IDEAS home Printed from https://ideas.repec.org/p/lis/liswps/686.html
   My bibliography  Save this paper

Anatomy of Income Inequality in the United States: 1979-2013

Author

Listed:
  • Aboozar Hadavand

Abstract

This paper provides a novel analysis of the trend in income inequality in the United States between 1979{2013. There are two ways in which this paper contributes to the literature. First, I analyze how much of the existing inequality in the U.S. is due to the demographic changes that happened over this period. Using microdata from Luxembourg Income Study and after decomposing inequality into within- and between-age group components, I find that the within-group share of overall inequality in the U.S. is high and steady compared to other developed countries. I also find that about 17 percent of the rise in inequality in this period is due to the between-group component (life-cycle effects). Second, I provide a regression analysis to explain cross-group variations in inequality during the period. I estimate that most of the rise in inequality has happened among middle-aged men while inequality among women, especially among married women has, in fact, decreased. This more granular analysis of inequality can help us investigate the causes of inequality, which would be impossible if we only look at a single inequality statistic.

Suggested Citation

  • Aboozar Hadavand, 2017. "Anatomy of Income Inequality in the United States: 1979-2013," LIS Working papers 686, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:686
    as

    Download full text from publisher

    File URL: http://www.lisdatacenter.org/wps/liswps/686.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
    2. Jeremy Greenwood & Nezih Guner & Georgi Kocharkov & Cezar Santos, 2016. "Technology and the Changing Family: A Unified Model of Marriage, Divorce, Educational Attainment, and Married Female Labor-Force Participation," American Economic Journal: Macroeconomics, American Economic Association, vol. 8(1), pages 1-41, January.
    3. Jenkins, Stephen P., 1995. "Did the middle class shrink during the 1980s? UK evidence from kernel density estimates," Economics Letters, Elsevier, vol. 49(4), pages 407-413, October.
    4. Bruce A. Weinberg, 2000. "Computer Use and the Demand for Female Workers," ILR Review, Cornell University, ILR School, vol. 53(2), pages 290-308, January.
    5. 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.
    6. Paglin, Morton, 1977. "The Measurement and Trend of Inequality: Reply," American Economic Review, American Economic Association, vol. 67(3), pages 520-531, June.
    7. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 437-467, June.
    8. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-469, June.
    9. Nelson, Eric R, 1977. "The Measurement and Trend of Inequality: Comment," American Economic Review, American Economic Association, vol. 67(3), pages 497-501, June.
    10. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2005. "Two Views of Inequality Over the Life Cycle," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 765-775, 04/05.
    11. Eden, Benjamin, 1980. "Stochastic Dominance in Human Capital," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 135-145, February.
    12. Steven Prus, 2000. "Income Inequality as a Canadian Cohort Ages: An Analysis of the Later Life Course," LIS Working papers 237, LIS Cross-National Data Center in Luxembourg.
    13. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    14. Lars Osberg, 2003. "Long Run Trends in Income Inequality in the United States, UK, Sweden, Germany and Canada: A Birth Cohort View," Eastern Economic Journal, Eastern Economic Association, vol. 29(1), pages 121-141, Winter.
    15. Formby, John P & Seaks, Terry G & Smith, W James, 1989. "On the Measurement and Trend of Inequality: A Reconsideration," American Economic Review, American Economic Association, vol. 79(1), pages 256-264, March.
    16. Brigitte Buhmann & Lee Rainwater & Guenther Schmaus & Timothy M. Smeeding, 1988. "Equivalence Scales, Well‐Being, Inequality, And Poverty: Sensitivity Estimates Across Ten Countries Using The Luxembourg Income Study (Lis) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
    17. David Autor, 2014. "Polanyi's Paradox and the Shape of Employment Growth," NBER Working Papers 20485, National Bureau of Economic Research, Inc.
    18. repec:bla:revinw:v:34:y:1988:i:2:p:115-42 is not listed on IDEAS
    19. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
    20. Matthew Higgins & Jeffrey G. Williamson, 1999. "Explaining Inequality the World Round: Cohort Size, Kuznets Curves, andOpenness," NBER Working Papers 7224, National Bureau of Economic Research, Inc.
    21. Paglin, Morton, 1975. "The Measurement and Trend of Inequality: A Basic Revision," American Economic Review, American Economic Association, vol. 65(4), pages 598-609, September.
