The Distribution of Lifetime Incomes in the United States

Our investigation reveals four sets of results. First, we find substantial inequality in lifetime earnings, more than double what has been reported in earlier work that relied on much shorter panels and made parametric assumptions. The inequality in lifetime earnings above the median of the distribution alone is comparable to or larger than the total inequality found in earlier work. Second, contrary to some previous papers, we find that most of the rise in cross-sectional income inequality did not get translated into a rise in lifetime inequality. Third we also characterize the gender lifetime inequality gap and racial income gap for lifetime incomes. We find remarkable similarities across the lifetime inequality among men and among women, especially for cohorts that entered the economy in the last 40 years. Fourth, we quantify the lifetime burden of taxes and compare it to the burden of tax distribution estimated from cross-sectional distribution of income (as commonly done in the literature).