The Distribution of Income and Wealth

Economic inequality has been a prominent and perennial concern in economics and public policy. The rise in inequality that occurred during the 1970s and early 1980s stimulated interest in the study of its causes and consequences. Experience from the 1990s suggests that economic growth and prosperity no longer dramatically reduce economic inequality. The persistent inequalities within nations and across nations raise several key issues that demand scholarship and innovative policies to aid in their resolution.

Recognizing this, the Levy Institute has maintained, since its inception, an active research program on the distribution of earnings, income, and wealth. Research in this area includes studies on the economic well-being of the elderly, public and private pensions, well-being over the life course, the role of assets in economic well-being, and the determinants of the accumulation of wealth.

It is widely recognized that existing official measures of economic well-being need to be improved in order to generate accurate cross-sectional and intertemporal comparisons. The picture of economic well-being can vary significantly depending on the measure used. Alternative measures are also crucially important for the formulation and evaluation of a wide variety of social and economic policies. The Levy Institute Measure of Economic Well-Being and related research is aimed at bridging this gap.

Program
The Levy Institute Measure of Economic Well-Being (LIMEW)

Research Group: James K. Galbraith, Edward N. Wolff, Dimitri B. Papadimitriou, Ajit Zacharias, Selcuk Eren, Thomas Masterson, Barry Bluestone, Robert Haveman, Christopher Jencks, Susan E. Mayer, Branko Milanovic, Jacques Silber, Barbara Wolfe

Program Publications
Policy Notes | June 2009 Who Gains from President Obama's Stimulus Package ... And How Much? In this Special Report, Levy scholars Ajit Zacharias, Thomas Masterson, and Kijong Kim provide a preliminary assessment of the 2009 American Recovery and Reinvestment Act (ARRA), a package of transfers and tax cuts that is expected to provide relief to low-income and vulnerable households especially hurt by the economic crisis, while at the same time supporting aggregate demand. By the administration’s estimate, ARRA will create or save approximately three and a half million jobs by the end of 2010; while the ameliorating impact of the stimulus plan on the employment situation is surely welcome, say the authors, the government could have achieved far more at the same cost by skewing the stimulus package toward outlays rather than tax cuts. [more] Special Report, June 12, 2009
Working Papers | June 2009 Distributional Impact of the American Recovery and Reinvestment Act Over the last two decades, those at the bottom of the income scale have seen their incomes stagnate, while those at the top have seen theirs skyrocket; without intervention, the recession that began in December 2007 was likely to exacerbate this trend. Will the American Recovery and Reinvestment Act of 2009 (ARRA) be able to keep the situation from getting worse for those at the bottom of the income scale? Will ARRA reverse the upward trend in inequality that we’ve seen in the recent past? The authors of this new working paper employ a microsimulation of ARRA to address these questions. [more] Working Paper No. 568
Working Papers | May 2009 Caste and Wealth Inequality in India In this paper, we conduct the novel exercise of analyzing the relationship between overall wealth inequality and caste divisions in India using nationally representative surveys on household wealth conducted during 1991–92 and 2002–03. According to our findings, the groups in India that are generally considered disadvantaged (known as Scheduled Castes or Scheduled Tribes) have, as one would expect, substantially lower wealth than the “forward” caste groups, while the Other Backward Classes and non-Hindus occupy positions in the middle. [more] Working Paper No. 566
LIMEW Reports | April 2009 New Estimates of Economic Inequality in America, 1959—2004 In this latest LIMEW report, the authors present new evidence on the pattern of economic inequality in the United States that indicates higher inequality in 2004 than in 1959. According to the LIMEW, there was a surge in inequality between 1989 and 2000 that reflects the large increase in income from wealth for the top rungs of the economic ladder; the principal factor behind the official measures was base income (consisting mainly of labor income). [more] LIMEW Report, April 2009
LIMEW Reports | February 2009 What Are the Long-Term Trends in Intergroup Economic Disparities? Over the last half century, government policy has had an important hand in alleviating disparities among population subgroups in the United States; for example, special tax treatment for families with children has meant an improvement in the well-being of single mothers, and Medicare and Social Security have been the driving force in improving well-being among the elderly. Thus, the measure of economic well-being used is critical in assessing changes in disparities between groups. [more] LIMEW Report, February 2009
LIMEW Reports | February 2009 Postwar Trends in Economic Well-Being in the United States,1959–2004 The Levy Institute Measure of Economic Well-Being (LIMEW) is a more comprehensive measure than either gross money income or extended income because it includes estimates of public consumption and household production, as well as the long-run benefits from the ownership of wealth. As a result, it provides a picture of economic well-being in the United States that is very different from the official measures. [more] LIMEW Report, February 2009
Working Papers | January 2009 Long-Term Trends in the Levy Institute Measure of Economic Well-Being (LIMEW), United States, 1959–2004 The motivation to construct the LIMEW in lieu of relying on the official measures of well-being is to provide a more comprehensive measure of economic inequality that will also show the disparities among key demographic groups. The authors of this new working paper show that the LIMEW provides a perspective on disparities among population subgroups that differs from the official measures, as well as differing time trends. [more] Working Paper No. 556
