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Measuring Social Tension from Income Class Segregation

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  • Yoonseok Lee
  • Donggyun Shin

Abstract

We develop an index that effectively measures the level of social tension generated by income class segregation. We adopt the basic concepts of between-group difference (or alienation) and within-group similarity (or identification) from the income [bi]polarization literature; but we allow for asymmetric degrees of between-group antagonism in the alienation function, and construct a more effective identification function using both the relative degree of within-group clustering and the group size. To facilitate statistical inference, we derive the asymptotic distribution of the proposed measure using results from U-statistics. As the new measure is general enough to include existing income polarization indices as well as the Gini index as special cases, the asymptotic result can be readily applied to these popular indices. Evidence from the Panel Study of Income Dynamics data suggests that, while the level of social tension shows an upward trend over the sample period of 1981 to 2005, government’s taxes and transfers have been effective in reducing the level of social tension significantly.

Suggested Citation

  • Yoonseok Lee & Donggyun Shin, 2016. "Measuring Social Tension from Income Class Segregation," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 34(3), pages 457-471, July.
    • Handle: RePEc:taf:jnlbes:v:34:y:2016:i:3:p:457-471
    DOI: 10.1080/07350015.2015.1051624
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    Cited by:

    1. Ying Yao & Guanghua Wan & Dongfang Meng, 2019. "Income distribution and health: can polarization explain health outcomes better than inequality?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(4), pages 543-557, June.
    2. Seonyoung Park & Donggyun Shin, 2023. "Recent changes in the nature of the distribution dynamics of the US county incomes," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(7), pages 1048-1067, November.

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