Income and Wealth Inequality

  • Nicholas Bloom
  • Raj Chetty
  • Emmanuel Saez

Leaders: Nicholas Bloom, Raj Chetty, Emmanuel Saez

The CPI is home to some of the country’s most influential analyses of the income and wealth distribution. The purpose of the Income and Wealth RG is to monitor the ongoing takeoff in income inequality, to better understand its sources, and to analyze its implications for labor market performance, educational attainment, mobility, and more. The following is a sampling of the CPI’s research projects within this area.

Trends in income and wealth inequality: What are the key trends in U.S. income and wealth inequality? The U.S. increasingly looks to Emmanuel Saez and his research team for the latest data on U.S. economic inequality.

Distributional National Accounts: In an ambitious infrastructural project, Emmanuel Saez and his team are building a “Distributional National Accounts” based on tax returns, a data set that will eliminate the current gap between (a) national accounts data based on economic aggregates and (b) inequality analysis that uses micro-level tax data to examine the distribution of income but is not consistent with national aggregates. This new data set will in turn make it possible to evaluate the extent to which economic growth, which has long been represented as a preferred poverty-reduction approach, is indeed delivering on that objective.

The rise of between-firm inequality: How much of the rise in earnings inequality can be attributed to increasing between-firm dispersion in the average wages they pay? This question can be addressed by constructing a matched employer-employee data set for the United States using administrative records.

Rent and inequality: It is increasingly fashionable to argue that “rent” accounts for much of the takeoff in income inequality. The Current Population Survey can be used to assess whether this claim is on the mark. 

Income And Wealth - CPI Research

Title Author Media
The Association Between Income and Life Expectancy in the United States, 2001-2014 Raj Chetty, Michael Stepner, Sarah Abraham, Shelby Lin, Benjamin Scuderi, Nicholas Turner, Augustin Bergeron, David Cutler

The Association Between Income and Life Expectancy in the United States, 2001-2014

Author: Raj Chetty, Michael Stepner, Sarah Abraham, Shelby Lin, Benjamin Scuderi, Nicholas Turner, Augustin Bergeron, David Cutler
Publisher: Journal of the American Medical Association
Date: 04/2016

In the United States between 2001 and 2014, higher income was associated with greater longevity, and differences in life expectancy across income groups increased over time. However, the association between life expectancy and income varied substantially across areas; differences in longevity across income groups decreased in some areas and increased in others. The differences in life expectancy were correlated with health behaviors and local area characteristics.

The Continuing Increase in Income Segregation, 2007-2012 Sean Reardon, Kendra Bischoff

The Continuing Increase in Income Segregation, 2007-2012

Author: Sean Reardon, Kendra Bischoff
Publisher:
Date: 03/2016

In this report, we use the most recent data from the American Community Survey to investigate whether income segregation increased from 2007 to 2012. These data indicate that income segregation rose modestly from 2007 to 2012. This continues the trend of rising income segregation that began in the 1980s. We show that the growth in income segregation varies among metropolitan areas, and that segregation increased rapidly in places that experienced large increases in income inequality. This suggests that rising income inequality continues to be a key factor leading to increasing residential segregation by income.

Childhood Environment and Gender Gaps in Adulthood Raj Chetty, Nathaniel Hendren, Frina Lin, Jeremy Majerovitz, Benjamin Scuderi

Childhood Environment and Gender Gaps in Adulthood

Author: Raj Chetty, Nathaniel Hendren, Frina Lin, Jeremy Majerovitz, Benjamin Scuderi
Publisher: NBER
Date: 02/2016

We show that differences in childhood environments play an important role in shaping gender gaps in adulthood by documenting three facts using population tax records for children born in the 1980s. First, gender gaps in employment rates, earnings, and college attendance vary substantially across the parental income distribution. Notably, the traditional gender gap in employment rates is reversed for children growing up in poor families: boys in families in the bottom quintile of the income distributionare less likely to work than girls. Second, these gender gaps vary substantially across counties and commuting zones in which children grow up. The degree of variation in outcomes across places is largest for boys growing up in poor, single-parent families. Third, the spatial variation in gender gaps is highly correlated with proxies for neighborhood disadvantage. Low-income boys who grow up in high-poverty, high-minority areas work significantly less than girls. These areas also have higher rates of crime, suggesting that boys growing up in concentrated poverty substitute from formal employment to crime. Together, these findings demonstrate that gender gaps in adulthood have roots in childhood, perhaps because childhood disadvantage is especially harmful for boys.

