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Working Papers

Original working papers and reports published by the III.

The Great British Sorting Machine: Adolescents’ future in the balance of family, school and the neighborhood 
Jonathan J.B. Mijs and Jaap Nieuwenhuis

Research calls attention to the divergent school and labor market trajectories of Europe’s youth while, across the Atlantic, researchers describe the long-lasting consequences of poverty on adolescent development. In this paper we incorporate both processes to shed a new light on a classic concern in the sociology of stratification: how are adolescents’ aspirations, expectations, and school performance shaped by the combined socioeconomic contexts of family, school and neighborhood life? Theoretically, social contexts provide children with cultural resources that may foster their ambitions and bolster their academic performance. Reference group theory instead highlights how seemingly positive settings can depress educational performance as well as aspirations and expectations. We empirically test these competing claims, drawing on the Avon Longitudinal Study of Parents and Children (ALSPAC) which describes the school and neighborhood trajectories of 7,934 British children followed from birth to adolescence. We find that, generally, childhood school and neighborhood deprivation is negatively associated with adolescents’ school performance, aspirations and expectations for their future, in line with the cultural resource perspective. However, there are important exceptions to this pattern which point to reference group processes for (1) children of highly-educated parents, whose academic performance especially suffers from growing up in a poor neighborhood, and (2) for children from low-educated parents, whose academic aspirations and expectations are unexpectedly high when they either went to an affluent school or lived in an affluent neighborhood—but not both. We conclude by discussing implications for theory, policy and future research. 

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Inclusive Growth in Cities: a sympathetic critique
Neil Lee

The concept of “Inclusive Growth” – a concern with the pace and pattern of growth – has become a new mantra in local economic development. Despite enthusiasm from some policymakers, others argue it is a buzzword which is changing little. This paper summarises and critiques this agenda. There are important unresolved issues with the concept of Inclusive Growth, which is conceptually fuzzy and operationally problematic, has only a limited evidence base, and reflects an overconfidence in local government’s ability to create or shape growth. Yet, while imperfect, an Inclusive Growth model is better than one which simply ignores distributional concerns. 

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Mapping recent inequality trends in developing countries
Rebecca Simson

Over the course of the middle half of the 20th century, countries around the world underwent dramatic social transformations as incomes grew, inequality declined and living standards improved. Since roughly 1980, however, this downward trend in income inequality has reversed or stagnated in many regions. Leading researchers have warned that we are entering a new era of high and persistent inequality coupled with low economic growth (Piketty 2014; Scheidel 2017). Yet other research suggests that this inequality escalation is not a universal phenomenon. As many scholars of global inequality have noted, Latin America saw a sizable decline in the gini index in the 2000s. The available evidence also suggests that many countries in Africa and the Middle East experienced an inequality drop in the 1990s-2000s. Even in Asia, where aggregate inequality has been on the rise, there are nonetheless a few countries where inequality is defying the regional trend. What does the available evidence tell us about inequality trends in these less studied regions of the world? What may explain these different trajectories across regions or countries? This paper provides a review of the state of knowledge about inequality dynamics in developing regions, with a focus on countries where the level of income inequality has fallen in recent decades. It is written to inform future research at LSE’s International Inequalities Institute about the political drivers of redistribution.

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Recasting Human Development Measures
Sudhir Anand

The UNDP introduced three new human development measures in its 2010 HumanDevelopmentReport, which it has since continued to estimate and report on annually.  These measures are the geometrically-averaged Human Development Index (HDI), the Inequality-adjusted Human Development Index (IHDI), and the Gender Inequality Index (GII).  This paper critically reviews these measures in terms of their purpose, concept, construction, properties, and data requirements.  It shows that all three measures suffer from serious defects, and concludes that two of them are not fit for purpose.  The paper suggests how HDI and GII might be recast to overcome the problems identified and better reflect the purposes for which they were devised. 

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The Stakes of Trade Policy: domestic and global inequalities
Sarah Goff

Economic nationalism is on the rise, while decision-making is floundering within multilateral and regional trade institutions. As stakes ‘take back control’ over their trade policies, what does this imply for domestic and global inequalities? The paper will clarify how a state’s trade policy can affect what matters about domestic inequalities, global procedural fairness, and global distributional inequality. A state should aim to: i) pursue gains in national income, without making excessive contributions of its ‘policy space’ on issues that matter for disadvantaged groups; ii) refrain from abusing its unilateral decision-making power over its trading partners; and iii) prioritize trade liberalization with poor countries that have the competencies to take advantage of economic opportunities and that are likely to share the benefits of prosperity with disadvantaged citizens. There is room for a state’s trade policy to represent improvements over existing multilateral and regional institutions with respect to these aims, although improvements are by no means guaranteed.

