Tuesday, December 18, 2007

More on Income Inequality

My posts below on the distribution of income over time in US does not take into account a number of things.

One of those is that though the piece of the pie for the bottom 90% of the population in the US has grown smaller, the pie as a whole has grown larger. I am wadding through the CBO data to find out more on how to best represent this issue. I'll post more on it later.

The other thing that the CBO data released last week does not address is income mobility. The Center for American Progress released a study last year on income inequality and mobility in the US.

Some highlights:
By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.

Since 1990-91, there has been an increase in the share of households who experienced significant downward short-term mobility. The share that saw their incomes decline by $20,000 or more (in real terms) rose from 13.0 percent in 1990-91 to 14.8 percent in 1997-98 to 16.6 percent in 2003-04.
And the middle class has more income volatility:
The middle class is experiencing more insecurity of income, while the top decile is experiencing less. From 1997-98 to 2003-04, the increase in downward short-term mobility was driven by the experiences of middle-class households (those earning between $34,510 and $89,300 in 2004 dollars). Households in the top quintile saw no increase in downward short-term mobility, and households in the top decile ($122,880 and up) saw a reduction in the frequency of large negative income shocks.
There is a lot more at the CfAP website, including race as a significant factor on upward mobility. Worth reading.

1 comment:

evision said...