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Who benefits from ethnic income redistribution?
SOCIAL
SCIENCE
RESEARCH
18,
70-87 (1989)
Who Benefits from Ethnic Income Redistribution? A Cross-Cultural
Analysis
D. JOHN GROVE AND EIICHI HOSHINO Graduate School of International
Studies,
University
of
Denver
We know very little about who benefits from the distribution of ethnic income in different parts of the world. Although neoclassical and Marxian theories have come to opposite conclusions concerning who will gain from ethnic income changes, comparativists have largely ignored the question. This cross-cultural study examines the relative gains and losses among 10 pair-wise comparisons in five multiethnic countries. The results show some encouraging signs of interethnic equalization for 7 out of the 10 comparisons, but there are some disturbing reversals in the 1980s. In most cases the dispersion of gains within the upwardly mobile groups are skewed in favor of the richest income groups; however, there are cases where the dispersion of gains is relatively even between top and bottom income groups. Upper-income groups also prospered within the downwardly mobile groups. Thus, the evidence does not support either the Marxian contention that group progress is due to workers usurping the economic privileges of the rich, or the neoclassical position that ethnic equalization is inversely related to within group inequalities. 0 1989 Academic Press, Inc.
Who has benefitted from social policies designed to redress ethnic income imbalances? Apart from a number of studies in the United States, there has been little systematic comparative work on how effective equal opportunity strategies have been in ameliorating ethnic income disparities in different parts of the world (Wilson, 1978; Reich, 1981; Farley, 1984). The few comparative studies conducted show some reduction in ethnic inequalities, but fail to analyze who benefits (Grove, 1978, 1980; Echols, 1981). Esman (1987) argues that the well-educated elite have gained from the implementation of preferential treatment strategies in third world countries. Since we know little about who benefits from changes in ethnic wealth, we must turn to theory. Although the two most influential theoriesThis paper was originally presented at the American Political Science Association conference, Washington, August 1986. We would like to thank the readers for their insightful comments. Address reprint requests to D. John Grove, Graduate School of International Studies, University of Denver, Denver, CO 80208. 0049-089X/89 $3 .OO Copyright Q 1989 by Academic Press, Inc. All rights of reproduction in any form reserved.
70
ETHNIC
INCOME
DISTRIBUTION
71
neoclassical and Marxian-do provide predictions concerning who will gain, they both theoretically dismiss discriminatory behavior as an unexplained cultural residual.’ They can give us, however, a starting point for a more in-depth analysis. Two recent books on the economics of discrimination suggest that orthodox theoretical positions are still being defended (Reich, 1981; Sowell, 1981). The human capital theory contends that relative ethnic inequalities will decline over time because it costs employers to discriminate (Becker, 1957). If ethnic inequalities do persist in market-orientated societies, then it is due to the long-lasting cultural differences between groups (Sowell, 1981; Chiswick, 1983). To deal with these cultural differences, social policies are implemented to remove the inequality in educational expenditures and to provide the human capital and legal prerequisites for equal employment opportunity. The result of this more competitive market mechanism will be to complete the transfer of the appropriate cultural norms from the high to the low achievers. The fruits of the expected intergroup convergence should accrue to employers, who can now maximize profits from a larger labor pool, and to disfavored groups, who can now enter previously excludedjobs (Becker, 1957). This will create unequal beneficiaries within dominant groups (employers gain, workers lose) and the locus of gain within nondominant groups will be found in those higher stratagroups who can take advantage of altered opportunity structures. Some variants on this theory have criticized Becker’s notion of preference formation and have argued that dominant groups rationally discriminate against disfavored groups in order to maximize their own economic interests (Glenn, 1966; Thurow, 1969). These authors argue that both dominant group employers and workers would suffer from a reduction in ethnic inequalities. More radical approaches argue that ethnic inequalities will persist in market-orientated societiesbecausethe ruling class,motivated by extracting surplus profits from workers, uses discrimination as a devise for dividing and controlling the working class through the formation of the industrial reserve army, and as a mechanism to introduce new pools of immigrant labor who will accept lower wages (Dowdell, 1974;Perlo, 1975; Szymanksi, 1976; Bonacich, 1979; Reich, 1981). The economic consequences of an exploitive class are clear: wages of the working class, regardless of ’ For a more comprehensive review of how Marxian and neoclassical theories analyze discriminatory behavior, see Dex (1979), Marshall (1974), and Reich (1981). Reich’s work is one of the most systematic attempts to compare Marxian and neoclassical theories through cross-sectional analysis in America. Reich concludes that Marxian predictions fit closer to patterns of American racial inequality than neoclassical arguments. Central to the Beck (1980)-Vellemez (1978) critique of the Reich (1981)-Szymanski (1976) model is that when indicators of the whole income distribution are used, instead of median ratios, then the United States data demonstrate that White workers do not lose from the economic subordination of Blacks.
72
GROVE
AND
HOSHINO
ethnicity, are lessened by cheaper, underemployed labor supply, while benefitting the capitalist class (Baron, 1985). Although Marxists are skeptical that any fundamental improvement in the relative position of minorities will occur under capitalism, they do concede that all ethnic workers can make gains by successfully threatening the interests of the capitalist class. In order to appropriate a share of what capitalist receive, workers must pressure governments to institute social policies that stress full employment and social welfare policies. Without class pressure, the persistence of ethnic inequalities will have unequalizing consequences within ethnic groups; capitalist gain, while workers suffer. There is a debate, however, within Marxism as to who precisely benefits from racism. Critics have argued that there are material gains for the working class within dominant groups to practice discriminatory behavior (Allen, 1975; Bonacich, 1979; Willhelm, 1980). Thus we have two different predictions about who should benefit from ethnic income redistribution. Human capital theories contend that there is an inverse relationship between intergroup convergence and the distribution within groups (interethnic equalization benefits dominant group employers and nondominant group elites, while workers of both groups suffer). A variant on the neoclassical position (Thurow-type models) argues that intergroup convergence has neutral implications for the distributional gains within both dominant and nondominant groups (dominant group employers and employees lose, and nondominant employers and employees gain). Radical theories, on the other hand, contend that there is a positive relationship between inter- and intragroup income inequalities (ethnic inequalities benefit capitalist and hurt workers in both dominant and nondominant groups). If workers are, however, able to pressure the state into promoting equal opportunity strategies and full employment policies, then it is the workers who will be the primary beneficiaries. Revisionists within the Marxist tradition argue that ethnic inequalities have neutral implications for dominant groups (all segments gain), but have a positive effect on the income inequalities within nondominant groups (capitalists still gain, but nondominant group workers lose). Most of the discussion on who benefits concerns either dominant or minority groups. The debate among Szymanski (1976), Reich (1981), and Villemez (1978) focuses on which segment of the White population gains from racial subordination. Wilson thesis (1978), on the other hand, redirects the focus of the debate into the polarization between the haves and havenots within minority groups. In this study we will examine the relative gains and losses of income groups within both dominant and nondominant groups. Since there are no external reference groups to assess the relative gains and losses within dominant groups, the extent of income concentration is sufficient. However, the relative gains and losses within nondominant
ETHNIC
INCOME
DISTRIBUTION
73
groups should be judged in comparison with comparable income groups within dominant groups. Thus we argue that the former notion of beneficiaries should be assessed within the confines of the group, the latter should be judged in comparison with the groups it is trying to catch up with. Since a number of multiethnic countries have now published their 1980 income data, it is an appropriate time to make judgements about the zero-sum structure of ethnic redistribution. The objective of this paper is to determine who has benefitted from changes in ethnic income redistribution and whether the results confirm either of the two theoretical predictions. The follow-up question of the reasons for these changes will be dealt with in another paper. This study extends the analysis to five market-oriented multiethnic countries which have all implemented social reforms to promote greater ethnic equality. The sample includes Canada and its bilingual policy of supporting parity for English and French speaking Canadians, the United States and its Civil Rights Act which forbids discrimination in employment and public accommodations, and three of the most successful welfare state systems in the Middle East (Israel), Oceania (New Zealand), and Asia (Sri Lanka). In reviewing the literature on ethnic income redistribution in the five countries, we found evidence that ethnic inequalities have declined, but apart from the United States, there are no studies which have identified the beneficiaries from these egalitarian trends. Although these five cases are not identical, the underlying issue of redressing unequal ethnic wealth, and who benefits from it, is sufficiently similar to warrant systematic comparative analysis. THE SAMPLE The most comprehensive studies are in the United States where there is a lively debate about how effective affirmative action programs have been in elevating the economic position of Black and Hispanic Americans (Freeman 1973; Smith and Welch 1983; Hoffman 1979; Lazear 1979; Darity and Myers 1980; Reich 1981; Farley 1984). Most of these studies suggest that Blacks and Hispanics have recently lost some of their gains made during the 1960s and early 1970s. Villemez (1978) argues that most Whites have gained from the post-World War II period of racial inequalities, while Reich (1981) and Szymanski (1976) show that capitalists are the major beneficiaries. The contending positions have now moved onto the related question of whether Black progress in the 1950-1970 period has been impeded by economic polarization (Wilson, 1978). Well-educated Blacks have made substantial progress, but there is an emerging Black underclass where the opportunities for advancement are very limited. In Canada, the Official Language Act appears to have increased employment opportunities for the French Canadian. Whether due to language
74
GROVE AND HOSHINO