Working Papers | May 2008 Statistical Matching Using Propensity Scores This paper summarizes the background, type, logic, and working procedure of the statistical matching used in the Levy Institute Measure of Economic Well-Being (LIMEW) project to combine the various data sets used to produce the synthetic data set with which the LIMEW is constructed. The authors use the match between the 2001 Survey of Consumer Finances and the Annual Demographic Survey of the Current Population Survey data sets to demonstrate the procedure and results of the matching. [more] Working Paper No. 535
Working Papers | November 2007 Earnings Functions and the Measurement of the Determinants of Wage Dispersion This paper extends the famous Blinder and Oaxaca (1973) discrimination in several directions. First, the wage difference breakdown is not limited to two groups. [more] Working Paper No. 521
Working Papers | October 2007 What Are the Relative Macroeconomic Merits and Environmental Impacts of Direct Job Creation and Basic Income Guarantees? There is a body of literature that favors universal and unconditional public assurance policies over those that are targeted and means-tested. Two such proposals—the basic income proposal and job guarantees—are discussed here. [more] Working Paper No. 517
Working Papers | September 2007 Inequality of Life Chances and the Measurement of Social Immobility This paper begins by proposing two cardinal measures of inequality in life chances. Using as its database a matrix in which the lines correspond to the social category of parents and the columns to the income distribution of their children, it then highlights the importance of the marginal distributions when comparing social immobility within two populations. [more] Working Paper No. 513
Working Papers | June 2007 Recent Trends in Household Wealth in the United States I find here that the early 2000s witnessed both exploding debt and the middle-class squeeze. While median wealth grew briskly in the late 1990s, it fell slightly between 2001 and 2004, while the inequality of net worth increased slightly. [more] Working Paper No. 502
Working Papers | May 2007 Economic Perspectives on Aging The aging of the American population will be a critical public policy issue in the years ahead. This paper surveys the recent literature on the economics of aging, with a special emphasis on government spending on the aged. [more] Working Paper No. 500
LIMEW Reports | April 2007 How Well Off Are America’s Elderly? Given the aging of the American population and the widening gap between rich and poor—not to mention the controversy surrounding the future viability of Social Security—the economic welfare of the elderly is an extremely topical issue. This report provides a new look at America’s elderly, and shows that the official measures drastically understate their level of economic well-being. [more] LIMEW Report, April 2007
Working Papers | January 2007 Class Structure and Economic Inequality Existing empirical schemas of class structure do not specify the capitalist class in an adequate manner. We propose a schema in which the specification of capitalist households is based on wealth thresholds. [more] Working Paper No. 487
Book Series | December 2006 International Perspectives on Household Wealth The contributors to this comprehensive book compile and analyze the latest data available on household wealth using, as case studies, the United States, Canada, Germany, Italy, Sweden, and Finland during the 1990s and into the 21st century. The authors show that in the United States, trends are highlighted in terms of wealth holdings among the low-income population, along with changes in wealth polarization, racial differences in wealth holdings, and the dynamics of portfolio choices. [more] Book Series, December 2006
LIMEW Reports | December 2006 Wealth and Economic Inequality This report argues that wealth is an integral aspect of economic well-being. The authors combine income and net worth to demonstrate the importance of wealth inequalities in shaping overall economic inequality and defining the disparities among population subgroups. [more] LIMEW Report, December 2006
Working Papers | November 2006 Net Intergenerational Transfers from an Increase in Social Security Benefits When the age of death is uncertain, individuals will leave bequests–even if they have no desired bequests–simply because they will hold wealth against the possibility of living longer. Bequests are accidental. [more] Working Paper No. 482
Working Papers | November 2006 European Welfare State Regimes and Their Generosity toward the Elderly This paper examines the generosity of the European welfare state toward the elderly. It shows how various dimensions of the welfare regimes have changed during the past 10 to 15 years and how this evolution is related to the process of economic integration. [more] Working Paper No. 479
Working Papers | August 2006 The Adequacy of Retirement Resources among the Soon-to-Retire, 1983-2001 A central issue confronting soon-to-retire workers (those aged 47–64) is whether they will have command over enough resources (both private and public) to maintain a decent standard of living in retirement. Typically, the adequacy of projected retirement income is judged in relation to some absolute standard (for example, the poverty threshold) and preretirement income (“replacement rate”). [more] Working Paper No. 472
Working Papers | August 2006 Population Forecasts, Fiscal Policy, and Risk This paper describes how stochastic population forecasts are used to inform and analyze policies related to government spending on the elderly, mainly in the context of the industrialized nations. The paper first presents methods for making probabilistic forecasts of demographic rates, mortality, fertility, and immigration, and shows how these are combined to make stochastic forecasts of population number and composition, using forecasts of the U. [more] Working Paper No. 471
