Twenty Years of Rising Inequality in U.S. Lifetime Labour Income Values

In this paper we study the evolution of lifetime labour income inequality by constructing present value life cycle measures that incorporate both earnings and employment risk. We find that, even though lifetime income inequality is 40% less than earnings inequality, the total increase in lifetime income inequality over the past 20 years is the same as earnings inequality. While the total increase is the same, the pathways there differ with earnings inequality experiencing a steady increase and lifetime income inequality increasing in spurts particularly in the latter half of the 1990s. Finally, we find the changes in lifetime income inequality are primarily driven by changes in earnings mobility and changes in the earnings distribution itself, changes in employment risk and the composition of the sample, such as the shift toward attaining more education and the ageing population, do not play a large role.     

INTERGENERATIONAL INCOME MOBILITY IN SWEDEN: WHAT DO TAX‐DATA SHOW?

The aim of this paper is to investigate intergenerational income mobility in Sweden by means of a representative sample drawn from tax-data files. Longitudinal data on actual parent-child pairs spanning 1978–92 are employed. Regression and correlation coefficients are analyzed and transition matrices calculated in order to investigate income mobility over generations. The results achieved show high intergenerational income mobility in Sweden between fathers and sons in comparison to estimations performed in most other countries and more especially compared to the U.S. This indicates that Sweden does not only have lower cross-sectional income inequality, but also higher intergenerational income mobility than those countries. The mother's earnings influence children's earnings less than the father's. However, the mother's earnings correlate more strongly with a daughter's earnings than they do with that of a son. The major indication of immobility across generations is found in the upper income deciles.     

THE EFFECT ON POVERTY STATUS IN ISRAEL OF CONSIDERING WEALTH AND VARIABILITY OF INCOME

This paper assesses the effects of including wealth and the variability of income on the incidence of poverty and the degree of income inequality in Israel. A special survey, which includes data on the wealth and income of a national sample of Israeli families in 1963–64 and 1964–65, allows us to go beyond measures based on current income alone.
The first section reviews earlier studies of poverty in Israel. The next section looks at poverty and inequality in terms of current income, current wealth, and a combined measure of income and wealth. The combined measure is the Hansen-Weisbrod measure (HW), which equals income plus the annuity value of wealth, assuming all wealth is just consumed at the time of death. It is interesting that, in spite of the much higher wealth inequality than income inequality, the HW measure was slightly more equally distributed than income. This result occurred because the annuity component made up a low share of the total HW measure and the correlation between income and wealth was well under 1. Although overall inequality and poverty were similar for income and HW measures, the incidence of poverty by subgroup depended on the measure used.
The final section presents a dynamic view of poverty and inequality. Year-to-year changes in poverty were substantial. Because of the use of a relative poverty concept and the rise in real incomes, the real income poverty line rose by 15 percent between 1963 and 1964. Still, of those in income poverty in 1963, 37 percent managed to escape poverty in 1964. The paper shows how the degree to which poverty was stable or transitory varied substantially by age and country of origin.     

Intergenerational Mobility under Private vs. Public Education*

Intergenerational earnings mobility is analyzed in a model where human capital is produced using schooling and parental time. In steady states more mobile societies have less inequality, but in the short run higher mobility may result from an increase in inequality. Starting from the same inequality, mobility is higher under public than under private education. A rise in income shocks, for example due to increased returns to ability, or a switch from public to private schooling both increase inequality. However, increased shocks raise mobility in the short run and do not affect it in the long run, whereas an increased role for private schooling reduces mobility in both the short and long run. That these differences may help to identify the source of changes in inequality, and other real‐world implications, are illustrated in a brief discussion of time trends and cross‐country differences.     

机会不平等与社会流动预期研究——基于CGSS数据的经验分析

随着"中国梦"的提出,对于居民社会流动预期的研究受到了广泛关注.现有文献对于社会流动预期影响因素的相关研究较为匮乏,文章在政府以实现社会公平正义为目标的改革背景之下,研究我国机会不平等对居民社会流动预期的影响,具有重要的理论和现实意义.研究表明:机会不平等作用于社会流动预期的总效应为正,即当前机会不平等程度越高的地区,人们向上的社会流动预期越显著;并且,这种正向影响在家庭背景条件较差、年龄较大、受教育程度较高以及非农业户籍群体中更加显著.文章认为,在政府以实现社会公平正义为目标的改革背景下,人们预期未来机会不平等程度会下降,导致机会不平等直接效应的不利影响受到间接效应的抵消,从而出现上述看似"有悖常理"的结论.实证结果也在一定程度上证实了间接效应的存在.因此,相对于当前现实存在的机会不平等,人们对未来机会不平等变化的预期对其社会流动预期的影响更为突出.政府部门应当在贯彻落实公平政策的同时,实施必要的预期管理,增强人们对政府部门的信任,使其保持对未来改革政策的乐观预期,从而维持当前较为良好的居民社会流动预期.     

