Gornick, Janet and Milanovic, Branko and Johnson, Nathaniel (2017): American Exceptionalism in Market Income Inequality: An Analysis Based on Microdata from the Luxembourg Income Study (LIS) Database.
The US has exceptionally high inequality of disposable household income. Among working-age households (those with no persons over age 60), that high level of inequality is caused by a high level of market income inequality (i.e., income before taxes and transfers), paired with a moderate level of redistribution. In this paper, we look more deeply at market income inequality, focusing on its main component – labor income – across a group of 24 OECD countries. We disaggregate the working-age population into household types, defined by the number and gender of the household’s earners and the partnership and parenting status of its members. We concentrate on comparing US results with those of the other OECD countries. Our main finding is that high levels of labor income inequality in the US cut across diverse subgroups. We conclude that within-group inequality of labor incomes in the US is, in almost all groups, high by OECD standards. So it is neither an unusual household composition, nor unusually high mean labor incomes of some groups (nor indirectly, unusually low levels of redistribution), that explain high US disposable income inequality, but instead the fact that high and low labor incomes are universally spread across all household/demographic categories.
|Item Type:||MPRA Paper|
|Original Title:||American Exceptionalism in Market Income Inequality: An Analysis Based on Microdata from the Luxembourg Income Study (LIS) Database|
|Keywords:||Wage distribution, earnings distributions, income inequality|
|Subjects:||D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
D - Microeconomics > D3 - Distribution > D33 - Factor Income Distribution
|Depositing User:||Branko Milanovic|
|Date Deposited:||16 Feb 2017 00:46|
|Last Modified:||16 Feb 2017 00:46|
Brandolini, Andrea, and Timothy M. Smeeding (2006), “Patterns of Economic Inequality in Western Democracies: Some Facts on Levels and Trends”, Political Science and Politics, 39 (1), January, 21–26.
Gabaix, Xavier, and Augustin Landier (2008), “Why has CEO pay increased so much?”, Quarterly Journal of Economics, vol. 23, pp. 49-100.
Gornick, Janet C., and Branko Milanovic (2015), “Income Inequality in the United States in Cross-National Perspective: Redistribution Revisited”, LIS Research Center Brief, No. 1, May. Available at http://www.gc.cuny.edu/CUNY_GC/media/CUNY-Graduate-Center/PDF/Centers/LIS/LIS-Center-Research-Brief-1-2015.pdf
Mishel, Lawerence and Alyssa Davis (2015), “The CEOs make 300 times more than typical workers”, Economic Policy Institute Issue Brief No. 399, June 2015. Available at http://www.epi.org/files/2015/top-ceos-make-300-times-more-than-typical-workers.pdf
Mishel, Lawrence (2015), “Causes of wage stagnation”, Economic Policy Institute, January 6.
Organization for Economic Cooperation and Development, OECD (2011), Divided We Stand, Paris: OECD.
Piketty, Thomas (2014), Capital in the Twenty-First Century, Harvard University Press.
Piketty, Thomas, and Emmanuel Saez (2006), “The Evolution of Top Incomes: A Historical and International Perspective”, American Economic Review, 96 (2), May, 200–205.