Comments on: Does More Equality Mean Less Economic Growth? http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/ Lane Kenworthy Tue, 09 Feb 2010 15:03:34 +0000 http://wordpress.com/ hourly 1 By: Wealth, Inequality, and Europe | Rants & Reasons http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1584 Wealth, Inequality, and Europe | Rants & Reasons Fri, 15 Jan 2010 07:12:47 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1584 [...] These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth. [...] [...] These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth. [...]

]]> By: Wealth, Inequality, and Europe « Philosophy On The Mesa http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1583 Wealth, Inequality, and Europe « Philosophy On The Mesa Fri, 15 Jan 2010 07:06:01 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1583 [...] These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth. [...] [...] These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth. [...]

]]> By: Jim Manzi, On The Edge « Around The Sphere http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1542 Jim Manzi, On The Edge « Around The Sphere Wed, 06 Jan 2010 19:10:47 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1542 [...] These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth. [...] [...] These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth. [...]

]]> By: Matthew Yglesias » Social Democracy and Global Competitiveness http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1541 Matthew Yglesias » Social Democracy and Global Competitiveness Wed, 06 Jan 2010 16:30:06 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1541 [...] These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth. [...] [...] These last two show us what I think is the real meaning of social democracy for a developed country—you get more equality and more vacation, with no real impact on the rate of growth. There’s a case to be made that less vacation and better televisions are a better deal than more vacation and worse televisions (the two things I like to do on vacation are go to Europe and watch TV, so I have mixed feelings about this) and there’s a tradition of philosophical argument which holds that the failure of modern mixed economies to be sufficiently solicitous of the interests of the wealthy is a major source of injustice. But though some level of income inequality would seem to be necessary to achieve economic growth, within the range that actual developed countries exist at there’s no evidence that inegalitarian policies boost growth. [...]

]]> By: Babumohanan http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1268 Babumohanan Thu, 18 Jun 2009 08:05:38 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-1268 In India around 40% of people are living in poverty. This means their purchasing power is zero. Suppose by some means in the next 10 yeras we make this 30% , then these people are going to spend their money in purchasing many goods. Is this not good for economic growth? We may have to find out ways of reducing poverty and increasing the purcasing power of people. May be whatever we are doing is not good enough. What about investing more on education? Let us give free meals to the children who are attending the schools. In India around 40% of people are living in poverty. This means their purchasing power is zero. Suppose by some means in the next 10 yeras we make this 30% , then these people are going to spend their money in purchasing many goods. Is this not good for economic growth? We may have to find out ways of reducing poverty and increasing the purcasing power of people. May be whatever we are doing is not good enough. What about investing more on education? Let us give free meals to the children who are attending the schools.

]]> By: Why I Think Social Programs Like Welfare Don’t Work And Really Just Make Things Worse. | Drink To The Dead http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-342 Why I Think Social Programs Like Welfare Don’t Work And Really Just Make Things Worse. | Drink To The Dead Wed, 23 Apr 2008 18:57:39 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-342 [...] ago I came across this post about economic growth and equality. The gist of the post is that we can even everyone’s [...] [...] ago I came across this post about economic growth and equality. The gist of the post is that we can even everyone’s [...]