legislation or upgrading the French labor force, there has been a substantial reduction in the income gap between French and English workers in Quebec (Lieberson, 1970; Vaillaincourt, 1978; Boulet, 1979; Carlinger, 1981). A study reviewing the linguistic differences in income for males in Montreal found that the Francophone/Anglophone ratio declined from 1.5 in 1961 to 1.1 in 1977 (Vaillaincourt, 1979). There is still, however, substantial rewards to speaking English. In the three welfare state systems, there are some encouraging signs of greater ethnic equality. Israeli studies that have evaluated the assimilation policy show that the income gap widened initially during the 1950-l%O period between the two major ethnic groups-Jews from Asia or Africa and Jews of European or American origin-but declined substantially in the 1970s (Remba, 1973; Semyonov and Kraus, 1983). In reviewing the evidence for a similar policy in New Zealand of assimilating the Maori population into the European culture, we could find only one study which evaluates ethnic income differentials over time, and it shows that urban Maoris have made some progress between 1951 and 1966 (Collette and O’Malley 1974:150). More recent studies of the 1976 census conclude that ethnic income inequality increases as one moves up the occupational ladder (Brosnan, 1982, 1984; Brosnan and Hill, 1983). To combat the advantages of the Sri Lankan Tamils and Muslims, the Sri Lankan welfare state system, until 1977 one of the most successful in Asia, subsidized education, health care, and food distribution, and was used to convert the Sinhalese political power into economic advancement. Studies by Abeysekerea (1975) and Grove (1980, 1986) show that this strategy has succeeded in elevating the Sinhalese above that of the Tamils. The beneficiaries of this rapid economic advancement of the Sinhalese are unclear; all we know is that the Gini coefficients within each of the ethnic groups declined from 1963 to 1973, and then increased by 1981 (Glewwe, 1986). METHOD In order to measure the income gains and losses steming from changes in ethnic income distribution, we need a measure that can (1) satisfy the inequality principles set out in Fossett and South (1983), (2) estimate income changes using the whole distribution, (3) measure the gains and losses under different distributional intersections (in our sample there will be a few groups that have overtaken economically advantaged groups), and (4) be relatively insensitive to aggregation bias as set out by Waldman (1977). There are two indexes which have traditionally measured intergroup inequality. The Theil measure decomposes income distribution into between and within group components, but it will not disaggregate by percentile. Thus the Theil measure cannot show the gains and losses of particular
ETHNIC
INCOME
DISTRIBUTION
75
income groups. It also has a bias built into the measure which overestimates the first component placed into the measure (Adelman and Levy, 1984). Lieberson’s (1976) index of Net Difference (ND) also has limitations in its ability to effectively disaggregate the total distance between two disribution functions. The ND index can assess the direction of overall change between groups but cannot determine the robustness of the catch up factors for each particular income group. What we need is a measure that can analyze the gains and losses of income groups within the context of overall changes. There is one measure, however, that can satisfy the four above-mentioned points and that can be disaggregated by percentile. This new measure of intergroup inequality developed by Grove and Hannum (1986) has so far not been applied to a substantive problem. (We realize that one of the prerequisites of using a new measure is to compare it with more traditional indexes and then show the advantages and disadvantages of the new one. Space limitations, however, restrict a comprehensive comparison between measures. One example (Fig. 1) may help to illustrate the problems with difference measures that cannot effectively disaggregate. Examples 1 and 2 are cumulative distributions where each pair of, say, NDs are identical. Suppose that example 1 is in year t and example 2 is in year t - 1. Such a disaggregated analysis will tell us that, even though overall inequality did not change, the top income group of X did catch up with the top income group of Y and Y’s lower income group slipped.) This measure is composed of an inequality-type measure defined as the ratio of mean incomes, made to conform to the principle of symmetry by dividing the mean incomes of the two groups by the sum of the two (Fossett and South 1983:863), and a distance ratio developed in economics (Dagum 1980; Shot-rocks 1982; Ebert 1984). The Grove-Hannum (1986) measure* is expressed in two parts, an intergroup inequality measure which is simply a ratio of mean incomes and a crossover measure (the difference between a distance-type measure and an inequality-type measure) which can locate the point at which cumulative distributional curves intersect with one another, Intergroup inequality Crossover(C)
(I) = f: (Pi - Qi) Mj
=
’ Following Waldman (1977), we calculated the aggregation bias (AB) and correlated the number of categories (NOC) with inequality scores (I) and obtained the following results: AB = .259, ri.- = .305. Thus compared with other standard inequality measures reported in Waldman, we find that the Grove-Hannum (1986) measure is less sensitive to aggregation bias and the number of categories.
76
GROVEANDHOSHINO
Population Percentile
4 4
Xl Yl
Income
I
Level
r I
Populatlon Percentile
+ 4
Income
x2 Y2
Level
FIGURE I
where i is the category of a ranked income disribution, Pi is the cumulative proportion through category of the first group, Qi is the cumulative proportion through category of the second group, and Mi is the midpoint of category. Note that crossover (C) is composed of two pieces, the first of which, D=
~ IPi-Q,lM,’ i= I
1s a distance-type measure (it detects any discrepancies
between two distributions)
and the second of which, I = i(Pi
- QJ M;,
i= I
is a ratio of mean incomes measure (it compares average sense through the ratio of mean incomes). functions do not cross over (overlap) then either all i and so D = I and C = 0. When the two income
the distributions in an If the two distribution P c Q or Q G P for distribution functions
ETHNIC
INCOME
DISTRIBUTION
77
do cross over then D > Z and C > 0. In our case, when two distribution functions do not cross over the scores of distance and inequality are equivalent. The C can be interpreted as a descriptive statistic which locates the crossover and determines what portion of the overall differences between two income distribution functions is due to crossover. To determine the overall distributional pattern within groups, we use the Gini coefficient, the most popular index of income concentration. For specific gains and losses within dominant groups, we compare the ratio of group median incomes at selected percentiles. To assess the gains and losses by particular nondominant income groups, we contrast their changes with comparable income groups within dominant groups. Specifically, we utilize the change in Z scores in order to measure the magnitude and direction of relative gain/loss by a particular group, and can be expressed as: AZ = I, - I,- 1. A positve sign of Z means the loss and the negative sign means the gain for the disadvantaged groups. In his analysis, Reich (1981: 120-121) used the top 1, 5, and 10% as a proxy for defining capitalists/employers and he divided workers into the bottom 40% and the rest. When we compared the gains and losses of the top 10 and 20% and the bottom 20 and 40% in the different countries, we found that our results did not vary significantly. Therefore, we decided to adopt Reich’s threefold division of the top lo%, middle 50%, and the bottom 40%. We have collected a reliable time series ethnic income data set from census and government publications in the five multiethnic societies (see Appendix). Ideally we would like the data set to be over a longer time period which could be decomposed. Until recently though government statisticians considered the measurement of ethnicity fraught with difficulties which is in large part due to the ambiguities with the term. In countries like Brazil and Trinidad, for example, racial categories have been dropped from the census. Consequently it is only in the last 20 to 30 years that government surveys have included ethnic data.3 Also, we would have liked to decompose the published ethnic income data into different types of demographic and social variables. In this way we could subtract out the variability across, for example, education, age, and urbanization rates (see Paglin, 1975). However, the published ethnic income data are rarely disaggregated by social and demographic variables and are not consistent over time. 3 We are aware of only three other countries which publish ethnic income data on a regular basis: South Africa collects racial data, but was excluded in this study because it does not fit with our social reform criteria; Malaysia, which only publishes racial income by decile; and Australia, which only recently has disaggregated income by ethnicity. Other countries such as Yugoslavia, the Soviet Union, and Belgium publish income data by regions, not ethnicity.
78
GROVE AND HOSHINO
Census classifications allocate individuals to their respective categories on the basis of their preferred cultural affiliation or common ancestry (self-classification). In choosing the sample we have included only those groups that have been the target of social policies. The sample of 14 groups and their population size (%) include: Canada-Anglophone (60.1) Francophone (26.8), and other mother tongues (13.0); Israel-Western or Jews of American or European origin, mainly Ashkenazim (29.4); Oriental or Jews from Asian or African origin, mainly Sephardim (45.5), and Israeli-born Jews (25.0); New Zealand-European (88.1) and Maoris of Polynesian ancestry (8.8); Sri Lanka--Sinhalese who are Budhist (73.3), Ceylon (11.5) and Indian Tamil (7.2) who are Hindus, and Muslims (7.1) who are mainly Moors and Malays; United States-White (86.2), Black (9.8), and Hispanic (5.5).4 FINDINGS Have interethnic differentials persisted or declined, and what effect have any changes had on inequalities within groups? Table 1 shows that the rate at which between-group convergence/divergence is achieved over 10 years is unrelated to changes in inequality within dominant groups (r = .12), but has a positive effect on Ginis within nondominant groups (r = .42).5 These results lend some support to the revisionist school within Marxism which differs from more orthodox approaches on the contention that dominant group workers will suffer from the gains of disadvantaged groups. If this is the case, inequalities between low-tomiddle ethnic income groups should diminish. In Table 2 we find that 7 out of the 10 pair-wise comparisons show some reduction in ethnic differentials. The French Canadians, Israeli Orientals, and New Zealand Maoris have all made substantial progress (the I scores move closer to 0). Other groups like Israeli-born Jews, Canadians whose mother tongue is neither English or French (other), and Shinalese (in comparison with Ceylon Tamils) have even periodically overtaken more economically advanced groups (the Z scores change from + to - and the C scores describe how much distributional crossover has occurred and at what level). Most of the crossovers occur at the middle-to-upper income group and would look like those in Fig. 2. American Blacks made some gains on Whites from 1967 to 1978, but these gains began to disappear in the early 1980s. And then, there are groups like Hispanic Americans, Indian Tamils, and Sinhalese (in comparison with ’ The unit of analysis for each country is: Canada, family income; Israel, family income; New Zealand, personal income; Sri Lanka, personal income; and the United States, household income. ’ We define a dominant group as the group that is economically advantaged at the start of the period under study.
