Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States, 1967-2006
64 Pages Posted: 17 Nov 2009
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Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States, 1967-2006
Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States, 1967-2006
Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States, 1967-2006
Date Written: November 2009
Abstract
We conduct a systematic empirical study of cross-sectional inequality in the United States, integrating data from the Current Population Survey, the Panel Study of Income Dynamics, the Consumer Expenditure Survey, and the Survey of Consumer Finances. In order to understand how different dimensions of inequality are related via choices, markets, and institutions, we follow the mapping suggested by the household budget constraint from individual wages to individual earnings, to household earnings, to disposable income, and, ultimately, to consumption and wealth. We document a continuous and sizable increase in wage inequality over the sample period. Changes in the distribution of hours worked sharpen the rise in earnings inequality before 1982, but mitigate its increase hereafter. Taxes and transfers compress the level of income inequality, especially at the bottom of the distribution, but have little effect on the overall trend. Finally, access to financial markets has limited both the level and growth of consumption inequality.
Keywords: Inequality
JEL Classification: D31
Suggested Citation: Suggested Citation
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