Implications of different income distributions for future residential energy demand in the U.S.

Future income distribution will affect energy demand and its interactions with various societal priorities. Most future model simulations assume a single average consumer and thus miss this important demand determinant. We quantify long-term implications of alternative future income distributions for state-level residential energy demand, investment, greenhouse gas (GHG), and pollutant emission patterns in the United States (U.S.) by incorporating income quintiles into the residential energy sector of the Global Change Analysis Model with 50-state disaggregation (GCAM-USA). We find that if the income distribution within each U.S. state becomes more egalitarian than present, what means that the difference on income between the richest and poorest decreases over time, residential energy demand could be 10% (4-14% across states) higher in 2100. This increase of residential energy demand will directly reduce energy poverty, with a very modest increment on economywide CO2 emissions (1-2%). On the other hand, if U.S. states transition to a less equitable income distribution than present, with the difference between richest and poorest increasing over time, residential energy demand could be 19% (12-26% across states) lower. While this study focuses on a single sector, we conclude that to improve understanding of synergies and tradeoffs across multiple societal goals such as energy access, emissions, and investments, future model simulations should explicitly consider subregional income distribution impacts.

Pathways toward Inclusive Income Growth: A Comparative Decomposition of National Growth Profiles

Despite rising interest in income inequality, scholars remain divided over the mechanisms underlying inclusive income growth and how these mechanisms vary across countries. This study introduces the concept of national growth profiles, that is, the additive contribution of changes in taxes, transfers, composition, and other factors including market institutions to changes across a country’s income distribution. We present a decomposition framework to measure national growth profiles for eight high-income countries from the 1980s to 2010s. Our findings adjudicate competing sociological and economic perspectives on rising inequality. First, we find that policy-driven changes in taxes and transfers are the dominant drivers of inclusive growth at the tails of the income distributions. Second, rising educational attainment contributes most to income growth across the distribution, but consistently contributes to less-inclusive growth. When changes in education are considered, changes in assortative mating and single parenthood have little consequence for changes in inequality. Third, changes to other factors including market institutions increased inequality in countries such as the United States, but less so in France and Germany. Had the United States matched the changes to Dutch tax policy, Danish transfer policy, or other factors of most other countries, it could have achieved more inclusive income growth than observed.

Taxation and Redistribution against Inequality: A Mathematical Model

Reducing inequality is a tremendously important sustainable development goal. Albeit providing stylised frames for modelling, also mathematics can contribute to understanding and explaining the emergence of collective patterns in complex socio-economic systems. It can then effectively help to identify actions and measures to be taken and support policy-makers towards adoption of conceivable welfare measures aimed at halting the growth of inequality. Based on these assumptions, we here discuss some variants of a mathematical “micro-to-macro” model for the dynamics of taxation and redistribution processes in a closed trading market society. The model has an exploratory character resulting from possible tuning of various parameters involved: through its analysis, one can foresee the consequences on the long-run income distributions of different fiscal policies and differently weighted welfare policies, interventions, and subsidy provision, as well as the impact of the extent of tax evasion. In short, the model shows that in the long term redistributive policy results in a lower level of economic inequality in society.

Do distributional preferences reverse on a dollar? An experiment

In settings where other-regarding motives are likely to be (and some would argue, should be) at the forefront of our minds, how much of our behavior can still be explained by narrow pecuniary self-interest by itself? In an experiment where subjects are asked to vote between two income distributions that have diametrically opposed effects on the group as a whole, I find that self-interest still appears to dwarf the combined effects of other-regarding motives in influencing the votes of the vast majority of subjects.

Econophysics and the Entropic Foundations of Economics

This paper examines relations between econophysics and the law of entropy as foundations of economic phenomena. Ontological entropy, where actual thermodynamic processes are involved in the flow of energy from the Sun through the biosphere and economy, is distinguished from metaphorical entropy, where similar mathematics used for modeling entropy is employed to model economic phenomena. Areas considered include general equilibrium theory, growth theory, business cycles, ecological economics, urban–regional economics, income and wealth distribution, and financial market dynamics. The power-law distributions studied by econophysicists can reflect anti-entropic forces is emphasized to show how entropic and anti-entropic forces can interact to drive economic dynamics, such as in the interaction between business cycles, financial markets, and income distributions.