ETHNIC
INCOME
DISTRIBUTION
79
TABLE 1 Correlations between Changes in Z and Gini Scores: Pooled Data AZ 1.00 .12 .42* - .OlO .052 32
AZ AGx AGY Mean SD N
AGx
AGY
1.00 .66** -.009 .044 32
1.00 - .OlO .067 32
Note. AZ = (Z, - I,-,,); AGx = (Gx, - Gx,-10); AGY = (GY, - W-d. * P c .Ol, **P < .ool.
Muslims) who have economically slipped further behind more economically advanced groups. If inequalities in 7 out of 10 pair-wise comparisons have declined, then what effect have these changes had on distributional gains within more economically advantaged groups? By comparing the median incomes of the bottom 40% and the middle 50%, with the top decile, we can establish the beneficiaries within the dominant group. Out of the five dominant groups there is a mixed bag of beneficiaries. It is the lower and middle income English Canadians, Western Jews, and Muslim Sri Lankans who have made gains on the wealthy 10%. In the Sri Lankan Muslim case, only the bottom 40% made gains on the top decile.6 In the other two cases, upper income New Zealand Europeans and American Whites have gained while the lower-to-middle income groups actually lost ground relative to the upper tail.’ 6 The median income ratios are as fellows: Bottom 40% Dominant group
t
Canadian English .200 Western Jew .186 Sri Lankan Muslim .119 Note. t, first time period; t + 1, last ’ The median income ratios: Bottom 4m Dominant group
t
NZ Europeans American Whites
.3% .164l
t+1 .239 .263 .153 time period.
Middle 50% t
Top 10% t+l
.463 .414 .344
.569 .623 .341 Middle 50%
t+1 .089 .151
t .662 .479
t, t + 1 1.000 1.000 1.000
Top 10% t+l .447 .463
t, f + 1 1.ooo 1.000
1951 I956
,176 .I64
I
-
,241 .I83 .I87 .I52 .I63 .I49 .I40 ,104 .I00 ,111 ,119 .I14 .I18 .I12
I%7 1968 I%9 1971 1972 1973 1974 1975 1976 1977 1978 1979 1981 1982
-
c
European/Maxi
-
.5 36 -
,067 ,039 ,052 ,034 .048 ,050 .041 ,050 .038
1977 1978 1979 1980 1981 1982 1983 1984
I%9 I
I
-
IL(l-lol
-
L
-
-
-
L
.22 I ,308
-~ __ G,
.360 ,336 .322 ,307 ,316 ,319 ,326 .305 ,307 ,317 .325 .293 ,298 ,303
,342 ,307 ,288 ,279 ,287 ,272 ,266 .310 .307
G
3. New
,265 ,309
__ G,!
Zealand
.357 .323 ,324 ,288 .306 .2YY ,316 .298 ,282 ,291 .295 .305 ,313 .309
G.,
2. Israel
,327 .305 ,300 ,288 .303 .291 ,283 ,312 ,316
G
I. Canada
TABLE 2 Ethnic income Inequality
,357 .33 I ,317 ,324 .320 .316 ,342 .310 .305 ,310 ,324 ,285 ,286 ,291
.322 ,298 ,288 2x1 .2X9 ,280 ,262 .30X ,309
,012 ,005 JOY - .OI2 ,008 .035 ,003 .00x ,012 - a02 St44 ,009 - .OI2 -.ooY
I
.04x -.ool ,003 - .004 -.Wl .005 -.ool ,006 ,004
-
2.4 34.9 26.5 lY.4 41.6 76.4 44.8 63.5 73.1 55.6 38.6 46.6 65.2 70.2
C
Western/l\nleli-horn
Y-14. Iii. 4-17 I-Y. l-7. l-5. 613. i-IO.
I
II-16 10-11. 15-16 16 l3-If!
IY
I‘l
17-X IO. 11-1tj
I-?. Y-14 l-3, 11-12. I I-20 IhIX l-2, 4-N
z-1
IS-201
614 54. 13-15 f%20 5-13. 15-16. 14. 1~20 3-10 I-6. I’)-20 17
57.7 9.0 72. I 59.2 13.3 63.7 21.0 16. I
II l-20)
C
English/other
E 2 0
8
is
b
00 0
NO/P.
I%7 196a 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 I982 1983 1984
1953 I%3 1973
1953 I%3 1973
I. between
,209 ,198 ,200 .I89 .I% ,198 ,199 .I97 ,192 ,190 ,194 ,188 .I95 ,202 ,211 .211 ,209 ,205
I
,228 .323
I
.047 ,136 390
I
.I44 ,121 .I20
group
C
L
inequality:
-
-
-
within
-
-
l-3 l-4 -
--
L
Gini.
Tamil
l-3 -
L
-
C
White/Black
2.0 I.1 -
Sinhalese/I.
1.7 -
C
Muslim/Sinhalese
-
group
.332 ,279 ,484
L. level:
--
Gh ~~ ,424 ,414 .412 .42 I .417 .423 ,420 ,415 .42 I ,420 ,423 ,432 ,433 ,436 ,442 .43x ,449 ,448
States
Go -_~~ .334 ,335 .344
,523 ,523 .4Ol
Gn
4. Sri Lanka
5. United
inequality;
G, __~~ ,364 ,357 ,358 ,362 ,363 ,363 ,361 ,361 ,367 .365 ,366 ,365 .367 ,370 .376 ,378 ,377 .3?6
G. ~____~ .484 ,476 .390
.484 .476 ,390
G.
-__.___
.353 ,334 ,469
Gh
,362 .36Y ,370 .37Y ,383 .37Y .3x0 .3x7 .3Y6 ,392 .406 ,410 ,410 C. crossover.
-
,443 ,497 .3YO
Gs I
-
,120 .I20 .I38 .I40 .I22 .I I7 ,107 .I24 ,116 ,138 I42 ,132
-
-
-
0.01
c
~~
White/Hispanic
-
-
-
I
L( I-20)
4-20
91.1
L( I-20)
C
C. Tamil/Sinhalese
,130
I
.w3 .0x9 - ,017
-
00 L
2
5 2
3
2 u t;
H m
82
GROVE AND HOSHINO
Population Percentile \
Crossover
Income Level FIGURE 2
We can now return to our original finding that Z and nondominant Gini scores are positively related. If we apply the same median income ratios to the distributional gains within nondominant groups, we find that, within upwardly mobile groups, lower-to-middle income groups have benefitted the most while upper income groups benefit within downward movement groups.’ However, as we argued in the introduction, beneficiaries within nondominant groups should be judged relative to beneficiaries within dominant groups. In order to establish whether the gains or losses within nondominant groups are significant compared with income changes within dominant groups, we compared income figures across ethnic lines. Table 3 shows that the Z scores were disaggregated into the three income groups and * The median income ratios for nondominant groups are: Bottom Middle 40% 50% Nondominant
groups
Canadian French Canadian other Israeli-born Oriental Jew Ceylon Tamil Sinhalese Maori American Black American Hispanic Indian Tamil
t ,218 .214 .187 ,198 ,138 .I23 ,319 .I21 ,184 ,285
r+1 ,224 .237 ,306 .259 ,163 ,174 ,039 ,107 ,129 ,240
t .465 ,481 ,421 .444 .360 .345 ,627 ,413 ,480 ,527
Top 10% t+1 s41 ,564 ,666 S48 ,456 .454 .506 .394 ,437 ,463
1, t + 1 l.ooo l.ooo l.ooo l.ooo l.ooo l.ooo l.ooa l.ooo l.ooo l.ooo
ETHNIC
INCOME
83
REDISTRIBUTION
TABLE 3 Overall Change in Z Scores and Average Change in I Scores for Each Income Group
1. Canada: 1%9-1984 English/French English/other 2.Israel: 1967-1982 Western/Oriental Western/I-born 3. New Zealand: 1951-1981 European/Maori 4. Sri Lanka: 1953-1973 Muslim/Sinhalese C. Tamil/Sinhalese Sinhalese/I. Tamil 5. United States White/Black: 1%71984 White/Hispanic: 19721984
Average gains/losses of income groups
Overall changes hl
Bottom 40%
Middle 50%
Top 10%
- .0290 - .0452
.OOOl - .0125
- .0366 - .0554
- .I073 - .1245
-.1290 - .0214
- .0470 - .0202
-.1464l - .0232
- .3720 - .0174
- .0564
- .0757
- .0372
- .0753
.0440 - .0797 .1197
.0357 - .0472 .1024
.0182 - .0978 .1648
.2055 -.1194 - .0374
- .0042
- .0054
- .0030
- .0045
.0019
.0252
-4066
- .0376
Note. Overall change in Z = Z, - Z,,,. For example, AZ in English/French = Z,, Z,%9. An example of an average change in an income group is AI in bottom 40%/.4.
