TRENDS IN POVERTY IN THE UNITED STATES, 1967–84

The sensitivity of movements in poverty to the method used in measuring poverty is examined. The use of various poverty indices, and of various ways of setting the poverty lines, does not affect the conclusion that poverty followed a U-shaped pattern from 1967 to 1984. A model for a family's income/needs ratio is estimated and used to explore the factors that might lie behind this pattern. The results suggest that changes over time in the location of the income distribution are most relevant to the corresponding changes in poverty. Changes in the structure of families, and in labor supply within families, have also been relevant to recent movements in poverty.     

POTENTIAL GNP IN THE UNITED STATES, 1948–80

Potential gross national product (GNP) is a measure of the aggregate supply capability of an economy, or the amount of output that could be expected at full employment. Such a measure of output at constant rates of labor and capital utilization is useful as a benchmark for economic performance, calculation of the full employment surplus as an indicator of fiscal policy, and in the projection of unemployment rates. Potential GNP for the United States is estimated for the years 1948–77, and projected for 1978–80. The calculations use a variable benchmark for the full-employment unemployment rate, based on the changing age-sex composition of the labor force, and a constant benchmark for the utilization of fixed capital. A framework for separation of productivity into trend, cycle, and irregular components is developed, and then estimated for the 1948–77 period, using quarterly data. The relationships between various age- and sex-specific unemployment rates are also estimated in construction of the variable unemployment benchmark.     

VERTICALLY INTEGRATED MEASURES OF THE RATE OF PROFIT IN THE UNITED STATES 1950–90

This paper investigates the importance of increases in the productivity of producing capital in estimates of the profit rate decline which occurred in the United States during the period 1950–90. We find that, when profit rate measures take into account the increasing productivity of producing capital stock (as measured by the embodied labor required to produce it), the observed decline is about one-half that found using conventional measures of profit. This finding has important implications for interest rate and investment policies.     

TOTAL INCOMES IN THE UNITED STATES, 1946–1976: A SUMMARY REPORT

Extended accounts of total income and product and associated capital stocks for the United States, in current and constant dollars, are offered for the years 1946 to 1976. They include intangible and tangible capital accumulation and non-market and market outputs in all sectors, services of government and household capital and of unpaid household labor, and opportunity costs of students. Defense and police services are classified as intermediate product; a portion of commercial media services is counted as final product. Expenses related to work are subtracted while the values of employee training and human capital formation and net revaluations of existing tangible capital are added.
Total incomes (TISA) net national product was 50 percent greater than official Bureau of Economic Analysis (BEA) NNP in 1976. BEA gross private domestic investment was only about 18 percent of TISA gross capital accumulation. Intangible investment and TISA net domestic capital accumulation grew more rapidly than BEA net private domestic investment. Household investment has been growing while there have been sharp declines in government investment, particularly in research and development. Contrary to some views of the import of the narrower BEA accounts, total capital accumulation appears to have risen considerably more rapidly than total consumption, 6.3 percent versus 2.2 percent per annum from 1946 to 1976, thus increasing sharply its share of TISA GNP.     

TRENDS IN HOUSEHOLD WEALTH IN THE UNITED STATES, 1962–83 AND 1983–89

Using the 1983 and 1989 Surveys of Consumer Finances, I find evidence of sharply increasing house-hold wealth inequality over this period. Whereas mean wealth increased by 23 percent in real terms, median wealth grew by only 8 percent. The share of the top one-half percentile rose by five percentage points, while the wealth of the bottom two quintiles showed an absolute decline. The Gini coefficient increased from 0.80 to 0.84. Almost all the growth in real wealth accrued to the top 20 percent of wealthholders. In contrast, the degree of wealth inequality was almost identical in 1983 as in 1962, and real wealth growth was more evenly distributed across the wealth distribution. There is also evidence that the sharp increase in wealth inequality from 1983 to 1989 was due to a correspondingly sharp rise in income inequality, the increase of stock prices relative to housing prices, and relatively slow inflation.     

A COMPARATIVE ANALYSIS OF HOUSEHOLD WEALTH PATTERNS IN FRANCE AND THE UNITED STATES

We find that household wealth is distributed more unequally in the U.S. in 1983 than France in 1986. The Gini coefficient is 0.77 for the U.S. and 0.71 for France. There are also significant differences in the composition of wealth. Owner-occupied housing accounted for half of total assets in France, and only 30 percent in the U.S., while corporate stock and financial securities amounted to 19 percent in the U.S. and 8 percent in France. The debt-equity ratio was 0.13 in France and 0.20 in the U.S. The age-wealth profile in the two countries had the characteristic hump-shape predicted by the life-cycle model, but the profile was much flatter in France and peaked for families aged 50–59 in France, compared to 60–69 in the US.     

THE VALUE OF SERVCES PROVDED BY THE STOCK OF GOVERNMENT-OWNED FIXED CAPTAL IN THE UNITED STATES, 1948–79

Expanded measures of government product normally include imputations for the services of government capital. This article discusses several approaches to measuring the value of the services of government capital and focuses on the conceptual and empirical difficultes associated with making such imputations. In addition, four sets of alternative estimates for 1948–79 are presented.     