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Private Renting: can social landlords help?
Anne Power, Alice Belotti, Laura Lane, Bert Provan 

Private renting is a massively expanding sector, and has now overtaken social housing to become the second largest housing tenure in Britain after owner-occupation. Private renting plays a crucial role in housing many groups who can neither afford to buy, and are unable to access social housing. Vulnerable and homeless people are more and more housed in privately rented accommodation. However, the private rented sector is weakly regulated and offers little security to tenants.

This report explores how social landlords are increasingly contributing to the growth of private renting in a variety of different ways. Social landlords have experience in managing rented housing and a strong track record in providing long-term, secure, decent homes. They have an ethical purpose and a core mission to house people. Their involvement in the private rented sector provides an opportunity to make the PRS more stable, secure, and affordable. As well-established landlords and housing managers, social landlords can provide decent quality and secure homes to the people who need them within the private sector. As institutional investors, private renting at sub-market or intermediate rent becomes possible and social landlords should not seek to maximise profits as their main purpose. We also look at how local authorities can improve the private rented sector, looking at case studies of Newham, Liverpool, and other areas that have established local housing companies, have increased their regulatory role with licensing schemes and enforcement powers, as well as how the private rented sector differs in the devolved nations.

The overall conclusion of our report is that private renting by social landlords can deliver good housing for households in need of a home. This activity provides decent private rental homes; and surpluses to cross-subsidise social housing. We believe that through the development of private rented accommodation and the regulation and licensing of the private rented sector, social landlords and local authorities are able to provide a more social model of private renting. 

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Can cultural consumption increase future earnings? Exploring the economic returns to cultural capital
Aaron Reeves and Robert de Vries

Cultural consumption is often viewed as a form of embodied cultural capital which can be converted into economic rewards because such practices increase the likelihood of moving into privileged social positions. However, quantitative evidence supporting this proposition remains uncertain because it is often unable to rule out alternative explanations. Cultural consumption appears to influence hiring decisions in some elite firms, in both the U.S. and the U.K., but it is unclear whether these processes are generaliseable to other professional occupations and other labour market processes such as promotions. We examine these processes using data from Understanding Society, an individual-level panel survey conducted in the UK, allowing us to explore whether cultural consumption predicts future earnings, upward social mobility, and promotions. People who consume a larger number of cultural activities are more likely to earn higher wages in the future, to be upwardly socially mobile, and to be promoted. Cultural consumption, then, can function as cultural capital in some labour market settings, potentially contributing to the reproduction of income inequality between generations.

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Immobility and the Brexit vote
Neil Lee, Katy Morris and Tom Kemeny

Popular explanations of the Brexit vote have centred on the division between cosmopolitan internationalists who voted Remain, and geographically rooted individuals who voted Leave. This paper conducts the first empirical test of whether residential immobility - the concept underpinning this distinction - was an important variable in the Brexit vote. It finds that locally rooted individuals - defined as those living in their country of birth - were 7 percent more likely to support Leave. However, the impact of immobility was filtered by local circumstances: immobility only mattered for respondents in areas experiencing relative economic decline or increases in migrant populations. 

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The transition to the knowledge economy, labour market institutions, and income inequality in advanced democracies
David Hope and Angelo Martelli

The transition from Fordism to the knowledge economy in the advanced democracies was underpinned by the ICT revolution. The introduction and rapid diffusion of ICT pushed up wages for college-educated workers with complementary skills and allowed top managers and CEOs to reap greater rewards for their talents. Despite these common pressures, income inequality did not rise to the same extent everywhere; the Anglo-Saxon countries stand out as being particularly unequal. To shed new light on this puzzle, we carry out a panel data analysis of 18 OECD countries between 1970 and 2007. The analysis stands apart from the existing empirical literature by taking a comparative perspective. We look at the extent to which the relationship between the knowledge economy and income inequality is influenced by national labour market institutions. We find that the expansion of knowledge employment is positively associated with both the 90–10 wage ratio and the income share of the top 1%, but that these effects are mitigated by the presence of strong labour market institutions, such as coordinated wage bargaining, strict employment protection legislation and high bargaining coverage. The study provides robust evidence against the argument that industrial relations systems are no longer important safeguards of wage solidarity in the knowledge economy.

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Top Incomes during Wars, Communism and Capitalism: Poland 1892-2015
Pawel Bukowski and Filip Novokmet

This study presents the history of top incomes in Poland. We document a U-shaped evo-lution of top income shares from the end of the 19th century until today. The initial high level, during the period of Partitions, was due to the strong concentration of capital income at the top of the distribution. The long-run downward trend in top incomes was primarily induced by shocks to capital income, from destructions of world wars to changed political and ideological environment. The Great Depression, however, led to a rise in top shares as the richest were less adversely affected than the majority of population consisting of smallholding farmers. The introduction of communism abruptly reduced inequalities by eliminating private capital income and compressing earnings. Top incomes stagnated at low levels during the whole communist period. Yet, after the fall of communism, the Polish top incomes experienced a substantial and steady rise and today are at the level of more unequal European countries. While the initial upward adjustment during the transition in the 1990s was induced both by the rise of top labour and capital incomes, the strong rise of top income shares in 2000s was driven solely by the increase in top capital incomes, which make the dominant income source at the top. We relate these developments to processes associated with the new phase in globalisation. 

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The Wider Impacts of High-Technology Employment: Evidence from U.S. Cities
Tom Kemeny and Taner Osman

Innovative, high-technology industries are commonly described as drivers of regional development. ‘Tech’ workers earn high wages, but they allegedly generate knock-on effects throughout the local economies that host them, producing new jobs and raising wages in nontradable activities. At the same time, in iconic high-tech agglomerations like the San Francisco Bay Area, the home of Silicon Valley, the success of the tech industry creates tensions, in part as living costs rise beyond the reach of many non-tech workers. Across a large sample of US cities, this paper explores these issues systematically. Combining annual data on wages, employment and prices from the Quarterly Census of Employment and Wages, the Department of Housing and Urban Development and the Consumer Price Index, it estimates how growth in tradable tech employment affects the real, living-cost deflated wages of local workers in nontradable sectors. Results indicate that high-technology employment has significant, positive, but substantively modest effects on the real wages of workers in nontradable sectors. However, in cities with highly price-inelastic housing markets, the relationship is inverted, with tech generating negative externalities for nontradable workers. 

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Inequalities in the application of welfare sanctions in Britain
Robert de Vries, Aaron Reeves and Ben Geiger

Unemployed people in Britain who are in receipt of government welfare benefits can have these benefits stopped if they fail to comply with certain conditions. Such a stoppage is known as a 'benefit sanction'. This working paper has two aims: 1) to provide an introduction to the British system of sanctions, specifically as it applies to unemployed people who are not disabled, and ii) to identify demographic inequalities in the application of sanctions. Using data published by the UK Department of Work and Pensions, we find that some groups of unemployed claimants (younger people, men, and ethnic minorities) are at substantially higher risk of experiencing a sanction. This paper will be updated at a later date with analyses investigating the drivers of this inequality.

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Intersecting Inequalities and the Sustainable Development Goals: insights from Brazil
Naila Kabeer and Ricardo Santos

The international development community has long been pre-occupied with the reduction of absolute income poverty, relegating concerns with inequality to the margins of its policy agenda. The Millennium Development Goals, for instance, which were adopted by 189 world leaders at the 2000 Millennium Summit, defined the reduction of absolute poverty by 2015 as its overarching goal. However, concerns about the dramatic rise in income inequality across the world have been growing over the last few decades and came to the forefront of public consciousness in the wake of the global financial crisis of 2008. At the same time, assessments of national progress on the Millennium Development Goals made it clear that income inequality alone did not explain the distribution of gains and losses across countries. Rather it was the intersection of income inequality, marginalized social identities and, very often, locational disadvantage which led to the systematic exclusion of certain groups. In recognition of this, the Sustainable Development Goals which became the basis of the new post-2015 international development agenda now includes a commitment to the reduction of income and other inequalities, summarized as the principle of ‘leave no one behind’. Our paper uses national data from Brazil between 2002 and 2013 to examine retrospectively how it has performed on some of the indicators relating to the inclusive principles articulated by the SDGs. We have selected this period in Brazil because at a time when income inequalities were rising in most countries of the world, they were declining in Brazil. Our paper examines the extent to which this decline in income inequality was accompanied by a decline in intersecting inequalities and explores some of the economic, political and social explanations given for the country’s performance. 