-
were divided by the population decile to give us comparable figures across ethnic lines.’ The average change for each income group is then compared with the overall between-group inequality changes to give us some measure of significant gains and losses. The results show that the upwardly mobile subsample of seven cases can be divided into those cases where the dispersion of gains within the nondominant groups are skewed in favor of the richest lo%, and those where the dispersion is much more even. In the four cases of skewed development, the richest percentile within the Francophone, Canadian others, and Oriental Jew communities made between two to three times the overall gains (- .107/ - .029; - .125/ - .045; - .372/ - .129). In the case of the Sinhalese overtaking the Ceylon Tamils, the gains of the upper income Sinhalese were only slightly higher than the overall gains (- .119/ - .080). In the remaining three cases of upward mobility, the dispersion of benefits was much more even. The advancement of the New Zealand Maoris is due to the gains of the bottom 40% and upper income Maoris, both of which made above overall gains (- .076 and - .075, respectively). 9 In order to make the percentage of people in the percentiles the same, we will divide the change in Z scores by the percentile: average AZ, = AZ,for each income group/percentile.
84
GROVE
AND
HOSHlNO
Similarly, the progress of the Black Americans is due to the greater than average advancement of the poor and the upper tail of the Black distribution (- .005 and - .005, respectively). The progress of the Israeli-born Jews. on the other hand, is due to the middle income groups (- .023) who have helped the group overtake the Western-born Jews. When we turn to the subsample of downward movers we find an uneven distribution of gains and losses in all cases. The relative decline of the Hispanic Americans (.002) is caused by the bottom 40% (.025) which is nearly offset by the richest Hispanics who were able to make substantial gains (- .038). The decline of the Indian Tamils is due to the middle income Tamils (.165) who made well-above average overall losses. Upper income Indian Tamils, on the other hand, made some gains (- .037). Although the Sinhalese overtook the Ceylon Tamils, they were unable to catch up with the Muslims. This is mainly due to the upper income Sinhalese who made over four times the overall losses (.206/.044). CONCLUSIONS
There are a number of groups that have made significant progress (French Canadians, Oriental Jews, New Zealand Maoris, and Sri Lankan Sinhalese) in the post-World War II period. Others have even periodically overtaken more economically advanced groups (Israeli-born Jews and Canadians whose mother tongue is neither French nor English). Some groups made progress in the 1960-1970 period (Black and Hispanic Americans), but these gains disappeared in the 1980s and others (Indian Tam&) made no progress at all. Thus 7 out of 10 pair-wise comparisons show some economic progress. These trends have had no effect on changes within dominant group inequalities, but are related to inequalities within nondominant groups. The implication of this relationship is that low-to-middle income minorities have benefited from change. This is true if intragroup comparison are made. If, however, we want to judge progress in comparison with income groups whose minorities are trying to catch up with, we get a different picture. When we look at the seven upwardly mobile groups our results show that the minority gains are skewed in four out of the seven cases, with wealthy disadvantaged groups receiving the bulk of benefits, with middle income groups also gaining, leaving a large percentage of the poor unatrected. In the other three upwardly mobile cases, the distributional gains have been more even, with either the poor and upper income groups gaining or the middle income groups making the most progress. In the three dowrlwardly mobile cases, the most pronounced losers are either concentrated at the bottom, with some gains at the top, or the group losses are caused by the lack of upward mobility of the rich. Does this support the Marxian or neoclassical position? In the upwardly mobile subsample, the evidence does not support the Marxian contention
ETHNIC
INCOME
REDISTRIBUTION
85
that group progress is due to workers usurping the economic privileges of the rich. Although there is some support for the contention that increases in ethnic inequalities have benefited upper income minorities. Nor does this subsample support the neoclassical notion that ethnic equalization is inversely related to within group inequalities. The application of this relatively new measure of intergroup inequality shows that there is no set .pattern to the structure of intergroup convergence. It appears that the “styles” of catch up are more country specific than previously thought. What we find in this study is that when relative gains and losses of nondominant groups are contrasted with comparable groups within more advantaged groups, the results do not fit neatly into standard explanations. In order to understand why different income groups benefit by group gains, we need to decompose the income trends by demographic and social criteria. However, many countries are still hesitant to publish ethnic data for fear that the results may exacerbate intense feelings of relative deprivation. APPENDIX: 1. Canada:
Family
INCOME
SOURCES
Income
Statistics Canada, Income Distribution by Size in Canada, 1969, l9771984, Ottawa. 2. Israel:
Employees
Families
Central Bureau of Statistics, Employees Families Income, 1967-1971, special series 395, Jerusalem, pp. 36-37, 48; 1971, special series 395, pp. 37-48; 1972-1974, special series 510, pp. 56-57, 69-74; 1975-1977, special series 598, pp. 28-29, 46-47, 64-67; 1977, special series 395; 1978, special series 626, pp. 60-61; 1980, special series 681, pp. 94-97; 1982, special series 734, pp. 66-69. 3. New Zealand:
Personal
Zncome
Population and Dwelling Census, 1951, Vol. 8, p. 63; 1956 Maori Census, pp. 24-28; 1966, Vol. 5, T. l-3; 1966Maori Census, p. 54; 1976, Vol. 5, p. 9; Maori Census, T. 24, 34; 1981, Vol. 5, pp. 96-97; 1981 Maori Census, Vol. 8a, pp. 86, 95. 4. Sri Lanka:
Personal
Income
Central Bank of Ceylon, Survey of Ceylon’s Consumer Finances, 1963, part 2, pp. 121-134; 1973, part 2, pp. 140-159. 5. United
States: Household
Income
Department of Commerce, Money Income of Households, Families and Persons in the U.S., 1984, Consumer Income P-60-151, p. 9.
86
GROVE AND HOSHINO
REFERENCES Abeysekerea, G. (1975). Distribution of Income in Sri Lanka, 1953-73: Its Structure, Trend and Interpretation, Thesis, University of Wisconsin, Madison. Adelman, I., and Levy, I. (1984). “Decomposing Theil’s index of income inequality into between and within components: A note.” Review of Income Wealth 30, 119-121. Allen, R. 1. (1975). Reluctant Reformers, Doubleday, New York. Baron, H. (1985). “Racism transformed: The implications for the 1980s” Review of the Radical Economist 17, 10-33. Beck, E. M. (1980). “Discrimination and White economic loss: A time series examination of the radical model,” Social Forces 59, 148-168. Becker, G. S. (1957). The Economics of Discrimination, Univ. of Chicago, Chicago. Bonacich, E. (1979). “The past, present, and future of split labor market theory,” in Research in Race and Ethnic Relations (C. Marrett and C. Leggon, Eds.), Vol. 1, pp. 17-64, JAI Press, Greenwich, CT. Boulet, J.-A. (1979). L’evolution des disparities linguistiques de revenue de travail dans la zone metropolitaine de Montreal de 1961 a 1977, Economic Council of Canada, document No. 127. Brosnan, P. (1982). “Ethnic origin and income in New Zealand,” New Zealand Population Review 8, 358-368. Brosnan, P. (1984). “Age, education and Maori-Pakeha income differences,” New Zealand Economic Papers 18, 49-62. Brosnan, P., and Hill, C. (1983). “Income, occupation and ethnic origin in New Zealand,” New Zealand Economic Papers 17, 51-57. Carlinger, G. (1981). “Wage differences by language group and the market for language skills in Canada,” Journal of Human Resources 16, 384-399. Chiswick, B. R. (1983). “The earnings and human capital of American Jews,” Journal of Human Resources 18, 313-336. Collette, J., and O’Malley, P. (1974). “Urban migration and selective acculturation: The case of Maori,” Human Organization 33, 146-158. Dagum, C. (1980). “Inequality measures between income distributions with applications,” Econometrica 48, 1791-1803. Darity, W., and Myers, S. (1980). “Changes in Black-White income inequality, 1968-78: Illusions of progress,” Review of Black Political Economy 10, 354-379. Dex, S. (1979). “Economist’s theories of the economics of discrimination,” Ethnic and Racial Studies 2, 90-108. Dowdell, G. (1974). “White gains from Black subordination,” Social Problems 22, 162183. Ebert, U. (1984). “Measures of distance between income distributions,” Journal of Economic Theory 32, 266-274. Echols, J. (1981). “Racial and ethnic inequality: The comparative impact of socialism,” Comparative Political Studies 13, 397-402. Esman, M. (1987). “Ethnic politics and economic power,” Comparative Politics 19, 395418. Farley, R. (1984). Blacks and Whites: Narrowing the Gap? Harvard Univ. Press, Cambridge, MA. Fossett, M., and South, S. J. (1983). “The measurement of intergroup income inequality: A conceptual review,” Social Forces 61, 855-871. Freeman, R. B. (1973). “Decline of labor market discrimination and economic analysis,” American Economics Review 63, 280-286. Glenn, N. (1966). “White gains from Negro subordination,” Social Problems 14, 159-178. Glewwe, P. (1986). “The distribution of income in Sri Lanka in 1969-70 and 1980-81: A decomposition analysis,” Journal of Development Economics 24, 255-274.
