The Benefits and Costs of Inequality for the Advantaged and Disadvantaged

Objectives. To test theoretical models intended to improve our understanding of the consequences of increased inequality for advantaged and disadvantaged populations. Methods. The 5 percent PUMS (Public Use Microdata Sample) data from the 2000 Census of Population and Housing were analyzed using a variety of ANOVA and regression techniques. Results. It was found that in geographic areas where inequality levels were high, individuals with low levels of education earn lower incomes than equally educated individuals in areas where inequality levels were lower. Similarly, in high‐inequality areas, individuals employed in low‐paying industries, who were not married, and who were minority earned lower incomes than individuals with similar characteristics in low‐inequality areas. The data clearly show that as the level of inequality increases, the benefits of being advantaged and the costs of being disadvantaged both increase. Conclusions. Support was found for both theoretical models tested in this study. As the extent of inequality increases in the United States, it is apparent from this study that the life chances of disadvantaged individuals diminish and are largely determined by the accident of their birth.