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Understanding the Determinants of Penal Policy: crime, culture and comparative political economy
Nicola Lacey, David Soskice and David Hope

This review sets out four main explanatory paradigms of penal policy—focusing on, in turn, crime, cultural dynamics, economic structures and interests, and institutional differences in the organisation of different political economies as the key determinants of penal policy.  We argue that these paradigms are best seen as complementary rather than competitive, and present a case for integrating them analytically in a comparative political economy framework situated within the longue durée of technology regime change.  To illustrate this, we present case studies of one exceptional case—the United States—and of one substantive variable—race. Race has been thought to be of importance in most of these paradigms and provides a pertinent example of how the different dynamics intersect in practice. We conclude by summarising the explanatory challenges and research questions that we regard as most urgent for the further development of the field, and point to the approaches that will be needed if scholars are to meet them.

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De-Democratisation and Rising Inequality: The Underlying Cause of a Worrying Trend
Dena Freeman

This paper is concerned with the question of why economic inequality has increased so dramatically in recent decades, and in particular, with the seemingly paradoxical situation that this upswing in inequality has taken place at the same time as a major spread of democracy worldwide. This paper argues that democracy itself has changed in this period and that globalization has led to a process of economic de-democratisation – by (1) the direct removal of certain economics matters from political control, (2) by increasing restrictions on the policy options available to policy-makers, and (3) by transformations in the structure of the policy-making process itself. In each of these shifts the representation of capital has been significantly increased, while that of labour has been correspondingly decreased. This analysis has major implications for how we should go about tackling the contemporary rise in inequality and suggests that it is imperative to democratise economic policy making at both the national and the global level.  If we are serious about tackling inequality then we must be serious about democracy.

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A Relational Analysis of Top Incomes and Wealth: Economic Evaluation, Relative (Dis)advantage and the Service to Capital
Katharina Hecht

While an impressive body of economic literature documents increases in top incomes and wealth in liberal market economies, few studies focus on the social and cultural processes constitutive of this inequality. Drawing on a mixed-methods study in the UK, this article elaborates how top incomes and wealth are made sense of and produced by economic ‘elites’ through the cultural process of economic evaluation. Economic evaluative practices are based on the idea that ‘the market’ is a neutral and fair instrument for the distribution of resources. Due to economic evaluation and inequality at the top, top income earners experience relative (dis)advantage; while recognizing their advantage compared to the general population they experience disadvantage when ‘looking up’. Top incomes are produced via economic evaluative practices which conceptualize the value of labour based on increases in the value of capital. Hence the legitimating purpose of top incomes and wealth is service to capital. 

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The rise and fall of Africa's bureaucratic bourgeoisie: public employment and the income elites of postcolonial Kenya and Tanzania
Rebecca Simson

In 1961 Frantz Fanon scathingly characterised the emerging African elite as a bourgeoisie of the civil service. Many others have since described Africa’s public sector employees as a privileged rentier class that grew disproportionately large in relation to the continent’s under-developed private sector. Is this characterisation accurate? Using household budget survey and administrative data from Kenya and Tanzania, this paper aims to situate public sector employees in two African countries within their respective national income distributions and establish the share of high-income households that were headed by public servants. It finds that while public sector employees formed a considerable share of the top 1% - 0.1% at independence, their share of the broader middle class was never that large and fell substantially over the postcolonial era.

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Wealth, Top Incomes and Inequality
Frank Cowell, Brian Nolan, Javier Olivera and Philippe Van Kerm

Although it is heartening to see wealth inequality being taken seriously, key concepts are often muddled, including the distinction between income and wealth, what is included in "wealth", and facts about wealth distributions. This paper highlights issues that arise in making ideas and facts about wealth inequality precise, and employs newly-available data to take a fresh look at wealth and wealth inequality in a comparative perspective. The composition of wealth is similar across countries, with housing wealth being the key asset.  Wealth is considerably more unequally distributed than income, and it is distinctively so in the United States. Extending definitions to include pension wealth however reduces inequality substantially. Analysis also sheds light on life-cycle patterns and the role of inheritance. Discussion of the joint distributions of income and wealth suggests that interactions between increasing top income shares and the concentration of wealth and income from wealth towards the top is critical.

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The impact of benefit sanctioning on food insecurity: a dynamic cross-area study of food bank usage in the UK
Rachel Loopstra, Jasmine Fledderjohann, Aaron Reeves and David Stuckler

Household food security, which may be compromised by short-term income shocks, is a key determinant of health. Since 2012, the UK witnessed marked increases in the rate of ‘sanctions’ applied to unemployment insurance claimants, which stop payments to claimants for a minimum of four weeks. In 2013, over 1 million sanctions were applied, potentially leaving people facing economic hardship and driving them to use food banks. The paper tests this hypothesis by linking data from the Trussell Trust Foodbank Network with records on sanctioning rates across 259 local authorities in the UK. 

