Decomposing trends in income volatility: The "wild ride" at the top and bottom

Bradley Hardy, James P. Ziliak

Research output: Contribution to journalArticlepeer-review

72 Scopus citations

Abstract

We use 2-year panels from the Current Population Survey to provide a detailed accounting of family income volatility from 1980 to 2009. Volatility doubled overall, and the increase was most pronounced among the top 1% of the income distribution, but in any given year the level of volatility among the bottom 10% exceeds that of the top. The increased volatility comes from higher instability of head and spouse earnings, other nonlabor income, and from reduced covariance between these income sources with the tax system. This suggests that current tax policy is less effective in mitigating income shocks than previous decades. (JEL J31, I30)

Original languageEnglish
Pages (from-to)459-476
Number of pages18
JournalEconomic Inquiry
Volume52
Issue number1
DOIs
StatePublished - Jan 2014

ASJC Scopus subject areas

  • General Business, Management and Accounting
  • Economics and Econometrics

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