Economic inequality in Spain: the european community household panel dataset

This article uses data from the 1998 European Community Household Panel to study economic inequality in Spain. It reports data on the Spanish distributions of income, labor income, and capital income, and on related features of inequality, such as age, employment status, educational attainment, and marital status. It also reports data on the income mobility of Spanish households, and data on income inequality in other European countries and in the US. We find that income, earnings, and, especially, capital income are very unequally distributed in Spain and that economic inequality in Spain is well above the European average.     

Lifetime Earnings and Inequality*

It is argued that for many purposes the measurement of inequality should be based on income measured over a longer period than a single year. However, samples of individual earnings over a long period are extremely rare, and there are no data on complete lifetime earnings. This survey examines the wide variety of attempts that have been made to estimate inequality using a longer accounting period Emphasis is placed on the problems of extending the accounting period, rather than the properties of particular statistical measures of inequality.     

Sources of Inequality: Measuring the Contributions of Income Sources to Rising Family Income Inequality

We develop a simulation method for measuring the impact of changes in the distributions of the main income sources on growth in family income inequality. We simulate the entire distribution of family income under the counterfactual, “What if the distribution of each source had not changed?” The simulation method allows us to evaluate the impact of changes at any point in the distribution as well as with multiple measures of inequality. We incorporate married‐couple and single‐person families, appropriately accounting for changes in the proportion married. We apply the simulation method to investigate the impact of changes in male earnings, female earnings, and capital income on the distribution of family income in the United States between 1969 and 1999. We find that changes in the distribution of male earnings account for more of the growth in family income inequality than do changes in any other source of income. Changes in the distribution of female earnings have reduced family income inequality.     

TRENDS IN LONG-RUN VERSUS CROSS-SECTION EARNINGS INEQUALITY IN THE 1970s AND 1980s

This paper uses the PSID to assess the changes in earnings mobility and to compare the changes in cross-section and long-run inequality in the 1970s and 1980s. Previous inequality studies have primarily used measures of cross-section inequality. However, long-run inequality depends not only on cross-section inequality, but also on the degree of earnings mobility, which equalizes earnings over time. I find that earnings mobility increased during the 1970s, but fell during the 1980s. Consistent with this result, the increase in cross-section inequality overstated the true increase during the 1970s, but understated the true increase in inequality during the 1980s.     

Consumption,income and earnings inequality in Britain

This paper presents an analysis of the trends in inequality across income, earnings and consumption in Britain since 1978. It documents the episodic nature of inequality growth over this period largely dominated by the inequality ‘boom’ in earnings inequality of the 1980s. It builds a consistent picture across these key measures of inequality to provide a coherent link between the microeconomic and macroeconomic analysis of the evolution of inequality.     

USING THE P90/P10 INDEX TO MEASURE U.S. INEQUALITY TRENDS WITH CURRENT POPULATION SURVEY DATA: A VIEW FROM INSIDE THE CENSUS BUREAU VAULTS

The March Current Population Survey (CPS) is the primary data source for estimation of levels and trends in U.S. earnings and income inequality. However, time-inconsistency problems related to top coding lead many CPS users to measure inequality via the ratio of the 90th to the 10th percentile (P90/P10) rather than by more traditional summary measures. With access to public use and restricted-access internal CPS data, and by applying bounding methods, we show that using P90/P10 does not completely obviate time-inconsistency problems, especially in capturing household income inequality trends. Using internal data, we create consistent cell mean values for all top-coded public use values that, when used with public use data, closely track inequality trends in earnings and household income using internal data. But estimates of longer-term inequality trends with these corrected data based on P90/P10 differ from those based on the Gini coefficient. The choice of inequality measure still matters.     

Effects of growing wage disparities and changing family composition on the U.S. income distribution

U.S. income inequality soared after 1979. The present paper estimates the contribution of increased earnings inequality to the surge in overall income inequality between 1979 and 1996. The direct contribution of increased earnings inequality is surprisingly modest. Even if male and female earnings inequality had remained unchanged at their 1979 levels, about two thirds of the observed increase in overall U.S. inequality would have occurred. Other factors contributing to higher overall inequality include the growing correlation of husband and wife earned incomes and the increasing percentage of Americans who live in single-adult families, families that typically have much more unequal incomes than husband–wife families.     

Consumption and Income Inequality in Australia

Consumption may be a more appropriate measure of household well-being than income or earnings. Using four ABS Household Expenditures Surveys collected between 1975 and 1993, we compare trends in consumption and income inequality among Australian households. We find that consumption is much more equal than income. While there were significant increases in both income and consumption inequality, consumption inequality rose by much less. One interpretation of the results is that some income inequality in Australia reflects transitory fluctuations which households can smooth,'and that part of the growth in income inequality reflects an increase in these transitory fluctuations.     

