Disposable income in advanced economies is comprised mostly of labor compensation. Thus, numerous compensation practices, pay-setting institutions, and regulatory policies are crucial determinants of labor market inequality. But when it comes to understanding public preferences for reducing inequality, most research focuses on public support for redistribution via tax and transfer policies. Minimum wage policies are an exception, but they are rarely included in national surveys. And, the minimum wage is only one of many policy levers for reducing labor market inequalities. Leslie McCall, Arvid Lindh and Jonas Edlund suggest that these data and research gaps downwardly bias the measured redistributive preferences among Americans.
The principal investigators are proposing to measure preferences for reducing labor market inequality that can be contrasted with the common assumptions (and leading alternative hypothesis) that most Americans hold strong free-market beliefs, generally trust market institutions and are content with the distributional effects of private markets. The 2020 General Social Survey (GSS) offers an ideal opportunity to explore these hypotheses because the fifth wave of the International Social Survey Program's (ISSP) Social Inequality module will be fielded on the GSS at that time. To supplement that module, the PIs would include eleven items on the GSS (ten are new to the 2020 ISSP Social Inequality module) that will gauge public preferences for policies related to labor market inequality. McCall and her colleagues point out that because preferences for government redistribution are low in the U.S., it is assumed that preferences for less income inequality are also low. However, surveys show significant support for raising the minimum wage, a belief that income differences are too large, and support for employer-provided benefits. They hypothesize that a higher proportion of the public desires less income inequality than the proportion that supports tax-and-transfer redistribution. In short, most Americans embrace free market principles, but it is possible that a sizeable proportion favors redistribution in the labor market as an alternative to tax-and-transfer redistribution.