Working Papers | August 2006 Global Demographic Trends and Provisioning for the Future The world's population is aging. Virtually no nation is immune to this demographic trend and the challenges it brings for future generations. [more] Working Paper No. 468
Working Papers | August 2006 Net Government Expenditures and the Economic Well-Being of the Elderly in the United States, 1989-2001 We examine the economic well-being of the elderly, using the Levy Institute Measure of Economic Well-Being (LIMEW). Compared to the conventional measures of income, the LIMEW is a comprehensive measure that incorporates broader definitions of income from wealth, government expenditures, and taxes. [more] Working Paper No. 466
Working Papers | July 2006 Differing Prospects for Women and Men Although elderly men and women share many of the same problems as they age, their lives are likely to follow different courses. Women are more likely than men to live into old old-age and are more likely to spend part of their young old-age caring for husbands or parents. [more] Working Paper No. 464
Working Papers | July 2006 Working for a Good Retirement The choice of retirement age is the most important portfolio choice most workers will make. Drawing on the Urban Institute's Dynamic Simulation of Income model (DYNASIM3), this report examines how delaying retirement for nondisabled workers would affect individual retiree benefits, the solvency of the Social Security trust fund, and general revenues. [more] Working Paper No. 463
Working Papers | July 2006 Wage Growth and the Measurement of Social Security's Financial Condition Government spending on the elderly is projected to increase rapidly as the American population becomes older. As a result, many policymakers and budget analysts are concerned about the continued viability of entitlement programs such as Social Security. [more] Working Paper No. 461
Book Series | July 2006 The Distributional Effects of Government Spending and Taxation This book focuses on the distributional consequences of the public sector. It examines and documents, both theoretically and empirically, the effects of government spending and taxation on personal distribution, that is, on families and individuals. [more] Book Series, July 2006
Policy Notes | July 2006 The Burden of Aging Demographers and economists agree that we are aging—individually and collectively, nationally and globally. An aging population results from the twin demographic forces of fewer children per family and longer lives. [more] Policy Note 2006/5
Working Papers | June 2006 How Does Household Production Affect Earnings Inequality? Although income inequality has been studied extensively, relatively little attention has been paid to the role of household production. Economic theory predicts that households with less money income will produce more goods at home. [more] Working Paper No. 454
Working Papers | May 2006 Time and Money Time and money are basic commodities in the utility function and are substitutes in real terms. To a certain extent, having time and money is a matter of either/or, depending on individual preferences and budget constraints. [more] Working Paper No. 451
Working Papers | May 2006 The Temporal Welfare State: A Cross-national Comparison Welfare states contribute to people’s well-being in many different ways. Bringing all these contributions under a common metric is tricky. [more] Working Paper No. 449
Working Papers | May 2006 Household Wealth and the Measurement of Economic Well-Being in the United States The standard official measure of household economic well-being in the United States is gross money income. The general consensus is that such measures are limited because they ignore other crucial determinants of well-being. [more] Working Paper No. 447
Working Papers | February 2006 Government Effects on the Distribution of Income This paper is the overview chapter of an edited volume on “The Distributional Effects of Government Spending and Taxation.” The paper offers the author’s perspective on the government’s role as a redistributive agent. [more] Working Paper No. 442
Working Papers | February 2006 Parental Child Care in Single Parent, Cohabiting, and Married Couple Families This study uses time diary data from the 2003 American Time Use Survey and the United Kingdom Time Use Survey 2000 to examine the time that single, cohabiting, and married parents devote to caring for their children. Time spent in market work, in child care as a primary activity, and in child care as a passive activity are jointly modeled using a correlated, censored regression model. [more] Working Paper No. 440
Working Papers | February 2006 Where Do They Find the Time? Parents who undertake paid work are obliged to spend time away from their children, and to use nonparental childcare. This has given rise to concern that children are missing out on parental attention. [more] Working Paper No. 439
Working Papers | January 2006 Enhancing Livelihood Security through the National Employment Guarantee Act The National Rural Employment Guarantee Act of 2005 is a major development in the history of poverty reduction strategies and rural development policies in India. Though the successful passage of the Act is due to the long struggle by NGOs, academics, and some policymakers, its successful implementation is a much bigger challenge. [more] Working Paper No. 437
Working Papers | January 2006 Time to Eat Eating requires the raw food materials that make up meals and also the time devoted to buying food, preparing meals and eating them, and cleaning up afterwards. Using time-diary and expenditure data for the United States for 1985 and 2003, I examine how income and time prices affect both time and goods input into this household-produced commodity. [more] Working Paper No. 434
LIMEW Reports | May 2005 Interim Report This interim report compares the LIMEW and official measures of economic well-being for 1989–2002, a period marked by the economic boom of the late 1990s and a mild recession in 2001–02. All measures show that the well-being of the average American household was significantly higher in 2000 than in 1989, with most of the improvement occurring in the latter half of the 1990s. [more] LIMEW Report, May 2005
