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Why has the median real income of lawyers been declining?

Author

Listed:
  • James V. Koch

    (Old Dominion University)

  • Barbara Blake-Gonzalez

    (Old Dominion University)

Abstract

The median real incomes of lawyers have been declining. In 2001, the median real income of lawyers in the 50 states plus the District of Columbia was $129,389 (July 2020 prices). Almost two decades later, in 2020, this number had fallen to $126,930, 1.90% less than in 2001. By contrast, the median real income of workers in all occupations together rose 3.93% between 2001 and 2020, while the median real income of the average family practice physician rose 20.15% and the median real income of a typical economist rose 10.9%. We examine both supply and demand influences to explain the declining median real incomes of lawyers. An oversupply of lawyers provides only a partial explanation. The number of lawyers per 1,000 people nationally did nudge upward from 1.72 in 2001 to 2.22 in 2020, but the number of first year law students nationally in 2020 was 6.6% smaller than in 2001. Supply side adjustments to new market conditions take years to occur and hence we observe some cobweb-like oscillations in lawyers’ incomes. Demand side influences on lawyers’ incomes loom large. Between 2008 and 2019, lawyers’ income share of the national gross domestic product fell from 1.64% to 1.32% because clients purchased lawyers’ services less often.

Suggested Citation

  • James V. Koch & Barbara Blake-Gonzalez, 2022. "Why has the median real income of lawyers been declining?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(4), pages 646-665, October.
  • Handle: RePEc:spr:jecfin:v:46:y:2022:i:4:d:10.1007_s12197-022-09588-6
    DOI: 10.1007/s12197-022-09588-6
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    References listed on IDEAS

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    1. Rosen, Sherwin, 1992. "The Market for Lawyers," Journal of Law and Economics, University of Chicago Press, vol. 35(2), pages 215-246, October.
    2. Pashigian, B Peter, 1977. "The Market for Lawyers: The Determinants of the Demand for and Supply of Lawyers," Journal of Law and Economics, University of Chicago Press, vol. 20(1), pages 53-85, April.
    3. Arlene S. Holen, 1965. "Effects of Professional Licensing Arrangements on Interstate Labor Mobility and Resource Allocation," Journal of Political Economy, University of Chicago Press, vol. 73(5), pages 492-492.
    4. Freeman, Richard B, 1975. "Legal "Cobwebs": A Recursive Model of the Market for New Lawyers," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 171-179, May.
    5. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
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    Cited by:

    1. James V. Koch & Barbara Blake‐Gonzalez, 2023. "Using the LSAT as a labor market thermometer for lawyers," American Journal of Economics and Sociology, Wiley Blackwell, vol. 82(1), pages 29-42, January.

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    More about this item

    Keywords

    Lawyers; Declining median income; Labor markets; LSAT; Bar examination;
    All these keywords.

    JEL classification:

    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • K - Law and Economics

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