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INCOME
REDISTRIBUTION
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Grove, D. J. (1978). “A test of the ethnic equalization hypothesis: A cross-national study,” Ethnic and Racial Studies 1, 175-195. Grove, D. J. (1980). “The effect of economic development and growth on ethnic income mobility: A cross-cultural study,” Studies in Comparative International Development 15, 22-36. Grove, D. J. (1986). “Restructuring the cultural division of labor in Malaysia and Sri Lanka,” Comparative Political Studies 19, 179-199. Grove, D. J., and Hannum, R. (1986). “On measuring intergroup inequality,” Sociological Methods and Research 15, 142-159. Hoffman, S. (1979). “Black-White life cylce earning differences and the vintage hypothesis: A longitudinal analysis,” American Economic Review 70, 855-867, Lazear, E. (1979). “The narrowing of the Black-White differential is illusory,” American Economic Review 69, 553-564. Lieberson, S. (1970). Language and Ethnic Relations, Wiley, Toronto. Lieberson, S. (1976). “Rank-sum comparisons between groups,” in Sociological Methodology (D. Heiss, Ed.), pp. 276-291, Jossey-Bass, San Francisco. Marshall, R. (1974). “The economics of racial discrimination: A survey,” Journal of Economic Literature 12, 849-871. Paglin, M. (1975) “The measurement and trend of inequality: A basic revision,” American Economic Review 65, 598-609. Perlo, V. (1975). Economics of Racism, International, New York. Reich, M. (1981). Racial Inequality, Princeton Univ. Press, Princeton, NJ. Remba, 0. (1973). “Income inequality in Israel: Ethnic aspects,” in Israel: Social Structure and Change (M. Curtis and M. S. Chertoff, Ed.), pp. 199-213, Transaction Books, NJ. Semyonov, M., and Kraus, V. (1983). ‘Gender, ethnicity and income inequality: The Israeli experience,” International Journal of Comparative Sociology 24, 258-272. Shorrocks, A. F. (1982). “On the distance between income distributions,” Econometrica so, 1337-1339. Smith, J. P., and Welch, F. R. (1983). Closing the Gap: Forty Years of Economic Progress for Blacks, R-3330-DOL Rand, Santa Monica, CA. Sowell, T. (1981). Markets and Minorities, Basic Books, New York. Szymanski, A. (1976). “Racial discrimination and White gain,” American Sociological Review 41, 403-414. Thurow, L. (1%9). Poverty and Discrimination, The Brookings Institute. Vaillaincort, F. (1978). “Revenue et langues, Quebec, 1961-71,” Journal of Canadian Studies 13, 63-69. Vaillaincort, F. (1979). “La situation des francophones du Quebec,” Canadian Public Policy 5, 542-552. Villemez, W. (1978). “Black subordination and White economic well-being,” American Sociological Review 43, 772-776. Waldman, L. K. (1977). “Types and measures of inequality,” Social Science Quarterly 58, 229-241. Willhelm, S. M. (1980). “Can Marxism explain America’s racism?” Social Problems 28, 98-l 12. Wilson, W. J. (1978). The Declining Significance of Race: Blacks and Changing American Institutions, Univ. of Chicago, Chicago.
SCIENCE
RESEARCH
18,
70-87 (1989)
Who Benefits from Ethnic Income Redistribution? A Cross-Cultural
Analysis
D. JOHN GROVE AND EIICHI HOSHINO Graduate School of International
Studies,
University
of
Denver
We know very little about who benefits from the distribution of ethnic income in different parts of the world. Although neoclassical and Marxian theories have come to opposite conclusions concerning who will gain from ethnic income changes, comparativists have largely ignored the question. This cross-cultural study examines the relative gains and losses among 10 pair-wise comparisons in five multiethnic countries. The results show some encouraging signs of interethnic equalization for 7 out of the 10 comparisons, but there are some disturbing reversals in the 1980s. In most cases the dispersion of gains within the upwardly mobile groups are skewed in favor of the richest income groups; however, there are cases where the dispersion of gains is relatively even between top and bottom income groups. Upper-income groups also prospered within the downwardly mobile groups. Thus, the evidence does not support either the Marxian contention that group progress is due to workers usurping the economic privileges of the rich, or the neoclassical position that ethnic equalization is inversely related to within group inequalities. 0 1989 Academic Press, Inc.
Who has benefitted from social policies designed to redress ethnic income imbalances? Apart from a number of studies in the United States, there has been little systematic comparative work on how effective equal opportunity strategies have been in ameliorating ethnic income disparities in different parts of the world (Wilson, 1978; Reich, 1981; Farley, 1984). The few comparative studies conducted show some reduction in ethnic inequalities, but fail to analyze who benefits (Grove, 1978, 1980; Echols, 1981). Esman (1987) argues that the well-educated elite have gained from the implementation of preferential treatment strategies in third world countries. Since we know little about who benefits from changes in ethnic wealth, we must turn to theory. Although the two most influential theoriesThis paper was originally presented at the American Political Science Association conference, Washington, August 1986. We would like to thank the readers for their insightful comments. Address reprint requests to D. John Grove, Graduate School of International Studies, University of Denver, Denver, CO 80208. 0049-089X/89 $3 .OO Copyright Q 1989 by Academic Press, Inc. All rights of reproduction in any form reserved.
70
ETHNIC
INCOME
DISTRIBUTION
71
neoclassical and Marxian-do provide predictions concerning who will gain, they both theoretically dismiss discriminatory behavior as an unexplained cultural residual.’ They can give us, however, a starting point for a more in-depth analysis. Two recent books on the economics of discrimination suggest that orthodox theoretical positions are still being defended (Reich, 1981; Sowell, 1981). The human capital theory contends that relative ethnic inequalities will decline over time because it costs employers to discriminate (Becker, 1957). If ethnic inequalities do persist in market-orientated societies, then it is due to the long-lasting cultural differences between groups (Sowell, 1981; Chiswick, 1983). To deal with these cultural differences, social policies are implemented to remove the inequality in educational expenditures and to provide the human capital and legal prerequisites for equal employment opportunity. The result of this more competitive market mechanism will be to complete the transfer of the appropriate cultural norms from the high to the low achievers. The fruits of the expected intergroup convergence should accrue to employers, who can now maximize profits from a larger labor pool, and to disfavored groups, who can now enter previously excludedjobs (Becker, 1957). This will create unequal beneficiaries within dominant groups (employers gain, workers lose) and the locus of gain within nondominant groups will be found in those higher stratagroups who can take advantage of altered opportunity structures. Some variants on this theory have criticized Becker’s notion of preference formation and have argued that dominant groups rationally discriminate against disfavored groups in order to maximize their own economic interests (Glenn, 1966; Thurow, 1969). These authors argue that both dominant group employers and workers would suffer from a reduction in ethnic inequalities. More radical approaches argue that ethnic inequalities will persist in market-orientated societiesbecausethe ruling class,motivated by extracting surplus profits from workers, uses discrimination as a devise for dividing and controlling the working class through the formation of the industrial reserve army, and as a mechanism to introduce new pools of immigrant labor who will accept lower wages (Dowdell, 1974;Perlo, 1975; Szymanksi, 1976; Bonacich, 1979; Reich, 1981). The economic consequences of an exploitive class are clear: wages of the working class, regardless of ’ For a more comprehensive review of how Marxian and neoclassical theories analyze discriminatory behavior, see Dex (1979), Marshall (1974), and Reich (1981). Reich’s work is one of the most systematic attempts to compare Marxian and neoclassical theories through cross-sectional analysis in America. Reich concludes that Marxian predictions fit closer to patterns of American racial inequality than neoclassical arguments. Central to the Beck (1980)-Vellemez (1978) critique of the Reich (1981)-Szymanski (1976) model is that when indicators of the whole income distribution are used, instead of median ratios, then the United States data demonstrate that White workers do not lose from the economic subordination of Blacks.
