljazeera.net/news/americas/2008/10/2008102321493551343.html

As'ad AbuKhalil

[anne]

http://www.guardian.co.uk/world/2008/oct/23/population-egalitarian-cities-urban-growth/print

October 23, 2008

Wealth Gap Creating a Social Time Bomb • Race behind division in US cities, says UN report • Beijing is most egalitarian place in the world
By John Vidal - Guardian

Growing inequality in US cities could lead to widespread social unrest and increased mortality, says a new United Nations report on the urban environment.

In a survey of 120 major cities, New York was found to be the ninth most unequal in the world and Atlanta, New Orleans, Washington, and Miami had similar inequality levels to those of Nairobi, Kenya Abidjan and Ivory Coast. Many were above an internationally recognised acceptable "alert" line used to warn governments.

"High levels of inequality can lead to negative social, economic and political consequences that have a destabilising effect on societies," said the report. "[They] create social and political fractures that can develop into social unrest and insecurity."

According to the annual State of the World's cities report from UN-Habitat, race is one of the most important factors determining levels of inequality in the US and Canada.
megacities

"In western New York state nearly 40% of the black, Hispanic and mixed-race households earned less than $15,000 compared with 15% of white households. The life expectancy of African-Americans in the US is about the same as that of people living in China and some states of India, despite the fact that the US is far richer than the other two countries," it said.

Disparities of wealth were measured on the "Gini co-efficient", an internationally recognised measure usually only applied to the wealth of countries. The higher the level, the more wealth is concentrated in the hands of fewer people.

"It is clear that social tension comes from inequality. The trickle down theory [that wealth starts with the rich] has not delivered. Inequality is not good for anybody," said Anna Tibaijuka, head of UN-Habitat, in London yesterday.

The report found that India was becoming more unequal as a direct result of economic liberalisation and globalisation, and that the most unequal cities were in South Africa and Namibia and Latin America. "The cumulative effect of unequal distribution [of wealth] has been a deep and lasting division between rich and poor. Trade liberalisation did not bring about the expected benefits."

The report suggested that Beijing was now the most egalitarian city in the world, just ahead of cities such as Jakarta in Indonesia and Dire Dawa in Ethiopia.

In Europe, which was generally more egalitarian than other continents, Denmark, Finland, the Netherlands and Slovenia were classed as the most equal countries with Greece, the UK and Spain among the least. "Disparities are particularly significant in the cities of eastern Europe, larger Spanish cities and in the north of England," it said.

It documents the seemingly unstoppable move of people away from rural to urban areas. This year it is believed that the number of people living in urban areas exceeded those in the countryside for the first time ever, but the report says there is no sign of the trend slowing.

"The dramatic transition between rural and urban communities is not over. Urbanisation levels will rise dramatically in the next 40 years to reach 70% by 2050," it predicts.

The most dramatic urbanisation has been taking place in China, with many millions of people moving from the countryside to cities. The report says 49 new cities have been built in the past 18 years. The rapid transition to an urban society has brought great wealth but also many negative results.

"China has attained some of the deepest disparities in the world with urban incomes three times those in rural areas. Inequalities are growing, with disproportionate rewards for the most skilled workers ... and serious problems for the unemployed and informal workers."

Urban growth rates are highest in the developing world, which absorbs an average 5 million new urban residents a month and is responsible for 95% of world urban growth. The report predicts that Asian cities will grow the most in the next 40 years and could have 63% of the world urban population by 2050.

Tokyo is expected to remain the world's largest mega city, with 36.4m people by 2025. But Mexico City, New York, and Sao Paulo could give way in the league table to Mumbai, Delhi and Dhaka. Kinshasa and Lagos are the two African cities expected to grow the most, with each adding more than 6 million people by 2025.

Rather than countryside to city movement, which has marked rapid population growth in the last 40 years, the UN expects more people to move from city to city.

Capital cities in particular are attracting much more of countries' investments and are growing fast. Some are becoming home to nearly half a country's population.