State of the Union 2016: Wealth Inequality Gabriel Zucman

State of the Union 2016: Wealth Inequality

Author: Gabriel Zucman
Publisher:
Date: 02/2016

Over the past four decades, only the very rich, the top 0.1 percent, have realized wealth increases in the U.S. In 2012, the top 0.1 percent included 160,000 households with total net assets of more than 20 million. At the same time, the middle class, those in the 50th-90th percentiles, have experienced a decline in their wealth share.

State of the Union 2016: Income Inequality Jonathan Fisher, Timothy Smeeding

State of the Union 2016: Income Inequality

Author: Jonathan Fisher, Timothy Smeeding
Publisher: Stanford Center on Poverty and Inequality
Date: 02/2016

When disposable-income inequality is measured across 20–35 years of survey data, the consistent result is that the U.S. has the highest level of disposable-income inequality among rich countries. Some countries have experienced periods of falling, as well as rising, inequality over the last three decades. The simple, but important, conclusion to draw is that rising income inequality is not inevitable. Policy and markets can both make a difference.

income and wealth - CPI Affiliates

Mario Luis Small's picture Mario Luis Small Grafstein Family Professor, Department of Sociology
Harvard University
Fiona Devine's picture Fiona Devine Head of Alliance Manchester Business School; Professor of Sociology
The University of Manchester
Bruce D. Meyer's picture Bruce D. Meyer McCormick Foundation Professor of Public Policy; Research Associate, National Bureau of Economic Research
University of Chicago
Scott M. Lynch's picture Scott M. Lynch Professor, Department of Sociology and the Population Research Institute (DUPRI); Senior Fellow, Center for the Study of Aging and Human Development
Duke University
Mark Western's picture Mark Western Professor of Sociology; Director of the Institute for Social Science Research; Chief Investigator in the Australian Research Council Centre of Excellence for Children and Families Over the Life Course
The University of Queensland

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Income And Wealth - Other Research

Title Author Media
How Much Protection Does a College Degree Afford? The Impact of the Recession on Recent College Graduates The Pew Charitable Trusts

How Much Protection Does a College Degree Afford? The Impact of the Recession on Recent College Graduates

Author: The Pew Charitable Trusts
Publisher: The Pew Charitable Trusts
Date: 01/2013

Past research from Pew’s Economic Mobility Project has shown the power of a college education to both promote upward mobility and prevent downward mobility. The chances of moving from the bottom of the family income ladder all the way to the top are three times greater for someone with a college degree than for someone without one. Moreover, when compared with their less-credentialed counterparts, college graduates have been able to count on much higher earnings and lower unemployment rates. Even during the Great Recession, college graduates maintained higher rates of employment and higher earnings compared with less educated adults. However, the question of how recent college graduates have fared has remained largely unexamined, and many in the popular media have suggested that the advantageous market situation of college graduates is beginning to unravel under the pressure of the economic downturn. This study examines whether a college degree protected these recent graduates from a range of poor employment outcomes during the recession, including unemployment, low-skill jobs, and lesser wages.

Earnings Inequality and Mobility in the United States: Evidence from Social Security Data since 1937 Wojciech, Kopczuk, Emmanuel Saez and Jae Song

Earnings Inequality and Mobility in the United States: Evidence from Social Security Data since 1937

Author: Wojciech, Kopczuk, Emmanuel Saez and Jae Song
Publisher:
Date: 12/2010
The Race Between Education and Technology Goldin, Claudia, Lawrence F. Katz

The Race Between Education and Technology

Author: Goldin, Claudia, Lawrence F. Katz
Publisher: Harvard University Press
Date: 03/2010
Rousseau: A Free Community of Equals Joshua Cohen

Rousseau: A Free Community of Equals

Author: Joshua Cohen
Publisher: Oxford University Press
Date: 01/2010

In famously beautiful and laconic prose, Jean- Jacques Rousseau presents us a forceful picture of a democratic society, in which we live together as free and equal, and our politics focuses on the common good. In Rousseau: Free Community of Equals Joshua Cohen explains how the values of freedom, equality, and community all work together as parts of the democratic ideal expressed in Rousseau's conception of the ‘society of the general will'. The book also explains Rousseau's anti-Augustinian and anti-Hobbesian idea that we are naturally good, shows why Rousseau thinks it is reasonable for us to endorse that idea, and discusses how our natural goodness might make a free community of equals possible for us. Cohen examines in detail Rousseau's picture of the institutions of a democratic society: why he emphasized the importance of political participation, how he argued against extreme inequalities, and what led him to embrace a civil religion as necessary for the society of the general will. This book provides an analytical and critical appraisal of Rousseau's political thought that, while frank about its limits, also explains its enduring power.

Immigration and Inequality David Card

Immigration and Inequality

Author: David Card
Publisher: NBER
Date: 01/2009