Modeling the Impacts of Driver Income Distributions on Online Ride-Hailing Services

The online ride-hailing taxi brings new vitality into the traditional taxi market, as well as new issues and challenges. The pricing and profit distribution of online ride-hailing services is one of the major concerns. This study focuses on the pricing and income distribution in the online ride-hailing system. Queuing system model and birth and death process theory are introduced to describe the driver’s flow process in the network. The social welfare maximization model and the platform profit maximization model are constructed based on the dynamic pricing mechanism, from the government’s and platform’s standpoint, respectively. Through numerical experiments, this paper analyzes the income distribution of drivers under different settings and the influence of different factors (average travel time, psychologically expected price of drivers and passengers, and probability of driver leaving the system) on the proportion of income distribution. The results show that the drivers’ income distribution proportion is higher in the pursuit of social welfare maximization than that in the pursuit of platform profit maximization, and in different benefit pursuit models, various factors have a certain influence on the driver’s income distribution proportion. The proposed method and conclusion in this study can be considered as references for online ride-hailing market supervision and policy-making.

Pathways toward Inclusive Income Growth: A Comparative Decomposition of National Growth Profiles

Despite rising interest in income inequality, scholars remain divided over the mechanisms underlying inclusive income growth and how these mechanisms vary across countries. This study introduces the concept of national growth profiles, the additive contribution of changes in taxes, transfers, composition, and other factors including market institutions to changes across a country’s income distribution. We present a decomposition framework to measure national growth profiles for eight high-income countries from the 1980–2010s. Our findings adjudicate competing sociological and economic perspectives on rising inequality. First, we find that policy-driven changes in taxes and transfers are the dominant drivers of inclusive growth at the tails of the income distributions. Second, rising educational attainment contributes most to income growth across the distribution, but consistently contributes to less-inclusive growth. When changes in education are considered, changes in assortative mating and single parenthood have little consequence for changes in inequality. Third, changes to other factors including market institutions increased inequality in countries such as the U.S., but less so in France and Germany. Had the U.S. matched the changes to Dutch tax policy, Danish transfer policy, or other factors of most other countries, it could have achieved more inclusive income growth than observed. (Stone Center on Socio-Economic Inequality Working Paper)

Immigrant Men’s Economic Adaptation in Changing Labor Markets: Why Gaps between Turkish and German Men Expanded, 1976–2015

How important were manufacturing and heavy industries to the economic integration of twentieth-century immigrants in Western societies? This article examines how macro-social change in Germany since the height of manufacturing has affected the socio-economic integration of male immigrants. We develop an analytical framework to assess how educational expansion among natives, deindustrialization, and the increasing importance of formal qualifications shape male immigrant-native gaps in labor-market outcomes over time. Empirically, we focus on first-generation male Turkish immigrants in Germany and use micro-census data spanning almost 40 years. Through a novel empirical quantification of key theoretical arguments concerning immigrant economic integration, we find growing inter-group differences between the late 1970s and mid-2000s (employment) and mid-2010s (incomes), respectively. The growth of differences between the immigrant and native income distributions was most pronounced in their respective bottom halves. Our analysis shows that these trends are linked to the increased importance of formal educational qualifications for individual labor-market success, to educational expansion in Germany, and to deindustrialization. Employment in Germany shifted away from middling positions in manufacturing, but while natives tended to move into better-paying positions, Turkish immigrants mainly shifted into disadvantaged service jobs. These results provide novel evidence for claims that the economic assimilation of less-skilled immigrants may become structurally harder in increasingly post-industrial societies. We conclude that structural change in host countries is an important, yet often overlooked, driver of immigrant socio-economic integration trajectories.