]]> By: Xander http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-79 Xander Sat, 26 Jan 2008 15:35:44 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-79 Well, you provide statistics as proof while I offer up what I can plainly see with my own eyes. Until about a month ago when I finally found and bought my first home, I shared a duplex with a 100% welfare family. The "man" of the house, and I use the term loosely here, is 31 years old and has been claiming to be unable to work due to a back problem for about 6 years now. Of course, his back only seems to hurt when it's time for work but tell him you're going 4 wheeling, go cart racing or taking the snow mobile and he will run you over to show off his prowess on these machines. Amazing the number of jumps and crap his 'poor' back can suddenly take when it's play time. His wife is 26 and has never worked a day in her life and has been on some sort of public assistance her whole life and proudly brags about how she never has to work because, and I quote, "stupid people like you go to work and pay for me and my kids". There is nothing absolutely wrong with this woman save her state of mind. Too make matters worse, in my state you get a certain dollar amount per child up to a certain age, so guess who has a new kid every time one reaches that age and the money stops coming? They are up to 4 now and there is no end in sight to this cycle. Do they at least use the money wisely? Heck no! Because it was a duplex in what once was a single family home, bill collectors would often leave their collection notices on our front door (their entrance was in the back) and sure enough they were scamming everyone of the utility companies in the area. Due to liberal, 'lets save the world' laws, these companies were forced by law to not turn off basic utilities even though these people made it known they were never going to pay the bills. What do you think that does to prices for things like propane/oil/natural gas and electric? Utility companies don't just eat those loses, they pass them on to paying customers like you and me. NO they proudly tell anyone who will listen about how they take the money and buy beer, weed and other drugs so they can "hang out" with their good friends...who happen to be living the same bullsh*t lifestyle. Then theres the things you can never see in a statistic, the lessons these people are giving their kids. These kids have absolutely no chance at a decent life mainly because since birth it has been taught to them that this is the way it should be. Their oldest is now 16 and stopped going to school at 14, which means he barely made it through a semester of high school....and he's proud of it. The 2 younger school aged ones, about 10 and 8 respectively, already show signs of complete indifference towards school. The mother can barely get out of bed to put them on the bus most days and we have heard the complaints of the driver about his totally wold behavior on the bus. I can only imagine what this child is like to have to deal with for 6 hours in a classroom. He is allowed to do what he wants when he wants and is NEVER, EVER told no about anything. Believe me it shows. The only sot these kids have is either someone getting them out from under the influence of these people or some sort of miraculous epiphany occurring in their own little minds pushing them to do something better with their lives. I admit that anything is possible but not bloody likely. NO these kids will grow up to be what they were taught to be and they in turn will have more kids and keep the cycle going. As long as the system stands...they will thrive. This is what happens when people know they don't have to work because someone will be foolish enough to do it for them. Most parents know enough not to reward bad behavior and when someone in your life has a dependency of some sort, alcohol, drugs, food, etc.. we all know it is bad to be an enabler but funny enough when it's the state and our tax money suddenly there is no problem with being an enabler. Suddenly it's humane to help someone screw themselves, their children and every working stiff paying taxes. I also don't agree that these are 'isolated cases' as in my life I have seen this exact scenario played out several times...only the names change. You my friend probably live a respectable life and are more than likely a responsible, contributing to society person, and I applaud you for it, but do not think for one minute that just because you think and act a certain way, that means everyone is like you. The truth in my own opinion is that most people, not all, many for sure are opportunistic in nature and will take a free lunch every time. As long as you are willing to serve it up they will take it and they don't care what it cost you're dumb ass to give it to them. (Please note I am NOT calling anyone names here when I say dumb ass, that statement is just a reflection of those kind of people think of working citizens like you and me) What I have never understood is that if you must feel compelled to reach out and help people, then why not make it realistic? I have to pass a drug test to earn the money used to support these people...why don't they have to pass one to receive it? There are tons of menial jobs out there under government control...if you need to be on welfare and you have no physical limitations then why shouldn't you have to report for work to earn that welfare check? Why can't welfare recipients clean up trash on state and town roads for instance? Local post offices have been complaining about a huge back log in getting passports out...why can't the welfare crowd earn their keep by helping do clerical work at such places? Any fool can be taught to do what these people do at places like DMV for example. There are tons of state mental institutions where they can use able bodies to do menial stuff from serving lunches to just spending time talking to an elderly person. There are things they can be doing besides sitting at home waiting for a check in the mail if someone just put a little thought behind it. Anyway, sir I'm sure you will fire back with all sorts of statistic this and statistic that, but again I can only hit you with what I see with my own eyes and know from my own experiences. Thanks for at least listening respectively. It is appreciated. Well, you provide statistics as proof while I offer up what I can plainly see with my own eyes. Until about a month ago when I finally found and bought my first home, I shared a duplex with a 100% welfare family. The “man” of the house, and I use the term loosely here, is 31 years old and has been claiming to be unable to work due to a back problem for about 6 years now. Of course, his back only seems to hurt when it’s time for work but tell him you’re going 4 wheeling, go cart racing or taking the snow mobile and he will run you over to show off his prowess on these machines. Amazing the number of jumps and crap his ‘poor’ back can suddenly take when it’s play time. His wife is 26 and has never worked a day in her life and has been on some sort of public assistance her whole life and proudly brags about how she never has to work because, and I quote, “stupid people like you go to work and pay for me and my kids”. There is nothing absolutely wrong with this woman save her state of mind. Too make matters worse, in my state you get a certain dollar amount per child up to a certain age, so guess who has a new kid every time one reaches that age and the money stops coming? They are up to 4 now and there is no end in sight to this cycle. Do they at least use the money wisely? Heck no! Because it was a duplex in what once was a single family home, bill collectors would often leave their collection notices on our front door (their entrance was in the back) and sure enough they were scamming everyone of the utility companies in the area. Due to liberal, ‘lets save the world’ laws, these companies were forced by law to not turn off basic utilities even though these people made it known they were never going to pay the bills. What do you think that does to prices for things like propane/oil/natural gas and electric? Utility companies don’t just eat those loses, they pass them on to paying customers like you and me. NO they proudly tell anyone who will listen about how they take the money and buy beer, weed and other drugs so they can “hang out” with their good friends…who happen to be living the same bullsh*t lifestyle. Then theres the things you can never see in a statistic, the lessons these people are giving their kids. These kids have absolutely no chance at a decent life mainly because since birth it has been taught to them that this is the way it should be. Their oldest is now 16 and stopped going to school at 14, which means he barely made it through a semester of high school….and he’s proud of it. The 2 younger school aged ones, about 10 and 8 respectively, already show signs of complete indifference towards school. The mother can barely get out of bed to put them on the bus most days and we have heard the complaints of the driver about his totally wold behavior on the bus. I can only imagine what this child is like to have to deal with for 6 hours in a classroom. He is allowed to do what he wants when he wants and is NEVER, EVER told no about anything. Believe me it shows. The only sot these kids have is either someone getting them out from under the influence of these people or some sort of miraculous epiphany occurring in their own little minds pushing them to do something better with their lives. I admit that anything is possible but not bloody likely. NO these kids will grow up to be what they were taught to be and they in turn will have more kids and keep the cycle going. As long as the system stands…they will thrive. This is what happens when people know they don’t have to work because someone will be foolish enough to do it for them. Most parents know enough not to reward bad behavior and when someone in your life has a dependency of some sort, alcohol, drugs, food, etc.. we all know it is bad to be an enabler but funny enough when it’s the state and our tax money suddenly there is no problem with being an enabler. Suddenly it’s humane to help someone screw themselves, their children and every working stiff paying taxes. I also don’t agree that these are ‘isolated cases’ as in my life I have seen this exact scenario played out several times…only the names change. You my friend probably live a respectable life and are more than likely a responsible, contributing to society person, and I applaud you for it, but do not think for one minute that just because you think and act a certain way, that means everyone is like you. The truth in my own opinion is that most people, not all, many for sure are opportunistic in nature and will take a free lunch every time. As long as you are willing to serve it up they will take it and they don’t care what it cost you’re dumb ass to give it to them. (Please note I am NOT calling anyone names here when I say dumb ass, that statement is just a reflection of those kind of people think of working citizens like you and me)

