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On the evolution of income inequality in the United States

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  • Kevin A. Bryan
  • Leonardo Martinez

Abstract

This article discusses the evolution of income inequality in the United States. We focus mainly on the evolution of inequality since the 1960s because more data are available for this period than for earlier periods. We document that income inequality rose in the United States during the period under study. Furthermore, our article documents periods characterized by a decline in real income for lower income groups. We show that the increase in inequality is concentrated among individuals with higher income and we explain that welfare inequality may have increased less than income inequality (and, in fact, may actually have decreased). In addition, this article summarizes the findings of studies on inequality trends between the 1820s and the 1960s. We show that the recent period of increasing inequality followed a period of decreasing inequality since World War I, which in turn followed a period of increasing inequality in the 19th century.

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Bibliographic Info

Article provided by Federal Reserve Bank of Richmond in its journal Economic Quarterly.

Volume (Year): (2008)
Issue (Month): Spr ()
Pages: 97-120

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Handle: RePEc:fip:fedreq:y:2008:i:spr:p:97-120:n:v.94no.2

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Keywords: Labor market ; Income distribution;

References

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  1. Ana Castaneda & Javier Diaz-Gimenez & Jose-Victor Rios-Rull, 2003. "Accounting for the U.S. Earnings and Wealth Inequality," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 818-857, August.
  2. David S. Lee, 1999. "WAGE INEQUALITY IN THE UNITED STATES DURING THE 1980s: RISING DISPERSION OR FALLING MINIMUM WAGE?," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 977-1023, August.
  3. Margo, Robert A., 2000. "Wages and Labor Markets in the United States, 1820-1860," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226505077, August.
  4. Kopczuk, Wojciech & Saez, Emmanuel, 2004. "Top Wealth Shares in the United States, 1916-2000: Evidence from Estate Tax Returns," National Tax Journal, National Tax Association, vol. 57(2), pages 445-87, June.
  5. Richard Blundell & Luigi Pistaferri & Ian Preston, 2008. "Consumption Inequality and Partial Insurance," American Economic Review, American Economic Association, vol. 98(5), pages 1887-1921, December.
  6. Goldin, Claudia & Margo, Robert A, 1992. "The Great Compression: The Wage Structure in the United States at Mid-century," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 1-34, February.
  7. Wojciech Kopczuk & Emmanuel Saez & Jae Song, 2007. "Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data since 1937," NBER Working Papers 13345, National Bureau of Economic Research, Inc.
  8. Santiago Budria Rodriguez & Javier Diaz-Gimenez & Vincenzo Quadrini & Jose-Victor Rior-Rull, 2002. "Updated facts on the U.S. distributions of earnings, income, and wealth," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum, pages 2-35.
  9. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality In The United States, 1913-1998," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 1-39, February.
  10. Mark Aguiar & Erik Hurst, 2007. "Measuring Trends in Leisure: The Allocation of Time over Five Decades," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 969-1006, 08.
  11. Jeffrey G. Williamson, 2006. "Inequality and Schooling Responses to Globalization Forces: Lessons from History," NBER Working Papers 12553, National Bureau of Economic Research, Inc.
  12. David Card & John E. DiNardo, 2002. "Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," NBER Working Papers 8769, National Bureau of Economic Research, Inc.
  13. Daniel S. Hamermesh, 1999. "Changing Inequality In Markets For Workplace Amenities," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1085-1123, November.
  14. Thomas Lemieux, 2006. "Post-Secondary Education and Increasing Wage Inequality," NBER Working Papers 12077, National Bureau of Economic Research, Inc.
  15. David M. Cutler & Lawrence F. Katz, 1991. "Macroeconomic Performance and the Disadvantaged," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 1-74.
  16. Orazio Attanasio & Erich Battistin & Hidehiko Ichimura, 2004. "What Really Happened to Consumption Inequality in the US?," NBER Working Papers 10338, National Bureau of Economic Research, Inc.
  17. Brooks Pierce, 2001. "Compensation Inequality," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1493-1525, November.
  18. Dirk Krueger & Fabrizio Perri, 2006. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory -super-1," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 163-193.
  19. Zvi Eckstein & Éva Nagypál, 2004. "The evolution of U.S. earnings inequality: 1961?2002," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Dec, pages 10-29.
  20. Robert A. Margo, 1999. "The History of Wage Inequality in America, 1820 to 1970," Economics Working Paper Archive wp_286, Levy Economics Institute.
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