But the report also identified what it believes is the emergence of a new urban trend, with many cities now shrinking in size. The populations of 46 countries, including Germany, Italy, Japan and most former soviet states, are expected to be smaller in 2050 than they are now, and in the past 30 years, says the report, more cities in the developed world have shrunk than grown.

It found that 49 cities in the UK, including Liverpool and other old industrial centres in the north of England, and 100 in Russia reduced in size between 1990 and 2000, mainly because of unemployment. In the US 39 cities are smaller now than they were 10 years ago.

The reasons for the decline of cities was mostly economic, but the report says that the environment is now an important factor.

Air quality and pollution from mines, power plants and oil exploration have been responsible for population losses in India, Mexico and Africa, it says. "Cities tend to struggle most with health-threatening environmental issues, such as the lack of safe water, sanitation and waste."

[Icarus]

None of these remedies address the root cause of Inequality, which is a combination of fate, and decision making. Fate can only be changed over macro periods, as people make decisions which keep themeselves safer, and their offspring safer.

People with less than $1000 in the bank are having children. Just think about that. They don't have enough savings to have any net worth, and yet, they 'choose' to procreate. Is there really any confusion as to why people stay stuck in poverty?

[Robert Edele]

Government corruption is also heavily associated with inequality. I'm not shocked to see New York City high up in the list as we have a very corrupt city government.

Wall Street pays extremely low effective tax rates. The highest rates are paid by low-income apartments. Both baseball teams got very expensive new stadiums subsidized by the city. The only two expansions to the train system in recent times are the Air Train to help rich tourists get to Manhattan more easily and a 2nd avenue line covering very wealthy parts of Manhattan.

We have a police that is more interested in doing drug busts and harassing homeless people than in cracking down on Wall Street crime or corrupt contractors.

With all that in place, it's no small wonder that there's massive inequality.

[Patricia Shannon]

http://www.sciencedaily.com/releases/2008/10/081023120228.htm

ScienceDaily (Oct. 26, 2008) — Those who worship a higher power often do so in different ways. Whether they are active in their religious community, or prefer to simply pray or meditate, new research out of Temple University suggests that a person's religiousness – also called religiosity – can offer insight into their risk for depression.

Lead researcher Joanna Maselko, Sc.D., characterized the religiosity of 918 study participants in terms of three domains of religiosity: religious service attendance, which refers to being involved with a church; religious well-being, which refers to the quality of a person's relationship with a higher power; and existential well-being, which refers to a person's sense of meaning and their purpose in life.

In a study published on-line this month in Psychological Medicine, Maselko and fellow researchers compared each domain of religiosity to their risk of depression, and were surprised to find that the group with higher levels of religious well-being were 1.5 times more likely to have had depression than those with lower levels of religious well-being.

Maselko theorizes this is because people with depression tend to use religion as a coping mechanism. As a result, they're more closely relating to God and praying more.
Maybe a factor is the type of religion. I would expect that a religion which encourages people to be intolerant and judgemental might make people more prone to depression.
Researchers also found that those who attended religious services were 30 percent less likely to have had depression in their lifetime, and

Maselko says involvement in the church provides the opportunity for community interaction, which could help forge attachments to others, an important factor in preventing depression. She added that those with higher levels of existential-well being have a strong sense of their place in the world.

"People with high levels of existential well-being tend to have a good base, which makes them very centered emotionally," said Maselko. "People who don't have those things are at greater risk for depression, and those same people might also turn to religion to cope."

Maselko admits that researchers have yet to determine which comes first: depression or being religious, but is currently investigating the time sequence of this over people's lives to figure out the answer.
...
Other authors on this study are Stephen Gilman, Sc.D., and Stephen Buka, Sc.D., from the department of Public Health at Harvard University and Brown University Medical School. This research was funded by a grant from the National Institutes of Mental Health and by the Jack Shand Award from the Society for the Scientific Study of Religion.
--------------------------------------------------------------------------------
Adapted from materials provided by Temple University, via EurekAlert!, a service of AAAS.

[Patricia Shannon]

Oops, I tried to bold the following statement, and instead deleted it:

those who had high levels of existential well-being were 70 percent less likely to have had depression than those who had low levels of existential well-being.