What I have never understood is that if you must feel compelled to reach out and help people, then why not make it realistic? I have to pass a drug test to earn the money used to support these people…why don’t they have to pass one to receive it? There are tons of menial jobs out there under government control…if you need to be on welfare and you have no physical limitations then why shouldn’t you have to report for work to earn that welfare check? Why can’t welfare recipients clean up trash on state and town roads for instance? Local post offices have been complaining about a huge back log in getting passports out…why can’t the welfare crowd earn their keep by helping do clerical work at such places? Any fool can be taught to do what these people do at places like DMV for example. There are tons of state mental institutions where they can use able bodies to do menial stuff from serving lunches to just spending time talking to an elderly person. There are things they can be doing besides sitting at home waiting for a check in the mail if someone just put a little thought behind it. Anyway, sir I’m sure you will fire back with all sorts of statistic this and statistic that, but again I can only hit you with what I see with my own eyes and know from my own experiences.

Thanks for at least listening respectively. It is appreciated.

]]> By: Size of the Pie, Distribution of the Pie « Consider the Evidence http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-73 Size of the Pie, Distribution of the Pie « Consider the Evidence Wed, 23 Jan 2008 03:56:54 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-73 [...] Does More Equality Mean Less Economic Growth? [...] [...] Does More Equality Mean Less Economic Growth? [...]

]]> By: padraic2112 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-40 padraic2112 Wed, 16 Jan 2008 06:32:05 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-40 > Thats why social programs fail time and again. Provide some evidence for this claim, if you would. > Thats why social programs fail time and again.

Provide some evidence for this claim, if you would.

]]> By: Xander http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-28 Xander Tue, 15 Jan 2008 21:34:57 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-28 Sorry buddy, but I have to agree with PJ. Why is it that people in this country are obsessed with taking money from those of us who earn money? Always all this talk about social programs and "helping" people and yet even though we are throwing more money at our problems than ever before, nothing gets better or even slows down? The answer I suspect is rather simple...working hard and keeping the money you earn & contributing to the system by being a consumer of goods works, while taking money from some so that others don't have to "do" doesn't. Thats why social programs fail time and again. There is no such thing as a free ride (I'm looking at you Hillary) no matter how you try and divide it up...those who do prosper, while those who wait for handouts don't. Unless a democrat is in office. I know this will bring about much ire from the left side but it's only because the truth hurts. Sorry buddy, but I have to agree with PJ. Why is it that people in this country are obsessed with taking money from those of us who earn money? Always all this talk about social programs and “helping” people and yet even though we are throwing more money at our problems than ever before, nothing gets better or even slows down? The answer I suspect is rather simple…working hard and keeping the money you earn & contributing to the system by being a consumer of goods works, while taking money from some so that others don’t have to “do” doesn’t. Thats why social programs fail time and again. There is no such thing as a free ride (I’m looking at you Hillary) no matter how you try and divide it up…those who do prosper, while those who wait for handouts don’t. Unless a democrat is in office. I know this will bring about much ire from the left side but it’s only because the truth hurts.

]]> By: Växer länder med små inkomstskillnader långsammare? « Nonicoclolasos http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-27 Växer länder med små inkomstskillnader långsammare? « Nonicoclolasos Tue, 15 Jan 2008 20:51:08 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-27 [...] 15 januari 2008 av nonicoclolasos Hur ser relationen mellan inkomstojämlikhet och tillväxt ut? Lane Kenworthy presenterar följande [...] [...] 15 januari 2008 av nonicoclolasos Hur ser relationen mellan inkomstojämlikhet och tillväxt ut? Lane Kenworthy presenterar följande [...]

]]> By: PJ http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-24 PJ Tue, 15 Jan 2008 19:23:24 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-24 Here's a question for you. What if we cut the size of the government and did with less "services" and citizens of this great capitalist republic could be free to invest more into what they percieved to be a good investment? We all complain about how poorly govt. manages things (DMV, Katrina, etc.) why do you want to give them more money? Not to mention all those govt. employees living off of my hard earned tax dollars. They aren't producing anything to make this economy grow. Here’s a question for you. What if we cut the size of the government and did with less “services” and citizens of this great capitalist republic could be free to invest more into what they percieved to be a good investment? We all complain about how poorly govt. manages things (DMV, Katrina, etc.) why do you want to give them more money? Not to mention all those govt. employees living off of my hard earned tax dollars. They aren’t producing anything to make this economy grow.

]]> By: liberal http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-15 liberal Sat, 22 Dec 2007 19:14:00 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-15 Actually, there IS a set of government revenue policies that promote equality, fairness, AND growth: the taxation of economic rents. The biggest rent is land and other natural resources. Taxing land heavily promotes equality (because quality land tends to be held by the wealthy), is fair (because the returns to land ("rent") are captured by the landowner even though the landowner in his role of landowner didn't create them), and promotes growth (because an increase in taxes on land would enable a decrease in taxes on productive behavior, like laboring or creating capital). Actually, there IS a set of government revenue policies that promote equality, fairness, AND growth: the taxation of economic rents.

The biggest rent is land and other natural resources. Taxing land heavily promotes equality (because quality land tends to be held by the wealthy), is fair (because the returns to land (“rent”) are captured by the landowner even though the landowner in his role of landowner didn’t create them), and promotes growth (because an increase in taxes on land would enable a decrease in taxes on productive behavior, like laboring or creating capital).

]]> By: notsneaky http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-14 notsneaky Mon, 17 Dec 2007 23:11:27 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-14 Very interesting post. Couple things; I think if you go up to 1990 or 1995 there is a weak positive relationship between income and inequality for rich countries - with UK as an outlier (more inequality correlated with higher income). Also I think the mechanism through which redistribution can increase growth is by overcoming credit-constraints faced by lower income households, not by increasing the consumption rate (which pretty much has decrease growth in the long run, unless you're talking about a poor country stuck in a poverty trap in need of a Big Push). Finally because both average income, and the gini coefficients come from the same data (individual incomes) - hence from the same, usually left skewed distribution, one should actually expect to see a positive relationship for IDENTICAL countries in the data. Very interesting post. Couple things; I think if you go up to 1990 or 1995 there is a weak positive relationship between income and inequality for rich countries – with UK as an outlier (more inequality correlated with higher income). Also I think the mechanism through which redistribution can increase growth is by overcoming credit-constraints faced by lower income households, not by increasing the consumption rate (which pretty much has decrease growth in the long run, unless you’re talking about a poor country stuck in a poverty trap in need of a Big Push).
Finally because both average income, and the gini coefficients come from the same data (individual incomes) – hence from the same, usually left skewed distribution, one should actually expect to see a positive relationship for IDENTICAL countries in the data.

]]> By: lanekenworthy http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-13 lanekenworthy Mon, 17 Dec 2007 15:57:06 +0000 http://lanekenworthy.net/2007/12/03/does-more-equality-mean-less-economic-growth/#comment-13 eCAHNomics: Good question. It's because the data are from different sources. Both are the best available for the respective units, but they differ. The country data are from the Luxembourg Income Study (LIS) and are posttax-posttransfer. The state data are from the U.S. Census Bureau and are PREtax-posttransfer. The latter therefore don't include the equalizing impact of income taxes and of the Earned Income Tax Credit. Because these policies are mainly federal rather than state-specific, including them wouldn't change the cross-state differences in inequality much. But it would reduce the Gini in all states. eCAHNomics:

Good question. It’s because the data are from different sources. Both are the best available for the respective units, but they differ. The country data are from the Luxembourg Income Study (LIS) and are posttax-posttransfer. The state data are from the U.S. Census Bureau and are PREtax-posttransfer. The latter therefore don’t include the equalizing impact of income taxes and of the Earned Income Tax Credit. Because these policies are mainly federal rather than state-specific, including them wouldn’t change the cross-state differences in inequality much. But it would reduce the Gini in all states.

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