econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 11 July 2016

How Has Income Inequality Changed Over The Years?

from the St Louis Fed

Income inequality has been rising in the U.S. since World War II and reached its highest level since the 1920s in 2013, according to an article in The Regional Economist.

Assistant Vice President Michael Owyang and Senior Research Associate Hannah Shell noted that economists Thomas Piketty and Emmanuel Saez found that income inequality peaked in the 1920s, then decreased after the Great Depression.1 Top capital incomes had fallen and were unable to recover.

Using a different dataset than Piketty and Saez, Owyang and Shell examined trends in income inequality since 1947. They found that income inequality as measured by the Gini coefficient was relatively low from the start of their study through the early 1970s. (A Gini coefficient of 0 means incomes are perfectly equal, and 1 means incomes are perfectly unequal. Over this period, the Gini coefficient was flat or declining.)

That changed in the 1970s, when wages among the highest earners grew faster than wages for everyone else. The authors found that the Gini coefficient grew from 0.394 in 1970 to 0.482 in 2013. (For a figure showing the changes, see The Regional Economist article "Measuring Trends in Income Inequality.") Regarding wage growth among different earning groups, the authors cited a Congressional Budget Office report showing that:

  • Market income growth for everyone but the top 20 percent of earners averaged 16 percent between 1979 and 2011.

  • Among the top 20 percent, but excluding the top 1 percent, market income grew 56 percent.

  • The top 1 percent saw growth of 174 percent.2

Effects of the Great Recession on Income Inequality

While income inequality continued to rise after the 1970s, the 2001 and 2007-09 recessions caused top incomes to fall sharply. However, these losses were temporary. Owyang and Shell noted that the incomes of the top 1 percent captured about two-thirds of overall income growth during the period 2002-07, according to Piketty and Saez.

The authors wrote: "Further, even though top incomes fell 36.3 percent in the 2007-09 recession, the incomes of the bottom 99 percent also decreased 11.6 percent. This decrease is the largest two-year fall in the incomes of the bottom 99 percent since the Great Depression."

It's important to note that growth from 2013 to 2014 was more equal. Owyang and Shell noted that the incomes of the bottom 99 percent grew 3.3 percent, the highest in more than 10 years. It also means the Gini coefficient on household income decreased slightly, the first nonrecession decrease since 1998.

Conclusion

The authors concluded that economists have found that, in 2013, income inequality reached its highest level since the 1920s. They wrote: "Understanding the facts about inequality is the first step in assessing what can and should be done."

Notes and References

1 Piketty, Thomas; and Saez, Emmanuel. "Income Inequality in the United States, 1913-1998." The Quarterly Journal of Economics, Vol. 118, No. 1, 2003, pp. 1-39.

2 "The Distribution of Household Income and Federal Taxes, 2011." Congress of the United States: Congressional Budget Office. November 2014.

Additional Resources

Source

https://www.stlouisfed.org/on-the-economy/2016/june/how-has-income-inequality-changed-years

Disclaimer

Views expressed are not necessarily those of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
The Expected Effects of Petitions to Improve the Monetary System
Energy and Falling Productivity
News Blog
Early Headlines: Asia Stocks Mixed, Europa Water Plumes, All About The Debate, Putin Reacts To Debate, Oblivious Students, India Rocket Success, China Profits Surge And More
September 26, 2016 Weather and Climate Report - Not Quite the Camino Real
The Dominant Forces In The U.S. Gun Market
69 Percent Of Americans Have Less Than One Thousand Dollars In Savings
Average Gasoline Prices for Week Ending 26 September 2016 Unchanged
Genetic Studies Reveal Diversity Of Early Human Populations - And Pin Down When We Left Africa
Earnings And Economic Reports: Week Starting 26 September 2016
TV Matches Aren't All That Important And Trump's Less Trusted
What We Read Today 26 September 2016
Why Mosquitoes Bite Some People
September 2016 Texas Manufacturing Survey Improves Further Into Expansion.
August 2016 New Home Sales Decline On Lower Median Sales Prices.
U.S. Real Wage Growth: Fast Out Of The Starting Blocks - Part 1 Of 2
Investing Blog
Monday Morning Call 26 September
We're Back Here We Started
Opinion Blog
Housing Inflation- A Simple Case Of Supply And Demand Exacerbated By Low Rates
Heading For A Fall? With Summer Over, Europe Must Face Up To Its Mounting Crises
Precious Metals Blog
War On Cash Turns To $20, $50, And $100 Bills
Live Markets
26Sep2016 Market Close: Wall Street Remained Down Ahead Of Tonight's Presidential Debate And OPEC's Meeting Later This Week, WTI Crude Falls Back To The 45 Handle, Gold Also Falls Off Session Highs
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved