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Most people in the United States agree they want some income inequality but debate exactly how much is fair. High‐status people generally prefer more inequality than low‐status individuals. Here we examine how much preferences for inequality are (or are not) driven by self‐interest. Past work has generally investigated this idea in two ways: The first is by stratifying preferences by income, and the second is by randomly assigning financial status within lab‐constructed scenarios. In this paper, we develop a method that combines both experimental control and the social experience of inequality—a simulated society experiment. Across two experiments (N = 138, observations = 690), participants voted on the distribution of rewards—first behind a veil of ignorance, and then when they were randomly assigned a status within a game of chance. Status varied repeatedly across five rounds, allowing us to measure dynamic preferences. Under the veil of ignorance, people preferred inequality favoring the top status. When the veil of ignorance disappeared, self‐interest immediately influenced inequality preferences. Those who randomly landed in top positions were satisfied with the status quo established under the veil of ignorance, whereas those who randomly landed in bottom positions wanted more equality. Yet these preferences were not stable; decisions about the optimal level of inequality changed according to changes in social status. Our results also showed that, when inequality grows in a society, preferences regarding inequality become polarized by social status. Individuals in low‐status positions, particularly, tend to demand more equality. [ABSTRACT FROM AUTHOR]

This paper introduces a new comprehensive panel of annual state-level income inequality measures spanning the postwar period 1945–2004. For many states, the share of income held by the top decile experienced a prolonged period of stability after World War II, followed by a substantial increase in inequality during the 1980s and 1990s. This paper also presents an examination of the long-run relationship between income inequality and economic growth. Our findings indicate that the long-run relationship between inequality and growth is positive in nature and driven principally by the concentration of income in the upper end of the income distribution. ( JEL D31, O40) [ABSTRACT FROM AUTHOR]

This paper assesses the effects of U.S. tax policy reforms on inequality over around three decades, from 1979 to 2007. It applies a new method for decomposing changes in government redistribution into (1) a direct policy effect resulting from policy changes and (2) the effects of changing market incomes. Over the period as a whole, the tax policy changes increased income inequality by pushing up the income share of high-income earners (the top 20%). ( JEL H23, H31, H53, P16) [ABSTRACT FROM AUTHOR]

This article examines spatial aspects of distributional dynamics and finds that the distribution of US metropolitan incomes relative to their neighbours has diverged during the 1969-1999 period. Use of a spatial Markov approach shows that non-metropolitan neighbours of metropolitan regions have tended to converge during the period, with roughly equal rates of upward and downward mobility within the distribution. Non-metropolitan regions, not neighbouring metropolitan regions, show much less tendency to converge and reveal higher rates of downward rather than upward mobility. Results highlight regional differences in mobility coherence, with metropolitan areas in the West tending to outpace their non-metropolitan neighbours. [ABSTRACT FROM AUTHOR]