Working Papers | March 2005 Is the Equalizing Effect of Retirement Wealth Wearing Off? Retirement wealth is often viewed as a great equalizer, offsetting the inequality in standard household net worth. One of the most dramatic changes in the retirement income system over the last two decades has been a decline in traditional Defined Benefit (DB) pension plans and a sharp rise in Defined Contribution (DC) pensions. [more] Working Paper No. 420
LIMEW Reports | March 2005 Economic Well-Being in U.S. Regions and the Red and Blue States This report analyzes regional aspects of economic well-being according to four regions identified by the United States Census Bureau: the Northeast, Midwest, South, and West. Using the official measures and the Levy Institute Measure of Economic Well-Being (LIMEW), the authors examine how the average American household fared from 1989 to 2001 and discuss disparities in well-being among population subgroups and across regions. [more] LIMEW Report, March 2005
Working Papers | January 2005 Occupational and Industrial Mobility in the United States 1969–93 Using the Panel Study of Income Dynamics, we investigate occupational and industrial mobility of individuals over the 1969–80 and 1981–93 periods in the United States. We find that workers changed both occupations and industries more frequently in the later period. [more] Working Paper No. 416
LIMEW Reports | December 2004 How Much Does Public Consumption Matter for Well-Being? This report supplements previous findings of the Levy Institute Measure of Economic Well-Being (LIMEW) research project within our program on the distribution of income and wealth. Some readers have questioned the sensitivity of our estimates in view of our imputation techniques. [more] LIMEW Report, December 2004
Working Papers | November 2004 Household Wealth Distribution in Italy in the 1990s This paper describes the composition and distribution of household wealth in Italy. First, the evolution of household portfolios over the last 40 years is described on the basis of newly reconstructed aggregate balance sheets. [more] Working Paper No. 414
LIMEW Reports | September 2004 How Much Does Wealth Matter for Well-Being? Economic well-being refers to the command or access by members of a household over the goods and services produced in a modern market economy during a given period of time.The Levy Institute Measure of Economic Well-Being (LIMEW) is a comprehensive measure that is constructed as the sum of the following components: base money income (gross money income minus property income and government cash transfers), employer contributions for health insurance, income from wealth, net government expenditures (transfers and public consumption, net of taxes), and the value of household production. [more] LIMEW Report, September 2004
Public Policy Briefs | June 2004 The War on Poverty after 40 Years Twenty to 25 years ago, a debate was under way in academe and in the popular press over the War on Poverty. One group of scholars argued that the war, initiated by Presidents Kennedy and Johnson, had been lost, owing to the inherent ineffectiveness of government welfare programs. [more] Public Policy Brief No. 78, 2004
Public Policy Brief Highlights | June 2004 The War on Poverty after 40 Years Twenty to 25 years ago, a debate was under way in academe and in the popular press over the War on Poverty. One group of scholars argued that the war, initiated by Presidents Kennedy and Johnson, had been lost, owing to the inherent ineffectiveness of government welfare programs. [more] Public Policy Brief Highlights No. 78A, 2004
Book Series | June 2004 What Has Happened to the Quality of Life in the Advanced Industrialized Nations? Throughout the 1990s the United States expanded its lead over other advanced industrial nations in terms of conventionally measured per capita income. However, it is not clear that welfare levels in America have grown concomitantly with per capita income, nor that Americans are necessarily better off than citizens of other advanced countries. [more] Book Series, June 2004
LIMEW Reports | May 2004 Levy Institute Measure of Economic Well-Being This report presents the latest findings of the Levy Institute Measure of Economic Well-Being (LIMEW) research project within our program on the distribution of income and wealth. It enhances previous findings about economic well-being and inequality in the United States by extending our analysis to include additional years, 1995 and 2001, and by comparing our results with the Census Bureau's most comprehensive measure of a household's command over commodities, which we refer to as extended income (EI). [more] LIMEW Report, May 2004
Working Papers | May 2004 Changes in Household Wealth in the 1980s and 1990s in the U.S. I find that despite slow growth in income over the 1990s, there have been marked improvements in the wealth position of average families. Both mean and median wealth grew briskly in the late 1990s. [more] Working Paper No. 407
Public Policy Brief Highlights | April 2004 Asset Poverty in the United States Economic growth and a rising stock market in the 1990s gave the impression that everyone was accumulating wealth and asset poverty rates were declining. The impression was supported by the official, income-based poverty measure, which exhibited a sharp decline. [more] Public Policy Brief Highlights No. 76A, 2004
Working Papers | April 2004 The "War on Poverty" after 40 Years Hyman Minsky is best known for his work in the area of financial economics, and especially for his financial instability hypothesis. In recent years, some authors have also recognized his advocacy of the "employer of last resort" as part of his "big government" intervention to help maintain stability. [more] Working Paper No. 404
Public Policy Briefs | April 2004 Asset Poverty in the United States Economic growth and a rising stock market in the 1990s gave the impression that everyone was accumulating wealth and asset poverty rates were declining. The impression was supported by the official, income-based poverty measure, which exhibited a sharp decline. [more] Public Policy Brief No. 76, 2004
