Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316410 
Year of Publication: 
2025
Series/Report no.: 
Working Paper Series No. 45 (April 2025)
Publisher: 
University of Konstanz, Cluster of Excellence "The Politics of Inequality", Konstanz
Abstract: 
Existing evidence points to a positive correlation between specific regulations and income inequality at a country or regional level, but little is known about how overall regulatory burden affects inequality at the local labor market level. Our study fills this gap by measuring local exposure to regulation from the industry-relevant articles of U.S. Code of Federal Regulation linked to local industry employment structure in 741 commuting zones (CZs) in the U.S. over the period 1970-2019. Relating our exposure to regulation measure to the CZ-level income inequality, computed from the Census records, we find that heavier regulation is followed by higher income inequality, lower average income and higher unemployment in the affected CZs. The implied effect estimates are sizeable and robust to various checks. We contribute to inequality research by identifying previously unknown, local effects of regulation on income inequality, exploring mechanisms through which they may occur, and demonstrating how available data can be used to produce more granular measures of exposure to regulation.
Subjects: 
regulation
income
inequality
employment
local labor market
JEL: 
L5
D63
E24
Document Type: 
Working Paper

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