72
GROVE
AND
HOSHINO
ethnicity, are lessened by cheaper, underemployed labor supply, while benefitting the capitalist class (Baron, 1985). Although Marxists are skeptical that any fundamental improvement in the relative position of minorities will occur under capitalism, they do concede that all ethnic workers can make gains by successfully threatening the interests of the capitalist class. In order to appropriate a share of what capitalist receive, workers must pressure governments to institute social policies that stress full employment and social welfare policies. Without class pressure, the persistence of ethnic inequalities will have unequalizing consequences within ethnic groups; capitalist gain, while workers suffer. There is a debate, however, within Marxism as to who precisely benefits from racism. Critics have argued that there are material gains for the working class within dominant groups to practice discriminatory behavior (Allen, 1975; Bonacich, 1979; Willhelm, 1980). Thus we have two different predictions about who should benefit from ethnic income redistribution. Human capital theories contend that there is an inverse relationship between intergroup convergence and the distribution within groups (interethnic equalization benefits dominant group employers and nondominant group elites, while workers of both groups suffer). A variant on the neoclassical position (Thurow-type models) argues that intergroup convergence has neutral implications for the distributional gains within both dominant and nondominant groups (dominant group employers and employees lose, and nondominant employers and employees gain). Radical theories, on the other hand, contend that there is a positive relationship between inter- and intragroup income inequalities (ethnic inequalities benefit capitalist and hurt workers in both dominant and nondominant groups). If workers are, however, able to pressure the state into promoting equal opportunity strategies and full employment policies, then it is the workers who will be the primary beneficiaries. Revisionists within the Marxist tradition argue that ethnic inequalities have neutral implications for dominant groups (all segments gain), but have a positive effect on the income inequalities within nondominant groups (capitalists still gain, but nondominant group workers lose). Most of the discussion on who benefits concerns either dominant or minority groups. The debate among Szymanski (1976), Reich (1981), and Villemez (1978) focuses on which segment of the White population gains from racial subordination. Wilson thesis (1978), on the other hand, redirects the focus of the debate into the polarization between the haves and havenots within minority groups. In this study we will examine the relative gains and losses of income groups within both dominant and nondominant groups. Since there are no external reference groups to assess the relative gains and losses within dominant groups, the extent of income concentration is sufficient. However, the relative gains and losses within nondominant
ETHNIC
INCOME
DISTRIBUTION
73
groups should be judged in comparison with comparable income groups within dominant groups. Thus we argue that the former notion of beneficiaries should be assessed within the confines of the group, the latter should be judged in comparison with the groups it is trying to catch up with. Since a number of multiethnic countries have now published their 1980 income data, it is an appropriate time to make judgements about the zero-sum structure of ethnic redistribution. The objective of this paper is to determine who has benefitted from changes in ethnic income redistribution and whether the results confirm either of the two theoretical predictions. The follow-up question of the reasons for these changes will be dealt with in another paper. This study extends the analysis to five market-oriented multiethnic countries which have all implemented social reforms to promote greater ethnic equality. The sample includes Canada and its bilingual policy of supporting parity for English and French speaking Canadians, the United States and its Civil Rights Act which forbids discrimination in employment and public accommodations, and three of the most successful welfare state systems in the Middle East (Israel), Oceania (New Zealand), and Asia (Sri Lanka). In reviewing the literature on ethnic income redistribution in the five countries, we found evidence that ethnic inequalities have declined, but apart from the United States, there are no studies which have identified the beneficiaries from these egalitarian trends. Although these five cases are not identical, the underlying issue of redressing unequal ethnic wealth, and who benefits from it, is sufficiently similar to warrant systematic comparative analysis. THE SAMPLE The most comprehensive studies are in the United States where there is a lively debate about how effective affirmative action programs have been in elevating the economic position of Black and Hispanic Americans (Freeman 1973; Smith and Welch 1983; Hoffman 1979; Lazear 1979; Darity and Myers 1980; Reich 1981; Farley 1984). Most of these studies suggest that Blacks and Hispanics have recently lost some of their gains made during the 1960s and early 1970s. Villemez (1978) argues that most Whites have gained from the post-World War II period of racial inequalities, while Reich (1981) and Szymanski (1976) show that capitalists are the major beneficiaries. The contending positions have now moved onto the related question of whether Black progress in the 1950-1970 period has been impeded by economic polarization (Wilson, 1978). Well-educated Blacks have made substantial progress, but there is an emerging Black underclass where the opportunities for advancement are very limited. In Canada, the Official Language Act appears to have increased employment opportunities for the French Canadian. Whether due to language
74
GROVE AND HOSHINO
legislation or upgrading the French labor force, there has been a substantial reduction in the income gap between French and English workers in Quebec (Lieberson, 1970; Vaillaincourt, 1978; Boulet, 1979; Carlinger, 1981). A study reviewing the linguistic differences in income for males in Montreal found that the Francophone/Anglophone ratio declined from 1.5 in 1961 to 1.1 in 1977 (Vaillaincourt, 1979). There is still, however, substantial rewards to speaking English. In the three welfare state systems, there are some encouraging signs of greater ethnic equality. Israeli studies that have evaluated the assimilation policy show that the income gap widened initially during the 1950-l%O period between the two major ethnic groups-Jews from Asia or Africa and Jews of European or American origin-but declined substantially in the 1970s (Remba, 1973; Semyonov and Kraus, 1983). In reviewing the evidence for a similar policy in New Zealand of assimilating the Maori population into the European culture, we could find only one study which evaluates ethnic income differentials over time, and it shows that urban Maoris have made some progress between 1951 and 1966 (Collette and O’Malley 1974:150). More recent studies of the 1976 census conclude that ethnic income inequality increases as one moves up the occupational ladder (Brosnan, 1982, 1984; Brosnan and Hill, 1983). To combat the advantages of the Sri Lankan Tamils and Muslims, the Sri Lankan welfare state system, until 1977 one of the most successful in Asia, subsidized education, health care, and food distribution, and was used to convert the Sinhalese political power into economic advancement. Studies by Abeysekerea (1975) and Grove (1980, 1986) show that this strategy has succeeded in elevating the Sinhalese above that of the Tamils. The beneficiaries of this rapid economic advancement of the Sinhalese are unclear; all we know is that the Gini coefficients within each of the ethnic groups declined from 1963 to 1973, and then increased by 1981 (Glewwe, 1986). METHOD In order to measure the income gains and losses steming from changes in ethnic income distribution, we need a measure that can (1) satisfy the inequality principles set out in Fossett and South (1983), (2) estimate income changes using the whole distribution, (3) measure the gains and losses under different distributional intersections (in our sample there will be a few groups that have overtaken economically advantaged groups), and (4) be relatively insensitive to aggregation bias as set out by Waldman (1977). There are two indexes which have traditionally measured intergroup inequality. The Theil measure decomposes income distribution into between and within group components, but it will not disaggregate by percentile. Thus the Theil measure cannot show the gains and losses of particular
ETHNIC
INCOME
DISTRIBUTION
75
income groups. It also has a bias built into the measure which overestimates the first component placed into the measure (Adelman and Levy, 1984). Lieberson’s (1976) index of Net Difference (ND) also has limitations in its ability to effectively disaggregate the total distance between two disribution functions. The ND index can assess the direction of overall change between groups but cannot determine the robustness of the catch up factors for each particular income group. What we need is a measure that can analyze the gains and losses of income groups within the context of overall changes. There is one measure, however, that can satisfy the four above-mentioned points and that can be disaggregated by percentile. This new measure of intergroup inequality developed by Grove and Hannum (1986) has so far not been applied to a substantive problem. (We realize that one of the prerequisites of using a new measure is to compare it with more traditional indexes and then show the advantages and disadvantages of the new one. Space limitations, however, restrict a comprehensive comparison between measures. One example (Fig. 1) may help to illustrate the problems with difference measures that cannot effectively disaggregate. Examples 1 and 2 are cumulative distributions where each pair of, say, NDs are identical. Suppose that example 1 is in year t and example 2 is in year t - 1. Such a disaggregated analysis will tell us that, even though overall inequality did not change, the top income group of X did catch up with the top income group of Y and Y’s lower income group slipped.) This measure is composed of an inequality-type measure defined as the ratio of mean incomes, made to conform to the principle of symmetry by dividing the mean incomes of the two groups by the sum of the two (Fossett and South 1983:863), and a distance ratio developed in economics (Dagum 1980; Shot-rocks 1982; Ebert 1984). The Grove-Hannum (1986) measure* is expressed in two parts, an intergroup inequality measure which is simply a ratio of mean incomes and a crossover measure (the difference between a distance-type measure and an inequality-type measure) which can locate the point at which cumulative distributional curves intersect with one another, Intergroup inequality Crossover(C)
(I) = f: (Pi - Qi) Mj
=
’ Following Waldman (1977), we calculated the aggregation bias (AB) and correlated the number of categories (NOC) with inequality scores (I) and obtained the following results: AB = .259, ri.- = .305. Thus compared with other standard inequality measures reported in Waldman, we find that the Grove-Hannum (1986) measure is less sensitive to aggregation bias and the number of categories.
