ABSTRACT
This chapter examines simultaneously the effect of increased human capital formation in a county on family income distribution. It discusses the method for estimating a Gini coefficient of concentration using grouped family income data. The chapter describes the variables and the structural equation for family income inequality. A three-stage least squares model of income inequality is then constructed that considers inequality, net migration, and human capital as jointly determined. Three measures of family income inequality are used, based on the Gini coefficient. These are: black-to-black inequality; white-to-white inequality; and overall inequality. Migration affects income distribution because it changes factor supplies, factor productivity, and factor prices. Since potential in-migrants are more educated on average, an influx of domestic migrants may reduce earnings of higher-skilled original residents, which compresses income distribution. Urban counties may be more likely to have a bimodal income distribution of high and low-wage jobs leading to greater overall income inequality.