LIMEW Reports | February 2004 Levy Institute Measure of Economic Well-Being The Levy Economics Institute has, since its inception, maintained an active research program on the distribution of earnings, income, and wealth. [more] LIMEW Report, February 2004
Working Papers | January 2004 Inequality of the Distribution of Personal Wealth in Germany 1973–1998 This paper reports on trends in inequality of the distribution of household disposable wealth in West Germany from 1973 to 1998, and compares the changes in the size distribution of household disposable wealth in West and East Germany between 1993 and 1998. The empirical findings are based on several cross sections of the Income and Consumption Survey (ICS), which is conducted every five years by the German Federal Statistical Office. [more] Working Paper No. 398
LIMEW Reports | December 2003 Levy Institute Measure of Economic Well-Being The Levy Economics Institute has, since its inception, maintained an active research program on the distribution of earnings, income, and wealth. [more] LIMEW Report, December 2003
Working Papers | November 2003 The Evolution of Wealth Inequality in Canada Using data from the Assets and Debts Survey of 1984 and the Survey of Financial Security of 1999, the authors document the evolution of wealth inequality in Canada between 1984 and 1999. Among their principal findings: wealth inequality increased overall, and was associated with substantial declines in real average and median wealth for recent immigrants and young couples with children. [more] Working Paper No. 396
Working Papers | November 2003 On Household Wealth Trends in Sweden over the 1990s Influenced by major tax reform in the early 1990s and by the exceptional boom in the stock market at the end of that decade, overall wealth in Swedish households increased. So did wealth inequality. [more] Working Paper No. 395
Working Papers | November 2003 Wealth Transfer Taxation The purpose of this paper is to survey the theoretical literature on wealth transfer taxation. The focus is normative: we are looking at the design of an optimal tax structure from the standpoint of both equity and efficiency. [more] Working Paper No. 394
Working Papers | November 2003 A Rolling Tide From 1989 to 2001, wealth in real terms increased overall among families in the United States. But characterizing distributional changes is much more complex; it depends on the specific questions asked. [more] Working Paper No. 393
Working Papers | September 2003 Savings of Entrepreneurs Previous work on entrepreneurship and wealth has documented that entrepreneurial households are wealthier and have higher wealth mobility. However, the literature has not paid attention to the components of wealth change. [more] Working Paper No. 390
Working Papers | September 2003 Do Workers with Low Lifetime Earnings Really Have Low Earnings Every Year? When it comes to retirement income policy, there is a general perception that workers have full 40-year working careers before retiring. Further, it is generally assumed that workers with low lifetime earnings have low earnings in each year during a normal working career. [more] Working Paper No. 389
Policy Notes | June 2003 Caring for a Large Geriatric Generation The time has more than come to begin planning seriously for the aging of the baby-boom generation. The need for planning goes beyond concerns about the solvency of Social Security and Medicare. [more] Policy Note 2003/3
Working Papers | December 2002 The Persistence of Hardship over the Life Course This paper focuses on the persistence of hardship from middle age to old age. Proposed status maintenance models suggest that stratification of economic status occurs over the life course (for example, little mobility is seen within the income distribution). [more] Working Paper No. 367
Working Papers | December 2002 Is There an American Way of Aging? This study examines income dynamics during individuals' first 12 years of retirement. Two questions are asked: (1) Are the economic experiences of the elderly in the United States unique, or are they similar to those of the elderly in Germany? and (2) What is the role of Social Security in shaping these economic experiences? The results show major differences in the experiences of retired individuals as they age in the respective countries. [more] Working Paper No. 365
Working Papers | October 2002 Asset Poverty in the United States, 1984–1999 Using PSID data for the years 1984 to 1999, we estimate the level and severity of asset poverty. Our results indicate that the share of asset-poor households remained almost the same and the severity of poverty increased during this period, despite the growth in the economy and the financial markets. [more] Working Paper No. 356
Working Papers | August 2002 Race, Ethnicity, and the Gender-Poverty Gap We use data from the Current Population Survey (CPS 1994-2001) to document the relationship between gender-specific demographic variations and the gender-poverty gap among eight racial/ethnic groups. We find that black and Puerto Rican women experience a double disadvantage owing to being both women and members of a minority group. [more] Working Paper No. 351
Public Policy Brief Highlights | November 2001 Racial Wealth Disparities Despite decades of policies aimed at improving the economic position of African Americans in terms of relative income and earnings, they remain substantially behind whites. The research presented in this brief indicates that the wealth gap is even more staggering. [more] Public Policy Brief Highlights No. 66A, 2001
Public Policy Briefs | November 2001 Racial Wealth Disparities Despite decades of policies aimed at improving the economic position of African Americans in terms of relative income and earnings, they remain substantially behind whites. The research presented in this brief indicates that the wealth gap is even more staggering. [more] Public Policy Brief No. 66, 2001
