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Income Mobility in the United States: New Evidence From Income Tax Data

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  • Auten, Gerald
  • Gee, Geoffrey

Abstract

While many studies have documented the long–term trend of increasing income inequality in the U.S. economy, there has been less focus on income mobility and the potential opportunity for upward mobility. Data from panels of individual income tax returns suggest that there was considerable income mobility in the U.S. economy over the 1987–1996 and 1996–2005 periods. Consistent with prior mobility studies, the data show that over half of taxpayers moved to a different income quintile and that roughly half of taxpayers who began in the bottom income quintile moved up to a higher income group by the end of each period. By contrast, those with the very highest incomes in the base year were more likely to drop to a lower income group and the median real income of these taxpayers declined in each period. Economic growth resulted in rising incomes for most taxpayers over both time periods. Initial position in the income distribution and changes in marital status were found to be associated with the largest upward or downward movements through the income distribution.

Suggested Citation

  • Auten, Gerald & Gee, Geoffrey, 2009. "Income Mobility in the United States: New Evidence From Income Tax Data," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(2), pages 301-328, June.
  • Handle: RePEc:ntj:journl:v:62:y:2009:i:2:p:301-28
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    Citations

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    Cited by:

    1. Katharina Jenderny, 2016. "Mobility of Top Incomes in Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(2), pages 245-265, June.
    2. Bradbury, Katharine L., 2016. "Levels and trends in the income mobility of U.S. families, 1977−2012," Working Papers 16-8, Federal Reserve Bank of Boston.
    3. Lane Kenworthy & Timothy Smeeding, 2013. "GINI Country Report: Growing Inequalities and their Impacts in the United States," GINI Country Reports united_states, AIAS, Amsterdam Institute for Advanced Labour Studies.
    4. Gerald Auten & Geofrey Gee & Nicholas Turner, 2013. "New Perspectives on Income Mobility and Inequality," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(4), pages 893-912, December.
    5. Foellmi, Reto & Martinez, Isabel Z., 2017. "Die Verteilung von Einkommen und Vermögen in der Schweiz
      [The Distribution of Income and Wealth in Switzerland]
      ," MPRA Paper 84443, University Library of Munich, Germany.
    6. Till Treeck, 2014. "Did Inequality Cause The U.S. Financial Crisis?," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 421-448, July.
    7. Jeff Larrimore & Jacob Mortenson & David Splinter, 2017. "Household Incomes in Tax Data : Using Addresses to Move from Tax Unit to Household Income Distributions," Finance and Economics Discussion Series 2017-002, Board of Governors of the Federal Reserve System (U.S.).
    8. Kitov, Ivan & Kitov, Oleg, 2015. "Gender income disparity in the USA: analysis and dynamic modelling," MPRA Paper 67146, University Library of Munich, Germany.
    9. Burkhauser, Richard V. & Larrimore, Jeff & Simon, Kosali I., 2012. "A "Second Opinion" on the Economic Health of the American Middle Class," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(1), pages 7-32, March.
    10. Seth H. Giertz & Jacob A. Mortenson, 2013. "Recent Income Trends for Top Executives: Evidence From Tax Return Data," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(4), pages 913-938, December.
    11. Cano Liliana, 2015. "Income Mobility in Ecuador: New Evidence from Individual Income Tax Returns," WIDER Working Paper Series 040, World Institute for Development Economic Research (UNU-WIDER).
    12. Katharine L. Bradbury, 2011. "Trends in U. S. family income mobility, 1969-2006," Working Papers 11-10, Federal Reserve Bank of Boston.
    13. van Treeck, Till. & Sturn, Simon., 2012. "Income inequality as a cause of the Great Recession? : A survey of current debates," ILO Working Papers 994709343402676, International Labour Organization.
    14. repec:eso:journl:v:47:y:2016:i:1:p:109-153 is not listed on IDEAS
    15. Till van Treeck, 2012. "Did inequality cause the U.S. financial crisis?," IMK Working Paper 91-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    16. Larrimore, Jeff & Mortenson, Jacob & Splinter, David, 2015. "Income and Earnings Mobility in U.S. Tax Data," Finance and Economics Discussion Series 2015-61, Board of Governors of the Federal Reserve System (U.S.).
    17. Jean-Brieux Delbos, 2016. "Once in the Elite, Always in the Elite? Changing Wealth in a Changing City (Paris, France, 1845-1859)," Revue d'économie politique, Dalloz, vol. 126(5), pages 683-719.
    18. Gerald Auten & Geoffrey Gee & Nicholas Turner, 2013. "Income Inequality, Mobility, and Turnover at the Top in the US, 1987-2010," American Economic Review, American Economic Association, vol. 103(3), pages 168-172, May.
    19. Young, Cristobal & Varner, Charles, 2011. "Millionaire Migration and State Taxation of Top Incomes: Evidence From a Natural Experiment," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 255-283, June.
    20. Carrie B. Kerekes, 2011. "Property Rights and Environmental Quality: A Cross-Country Study," Cato Journal, Cato Journal, Cato Institute, vol. 31(2), pages 315-338, Spring/Su.

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