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Stratification by regulation: Are bootleggers and Baptists biased?

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  • Sean E. Mulholland

    (Western Carolina University)

Abstract

This paper investigates whether and to what extent regulation may be associated with wage inequality. Using regulation measures created by Al-Ubaydli and McLaughlin (Regul Govern 11:109–123, 2017), I find that regulation is associated with larger within-occupation wage inequality. Specifically, I show that a worker at the 90th wage percentile realizes a raise of $1.19 per hour relative to the 10th percentile earner for each standard deviation increase in regulation. That represents a 3.5% raise for a worker at the 90th percentile. Overall, increases in the regulatory burden are associated with 42–45% of the change in the 90th–10th percentile wage ratio from 2002 through 2014.

Suggested Citation

  • Sean E. Mulholland, 2019. "Stratification by regulation: Are bootleggers and Baptists biased?," Public Choice, Springer, vol. 180(1), pages 105-130, July.
    • Handle: RePEc:kap:pubcho:v:180:y:2019:i:1:d:10.1007_s11127-018-0597-2
    DOI: 10.1007/s11127-018-0597-2
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    Cited by:

    1. Dustin Chambers & Colin O’Reilly, 2022. "The economic theory of regulation and inequality," Public Choice, Springer, vol. 193(1), pages 63-78, October.
    2. Broughel, James & Chambers, Dustin, 2021. "Federal Regulation and Mortality in the 50 States," Working Papers 10289, George Mason University, Mercatus Center.
    3. Choudhury, Sanchari, 2023. "The causal effect of regulation on income inequality across the U.S. states," European Journal of Political Economy, Elsevier, vol. 80(C).
    4. Chambers, Dustin & O'Reilly, Colin, 2022. "Regulation and income inequality in the United States," European Journal of Political Economy, Elsevier, vol. 72(C).
    5. Chambers, Dustin, 2021. "Toward a Formalization of Policy Analytics," Working Papers 11019, George Mason University, Mercatus Center.
    6. Chambers, Dustin & O'Reilly, Colin, 2019. "Entry Regulations and Income Inequality at the Regional Level," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 49(1), April.

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    More about this item

    Keywords

    Inequality; Regulation; Income; Wages;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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