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Abstract We examine trends in household disposable income inequality and potential mechanisms shaping inequality through changes to work, wages, earnings, marriage, and the tax and transfer system in the United States over the nearly five‐decade period from 1975 to 2022. Overall after‐tax and transfer income inequality increased more than 25 per cent since the mid‐1970s, and by as much as 50 per cent when comparing the 90thand 10thpercentiles. While there has been substantial upgrading in formal education credentials among both men and women – an inequality‐reducing development – those with fewer credentials have increasingly been less likely to work and marry, each of which could result in higher inequality. The latter effects are exacerbated by those selecting into marriage and cohabitation being more likely to partner with those holding similar educational credentials and earning power. Moreover, the decline in work among the less skilled coincided with the transformation of the safety net to rewarding work. These demographic and policy changes have resulted in a pulling apart of the US income distribution.
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Trends in US Spatial Inequality: Concentrating Affluence and a Democratization of Poverty
We use Bureau of Economic Analysis, census, and Current Population Survey data to study trends in income inequality across US states and counties from 1960-2019. Both states and counties have diverged in terms of per capita pretax incomes since the late1990s, with transfers serving to dampen this divergence. County incomes have been diverging since the late 1970s. These trends in mean income mask opposing patterns among top-and bottom-income quantiles. Top incomes have diverged markedly across states since the late 1970s. In contrast, bottom-income quantiles and poverty rates have converged across areas in recent decades.
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- Award ID(s):
- 1941917
- PAR ID:
- 10320153
- Date Published:
- Journal Name:
- AEA Papers and Proceedings
- Volume:
- 111
- ISSN:
- 2574-0768
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Journal Article:
- https://doi.org/10.1257/pandp.20211075
