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What About the Rest of the Pie? A Dynamic Compositional Approach to Modeling Inequality

Author

Listed:
  • Ali Kagalwala
  • Andrew Q. Philips
  • Guy D. Whitten

Abstract

Objective To demonstrate how a novel method enhances our understanding of determinants of inequality. Methods We take advantage of recent advances in dynamic models of compositional dependent variables to simultaneously study tradeoffs across multiple slices of the composition of income in the United States between 1947 and 2014. Results Our analyses demonstrate the utility of dynamic compositional models of income shares. Factors that increase the income share of the top income group often also increase the income share of the second income group and decrease the shares of lower groups at different rates. Polarization and marginal tax rates have large effects on relative income shares, while returns to labor, returns to capital, and partisan control of Congress have smaller, but statistically significant effects. Conclusion Our suggested approach allows researchers to effectively explore interesting variation across multiple income groups in response to changes in determinants of inequality.

Suggested Citation

  • Ali Kagalwala & Andrew Q. Philips & Guy D. Whitten, 2021. "What About the Rest of the Pie? A Dynamic Compositional Approach to Modeling Inequality," Social Science Quarterly, Southwestern Social Science Association, vol. 102(4), pages 1534-1552, July.
    • Handle: RePEc:bla:socsci:v:102:y:2021:i:4:p:1534-1552
    DOI: 10.1111/ssqu.12987
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    References listed on IDEAS

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    1. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    2. Andrew Q. Philips, 2018. "Have Your Cake and Eat It Too? Cointegration and Dynamic Inference from Autoregressive Distributed Lag Models," American Journal of Political Science, John Wiley & Sons, vol. 62(1), pages 230-244, January.
    3. Scott Basinger & Damon Cann & Michael Ensley, 2012. "Voter response to congressional campaigns: new techniques for analyzing aggregate electoral behavior," Public Choice, Springer, vol. 150(3), pages 771-792, March.
    4. Nathan J. Kelly, 2005. "Political Choice, Public Policy, and Distributional Outcomes," American Journal of Political Science, John Wiley & Sons, vol. 49(4), pages 865-880, October.
    5. Andrew Q. Philips & Amanda Rutherford & Guy D. Whitten, 2016. "Dynamic Pie: A Strategy for Modeling Trade‐Offs in Compositional Variables over Time," American Journal of Political Science, John Wiley & Sons, vol. 60(1), pages 268-283, January.
    6. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    7. Jackson, John E., 2002. "A Seemingly Unrelated Regression Model for Analyzing Multiparty Elections," Political Analysis, Cambridge University Press, vol. 10(1), pages 49-65, January.
    8. Adam Bonica & Nolan McCarty & Keith T. Poole & Howard Rosenthal, 2013. "Why Hasn't Democracy Slowed Rising Inequality?," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 103-124, Summer.
    9. Tomz, Michael & Tucker, Joshua A. & Wittenberg, Jason, 2002. "An Easy and Accurate Regression Model for Multiparty Electoral Data," Political Analysis, Cambridge University Press, vol. 10(1), pages 66-83, January.
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    Cited by:

    1. Canh Phuc Nguyen & Binh Quang Nguyen & Duyen Thuy Le Tran, 2023. "Economic complexity and income inequality: New evidence of a nonlinear effect," Social Science Quarterly, Southwestern Social Science Association, vol. 104(4), pages 829-868, July.
    2. Samantha Zuhlke, 2024. "Presidents and nonprofits: Illustrating compositional modeling of the U.S. nonprofit sector," Social Science Quarterly, Southwestern Social Science Association, vol. 105(4), pages 1014-1028, July.
    3. Abbie Eastman & Andrea Junqueira & Ali Kagalwala & Andrew Q. Philips & Guy D. Whitten, 2024. "Volatile pies: Modeling compositional volatility," Social Science Quarterly, Southwestern Social Science Association, vol. 105(4), pages 965-979, July.
    4. Andrea Junqueira & Ali Kagalwala & Christine S. Lipsmeyer, 2023. "What's your problem? How issue ownership and partisan discourse influence personal concerns," Social Science Quarterly, Southwestern Social Science Association, vol. 104(1), pages 25-37, January.

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