76
GROVEANDHOSHINO
Population Percentile
4 4
Xl Yl
Income
I
Level
r I
Populatlon Percentile
+ 4
Income
x2 Y2
Level
FIGURE I
where i is the category of a ranked income disribution, Pi is the cumulative proportion through category of the first group, Qi is the cumulative proportion through category of the second group, and Mi is the midpoint of category. Note that crossover (C) is composed of two pieces, the first of which, D=
~ IPi-Q,lM,’ i= I
1s a distance-type measure (it detects any discrepancies
between two distributions)
and the second of which, I = i(Pi
- QJ M;,
i= I
is a ratio of mean incomes measure (it compares average sense through the ratio of mean incomes). functions do not cross over (overlap) then either all i and so D = I and C = 0. When the two income
the distributions in an If the two distribution P c Q or Q G P for distribution functions
ETHNIC
INCOME
DISTRIBUTION
77
do cross over then D > Z and C > 0. In our case, when two distribution functions do not cross over the scores of distance and inequality are equivalent. The C can be interpreted as a descriptive statistic which locates the crossover and determines what portion of the overall differences between two income distribution functions is due to crossover. To determine the overall distributional pattern within groups, we use the Gini coefficient, the most popular index of income concentration. For specific gains and losses within dominant groups, we compare the ratio of group median incomes at selected percentiles. To assess the gains and losses by particular nondominant income groups, we contrast their changes with comparable income groups within dominant groups. Specifically, we utilize the change in Z scores in order to measure the magnitude and direction of relative gain/loss by a particular group, and can be expressed as: AZ = I, - I,- 1. A positve sign of Z means the loss and the negative sign means the gain for the disadvantaged groups. In his analysis, Reich (1981: 120-121) used the top 1, 5, and 10% as a proxy for defining capitalists/employers and he divided workers into the bottom 40% and the rest. When we compared the gains and losses of the top 10 and 20% and the bottom 20 and 40% in the different countries, we found that our results did not vary significantly. Therefore, we decided to adopt Reich’s threefold division of the top lo%, middle 50%, and the bottom 40%. We have collected a reliable time series ethnic income data set from census and government publications in the five multiethnic societies (see Appendix). Ideally we would like the data set to be over a longer time period which could be decomposed. Until recently though government statisticians considered the measurement of ethnicity fraught with difficulties which is in large part due to the ambiguities with the term. In countries like Brazil and Trinidad, for example, racial categories have been dropped from the census. Consequently it is only in the last 20 to 30 years that government surveys have included ethnic data.3 Also, we would have liked to decompose the published ethnic income data into different types of demographic and social variables. In this way we could subtract out the variability across, for example, education, age, and urbanization rates (see Paglin, 1975). However, the published ethnic income data are rarely disaggregated by social and demographic variables and are not consistent over time. 3 We are aware of only three other countries which publish ethnic income data on a regular basis: South Africa collects racial data, but was excluded in this study because it does not fit with our social reform criteria; Malaysia, which only publishes racial income by decile; and Australia, which only recently has disaggregated income by ethnicity. Other countries such as Yugoslavia, the Soviet Union, and Belgium publish income data by regions, not ethnicity.
78
GROVE AND HOSHINO
Census classifications allocate individuals to their respective categories on the basis of their preferred cultural affiliation or common ancestry (self-classification). In choosing the sample we have included only those groups that have been the target of social policies. The sample of 14 groups and their population size (%) include: Canada-Anglophone (60.1) Francophone (26.8), and other mother tongues (13.0); Israel-Western or Jews of American or European origin, mainly Ashkenazim (29.4); Oriental or Jews from Asian or African origin, mainly Sephardim (45.5), and Israeli-born Jews (25.0); New Zealand-European (88.1) and Maoris of Polynesian ancestry (8.8); Sri Lanka--Sinhalese who are Budhist (73.3), Ceylon (11.5) and Indian Tamil (7.2) who are Hindus, and Muslims (7.1) who are mainly Moors and Malays; United States-White (86.2), Black (9.8), and Hispanic (5.5).4 FINDINGS Have interethnic differentials persisted or declined, and what effect have any changes had on inequalities within groups? Table 1 shows that the rate at which between-group convergence/divergence is achieved over 10 years is unrelated to changes in inequality within dominant groups (r = .12), but has a positive effect on Ginis within nondominant groups (r = .42).5 These results lend some support to the revisionist school within Marxism which differs from more orthodox approaches on the contention that dominant group workers will suffer from the gains of disadvantaged groups. If this is the case, inequalities between low-tomiddle ethnic income groups should diminish. In Table 2 we find that 7 out of the 10 pair-wise comparisons show some reduction in ethnic differentials. The French Canadians, Israeli Orientals, and New Zealand Maoris have all made substantial progress (the I scores move closer to 0). Other groups like Israeli-born Jews, Canadians whose mother tongue is neither English or French (other), and Shinalese (in comparison with Ceylon Tamils) have even periodically overtaken more economically advanced groups (the Z scores change from + to - and the C scores describe how much distributional crossover has occurred and at what level). Most of the crossovers occur at the middle-to-upper income group and would look like those in Fig. 2. American Blacks made some gains on Whites from 1967 to 1978, but these gains began to disappear in the early 1980s. And then, there are groups like Hispanic Americans, Indian Tamils, and Sinhalese (in comparison with ’ The unit of analysis for each country is: Canada, family income; Israel, family income; New Zealand, personal income; Sri Lanka, personal income; and the United States, household income. ’ We define a dominant group as the group that is economically advantaged at the start of the period under study.
ETHNIC
INCOME
DISTRIBUTION
79
TABLE 1 Correlations between Changes in Z and Gini Scores: Pooled Data AZ 1.00 .12 .42* - .OlO .052 32
AZ AGx AGY Mean SD N
AGx
AGY
1.00 .66** -.009 .044 32
1.00 - .OlO .067 32
Note. AZ = (Z, - I,-,,); AGx = (Gx, - Gx,-10); AGY = (GY, - W-d. * P c .Ol, **P < .ool.
Muslims) who have economically slipped further behind more economically advanced groups. If inequalities in 7 out of 10 pair-wise comparisons have declined, then what effect have these changes had on distributional gains within more economically advantaged groups? By comparing the median incomes of the bottom 40% and the middle 50%, with the top decile, we can establish the beneficiaries within the dominant group. Out of the five dominant groups there is a mixed bag of beneficiaries. It is the lower and middle income English Canadians, Western Jews, and Muslim Sri Lankans who have made gains on the wealthy 10%. In the Sri Lankan Muslim case, only the bottom 40% made gains on the top decile.6 In the other two cases, upper income New Zealand Europeans and American Whites have gained while the lower-to-middle income groups actually lost ground relative to the upper tail.’ 6 The median income ratios are as fellows: Bottom 40% Dominant group
t
Canadian English .200 Western Jew .186 Sri Lankan Muslim .119 Note. t, first time period; t + 1, last ’ The median income ratios: Bottom 4m Dominant group
t
NZ Europeans American Whites
.3% .164l
t+1 .239 .263 .153 time period.
Middle 50% t
Top 10% t+l
.463 .414 .344
.569 .623 .341 Middle 50%
t+1 .089 .151
t .662 .479
t, t + 1 1.000 1.000 1.000
Top 10% t+l .447 .463
t, f + 1 1.ooo 1.000
1951 I956
,176 .I64
I
-
,241 .I83 .I87 .I52 .I63 .I49 .I40 ,104 .I00 ,111 ,119 .I14 .I18 .I12
I%7 1968 I%9 1971 1972 1973 1974 1975 1976 1977 1978 1979 1981 1982
-
c
European/Maxi
-
.5 36 -
,067 ,039 ,052 ,034 .048 ,050 .041 ,050 .038
1977 1978 1979 1980 1981 1982 1983 1984
I%9 I
I
-
IL(l-lol
-
L
-
-
-
L
.22 I ,308
-~ __ G,
.360 ,336 .322 ,307 ,316 ,319 ,326 .305 ,307 ,317 .325 .293 ,298 ,303
,342 ,307 ,288 ,279 ,287 ,272 ,266 .310 .307
G
3. New
,265 ,309
__ G,!
Zealand
.357 .323 ,324 ,288 .306 .2YY ,316 .298 ,282 ,291 .295 .305 ,313 .309
G.,
2. Israel
,327 .305 ,300 ,288 .303 .291 ,283 ,312 ,316
G
I. Canada
TABLE 2 Ethnic income Inequality
,357 .33 I ,317 ,324 .320 .316 ,342 .310 .305 ,310 ,324 ,285 ,286 ,291
.322 ,298 ,288 2x1 .2X9 ,280 ,262 .30X ,309
,012 ,005 JOY - .OI2 ,008 .035 ,003 .00x ,012 - a02 St44 ,009 - .OI2 -.ooY
I
.04x -.ool ,003 - .004 -.Wl .005 -.ool ,006 ,004
-
2.4 34.9 26.5 lY.4 41.6 76.4 44.8 63.5 73.1 55.6 38.6 46.6 65.2 70.2
C
Western/l\nleli-horn
Y-14. Iii. 4-17 I-Y. l-7. l-5. 613. i-IO.
I
II-16 10-11. 15-16 16 l3-If!
IY
I‘l
17-X IO. 11-1tj
I-?. Y-14 l-3, 11-12. I I-20 IhIX l-2, 4-N
z-1
IS-201
614 54. 13-15 f%20 5-13. 15-16. 14. 1~20 3-10 I-6. I’)-20 17
57.7 9.0 72. I 59.2 13.3 63.7 21.0 16. I
II l-20)
C
English/other
E 2 0
8
is
b
00 0
NO/P.
I%7 196a 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 I982 1983 1984
1953 I%3 1973
1953 I%3 1973
I. between
,209 ,198 ,200 .I89 .I% ,198 ,199 .I97 ,192 ,190 ,194 ,188 .I95 ,202 ,211 .211 ,209 ,205
I
,228 .323
I
.047 ,136 390
I
.I44 ,121 .I20
group
C
L
inequality:
-
-
-
within
-
-
l-3 l-4 -
--
L
Gini.
Tamil
l-3 -
L
-
C
White/Black
2.0 I.1 -
Sinhalese/I.
1.7 -
C
Muslim/Sinhalese
-
group
.332 ,279 ,484
L. level:
--
Gh ~~ ,424 ,414 .412 .42 I .417 .423 ,420 ,415 .42 I ,420 ,423 ,432 ,433 ,436 ,442 .43x ,449 ,448
States
Go -_~~ .334 ,335 .344
,523 ,523 .4Ol
Gn
4. Sri Lanka
5. United
inequality;
G, __~~ ,364 ,357 ,358 ,362 ,363 ,363 ,361 ,361 ,367 .365 ,366 ,365 .367 ,370 .376 ,378 ,377 .3?6
G. ~____~ .484 ,476 .390
.484 .476 ,390
G.
