Sunday, December 16, 2018

All studies find that income inequality rose after 1979, but common perceptions that all income gain went to the top 10 percent and middle class incomes stagnated (or even declined) are wrong

How Different Studies Measure Income Inequality in the US. Stephen J. Rose
Urban Institute, December 2018, https://www.urban.org/sites/default/files/publication/99455/how_different_studies_measure_income_inequality.pdf

The results from at least four studies were compared for three measures of income change: change in median incomes, share of growth captured by the top 10 percent, and the changing income share of  the top 1 percent. In all cases, Piketty and Saez (2003) were the outlier, showing the most increased inequality. And in all three measures of income change , Piketty, Saez, and Zucman (2018) found much less growth in income inequality than Piketty and Saez (2003).

This brief does a meta-analysis of different findings to estimate a “consensus” level of change...I find that instead of stagnating, real median incomes grew by just over 40 percent (1 percent a year) from  1979 to 2014;  the top 10 percent of the income ladder captured 45 percent of income growth from 1979 to  2014; and the share of the top 1 percent grew 3.5 percentage points.

All studies find that income inequality rose after 1979, but common perceptions that all income gain went to the top 10 percent and middle class incomes stagnated (or even declined) are wrong.

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