This morning, Scioto Analysis released a landmark study on income inequality in Ohio. Analysts used data from the American Community Survey and Current Population Survey to assess the extent of inequality in the state.
“According to our analysis, a very high-income Ohioan makes five to nine times as much as a very low-income Ohioan,” said Scioto Analysis Principal Rob Moore.
Analysts found large returns to education, with workers without high school degrees making less than $10,000 a year on average and those with college degrees making upwards of $40,000.
Notably, race was a confounding factor in returns to education. While black Ohioans without high school degrees averaged the same amount of income as white Ohioans without high school degrees, black Ohioans with high school degrees, some college, or college degrees consistently averaged around $10,000 less in income than white counterparts.
Geography was also associated with inequality in Ohio. While very high-income households in rural areas averaged five to nine as much income as low-income households in rural areas, a high-income household in an urban area in Ohio had income anywhere from 12 to 21 times as high as a low-income household in an urban area.
Analysts also looked at different interventions to reduce inequality, using American Community Survey and Current Population Survey data to simulate different interventions to reduce inequality. Their simulations found that expansion of the state Earned Income Tax Credit and increasing the state minimum wage could have modest impacts on inequality across the state. They estimated that negative income tax proposal that provided cash to low income households using taxes levied on high income households would have a much larger impact.
“Traditional tools like Earned Income Tax Credits and minimum wage increases can ameliorate inequality,” said Moore, “but according to our simulations, a negative income tax would have an impact three times as large as either of those measures.”
This study is part of a larger project by Scioto Analysis to study well-being in the state of Ohio. UC Berkeley graduate students Nithya Nagarathinam, Julia Rosales, and Diego Villegas conducted analysis on this project.