More Unequal We Stand? Inequality Dynamics in the United States, 1967–2021

Jonathan Heathcote, Fabrizio Perri, Giovanni L. Violante and Lichen Zhang ()
Additional contact information
Lichen Zhang: https://www.hkubs.hku.hk/people/lichen-zhang/

No 648, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: Heathcote et al. (2010) conducted an empirical analysis of several dimensions of inequality in the United States over the years 1967-2006, using publicly-available survey data. This paper expands the analysis, and extends it to 2021. We find that since the early 2000s, the college wage premium has stopped growing, and the race wage gap has stalled. However, the gender wage gap has kept shrinking. Both individual- and household-level income inequality have continued to rise at the top, while the cyclical component of inequality dominates dynamics below the median. Inequality in consumption expenditures has remained remarkably stable over time. Income pooling within the family and redistribution by the government have enormous impacts on the dynamics of household-level inequality, with the role of the family diminishing and that of the government growing over time. In particular, largely due to generous government transfers, the COVID recession has been the first downturn in fifty years in which inequality in disposable income and consumption actually declined.

Keywords: Surveys; Wealth; Earnings; Wages; Recessions; Consumption; Income; Redistribution; Hours worked; Inequality (search for similar items in EconPapers)
JEL-codes: D12 D31 E21 H53 J31 (search for similar items in EconPapers)
Date: 2023-08-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.minneapolisfed.org/research/sr/sr648.pdf (application/pdf)

Related works:
Working Paper: More Unequal We Stand? Inequality Dynamics in the United States 1967-2021 (2023)
Working Paper: More Unequal We Stand? Inequality Dynamics in the United States 1967–2021 (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:96530

DOI: 10.21034/sr.648

Access Statistics for this paper

More papers in Staff Report from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().