Working Papers | November 2001 Israeli Attitudes about Inter Vivos Transfers Using data from the 1994–95 Survey of Families in Israel—which includes 1,607 urban Jewish respondents interviewed on topics relating to work behavior, household income, wealth, assistance received from parents and given to children, and views about financial responsibilities between parents and children—the authors examined attitudes in Israel about intergenerational assistance and the effects of these attitudes on transfer decisions by parents. Views about parental obligations are likely not independent of a country's economic and social organization. [more] Working Paper No. 341
Working Papers | June 2001 Contradictions Coming Home to Roost? It is widely believed that the current economic slowdown will be mild and temporary in nature, the result of a momentary wobble in the stock market. This paper argues that the slowdown stands to be more deep-seated, owing to contradictions in the existing process of aggregate demand generation. [more] Working Paper No. 332
Working Papers | May 2001 Is Wealth Becoming More Polarized in the United States? Recent work has documented a rising degree of wealth inequality in the United States between 1983 and 1998. In this paper we look at another dimension of the distribution: polarization. [more] Working Paper No. 330
Working Papers | January 2001 Testing Profit Rate Equalization in the U.S. Manufacturing Sector Long-run differentials in interindustrial profitability are relevant for several areas of theoretical and applied economics because they characterize the overall nature of competition in a capitalist economy. This paper argues that the existing empirical models of competition in the industrial organization literature suffer from serious flaws. [more] Working Paper No. 321
Public Policy Briefs | December 2000 Is There a Skills Crisis? Despite seven years of economic growth a large gap exists in the wages earned by workers at the top of the earnings scale and those at the bottom. The leading explanation for this growth in wage inequality continues to be the skills-mismatch theory. [more] Public Policy Brief No. 62, 2000
Public Policy Brief Highlights | December 2000 Is There a Skills Crisis? Despite seven years of economic growth a large gap exists in the wages earned by workers at the top of the earnings scale and those at the bottom. The leading explanation for this growth in wage inequality continues to be the skills-mismatch theory. [more] Public Policy Brief Highlights No. 62A, 2000
Working Papers | December 2000 Compensatory Inter Vivos Gifts Empirical studies of intergenerational transfers usually find that bequests are equally divided among heirs while inter vivos gifts tend to be compensatory. Using the 1992 and 1994 waves of the Health and Retirement Study, we find that only 4 percent of parents who give divide their gifts equally among their children. [more] Working Paper No. 319
Public Policy Briefs | November 2000 Whither the Welfare State? The idea that saving is the force driving private investment and economic growth has become ever more entrenched in mainstream economic thought as well as in the minds of policymakers and the general public. Even though the empirical evidence that increased household saving will directly stimulate private investment and economic growth is scant, the idea remains prominent and underlies policy debates on topics ranging from Social Security to a balanced federal budget to reducing the national debt. [more] Public Policy Brief No. 61, 2000
Public Policy Brief Highlights | November 2000 Whither the Welfare State? The idea that saving is the force driving private investment and economic growth has become ever more entrenched in mainstream economic thought as well as in the minds of policymakers and the general public. Even though the empirical evidence that increased household saving will directly stimulate private investment and economic growth is scant, the idea remains prominent and underlies policy debates on topics ranging from Social Security to a balanced federal budget to reducing the national debt. [more] Public Policy Brief Highlights No. 61A, 2000
Working Papers | September 2000 Asset Ownership across Generations This paper examines cross-generational connections in asset ownership. It begins by presenting a theoretical framework that develops the distinction between the intergenerational transfer of knowledge about financial assets and the direct transfer of dollars from parents to children. [more] Working Paper No. 314
Working Papers | August 2000 Racial Wealth Disparities A vast literature in economics has examined the economic progress of African Americans during this century. Most of these studies have focused on income--or on even narrower measures of economic well-being, such as earnings--to assess the extent to which any gains made relative to other racial groups can be attributed to such factors as declining racial discrimination, affirmative action policies, changes in industrial composition, or a narrowing gap between the educational levels of African Americans and the rest of the population. [more] Working Paper No. 311
Working Papers | August 2000 Race and the Value of Owner-occupied Housing, 1940–1990 The racial gap in the value of owner-occupied housing has narrowed substantially since 1940, but this narrowing has not been even over time or across space. The 1970s stand out as an unusual decade in which the value gap did not narrow despite continued convergence in the observed characteristics of housing. [more] Working Paper No. 310
Working Papers | August 2000 Discontinuities in the Distribution of Great Wealth National surveys of household economics and well-being in the United States usually focus on income. In those income surveys with supplemental wealth modules, the very rich are underrepresented if not unrepresented. [more] Working Paper No. 308
Working Papers | July 2000 An Examination of Changes in the Distribution of Wealth from 1989 to 1998 This paper considers the distribution of wealth in the period from 1989 to 1998 as an indicator of the economic condition of households. It examines changes in the distribution of wealth over that period, mostly using data from the Survey of Consumer Finances (SCF). [more] Working Paper No. 307
Working Papers | July 2000 Household Savings in Germany This paper describes how German households save and how their saving behavior is linked to public policy, notably pension policy. The analysis is based on a synthetic panel of four cross sections of the German Income and Expenditure Survey ("Einkommens- und Verbrauchsstichproben," EVS, 1978, 1983, 1988, and 1993). [more] Working Paper No. 306
Working Papers | July 2000 Family Structure, Race, and Wealth Ownership Researchers have documented racial inequalities in wealth ownership and have offered a variety of explanations to account for these differences. One potentially important contributing factor that has received little attention is racial differences in family structure. [more] Working Paper No. 304
Conference Proceedings | June 2000 Saving, Intergenerational Transfers, and the Distribution of Wealth Coordinated by Senior Scholar Edward N. Wolff of the Levy Institute and New York University, this conference examined wealth trends, and extremes, in the United States in the 1990s. [more] Conference Proceedings, June 7–9, 2000
Working Papers | May 2000 Recent Trends in Wealth Ownership, 1983–1998 Using data from the Survey of Consumer Finances, I find that wealth inequality continued to rise in the United States after 1989, though at a reduced rate. The share of the wealthiest 1 percent of households rose by 3. [more] Working Paper No. 300
Working Papers | March 2000 What's Behind the Recent Rise in Profitability? Profitability in the United States has been rising since the early 1980s and by 1997 was at its highest level since its postwar peak in the mid 1960s, and the profit share, by one definition, was at its highest point. In this paper I examine the role of the change in the profit share and capital intensity, as well as structural change, on movements in the rate of profit between 1947 and 1997. [more] Working Paper No. 297
Policy Notes | March 2000 Welfare College Students The rules and regulations that were developed to reduce welfare rolls through immediate employment discourage the achievement of economic independence through the pursuit of higher education. [more] Policy Note 2000/3
Working Papers | February 2000 Is There a Skills Crisis? Many economists and other social scientists and policy makers believe that the growth in inequality in the last two decades reflects mostly an imbalance between the demand for and the supply of employee skills driven by technological change, particularly the spread of computers. However, the empirical basis for this belief is not strong. [more] Working Paper No. 295
Working Papers | December 1999 Employment Inequalities This paper documents the employment disadvantage faced by the less qualified part of the labor force and examines the factors that influence the differing extent of this disadvantage across OECD countries. We argue that employment rates for quartiles of the population ranked by educational qualification provide the best measure of employment disadvantage. [more] Working Paper No. 293
Working Papers | December 1999 The Social Wage, Welfare Policy, and the Phases of Capital Accumulation This paper addresses two broad questions. The first one relates to the economic rationale for the existence of the welfare state. [more] Working Paper No. 291
Working Papers | December 1999 Finance in a Classical and Harrodian Cyclical Growth Model This paper is an extension of an earlier working paper ("Finance and the Macroeconomic Process in a Classical Growth and Cycles Model," Working Paper No. 253). [more] Working Paper No. 290
Working Papers | November 1999 New Perspectives on the Guaranteed Income Renewed interest in a guaranteed income is evident from the number of books that have been published on the topic in the 1990s. This paper compares seven of those books. [more] Working Paper No. 289
Working Papers | November 1999 Is There a Wage Payoff to Innovative Work Practices? During the 1980s, wage inequality increased dramatically and the American economy lost many high wage, low- to medium-skill jobs, which had provided middle class incomes to less skilled workers. Increasingly, less skilled workers seemed restricted to low wage jobs lacking union or other institutional protections. [more] Working Paper No. 288
Working Papers | November 1999 The History of Wage Inequality in America, 1820 to 1970 In recent decades the United States has experienced a pronounced widening of its wage structure. For the most part, analysis of the recent rise in wage inequality has taken place with the benefits of hindsight—that is, without placing recent changes in the wage structure in historical context. [more] Working Paper No. 286
Working Papers | October 1999 Computers and the Wage Structure A leading explanation for the rapid growth in wage inequality in the United States in the last 20 years, consistent with both human capital and postindustrial theories, is that advanced technology has increased job skill requirements and reduced the demand for less skilled workers. Krueger's 1993 study showing a wage premium associated with using computers at work is one of the few that seems to provide direct supportive evidence. [more] Working Paper No. 285
Working Papers | October 1999 The Distribution of Wages This paper presents a non-parametric procedure to analyze the effects of different factors on observed movements in any distribution. These effects are estimated by applying kernel density methods to weighted samples in order to obtain counterfactual distributions. [more] Working Paper No. 284
Working Papers | September 1999 The Rhetorical Evolution of the Minimum Wage The concept of the minimum wage has undergone several rhetorical permutations. Originally conceived as a living wage, which would function as a family wage, it ultimately became a matter of macroeconomic policy, the goals of which were to achieve greater efficiency and in some case economic development. [more] Working Paper No. 280
Public Policy Brief Highlights | July 1999 Down and Out in the United States Despite a long period of strong economic growth, more than 28 million working-age persons were categorized by the Bureau of Labor Statistics as out of the labor force in 1998. A small portion of this population will move into the labor force, but the majority will remain without work. [more] Public Policy Brief Highlights No. 54A, 1999