    22. Claudia Goldin, 2014. "A Grand Gender Convergence: Its Last Chapter," American Economic Review, American Economic Association, vol. 104(4), pages 1091-1119, April.
    23. Pyatt, Graham, 1976. "On the Interpretation and Disaggregation of Gini Coefficients," Economic Journal, Royal Economic Society, vol. 86(342), pages 243-255, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aboozar Hadavand, 2017. "Misperceptions and mismeasurements: An analysis of subjective economic inequality," Working Papers 449, ECINEQ, Society for the Study of Economic Inequality.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frank A. Cowell & Philippe Kerm, 2015. "Wealth Inequality: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 671-710, September.
    2. Bhalotra, Sonia & Fernandez Sierra, Manuel, 2018. "The distribution of the gender wage gap," ISER Working Paper Series 2018-10, Institute for Social and Economic Research.
    3. Ingvild Almås & Magne Mogstady, 2009. "Older or wealthier? The impact of age adjustments on the wealth inequality ranking of countries," Working Papers 113, ECINEQ, Society for the Study of Economic Inequality.
    4. Leonardo Gasparini & Mariana Marchionni & Walter Sosa Escudero, 2000. "Characterization of inequality changes through microeconometric decompositions. The case of Greater Buenos Aires," IIE, Working Papers 025, IIE, Universidad Nacional de La Plata.
    5. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1593-1640.
    6. Stefan Thewissen & Lane Kenworthy & Brian Nolan & Max Roser & Tim Smeeding, 2018. "Rising Income Inequality and Living Standards in OECD Countries: How Does the Middle Fare?," Journal of Income Distribution, Ad libros publications inc., vol. 26(2), pages 1-23, July.
    7. Christian Bayer & Moritz Kuhn, 2023. "Job Levels and Wages," SOEPpapers on Multidisciplinary Panel Data Research 1190, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Trends in U. S. Wage Inequality: Re-Assessing the Revisionists," Harvard Institute of Economic Research Working Papers 2095, Harvard - Institute of Economic Research.
    9. Andriana Bellou, 2017. "Male wage inequality and marital dissolution: Is there a link?," Canadian Journal of Economics, Canadian Economics Association, vol. 50(1), pages 40-71, February.
    10. Francine D. Blau, 1998. "Trends in the Well-Being of American Women, 1970-1995," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 112-165, March.
    11. Leonardo Bonilla Mejía, 2011. "Diferencias regionales en la distribución del ingreso en Colombia," Revista Sociedad y Economía, Universidad del Valle, CIDSE, December.
    12. Ferreira, Francisco H. G. & Barros, Ricardo Paes de, 1999. "The Slippery Slope: Explaining The Increase In Extreme Poverty In Urban Brazil, 1976-1996," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 19(2), November.
    13. Bönke, Timm & Schröder, Carsten, 2007. "Equivalence scales reconsidered: an empirical investigation," Economics Working Papers 2007-31, Christian-Albrechts-University of Kiel, Department of Economics.
    14. Stephen P. Jenkins & John Micklewright, 2007. "New Directions in the Analysis of Inequality and Poverty," Discussion Papers of DIW Berlin 700, DIW Berlin, German Institute for Economic Research.
    15. Bruce D. Meyer & James X. Sullivan, 2017. "Consumption and Income Inequality in the U.S. Since the 1960s," NBER Working Papers 23655, National Bureau of Economic Research, Inc.
    16. World Bank, 2003. "Brazil : Inequality and Economic Development, Volume 1. Policy Report," World Bank Publications - Reports 14653, The World Bank Group.
    17. Lima, Pedro G. & Teixeira, Pedro N. & Silva, Sandra T., 2021. "Major Streams in the Economics of Inequality: A Qualitative and Quantitative Analysis of the Literature since 1950s," IZA Discussion Papers 14777, Institute of Labor Economics (IZA).
    18. Lanjouw, Peter & Milanovic, Branko & Paternostro, Stefano, 1998. "Poverty and the economic transition : how do changes in economies of scale affect poverty rates for different households?," Policy Research Working Paper Series 2009, The World Bank.
    19. Thomas Otter, 2009. "Characterization of inequality changes through microeconometric decomposition - Paraguay 1992-2005," Ibero America Institute for Econ. Research (IAI) Discussion Papers 189, Ibero-America Institute for Economic Research.
    20. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2010. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States: 1967-2006," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 15-51, January.

    More about this item

    Keywords

    Inequality Decomposition; Within-Group Inequality; Income Distribution;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lis:liswps:686. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Piotr Paradowski (email available below). General contact details of provider: https://edirc.repec.org/data/lisprlu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.