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
Three Worlds of Inequality Kim A. Weeden , David B. Grusky

Three Worlds of Inequality

Author: Kim A. Weeden , David B. Grusky
Publisher: The University of Chicago Press
Date: 05/2012

Recent inequality scholarship fixates on trends in the amount of inequality and largely ignores trends in the form of inequality. The authors describe three ideal-typical inequality regimes (big-class, microclass, and gradational) and identify the mechanisms driving a shift toward or away from each of them. Using GSS and CPS data on 39 measures of life chances, attitudes, and behaviors, the authors find that big-class inequality is in decline whereas microclass inequality has remained stable. Moreover, big classes are simplifying into largely economic aggregates, whereas microclasses remain more complicated moral configurations that cannot be understood in terms of economic standing.


What to do about Inequality David Grusky

What to do about Inequality

Author: David Grusky
Date: 03/2012

If we’re serious about reducing inequality, we need to do more than raise taxes on the rich. We need to correct the market failures in labor and education that generate it.



The Widening Academic Achievement Gap Between the Rich and the Poor: New Evidence and Possible Explanations Sean F. Reardon

The Widening Academic Achievement Gap Between the Rich and the Poor: New Evidence and Possible Explanations

Author: Sean F. Reardon
Publisher: Russell Sage Foundation Press
Date: 07/2011

In this chapter I examine whether and how the relationship between family socioeconomic characteristics and academic achievement has changed during the last fifty years. In particular, I investigate the extent to which the rising income inequality of the last four decades has been paralleled by a similar increase in the income achievement gradient. As the income gap between high- and low-income families has widened, has the achievement gap between children in high- and low-income families also widened? The answer, in brief, is yes. The achievement gap between children from high- and low-income families is roughly 30 to 40 percent larger among children born in 2001 than among those born twenty-five years earlier. In fact, it appears that the income achievement gap has been growing for at least fifty years, though the data are less certain for cohorts of children born before 1970. In this chapter, I describe and discuss these trends in some detail. In addition to the key finding that the income achievement gap appears to have widened substantially, there are a number of other important findings. First, the income achievement gap (defined here as the average achievement difference between a child from a family at the 90th percentile of the family income distribution and a child from a family at the 10th percentile) is now nearly twice as large as the black-white achievement gap. Fifty years ago, in contrast, the black-white gap was one and a half to two times as large as the income gap. Second, as Greg Duncan and Katherine Magnuson note in chapter 3 of this volume, the income achievement gap is large when children enter kindergarten and does not appear to grow (or narrow) appreciably as children progress through school. Third, although rising income inequality may play a role in the growing income achievement gap, it does not appear to be the dominant factor. The gap appears to have grown at least partly because of an increase in the association between family income and children's academic achievement for families above the median income level: a given difference in family incomes now corresponds to a 30 to 60 percent larger difference in achievement than it did for children born in the 1970s. Moreover, evidence from other studies suggests that this may be in part a result of increasing parental investment in children's cognitive development. Finally, the growing income achievement gap does not appear to be a result of a growing achievement gap between children with highly and less-educated parents. Indeed, the relationship between parental education and children's achievement has remained relatively stable during the last fifty years, whereas the relationship between income and achievement has grown sharply. Family income is now nearly as strong as parental education in predicting children's achievement.

A Multigenerational View on Inequality Robert D. Mare

A Multigenerational View on Inequality

Author: Robert D. Mare
Publisher: Springer US
Date: 02/2011

The study of intergenerational mobility and most population research are governed by a two-generation (parent-to-offspring) view of intergenerational influence, to the neglect of the effects of grandparents and other ancestors and nonresident contemporary kin. While appropriate for some populations in some periods, this perspective may omit important sources of intergenerational continuity of family-based social inequality. Social institutions, which transcend individual lives, help support multigenerational influence, particularly at the extreme top and bottom of the social hierarchy, but to some extent in the middle as well. Multigenerational influence also works through demographic processes because families influence subsequent generations through differential fertility and survival, migration, and marriage patterns, as well as through direct transmission of socioeconomic rewards, statuses, and positions. Future research should attend more closely to multigenerational effects; to the tandem nature of demographic and socioeconomic reproduction; and to data, measures, and models that transcend coresident nuclear families.


The Sociology of Economic Life Richard Swedberg, Mark Granovetter

The Sociology of Economic Life

Author: Richard Swedberg, Mark Granovetter
Publisher: Westview Press
Date: 01/2011

In recent years, sociologists have taken up a fruitful examination of institutions such as capital, labor, and product markets; industrial organization; and stock exchanges. Compared to earlier traditions of economic sociology, recent work shows more interest in phenomena usually studied exclusively by economists. At the same time, recent work challenges the adequacy of the neoclassical model.

In The Sociology of Economic Life, editors Granovetter and Swedberg incorporate classic and contemporary readings in economic sociology and related disciplines to provide students with a broad understanding of the many dimensions of economic life. A thorough and accessible introduction by the editors traces the history of thought in the field and assesses recent advances and future trends. The third edition is substantially revised and updated with eight new chapters, including original contributions from some of the field’s leading scholars that explain cutting-edge research and critically review the essential scholarship in the field.


income and wealth - CPI Affiliates

Nathaniel Hendren's picture Nathaniel Hendren Assistant Professor of Economics
Harvard University
Paul Beaudry Professor
University of British Columbia
John Goldthorpe's picture John Goldthorpe Emeritus Fellow, Sociology
Nuffield College
Paul M. De Graaf's picture Paul M. De Graaf Professor of Cross-national and Longitudinal Analyzes of Socio-cultural processes
University of Tilburg
John Mirowsky's picture John Mirowsky Professor of Sociology, Emeritus
University of Texas at Austin


Income And Wealth - Other Research

Title Author Media
From Mill Town to Board Room: The Rise of Women’s Paid Labor Dora L. Costa

From Mill Town to Board Room: The Rise of Women’s Paid Labor

Author: Dora L. Costa
Publisher: Journal of Economic Perspectives
Date: 03/2000
The Transition to Home Ownership and the Black-White Wealth Gap Charles, Kerwin Kofi, Erik Hurst

The Transition to Home Ownership and the Black-White Wealth Gap

Author: Charles, Kerwin Kofi, Erik Hurst
Date: 03/2000
America Unequal Sheldon Danziger and Peter Gottschalk

America Unequal

Author: Sheldon Danziger and Peter Gottschalk
Publisher: Harvard University Press
Investment in Human Capital and Personal Income Distribution Mincer, Jacob.

Investment in Human Capital and Personal Income Distribution

Author: Mincer, Jacob.
Publisher: Journal of Political Economy
Between Class and Market Bruce Western

Between Class and Market

Author: Bruce Western
Publisher: Princeton University Press

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