Jonathan A. Schwabish

Income Distribution and Social Expenditures

Economic inequality, actual or perceived, plays an important role in influencing the set of goods and services that are subsidized by the public sector. Public expenditures on defense, police and fire services, roads, foreign aid, or research and development may (or may not) have benefits for all citizens. However, except for those directly employed in these activities, such expenditures do not directly affect the well-being of households. In this chapter, we focus on public expenditures that provide income or goods and services directly to households. This implies that we are primarily concerned with public expenditure on the provision of ‘private goods,’ including cash and near-cash transfers.1

The Effects of Earnings Inequality on State Social Spending in the United States

States provide a variety of goods and services to their citizens, ranging from police protection to highway construction to education and health services. This study is concerned with how earnings inequality has affected such spending at the state level in the United States between 1977 and 2005. The results show that for every 1 percent increase in the 9050 percentile ratio of earnings, social spending on non-health and non-education goods and services increases by approximately 0.231 percent, or about

Risk Tolerance and Retirement Income Composition

615 per person. A similar 1 percent increase in the 5010 percentile ratio of earnings is associated with a smaller 0.042 percent rise in spending, or

Estimating Employment Spillover Effects In New York City with an Application to The Stock Transfer Tax

112 per person. A one percent increase in overall inequality, as measured by the Gini coefficient, is associated with a rise in social spending of about 0.255 percent, or

Income Distribution and Social Expenditures: A Cross-National Perspective

680 per person. The model is robust to a variety of sensitivity tests and generally shows that increases in inequality in both the upper- and lower-tail of the earnings distribution serve to increase social spending.

Estimates of Year-to-Year Volatility in Earnings and in Household Incomes from Administrative, Survey, and Matched Data

Proposed changes to the Social Security system will affect people across the income distribution differently. Such changes are also accompanied by changes in the financial risk workers will face in their retirement. This study examines levels of financial risk workers face at different points in the lifetime earnings distribution. To do so, we use a microsimulation model that projects individual demographic and economic characteristics within the context of the Social Security system and the macroeconomy to assess the impact of two policy changes on the levels of lifetime benefits available to current and future retirees. Further, we incorporate data on pensions and savings to illustrate differences in the level and distribution of retirement funds across the earnings distribution. This exercise allows us to assess the financial risk workers face in their retirement, both within the Social Security system itself and within a broader view of the stream of total available retirement funds. We also use survey data to show that low earners are the least willing to tolerate such risk. DRAFT – DO NOT COPY OR CITE

Has Macroeconomic Performance Regained Its Antipoverty Bite

This article examines the effect of a change in stock market trading volume on employment in the New York City securities industry. This relationship is used as the first stage in an instrumental variables model to determine the effect that securities employment has on other forms of employment in the city. The resulting elasticities imply that a 10 percent decrease in securities industry employment would depress employment in the retail, services, and restaurant sectors by more than 1 percent; in the business services sector by about 4 percent; and in total private jobs by about 1 percent. The elasticities are then applied to New York City employment levels and to a proposal to reinstate the stock transfer tax on the city’s stock markets. At a trading volume decline of 10 percent, these elasticities imply that a stock transfer tax could cost New York City between 30,000 and 42,000 private-sector jobs.