Essays on Inequality and Poverty

This thesis is composed of three essays on inequality and poverty in the United States and Canada.Despite their nominal wage disadvantage, immigrants in the United States tend to settle in the most expensive locations in the country. I show that incorporating spatial price variation into the price index dramatically worsens estimates of immigrant integration. In comparison with nominal measures, real measures show twice as much immigrant wage disparity, much slower assimilation over time, and a more pronounced decline in entry wages of more recent cohorts. To rationalize these location patterns, I use a spatial equilibrium model. The model allows us to distinguish between quality of life and productivity differences as competing explanations for the concentration of immigrants. Parameterizing the model and using housing cost and wage differentials each year, the productivity channel seems to be the more plausible explanation. It also appears to have become more important over time. Like the United States, several studies document the tendency for immigrants in Canada to live in areas with high costs of living: approximately 90% live in metropolitan areas. In the second chapter, I re-examine immigrant wage disparity and poverty estimates in Canada after adjusting immigrant incomes for their relatively high costs of living.In the third chapter, I outline an Oaxaca-Blinder detailed decomposition method based on the Shapley Value. It is path-independent and adds up intuitively to the aggregate decomposition components. It is also simple to implement in practice for various limited dependent variable regression models. I show how this decomposition method can be used in tandem with the recentered influence function regression framework (Firpo et al., 2009) . Together, this constitutes a flexible framework to decompose differences of a wide variety of poverty measures over time or between groups. The empirical application examines the decline in U.S. poverty during the 1990s, in particular the importance of technological change and offshoring. I find these are important determinants of poverty in a given year but cannot explain any of the change in the poverty rate over time. Changes in the return to family size explain the entire change in the poverty rate. I also find that the methods we use to examine poverty can easily change the conclusions we draw.