ECONOMIC RESTRUCTURING, THE EDUCATIONAL INCOME GAP, AND OVERALL INCOME INEQUALITY

An important consequence of the economic structure transformations of recent decades is increased income inequality. While an extensive literature has explored the relationship between economic restructuring and inequality, the unique contribution of this article is that it develops and tests a model that explores the mechanisms by which this process occurs. Specifically, the intervening role of the income gap between the well-educated and those with lower levels of education (the educational income gap) and other moderating factors are explored. The 5 percent Public Use Microdata Sample (PUMS) data from the 2000 Census of Population and Housing was used in the analysis. The data provided strong support for the model. It was found that economic structure and the moderating variables were strongly related to the educational income gap, which in turn was strongly related to overall income inequality. Generally, both the educational income gap and overall income inequality were greater in geographic areas with higher proportions of the labor force employed in services, and both were lower where greater proportions of the labor force were employed in goods-producing industries.