Household income mobility in rural China: 1989–2006

This article analyzes household income mobility in rural China between 1989 and 2006. The results indicate that incomes in rural China are highly mobile. The high degree of rank and quantity mobility implies re-ranking and mean convergence in income distribution, but the disparity between them also enlarged with leveling-up and Gini divergence brought about by economic growth. In addition, there exists considerable transitorily poor and rich in positional mobility. Though, transitory movement provides an opportunity for both poor and rich and decreases long-term inequality, it also causes considerable income fluctuations and economic insecurity. Moreover, the equalizing effect of income mobility on income inequality is weakening.     

Changing income inequality: A distributional paradigm for Canada

This paper examines the major changes in income inequality in Canada since the 1970s and collects them as a distributional paradigm for Canada. It focuses on labour market changes in terms of shares of workers and earnings shares for lower earners, middle‐class workers and higher earners in a flexible general framework. Polarization of full‐time workers, loss of middle‐class earnings share and increase in a higher earnings gap are highlighted. Changing returns to human capital, role of demographics and cohort effects and declining labour share are examined. The paper also reviews evidence of changing economic mobility and estimating the role of inequality of opportunity.     

RELATIVE EARNINGS REDUX: YOUTH MOBILITY IN THE 1980s

A complete view of inequality should encompass not only measures of distance between hierarchical ranks, but also measures of the extent of individual movement across ranks (mobility). Evidence from the NLSY indicates that relative earnings mobility was pervasive among young workers in the 1980s; possibly even higher than in the 1960s. Gender and race differences are apparent, however.     

Income Mobility, Inequality and Social Welfare

It is often argued that an observation of rising annual income inequality need not have negative normative implications. The argument is that if there has been a sufficiently large simultaneous increase in mobility, the inequality of income measured over a longer time period can be lower despite the rise in annual inequality. In this paper, it is shown by example that if normative implications are drawn from a standard social welfare function, the set of circumstances put forward in the above argument are not sufficient to guarantee that social welfare will improve. The reason is that even though rising mobility does reduce longer term inequality, it also increases the variability of income profiles over time and the latter has a detrimental social welfare effect. Hence, there are two types of mobility: one which reduces inequality (regression to the mean), but another that increases inequality (relative movements uncorrelated with incomes). Further, if individuals' aversion to income variabiltiy is sufficiently larger than the social welfare judge's aversion to inequality, then an increase in mobility, no matter how large, cannot offset the negative normative effect of rising annual inequality.     

Does consumption inequality track income inequality in Italy?

This paper presents stylized facts on labor supply, income, consumption, wealth, and several measures of consumption and income inequality drawn from the 1980–2006 Survey of Household Income and Wealth (SHIW) conducted by the Bank of Italy. The SHIW provides information on consumption, income and wealth, and a sizable panel component that allows econometricians to estimate sophisticated income, consumption, and wealth processes and to analyze labor market and portfolio transitions. We find that over the sample period income inequality is higher and has grown faster than consumption inequality. Most of the increase in income inequality is related to an increase in the degree of earnings' instability rather than to shifts in the wage structure. We suggest that, in particular, the labor market reforms of the 1990s and 2000s are the most plausible explanation of the increased earnings inequality.     

DISTRIBUTION OF LABOR INCOMES IN URBAN ZAIRE

The author addresses himself first to the problem that summary measures of wage income inequality, computed for Kinshasa, the main urban area in Zaire, tend to overstate the degree of total labor income inequality among sharing units of comparable size. It is argued that this is true for two main reasons: (1) earnings from female commercial activity are not recorded in the available statistics; and (2) the 1960 UN definition of household upon which the measures of inequality are based understates the size of the actual sharing unit. Data taken from the 1967 Socio-Demographic Survey of Kinshasa and the 1970 household budget study are used to test these hypotheses regarding short-run income inequality.
The policy observation is made that, while modernization of the commodity distribution system may provide a disincentive for sharing and a reduction in opportunities for female employment, investment in non-service sectors may equalize the secular income distribution for a given migration cohort. Evidence of unskilled migrants moving from service to non-service sector employment in response to increased labor demand is presented. This is accomplished by supplementing sample survey data with time series on aggregate employment by sector for Kinshasa.     

Is Mobility in the United States Still Alive? Tracking career opportunities and income growth

Longitudinal data are used to compute income and earnings mobility in the 1970s and 1980s. The various strengths and weakness of different perspectives on mobility are assessed, with the change in real income or earnings being chosen as the one that most closely resembles the common-sense meaning of progress or decline. Care is taken to choose the proper age ranges and to define quantiles on the basis of 10-year income or earnings. Based on the Panel Study on Income Dynamics, this paper finds the share of family income losers among prime-age adults rose from 21% in the 1970s to 33% in the 1980s. This jump is reflected in a corresponding jump in the share of male earners with declining earnings over the same time period. Female earners, however, worked 44% more in the 1980s than the 1970s and fewer were on declining earnings paths. In terms of sub-populations, lower income and less educated groups had larger increases of income and earnings losses.