-__.___
.353 ,334 ,469
Gh
,362 .36Y ,370 .37Y ,383 .37Y .3x0 .3x7 .3Y6 ,392 .406 ,410 ,410 C. crossover.
-
,443 ,497 .3YO
Gs I
-
,120 .I20 .I38 .I40 .I22 .I I7 ,107 .I24 ,116 ,138 I42 ,132
-
-
-
0.01
c
~~
White/Hispanic
-
-
-
I
L( I-20)
4-20
91.1
L( I-20)
C
C. Tamil/Sinhalese
,130
I
.w3 .0x9 - ,017
-
00 L
2
5 2
3
2 u t;
H m
82
GROVE AND HOSHINO
Population Percentile \
Crossover
Income Level FIGURE 2
We can now return to our original finding that Z and nondominant Gini scores are positively related. If we apply the same median income ratios to the distributional gains within nondominant groups, we find that, within upwardly mobile groups, lower-to-middle income groups have benefitted the most while upper income groups benefit within downward movement groups.’ However, as we argued in the introduction, beneficiaries within nondominant groups should be judged relative to beneficiaries within dominant groups. In order to establish whether the gains or losses within nondominant groups are significant compared with income changes within dominant groups, we compared income figures across ethnic lines. Table 3 shows that the Z scores were disaggregated into the three income groups and * The median income ratios for nondominant groups are: Bottom Middle 40% 50% Nondominant
groups
Canadian French Canadian other Israeli-born Oriental Jew Ceylon Tamil Sinhalese Maori American Black American Hispanic Indian Tamil
t ,218 .214 .187 ,198 ,138 .I23 ,319 .I21 ,184 ,285
r+1 ,224 .237 ,306 .259 ,163 ,174 ,039 ,107 ,129 ,240
t .465 ,481 ,421 .444 .360 .345 ,627 ,413 ,480 ,527
Top 10% t+1 s41 ,564 ,666 S48 ,456 .454 .506 .394 ,437 ,463
1, t + 1 l.ooo l.ooo l.ooo l.ooo l.ooo l.ooo l.ooa l.ooo l.ooo l.ooo
ETHNIC
INCOME
83
REDISTRIBUTION
TABLE 3 Overall Change in Z Scores and Average Change in I Scores for Each Income Group
1. Canada: 1%9-1984 English/French English/other 2.Israel: 1967-1982 Western/Oriental Western/I-born 3. New Zealand: 1951-1981 European/Maori 4. Sri Lanka: 1953-1973 Muslim/Sinhalese C. Tamil/Sinhalese Sinhalese/I. Tamil 5. United States White/Black: 1%71984 White/Hispanic: 19721984
Average gains/losses of income groups
Overall changes hl
Bottom 40%
Middle 50%
Top 10%
- .0290 - .0452
.OOOl - .0125
- .0366 - .0554
- .I073 - .1245
-.1290 - .0214
- .0470 - .0202
-.1464l - .0232
- .3720 - .0174
- .0564
- .0757
- .0372
- .0753
.0440 - .0797 .1197
.0357 - .0472 .1024
.0182 - .0978 .1648
.2055 -.1194 - .0374
- .0042
- .0054
- .0030
- .0045
.0019
.0252
-4066
- .0376
Note. Overall change in Z = Z, - Z,,,. For example, AZ in English/French = Z,, Z,%9. An example of an average change in an income group is AI in bottom 40%/.4.
-
were divided by the population decile to give us comparable figures across ethnic lines.’ The average change for each income group is then compared with the overall between-group inequality changes to give us some measure of significant gains and losses. The results show that the upwardly mobile subsample of seven cases can be divided into those cases where the dispersion of gains within the nondominant groups are skewed in favor of the richest lo%, and those where the dispersion is much more even. In the four cases of skewed development, the richest percentile within the Francophone, Canadian others, and Oriental Jew communities made between two to three times the overall gains (- .107/ - .029; - .125/ - .045; - .372/ - .129). In the case of the Sinhalese overtaking the Ceylon Tamils, the gains of the upper income Sinhalese were only slightly higher than the overall gains (- .119/ - .080). In the remaining three cases of upward mobility, the dispersion of benefits was much more even. The advancement of the New Zealand Maoris is due to the gains of the bottom 40% and upper income Maoris, both of which made above overall gains (- .076 and - .075, respectively). 9 In order to make the percentage of people in the percentiles the same, we will divide the change in Z scores by the percentile: average AZ, = AZ,for each income group/percentile.
84
GROVE
AND
HOSHlNO
Similarly, the progress of the Black Americans is due to the greater than average advancement of the poor and the upper tail of the Black distribution (- .005 and - .005, respectively). The progress of the Israeli-born Jews. on the other hand, is due to the middle income groups (- .023) who have helped the group overtake the Western-born Jews. When we turn to the subsample of downward movers we find an uneven distribution of gains and losses in all cases. The relative decline of the Hispanic Americans (.002) is caused by the bottom 40% (.025) which is nearly offset by the richest Hispanics who were able to make substantial gains (- .038). The decline of the Indian Tamils is due to the middle income Tamils (.165) who made well-above average overall losses. Upper income Indian Tamils, on the other hand, made some gains (- .037). Although the Sinhalese overtook the Ceylon Tamils, they were unable to catch up with the Muslims. This is mainly due to the upper income Sinhalese who made over four times the overall losses (.206/.044). CONCLUSIONS
There are a number of groups that have made significant progress (French Canadians, Oriental Jews, New Zealand Maoris, and Sri Lankan Sinhalese) in the post-World War II period. Others have even periodically overtaken more economically advanced groups (Israeli-born Jews and Canadians whose mother tongue is neither French nor English). Some groups made progress in the 1960-1970 period (Black and Hispanic Americans), but these gains disappeared in the 1980s and others (Indian Tam&) made no progress at all. Thus 7 out of 10 pair-wise comparisons show some economic progress. These trends have had no effect on changes within dominant group inequalities, but are related to inequalities within nondominant groups. The implication of this relationship is that low-to-middle income minorities have benefited from change. This is true if intragroup comparison are made. If, however, we want to judge progress in comparison with income groups whose minorities are trying to catch up with, we get a different picture. When we look at the seven upwardly mobile groups our results show that the minority gains are skewed in four out of the seven cases, with wealthy disadvantaged groups receiving the bulk of benefits, with middle income groups also gaining, leaving a large percentage of the poor unatrected. In the other three upwardly mobile cases, the distributional gains have been more even, with either the poor and upper income groups gaining or the middle income groups making the most progress. In the three dowrlwardly mobile cases, the most pronounced losers are either concentrated at the bottom, with some gains at the top, or the group losses are caused by the lack of upward mobility of the rich. Does this support the Marxian or neoclassical position? In the upwardly mobile subsample, the evidence does not support the Marxian contention
ETHNIC
INCOME
REDISTRIBUTION
85
that group progress is due to workers usurping the economic privileges of the rich. Although there is some support for the contention that increases in ethnic inequalities have benefited upper income minorities. Nor does this subsample support the neoclassical notion that ethnic equalization is inversely related to within group inequalities. The application of this relatively new measure of intergroup inequality shows that there is no set .pattern to the structure of intergroup convergence. It appears that the “styles” of catch up are more country specific than previously thought. What we find in this study is that when relative gains and losses of nondominant groups are contrasted with comparable groups within more advantaged groups, the results do not fit neatly into standard explanations. In order to understand why different income groups benefit by group gains, we need to decompose the income trends by demographic and social criteria. However, many countries are still hesitant to publish ethnic data for fear that the results may exacerbate intense feelings of relative deprivation. APPENDIX: 1. Canada:
Family
INCOME
SOURCES
Income
Statistics Canada, Income Distribution by Size in Canada, 1969, l9771984, Ottawa. 2. Israel:
Employees
Families
Central Bureau of Statistics, Employees Families Income, 1967-1971, special series 395, Jerusalem, pp. 36-37, 48; 1971, special series 395, pp. 37-48; 1972-1974, special series 510, pp. 56-57, 69-74; 1975-1977, special series 598, pp. 28-29, 46-47, 64-67; 1977, special series 395; 1978, special series 626, pp. 60-61; 1980, special series 681, pp. 94-97; 1982, special series 734, pp. 66-69. 3. New Zealand:
Personal
Zncome
Population and Dwelling Census, 1951, Vol. 8, p. 63; 1956 Maori Census, pp. 24-28; 1966, Vol. 5, T. l-3; 1966Maori Census, p. 54; 1976, Vol. 5, p. 9; Maori Census, T. 24, 34; 1981, Vol. 5, pp. 96-97; 1981 Maori Census, Vol. 8a, pp. 86, 95. 4. Sri Lanka:
Personal
Income
Central Bank of Ceylon, Survey of Ceylon’s Consumer Finances, 1963, part 2, pp. 121-134; 1973, part 2, pp. 140-159. 5. United
States: Household
Income
Department of Commerce, Money Income of Households, Families and Persons in the U.S., 1984, Consumer Income P-60-151, p. 9.
86
GROVE AND HOSHINO
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INCOME
REDISTRIBUTION
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