Abstract
We examine trends in household disposable income inequality and potential mechanisms shaping inequality through changes to work, wages, earnings, marriage, and the tax and transfer system in the United States over the nearly five-decade period from 1975 to 2022. Overall after-tax and transfer income inequality increased more than 25 per cent since the mid-1970s, and by as much as 50 per cent when comparing the 90th and 10th percentiles. While there has been substantial upgrading in formal education credentials among both men and women – an inequality-reducing development – those with fewer credentials have increasingly been less likely to work and marry, each of which could result in higher inequality. The latter effects are exacerbated by those selecting into marriage and cohabitation being more likely to partner with those holding similar educational credentials and earning power. Moreover, the decline in work among the less skilled coincided with the transformation of the safety net to rewarding work. These demographic and policy changes have resulted in a pulling apart of the US income distribution.
Original language | English |
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Pages (from-to) | 155-171 |
Number of pages | 17 |
Journal | Fiscal Studies |
Volume | 45 |
Issue number | 2 |
DOIs | |
State | Published - Jun 2024 |
Bibliographical note
Publisher Copyright:© 2024 The Author(s). Fiscal Studies published by John Wiley & Sons Ltd on behalf of Institute for Fiscal Studies.
Keywords
- employment
- income transfers
- marriage
- taxes
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics