An analysis of family income inequality in metropolitan counties

Objective. The purpose of this study is to determine which factors affect f amily income inequality in metropolitan counties in the United States. Unli ke most previous studies, this study considers the possibility that state-l evel cultural characteristics may affect county-level income inequality. Me thods. Using data from the 1990 Census of the Population in an OLS regressi on model, county-level income inequality is regressed on an a variety of de mographic, economic, and geographic characteristics of the county. Special attention is paid to the effect of state-level cultural characteristics and employment growth. Results. This paper finds that counties in states with relatively liberal public policies have less income inequality than countie s in states with relatively conservative public policies. However, only wea k evidence is found to indicate that employment growth reduces income inequ ality. Conclusions. A surprising finding is the weak effect of employment g rowth. Since policymakers often view policies that induce employment growth as a method of reducing income inequality, this study suggests that such p olicies may not reduce inequality.