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Land Politics under Kenya's New Constitution: Countries, Devolution, and the National Land Commission
Catherine Boone, Alex Dyzenhaus, Seth Ouma, James Kabugu Owino, Catherine Gateri, Archiba Gargule, Jackie Klopp, and Ambreena Manji

Kenya's new constitution, inaugurated in August 2010, altered the institutional structure of the state in complex ways. In the land domain, reform objectives were as explicit and hard-hitting as they were anywhere else. Reform of land law and land administration explicitly aimed at putting an end to the bad old days of overcentralization of power in the hands of an executive branch considered by many to be corrupt, manipulative, and self-serving. This research asks how these significant reforms are changing land control and governance in rural Kenya.

This project was partly supported by the III Research Innovation Fund.

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Who are the Global Top 1%?
Sudhir Anand and Paul Segal

This paper presents the first in-depth analysis of the changing composition of the global income rich and the rising representation of developing countries at the top of the global distribution. We construct global distributions of income between 1988 and 2012 based on both household surveys and the new top incomes data derived from tax records, which better capture the rich who are typically excluded from household surveys. We find that the representation of developing countries in the global top 1% declined until about 2002, but that since 2005 it has risen significantly. This coincides with a decline in global inequality since 2005, according to a range of measures. We compare our estimates of the country-composition and income levels of the global rich with a number of other sources – including Credit Suisse’s estimates of global wealth, the Forbes World Billionaires List, attendees of the World Economic Forum, and estimates of top executives’ salaries. To varying degrees, all show a rise in the representation of the developing world in the ranks of the global elite.

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Gendering the elites: an ethnographic approach to elite women's lives and the re-production of inequality
Luna Glucksberg

This paper argues that the process by which accumulated capital is socialized and passed down the generations of the 'super-rich' is gendered in nature, heavily reliant on women, and currently under-researched. The author addresses this gap ethnographically, focusing on the gendered labour that women perform to sustain and reproduce the dynaist projects of elite families. In light of this data, elite London emerges as a social space structured around strong hierarchies not just of class but also gender. The paper concludes that it is essential to understand more about the interplay of these two structuring principles within elite spaces, focusing on the 'invisible' labour performed by elite women.

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The measurement of health inequalities: does status matter?
Joan Costa-Font and Frank A. Cowell

This paper examines several status concepts to examine self-assessed health inequality using the sample of world countries contained in the World Health Survey.  The authors also perform correlation and regression analysis on the determinants of inequality estimates assuming an arbitrary cardinalisation.  The findings indicate major heterogeneity in health inequality estimates depending on the status approach, distributional-sensitivity parameter and measure adopted.  The authors find evidence that pure health inequalities vary with median health status alongside measures of government quality.

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Top incomes and the gender divide
Tony Atkinson, Sarah Voitchovsky and Alessandra Casarico

In the recent research on top incomes, there has been little discussion of gender.  How many of the top 1 and 10% are women?  A great deal is known about gender differentials in earnings, but how far does this carry over into the distribution of total incomes, bringing self-employment and capital income into the picture?  We investigate the gender divide at the top of the income distribution using tax record data for a sample of 8 countries with individual taxation.

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The challenge of measuring UK wealth inequality
Facundo Alvaredo, Tony Atkinson and Salvatore Morelli

The concentration of personal wealth is now receiving a great deal of attention as an important part of understanding rising income inequality. But how can we measure the wealth of the super-rich? This Working Paper looks at the challenges of understanding the assets of the top 1% and 0.1%.

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European Identity & Redistributive Preferences
Joan Costa-Font and Frank A. Cowell

Did the introduction of the Euro change public preferences for redistribution? This Working Paper examines how the emergence of a European identity impacts support for poverty reduction policies.

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Inequality: what can be done?
Tony Atkinson

Economic inequality has become centre stage in the political debate, but what the political leaders have not said is what they would do about it. In this Working Paper, Tony Atkinson seeks to show what could be done to reduce the extent of inequality if we are serious about that objective.

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An interview with Thomas Piketty
Mike Savage

III Co-Director Mike Savage's interview focuses on Thomas Piketty’s future intellectual plans after Capital in the 21st Century. Includes insights into Piketty's views of new elites, social class, Bourdieu and Marx.

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