Public Policy Briefs | July 1999 Down and Out in the United States Despite a long period of strong economic growth, more than 28 million working-age persons were categorized by the Bureau of Labor Statistics as out of the labor force in 1998. A small portion of this population will move into the labor force, but the majority will remain without work. [more] Public Policy Brief No. 54, 1999
Public Policy Briefs | November 1998 Self-Reliance and Poverty The United States' official poverty measure defines the poor in terms of a family’s actual, yearly cash income relative to an estimate of the income needed to sustain a minimally acceptable standard of living. An alternative definition, designed to reflect a family’s ability to achieve economic independence, would instead rest on its capacity for generating income. [more] Public Policy Brief No. 46, 1998
Public Policy Brief Highlights | November 1998 Self-Reliance and Poverty The United States' official poverty measure defines the poor in terms of a family’s actual, yearly cash income relative to an estimate of the income needed to sustain a minimally acceptable standard of living. An alternative definition, designed to reflect a family’s ability to achieve economic independence, would instead rest on its capacity for generating income. [more] Public Policy Brief Highlights No. 46A, 1998
Working Papers | May 1998 An Important Inconsistency at the Heart of the Standard Macroeconomic Model The standard neoclassical model is the foundation of most mainstream macroeconomics. Its basic structure dominates the analyis of macroeconomic phenomena, the teaching of the subject, and even the formation of economic policy. [more] Working Paper No. 236
Working Papers | November 1997 Income Distribution, Macroeconomic Analysis, and Barriers to Full Employment The distribution of income is conspicuous by its absence from most mainstream macroeconomic analysis. Visiting Scholar Malcolm Sawyer, of the University of Leeds, makes an effort to remedy this situation by discussing three aspects of the relationship between macroeconomics and the distribution of income: the effect of conflicts over the distribution of income on the NAIRU (nonaccelerating inflation rate of unemployment), the effect of the distribution of income on aggregate demand, and the effect of monetary policy on the distribution of income. [more] Working Paper No. 211
Public Policy Brief Highlights | September 1997 Is There a Trade-Off between Unemployment and Inequality? Rebecca M. Blank considers how the flexibility of American labor markets and the regulation and redistribution policies of European labor markets may determine employers’ responses to worldwide economic transformations that result in increasing wage disparity in the United States and continuing high unemployment in Europe. [more] Public Policy Brief Highlights No. 33A, 1997
Public Policy Briefs | August 1997 Is There a Trade-Off between Unemployment and Inequality? Rebecca M. Blank considers how the flexibility of American labor markets and the regulation and redistribution policies of European labor markets may determine employers’ responses to worldwide economic transformations that result in increasing wage disparity in the United States and continuing high unemployment in Europe. [more] Public Policy Brief No. 33, 1997
Working Papers | August 1997 Macroeconomics without Equilibrium or Disequilibrium Distinguished Scholar Wynne Godley creates a numerical simulation model that attempts a synthesis between the monetary theory of Hicks and Kaldor, the asset allocation theory of James Tobin, and the Keynesian theory of income and output determination. Methodologically, it substitutes Walrasian rigor for the usual narrative exposition used by post-Keynesian writers—and indeed, by Keynes himself—before the computer age. [more] Working Paper No. 205
Public Policy Briefs | November 1996 Making Work Pay Barry Bluestone of the University of Massachusetts and Teresa Ghilarducci of the University of Notre Dame show that although the poverty rate for elderly Americans has declined over the past three decades, the total number of persons in poverty has grown and the number of poor nonelderly adults in poverty has nearly doubled since 1970. The authors argue for a comprehensive and coherent strategy aimed at the working poor and those susceptible to highly fluctuating incomes. [more] Public Policy Brief No. 28, 1996
Public Policy Briefs | January 1995 The Economics of Aging S. Jay Levy presents a preliminary study of the consumption patterns of retirees and nonretirees during the 1980s, paying particular attention to the distribution of the national consumer product. [more] Public Policy Brief No. 18, 1995
Book Series | June 1994 Aspects of Distribution of Wealth and Income The essays in this volume explore several aspects of wealth and income distribution during the 1980s, a decade characterized not only by economic expansion, but also by a widening disparity of income and wealth. The changing fortunes of American households and individuals as manifested in demographic and structural changes are examined from different perspectives, and factors affecting saving behavior and poverty rates and earning gaps relating to gender, education, and race of the head of household are examined. [more] Book Series, June 1994
Book Series | December 1993 Poverty and Prosperity in the USA in the Late Twentieth Century The fact that levels of poverty and inequality showed an unprecedented rise in the 1980s in the United States despite a sustained expansion beginning in 1983 raises concerns about appropriate policy actions needed to offset these developments. The papers in this volume explore manifestations of this inequality, including unexpectedly high poverty rates, shrinkage of the middle class, a growing intergenerational wage gap, a growing earnings gap between college and high school graduates, and increasing dispersion of the distribution of family income even with increased participation of female household members in the labor force. [more] Book Series, December 1993