> > Another non-nefarious cause of increasing income disparity may be
> > our ever-higher immigration rates. Immigrants tend to cluster in
> > low- and high-income groups. Thus it is no surprise that in the
> > seven most unequal states -- New York, Arizona, New Mexico,
> > Louisiana, California, Rhode Island and Texas -- about 13 percent
> > of the population is foreign-born (in California, it's 25 percent).
> > Among the seven states with the smallest income disparities, the
> > immigrant population is only 3.8 percent.
>
>The logic is sound (its easy to construct an example where an entire
>original population is better off income wise than it was in an earlier
>period, but due to the addition of new people at the bottom end of the
>income scale overall inequality at the end of the period is worse than it
>was originally). And inequality measures, in themselves, will not shed any
>light on this issue.
>
>So, I'm going to ask again. Does anyone know whether these guys are simply
>cooking the numbers, or do they have a point?
My first reaction is the same as the last time you brought this up here - so what? Immigrants are people too. They have to obey laws, pay taxes, and live in this lovely society.
But what about their numbers? These guys are extremely devious bastards. Several points. First, immigrants to not clutster in the top and bottom income groups; they cluster in the bottom. They're underrepresented in the upper brackets. Second, why did they pick seven states? A more conventional instinct would have been to pick, say, ten. Well, the average of the top 7, 12.9% (which they round to 13%, though they don't round 3.8% to 4.0%) comes in well above the national average of 9.7%; the average of the top 10, lots lower, at 10.8%. And, of course, they don't report the national average. Nor do they include DC in their average of the top 7 - though not a state, it has the most unequal distribution of all jurisdictions, and a below-average share of foreign-born residents. And while they list the top 7 states, they don't list the bottom 7 - Maine, Alaska,, Colorado, North Dakota, Iowa, Indiana, and Utah. Note that the top 7 are mostly large, urban states, and the bottom 7, smaller, less urban states. Which is the independent variable - immigration or ubanization? I'd guess that immigrants are more drawn to large cities, so if they were doing serious work they should control for this, but they're rank propagandists. Third, the income disparities are pretty much the same whether you look at gaps between the top and bottom, the middle and the bottom, or the top and the middle. So this alleged clustering of new arrivals in the bottom ranks doesn't explain the rest of the distribution. And fourth, inequality is driven by mainly by the massive increases in the incomes of the top 20% - especially the top several percent. Immigration doesn't have much to do with that either.
More on all this in the imminently forthcoming LBO #94.
Doug