Raffael Kind, who is in the third year of his doctoral research at the EUI Department of Economics, uses an economic perspective to analyse societal aspects and their relation to the labour market.
Economics has surely something to say about societies and can offer some insights into understanding certain social phenomena, commented the EUI researcher who has a profound interest in the issue of inequality - a rising issue in all industrially developed countries over the past 40 years. The EUI researcher underlines that, in Western societies, there has been an enormous increase both in income inequality and in wealth inequality.
"I am quite worried about the rise of inequalities. Moreover, I am convinced that the negative societal phenomena we experience in our times – for example the success of far-right anti-democratic parties – is closely linked to increases in inequality, he underlined, adding that the paradox is that the people who vote for far-right parties are often the ones who are disproportionately negatively affected by the economic policies supported by these extremist parties."
Kind’s research is linked to the very concept of inequality. The main question that one of his research projects aims to answer is whether people of different socio-economic family backgrounds systematically receive different labour incomes, even though they may have identical jobs and the same level of education.
"At a first glance, this research project might seem like another paper on social mobility. However, what we try to do is to go one step further compared to the social mobility literature, and investigate whether inequalities in labour income persist, even after people have achieved social mobility," clarified Kind, adding that he refers to this phenomenon as 'post-mobility inequalities'.
When saying we, Kind refers to fellow EUI researcher David Wittekopf, who is also a third-year PhD researcher at the Department of Economics. Kind and Wittekopf follow the sociological convention to define class based on occupations. Specifically, they use the International Standard Classification of Occupations (ISCO) to define three classes – high, medium, and low.
The high category consists of professional occupations such as doctors and lawyers, the medium class comprises skilled labour such as bookkeepers or medical assistants, and the low one includes unskilled labour like waiters or taxi drivers. The researchers define the social mobility by a comparison between the class of the parents and the class of their children.
To go deeper into this concept, Kind gives an example: If a doctor is the daughter of taxi drivers, Kind and his co-author would classify her as having achieved 'upward mobility'. On the other hand, if the doctor’s parents are lawyers, then there would be no mobility, as both doctors and lawyers belong to the same (top) category of professions.
The novelty about Kind’s research is to take this analysis one step further and investigate if the children of taxi drivers and the like systematically earn lower labour incomes than the children of lawyers or doctors, even if they achieved the same level of education and work in the same occupations. Kind underlined that these 'post-mobility inequalities' have not yet received much attention in the economics literature.
"While most sociological studies look at occupations, economic studies mostly consider income", specifies Kind, adding that "social mobility in economics is usually viewed through the lens of income." Kind’s ambition is to combine the economic approach with the sociological one.
As his research lies at the intersection between economics and sociology, Kind has been taking part in the seminars organised by the EUI Interdisciplinary Research Cluster on ‘Inequality, Welfare and Social Justice’, a cluster coordinated by Kind’s supervisor, Economics Professor Alexander Monge-Naranjo, and by Sociology Professor Herman Van De Werfhorst. Kind adds that the cluster also organises a mini conference once a year, which represents a useful forum for EUI economists and sociologists to gather and discuss topics linked to inequality.
To perform their work, Kind and Wittekopf use survey data from Germany related to the years 2010 to 2019. Their research endeavours focus on individuals in the top group of occupations, such as academics, lawyers, or doctors.
Kind explains that, within the top group of professions, they find that people from a 'lower family background' – meaning whose parents’ jobs are included in the low category – gain around 20% less labour income compared to those whose parents belong to the high occupational group. "Individuals from lower socioeconomic background earn significantly less labour income than peers of comparable current socioeconomic status but higher socioeconomic family background", reveals Kind.
In practical terms, the results of Kind’s research mean that on average a doctor whose parents are bus drivers earns around 20 percent less labour income compared to a doctor whose parents are, for instance, lawyers or academics. This is what the researcher calls "a raw gap, the unadjusted gap", a gap that only takes into consideration the class factor. Moreover, while the researchers find a statistically and economically significant penalty for people who achieve upward social mobility, their research findings suggest that downward mobility is not associated with neither a penalty nor a premium on labour income.
Going a bit deeper into the methodology, Kind explains that him and Wittekopf use an econometric model that allows them to analyse the association between the family background of individuals and the labour income they earn. Afterwards, they compare the results from this first model with those coming from a statistical model that considers also other factors, for example the level of education, or the work experience. Kind stresses that this method allows them to decompose the ‘unadjusted gap’ and to analyse how much of this gap can be explained by other factors than the class one.
"The 'unadjusted gap’, which is around 20% when considering only the class factor, reduces to about 8% when including all other variables, but it does not disappear", unveils Kind. "Individuals from a low family background earn generally less than those from a high family background, even when we account for their level of education, experience, occupation, and many other relevant factors", he reveals.
Therefore, Kind’s research demonstrates that a ’class-pay gap’ does exist. Is this a form of discrimination?
"It is difficult to say or to prove", answers the researcher, pointing out to other factors that might play a role and that are difficult to measure, such as people's abilities or their negotiation skills. When getting a job, "it might be that some individuals are more skilled than others in negotiating a better salary", underlines Kind. However, he also shares his belief that an element of class discrimination might exist, but it is difficult to demonstrate it and very hard to measure its exact amount.
Going one step further from the ‘class pay gap’, Kind’s research also aims to look whether there are systematic differences by gender. To do so, he explains that he had split the full data set in half to analyse men and women separately.
He reveals that, when analysing only women, the socioeconomic family background is not associated with significant differences in pay. In other words, on average a female doctor who is the daughter of bus drivers does not earn less labour income compared to a female doctor whose parents are lawyers. However, when analysing men only, then the ‘class pay gap’ in income reappears.
Kind’s research also demonstrates that, if we consider a man and a woman with identical jobs, "women from high-class backgrounds earn significantly less labour income than men from low-class backgrounds". Said differently, "on average a female lawyer whose parents are doctors earns significantly less labour income than a male lawyer whose parents are bus drivers." This finding shows the striking reality that, while having comparable professions, "even the most privileged women earn less than the least privileged men", he comments.
This phenomenon is what Kind calls ‘the gender-class gap’, because it is a pay gap which is related to both the class and the gender dimension.
It seems unfair if someone earns less, while doing an identical job compared to another individual, because of being a woman, or of being the son of a bus driver, while the other person is a man or the son of a lawyer. However, Kind says that it remains difficult to prove discrimination. "I can imagine that at least a fraction of the observed ‘gender-class pay gap’ can indeed be explained by discrimination, but our analyses cannot quantify if or how much exactly", concludes Kind.
Raffael Kind is a researcher at the EUI Department of Economics. His thesis title is ‘Essays on the Sources and Consequences of Inequality in the Labor Market’. Raffael’s supervisor is EUI Professor Alexander Monge-Naranjo, while his co-supervisor is EUI Professor Fabrizia Mealli.