THE STANDARD OF LIVING IN THE UNITED STATES

A common approach to the evaluation of the standard of living is based on a function of real income. In the United States this often takes the form of CPI-deflated mean household income. Material well-being is more appropriately evaluated using a consumption-based index. Using data from the Consumer Expenditure Surveys we find that real mean income provides an inaccurate representation of the level and trend of the standard of living relative to real per equivalent total expenditure in the postwar United States. The differences between real income and real total expenditure per household equivalent member are found at all levels of aggregation.     

THE CONTRACTING-OUT PROBLEM IN SERVICE SECTOR ANALYSIS: CHOICE OF STATISTICAL UNIT

The contracting-out problem in service sector analysis is defined and considered from the viewpoint of choice of statistical unit. It is shown that both the enterprise statistical unit and the establishment- based unit are unsatisfactory for economic analysis. This leads to the recommendation for an "intermediate" statistical unit, namely the "division." The division, by construction and definition, is shown to have desirable properties for analysis of the contracting-out problem (and own-account problem) relating to services. Some empirical evidence with respect to the Canadian service sector economy supports the analysis and suggests a new interpretation of conventional service sector growth statistics.     

ESCAPING POVERTY THROUGH WORK: THE PROBLEM OF LOW EARNINGS CAPACITY IN THE UNITED STATES, 1973–88

This paper documents the changes in earnings capacity poverty that occurred between 1973 and 1088. Families are "Earnings Capacity Poor" if they are unable to generate enough income to lift them out of poverty, even if all working-age adults in the family work full-time, year-round. Data from the March 1974 and March 1989 Current Population Surveys indicate that earnings capacity poverty increased more rapidly than official poverty. Much of this increase can be attributed to the rise in earnings capacity poverty among whites, intact families, and family heads with more than a high school diploma. Most alarming, the percentage of children in earnings capacity poor families is considerably higher than it is among persons over eighteen; in 1988, nearly 15 percent of children under six lived in families that could not have escaped poverty even if the adults in their family were working and earning at their full capacity levels.     

ASSET POVERTY IN THE UNITED STATES, 1984–99: EVIDENCE FROM THE PANEL STUDY OF INCOME DYNAMICS

Using PSID data for the years 1984–99, we estimate the level and severity of asset poverty. We find that despite a sharp decline in the official poverty rate, the asset poverty rate barely budged over this period. Moreover, the severity of asset poverty increased during this period. The likelihood of being asset-poor decreased for those who are college graduates or married with children, whereas it increased for those who are white, for the unmarried elderly, and for those without a college degree. Lifetime events such as changes in job market, marital and homeownership status are correlated with transitions into and out of asset poverty.     

DEPRECIATION, OBSOLESCENCE, AND THE MEASUREMENT OF THE AGGREGATE CAPITAL STOCK OF THE UNITED STATES 1900–1962

This paper is concerned with the sensitivity of estimates of the aggregate capital stock of the United States to the statistician's choice of depreciation method. The usual depreciation charge can be shown to include allowances both for physical deterioration and for obsolescence. If one interprets the gross stock as the stock of surviving assets, then the various net stocks defined by depreciation accounting may be interpreted as a revaluation of these assets by means of an index of embodied technical change. Estimates of the United States capital stock were generated under eight sets of assumptions. These estimates are compared with respect to level, trend, and implications for other aggregate statistical indicators. The conclusion is reached that the assumptions which define a country's stock of tangible capital are of considerably greater importance than has often been supposed.     

THE FISCAL MULTIPLIER AND ECONOMIC POLICY ANALYSIS IN THE UNITED STATES

The Great Recession sparked wide interest in the economic effects of fiscal policy. That interest is reflected in an ongoing debate over the size of the fiscal multiplier. This survey article addresses three questions: What models do economists use to estimate that multiplier? Why do estimates of it vary widely? How can economists use those estimates to judiciously analyze U.S. economic policy? (JEL E62, H30, H50)     

ACCRUED CAPITAL GAINS, PERSONAL INCOME AND SAVING IN THE UNITED STATES, 1948–1964

Capital gains are an important source of personal income in the United States but they are not included in the national accounts or the official estimate of personal income and saving. Individuals report their realized gains for tax purposes but the economic theorist would include both realized and accrued gains in income. National income theorists continue to debate whether capital gains should be included in income but, because of the many conceptual and statistical problems involved in estimating capital gains, no satisfactory estimates have been developed. Consequently, the debate has stayed mainly at the theoretical level. This paper deals with the methodology of estimating accrued capital gains. A simple analytical model is developed to estimate capital gains from data on market value and net acquisitions of an asset but the model can be adapted to incorporate asset prices directly. It is shown that the methods used for estimating accrued gains in the past are special cases of the model proposed in the paper. The model is then used for estimating gains accruing to individuals in the United States on their holdings of corporate stock, real estate and livestock during 1948–1964.
During this period accrued gains have amounted to roughly five times the realized gains reported for tax purposes; corporate stock and real estate are the most important sources of capital gains and corporate stock accounts for almost two-thirds of all accrued gains. The paper goes on to examine the implications of these estimates for the existing series on personal income and saving in the United States. The inclusion of accrued gains would increase the variance in the official estimates but personal saving is affected more than personal income. The paper concludes with an evaluation of these results and some suggestions for further research.     

