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Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data since 1937

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  • Wojciech Kopczuk
  • Emmanuel Saez
  • Jae Song

Abstract

This paper uses Social Security Administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the United States. Earnings inequality follows a U-shape pattern, decreasing sharply up to 1953 and increasing steadily afterwards. We find that short-term and long-term (rank based) mobility among all workers has been quite stable since 1950 (after a temporary surge during World War II). Therefore, the pattern of annual earnings inequality is very close to the pattern of inequality of longer term earnings. Mobility at the top has also been very stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s. However, the stability in long-term earnings mobility among all workers masks substantial heterogeneity across demographic groups. The decrease in the gender earnings gap and the substantial increase in upward mobility over a career for women is the driving force behind the relative stability of overall mobility measures which mask declines in mobility among men. In contrast, overall inequality and mobility patterns are not significantly influenced by the changing size and structure of immigration nor by changes in the black/white earnings gaps.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13345.

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Date of creation: Aug 2007
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Handle: RePEc:nbr:nberwo:13345

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Cited by:
  1. Alexander Gelber, 2008. "Taxation and Family Labor Supply," 2008 Meeting Papers 249, Society for Economic Dynamics.
  2. Lawrence Mishel & Kar-Fai Gee, 2012. "Why Aren’t Workers Benefiting from Labour Productivity Growth in the United States?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 23, pages 31-43, Spring.
  3. Robert J. Gordon & Ian Dew-Becker, 2008. "Controversies about the Rise of American Inequality: A Survey," NBER Working Papers 13982, National Bureau of Economic Research, Inc.
  4. Claudia Sanhueza & Ricardo Mayer, 2011. "Top Incomes in Chile using 50 years of household surveys : 1957-2007," Estudios de Economia, University of Chile, Department of Economics, vol. 38(1 Year 20), pages 169-193, June.
  5. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2009. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States, 1967-2006," NBER Working Papers 15483, National Bureau of Economic Research, Inc.
  6. Björklund, Anders & Roine, Jesper & Waldenström, Daniel, 2008. "Intergenerational top income mobility in Sweden – A combination of equal opportunity and capitalistic dynasties," Working Paper Series in Economics and Finance 705, Stockholm School of Economics.
  7. Jonathan A. Schwabish, 2009. "Identifying Rates of Emigration in the United States Using Administrative Earnings Records: Working Paper 2009-01," Working Papers 20516, Congressional Budget Office.
  8. Robert J. Gordon & Ian Dew-Becker, 2007. "Selected Issues in the Rise of Income Inequality," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 38(2), pages 169-192.
  9. Kevin A. Bryan & Leonardo Martinez, 2008. "On the evolution of income inequality in the United States," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 97-120.

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