The Political-Economic and Demographic Causes of Metropolitan Income Inequality and Its Components




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This research project examines variations in inequality in individual earned incomes across U.S. metropolitan areas. The main analysis includes thirteen explanatory variables from three major perspectives - the political economy perspective, the demand-side perspective and the labor force supply-side perspective. In addition, I applied path models to explain causalities between some independent variables and used the decomposition of the Theil index to show the between-group effects. The results indicate that most demand-side and supply-side factors significantly contribute to variances in metropolitan income inequalities, while the impact of political economic factors are very limited. The paper is organized in the following manner: Chapter I is the introduction; Chapter II reviews literature focusing on the level of earning inequality and its predictors; Chapter III describes data and measures of variables; Chapter IV introduces statistical methods (including OLS regression model, path analysis, and decomposition of the Theil index); Chapter V presents the results of OLS regression model and its explanations; Chapter VI explains path analysis and decomposition analysis and their results; and finally, Chapter VII discusses the current research project and its implications for future studies.