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In Search of the Roots of American Inequality Exceptionalism: An Analysis Based on Luxembourg Income Study (LIS) Data

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  • Janet Gornick
  • Branko Milanovic
  • Nathaniel Johnson

Abstract

Earlier work has established that the US has exceptionally high inequality of disposable household income (i.e., income after accounting for taxes and transfers). There is a debate whether it is due to an unusually high inequality of market (pre‐tax‐pre‐transfer) income or to weak redistribution. In this paper, we look more deeply at market income inequality, focusing on its main component – labor income – across a group of 24 OECD countries. We disaggregate the working‐age population into household types, defined by the number and gender of the household’s earners and the partnership and parenting status of its members. We conclude that within‐group inequality of labor incomes in the US is, in almost all groups, high by OECD standards. The roots of US inequality exceptionalism are not to be found in an unusual demographic composition, nor in unusually high or low mean incomes of some demographic groups, but in pervasive high inequality within each of these groups.

Suggested Citation

  • Janet Gornick & Branko Milanovic & Nathaniel Johnson, 2021. "In Search of the Roots of American Inequality Exceptionalism: An Analysis Based on Luxembourg Income Study (LIS) Data," LIS Working papers 692, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:692
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    References listed on IDEAS

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    1. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 49-100.
    2. Richard Anker & Martha Anker, 2017. "Living Wages Around the World," Books, Edward Elgar Publishing, number 17350.
    3. Leslie Mccall, 2000. "Explaining levels of within-group wage inequality in U.S. labor markets," Demography, Springer;Population Association of America (PAA), vol. 37(4), pages 415-430, November.
    4. Atkinson, Anthony B., 2015. "Inequality: what can be done?," LSE Research Online Documents on Economics 101810, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. Cai, Julie Y. & Wimer, Christopher & Berger, Lawrence & Maury, Matthew, 2023. "Intra-year employment instability and economic well-being among urban households: Mitigating effects of the social safety net," Children and Youth Services Review, Elsevier, vol. 148(C).
    2. Cathal O’Donoghue & Jason Loughrey & Denisa M. Sologon, 2018. "Decomposing the Drivers of Changes in Inequality During the Great Recession in Ireland using the Fields Approach," The Economic and Social Review, Economic and Social Studies, vol. 49(2), pages 173-200.

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    More about this item

    Keywords

    Wage distribution; earnings distributions; income inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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