Monday, March 23, 2009

More Female BA Degrees = Increasing Inequality?


Letter to the Editor in today's WSJ (HT: Don Bourdreaux):

Professional Women Drive More Families Into Top 1%

In regard to the appearance of French economists Thomas Piketty and Emmanuel Saez in President Barack Obama's budget ("The Obama Rosetta Stone," by Daniel Henninger, Wonder Land, March 12): In their use of statistics of the top 1% of income earners, Messrs. Piketty and Saez make the same false assumptions that the Internal Revenue Service does. In 1980 income disparity began to take off in the U.S. leaving the top 1% of income earners with a greater share of the income pie. Like the IRS, these French economists use "household" income as their measure.

But consider that 1980 was about the time when large percentages of college-educated women began to enter the workforce. Many of these professional women would go on to marry other professionals. This in effect created a doubling of "household" income for many families.

At the same time out-of-wedlock birth rates and divorce began to skyrocket creating large percentages of single-parent households. It should be no surprise that a two income household has a much higher income than a single-income household even if all workers make exactly the same income.

Surgeons will always make more than janitors, as anyone who has ever gone "under the knife" will agree with, and their income should not be distorted because they are married to a fellow surgeon.

Steve Walde; Easton, Conn.

MP: The graphs above illustrate Mr. Walde's point. The increasing share of income going to the top 1% of households since 1986 coincides with the increasing share of college degrees going to women. I never made the connection between those two trends before, but I think he makes a great point.

4 Comments:

At 3/23/2009 4:20 PM, Blogger misterjosh said...

Interesting suppositions. My initial response is to call BS, but as I think it through, it seems to make more sense. Higher income folks tend to divorce less, or perhaps people who stay married make more?

Single parent households are far less likely to be able to devote the time to a career that it takes to advance.

He may be on to something here.

 
At 3/23/2009 8:08 PM, Anonymous Anonymous said...

Post hoc ergo propter hoc. Most of the income inequality that we're talking about is well above the two-earner professional class. If you saw the 15% between the top 20 and the top 5% gaining relative to everyone else, this might be a good explanation. But female vs. male education doesn't explain the top 1% making out like bandits.

 
At 3/23/2009 8:09 PM, Anonymous Anonymous said...

Post hoc ergo propter hoc. Most of the income inequality that we're talking about is well above the two-earner professional class. If you saw the 15% between the top 20 and the top 5% gaining relative to everyone else, this might be a good explanation. But female vs. male education doesn't explain the top 1% making out like bandits.

 
At 3/24/2009 10:58 AM, Blogger spencer said...

Here is the footnote from the Pikketty and Saez report.
Source;http://emlab.berkeley.edu/users/saez/piketty-saezOUP04US.pdf


Top groups (such as the top 1%) are defined relative to all families in the US population (irrespective of whether the family files an individual tax return).
A family is defined as a tax unit (such as couple and dependents, or a head of household with dependents, or a single person).
A family can be smaller than a household (a household is defined as all individuals living in the same unit such as two roommates, etc.)
In 2004, there were 143.982 million families in the US population and 132.226 million tax returns filed.

As the footnote show they used family income not household income as Don Brourdreaux claims.

I have learned from experience to double check everything Don Bourdreaux says.

His use of data and sources is so sloppy that you should never trust anything he says.

 

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