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Is Wealth Becoming More Polarized in the United States?

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  • Conchita D'Ambrosio

    (Università Bocconi)

  • Edward N. Wolff

    (New York University)

Abstract

Recent work has documented a rising degree of wealth inequality in the United States between 1983 and 1998. In this paper we look at another dimension of the distribution: polarization. Using techniques developed by Esteban and Ray (1994) and extended by D'Ambrosia (2001), we examine whether a similar pattern exists with regard to trends in wealth polarization over this period. The approach followed provides a decomposition method, based on counterfactual distributions, that allows one to monitor which factors modified the entire distribution and precisely where on the distribution these factors had an effect. An index of polarization is provided, as are summary statistics of the observed movements and of distance and divergence among the estimated and the counterfactual distributions. The decomposition method is applied to U.S. data on the distribution of wealth between 1983 and 1998. We find that polarization between homeowners and tenants and among different educational groups continuously increased from 1983 to 1998, while polarization by income class continuously decreased. In contrast, polarization by racial group increased from 1983 to 1989 and then declined from 1989 to 1998, while polarization by age group followed the opposite pattern. We also find that most of the observed variation in the overall wealth density over the 1983–98 period can be attributed to changes in the within-group wealth densities rather than changes in household characteristics.

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File URL: http://128.118.178.162/eps/mac/papers/0106/0106006.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0106006.

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Length: 29 pages
Date of creation: 29 Jun 2001
Date of revision:
Handle: RePEc:wpa:wuwpma:0106006

Note: Type of Document - Adobe Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 29; figures: included
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Web page: http://128.118.178.162

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  1. Joan-Maria Esteban & Debraj Ray, 1991. "On the Measurement of Polarization," Boston University - Institute for Economic Development 18, Boston University, Institute for Economic Development.
  2. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August.
  3. D'Ambrosio, Conchita, 2001. "Household Characteristics and the Distribution of Income in Italy: An Application of Social Distance Measures," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(1), pages 43-64, March.
  4. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  5. Rebecca M. Blank & David Card, 1993. "Poverty, Income Distribution, and Growth: Are They Still Connected," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2), pages 285-340.
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Cited by:
  1. Thomas Goda, 2014. "Global trends in relative and absolute wealth concentrations," DOCUMENTOS DE TRABAJO CIEF 010897, UNIVERSIDAD EAFIT.
  2. Modrego, F. & Celis, X. & Berdegué, J., 2008. "Polarización étnica de los ingresos rurales en el sur de Chile," Working papers 015, Rimisp Latin American Center for Rural Development.
  3. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2004. "Polarization: Concepts, Measurement, Estimation," Econometrica, Econometric Society, vol. 72(6), pages 1737-1772, November.
  4. Deborah A. Cobb-Clark & Vincent A. Hildebrand, 2006. "The Wealth of Mexican Americans," Journal of Human Resources, University of Wisconsin Press, vol. 41(4).
  5. Joan Esteban & Debraj Ray, 2007. "A Comparison of Polarization Measures," UFAE and IAE Working Papers 700.07, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  6. Robert Haveman & Edward Wolff, 2004. "The concept and measurement of asset poverty: Levels, trends and composition for the U.S., 1983–2001," Journal of Economic Inequality, Springer, vol. 2(2), pages 145-169, August.
  7. Matías Horenstein & Sergio Olivieri, 2004. "Polarización del Ingreso en la Argentina: Teoría y Aplicación de la Polarización Pura del Ingreso," CEDLAS, Working Papers 0015, CEDLAS, Universidad Nacional de La Plata.
  8. Juan Gabriel Rodríguez, 2004. "Measuring polarization, inequality, welfare and poverty," Economic Working Papers at Centro de Estudios Andaluces E2004/75, Centro de Estudios Andaluces.
  9. Juan Prieto Rodríguez & Juan Gabriel Rodríguez & Rafael Salas, 2004. "Interactions inequality-polarization: an impossibility result," Economic Working Papers at Centro de Estudios Andaluces E2004/64, Centro de Estudios Andaluces.

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