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A new look at the distributional effects of economic growth during the 1980s: a comparative study of the United States and Germany

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Abstract

Beginning in 1983, and following the worst recession since the Great Depression, the United States experienced six years of uninterrupted economic growth, the longest such period since World War II. Along with this expansion came an increase in income inequality that many suggest diminished the middle class and made the United States unique among industrialized nations in its pace of economic growth and increase in income equality. This paper addresses these issues by using kernel density estimation to document changes in the United States income distribution during the 1980s economic expansion and the compare these changes to those experienced in Germany. The findings confirm that income inequality did increase and the United States middle class did lose members during the 1980s. However, these outcomes were due largely to real income gains rather than real income losses. The comparative analysis shows that these patterns were similar to those observed in Germany.

Suggested Citation

  • Richard V. Burkhauser & Amy D. Crews & Mary C. Daly, 1997. "A new look at the distributional effects of economic growth during the 1980s: a comparative study of the United States and Germany," Economic Review, Federal Reserve Bank of San Francisco, pages 18-31.
    • Handle: RePEc:fip:fedfer:y:1997:p:18-31:n:2
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    1. 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 1333-1381, September.
    2. D. K. Ginther, "undated". "A nonparametric analysis of the U.S. earnings distribution," Institute for Research on Poverty Discussion Papers 1067-95, University of Wisconsin Institute for Research on Poverty.
    3. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
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    Cited by:

    1. Frank A. Cowell & Emmanuel Flachaire, 2014. "Statistical Methods for Distributional Analysis," Working Papers halshs-01115996, HAL.
    2. repec:eee:labchp:v:3:y:1999:i:pc:p:3417-3528 is not listed on IDEAS
    3. M. Grazia Pittau & Roberto Zelli, 2001. "Income distribution in Italy: A nonparametric analysis," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 10(1), pages 175-189, January.

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