Inequality and Mobility over the Past Half Century using Income, Consumption and Wealth,This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.
Chapter in forthcoming NBER book Measuring Distribution and Mobility of Income and Wealth, Raj Chetty, John N. Friedman, Janet C. Gornick, Barry Johnson, and Arthur Kennickell, editors We use the Panel Study of Income Dynamics (PSID), which has followed individuals and families over almost five decades. The PSID has been the benchmark source for measuring both intra- and inter-generational mobility, and it is the only data set with income, consumption and wealth. Using income, consumption and wealth provides a more complete picture of the inequality and mobility of individuals and families. We find that overall resources increase from our oldest cohorts to our youngest cohorts, spanning those born from 1916-1925 to those born from 1976-1985 at least for income and consumption. This emerges at the mean and the median and above, while there have been little tangible improvements across cohorts at the 10th percentile. While resources are generally improving, inequality is increasing across cohorts at the same age, and intra-generational mobility is falling or flat. We put inequality and mobility together to show that intra-generational mobility is lower when that cohort is experiencing higher inequality. We are the first to show this intra-generational Great Gatsby Curve, matching the finding that countries with higher inequality experience lower inter-generational mobility. This paper is available as PDF (2156 K) or via email
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