Income inequality: The implications of economic structure and social conditions

During the past few decades income inequality has been increasing in the United States and other developed nations, and is having major social consequences. In this study county-level data for the United States was analyzed to test the relative importance of three alternative approaches for explaining increased levels of inequality. These three approaches include economic structure, social conditions, and a model that maintains that both social conditions and inequality are a function of economic structure. The results revealed that social conditions were much more strongly related to inequality than economic structure and little support was found for the theoretical model. The two social conditions most strongly related to inequality included female employment and the percent of female-headed households. Counties with high levels of female employment tended to have low levels of inequality, while counties with high proportions of female-headed households tend to have high levels of inequality. The implications of these findings are discussed.