THE INTERNATIONALIZATION OF AGRICULTURAL TECHNOLOGY: PATENTS, R&D SPILLOVERS, AND THEIR EFFECTS ON PRODUCTIVITY IN THE EUROPEAN UNION AND UNITED STATES

Multilateral indices of total factor productivity (TFP) allow efficiency comparisons between ten European Union countries and the United States from 1973 to 1993. Differences in TFP levels are then explained by land quality differences, public research and development (R&D) expenditures, education levels, private-sector patents, international spillovers of public R&D, and private-sector technology transfer. There is evidence that public R&D results in limited knowledge spillovers between the European countries and the United States. However, the use of international patent data from the Yale Technology Concordance shows not only that patents matter, but also that private sector technology transfer may be the dominant force in explaining TFP trends. The United States and the European Union countries with more advanced research systems (Netherlands, Denmark, France, and Belgium) converge in a high-growth club, while Germany, Luxembourg, Greece, Italy, Ireland, and the United Kingdom form the slow-growth group. Ignoring knowledge spillovers and technology transfer leads to biased estimates of R&D elasticities, which is hardly surprising since the private sector is now spending more than the public in some of these countries. Thus, the estimated rate of return to public agricultural R&D falls from over 60% in the closed economy model to 10% in the model that takes account of international spillovers. (JEL Q16)     

HUMAN CAPITAL INVESTMENT IN HEALTH: A MEASUREMENT FRAMEWORK AND ESTIMATES FOR THE UNITED STATES, 1952–78

Lack of a conceptual basis for measuring human capital investment in health has hampered efforts to expand national accounting systems to include human capital investment. This paper presents a conceptual basis for developing estimates of this health investment, an estimation methodology consistent with the conceptual basis, and preliminary estimates for the United States for 1952-78. While much work remains to be done before comprehensive estimates of investment in health are achieved, it is clear that previous estimates based on answers to the question, “What improves health?” have included some inappropriate expenditures while excluding others that should be included. The conceptual basis presented here leads to a methodology for separating health care costs (not the costs of illness) into maintenance and gross investment. Gross investment can be further separated into net investment and the sum of damages and depreciation but empirical implementation of this step is not attempted here.     

TRENDS IN THE CONCENTRATION OF PERSONAL WEALTH IN THE UNITED STATES, 1958 TO 1976

The trend in the concentration of U.S. wealth from 1958 through 1976 is examined in some detail and summary data are used to extend the period over which the trend is observed back to 1922. The data suggests a long-run secular decline in the concentration of U.S. wealth with a rather sharp decline in 1976, the last year for which measurements were made. Although the secular decline in wealth concentration is supported by numerous observations across 50 years, the precipitous decline measured between 1972 and 1976 should be interpreted with caution because it undoubtedly reflects the substantial downward revaluation which occurred in the stock market from 1972 (most recent previous observation) to 1976. This is not to argue that wealth holders at the top of the distribution were not made significantly less affluent by the revaluation, but that the 1976 observation includes a large cyclical component. Future observations which include the subsequent upward revaluation in the stock market are expected to show levels of concentration comparable to or only slightly below those for 1958 through 1972.     

THE SIZE DISTRIBUTION OF HOUSEHOLD DISPOSABLE WEALTH IN THE UNITED STATES

In this study, new estimates are presented of the size distribution of household wealth in the U.S. in 1969. Compared to previous studies, its major advance is the inclusion of all marketable or discretionary household assets and liabilities and their alignment with national balance sheet totals. Household disposable wealth (HDW) is defined as the sum of all marketable or fungible assets held by households less liabilities. The Gini coefficient for HDW is 0.72, the share held by the richest one percent of households is 31 percent, and the share held by the top five percent is 49 percent. There is, however, a large variation in the concentration of different household assets. The Gini coefficient is 0.30 for household durables and inventories, 0.69 for equity in owner-occupied housing, 0.94 for bonds and securities, and 0.98 for corporate stock. HDW is then divided into two mutually exclusive components. The first, called "life-cycle wealth," is defined as the sum of equity in owner-occupied housing, durables, household inventory, demand deposits and currency, and the cash value of life insurance and pensions less consumer debt. This form of wealth tends to be accumulated over the life-cycle for either consumption, liquidity, or retirement purposes. The second, called "capital wealth," is the sum of time and savings deposits, bonds and securities, corporate stock, business and investment real estate equity, and trust fund equity. Life-cycle wealth is substantially less concentrated than capital wealth. The Gini coefficient for it is 0.59, while that for capital wealth is 0.88. Moreover, among the lower wealth groups, over 80 percent of household wealth takes the form of life-cycle wealth, whereas among the top wealth groups the proportion is under 20 percent. The results suggest substantially different savings motivations between the two groups.