4/7/13

Money income inequality in the USA has not been changing since 1947 in all age groups


The Census Bureau reports money income distribution measured in the annual Current Population Surveys. Figure 1 shows the portion of population with income in various age groups. From 1947 to 1977, the portion with income grows linearly. In 1947, only 64.4% of the working age population in the USA had incomes according to the CB definition. In 1990, the portion peaked at 93.3%. The group between 15 and 24 years of age has a limited time span and demonstrates a dramatic fall since 1994.  In other age groups, the portion also falls since 1994, but at a slower rate.  In 1994, a new income definition and measuring procedure was introduced. The CB reports on the CPS results only from 1994. Before, only scanned copies of paper reports were available.

The estimates of money income inequality depend on income definition and thus on the portion of population with income.  Figure 2 depicts the evolution of Gini ratio in the same age groups, which reveals a similar growth between 1947 and 1977. When the change in the portion of population with income is compensated in the past, the Gini ratios in Figure 2 are likely to be constant since 1947.

The level of (money) income inequality in various age groups is practically constant over time.

It is worth noting that the jump in the portions of population with income between 1977 and 1979 did affect the Gini estimates and a step of 0.02 is observed in all groups above 25 years of age. The youngest group and the overall estimate did not show any change.


Figure 1. The portion of population with income in various age groups as reported by the Census Bureau.
 
Figure 2. Age dependent Gini ratio since 1947 as measured from personal income distributions published by the Census Bureau. “With income” – the Gini ratio for the whole working age population with income.

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