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Lee paper on social tension from income class segregation published in Jour of Business & Econ Stats

Jul 18, 2016

Measuring Social Tension from Income Class Segregation

Yoonseok Lee & Donggyun Shin

Journal of Business and Economic Statistics, July 2016

Yoonseok Lee

Yoonseok Lee

The authors develop an index that effectively measures the level of social tension generated by income class segregation. They adopt the basic concepts of between-group difference (or alienation) and within-group similarity (or identification) from the income [bi]polarization literature; but they 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, the authors 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.