Inequality and Mobility over the Past Half Century using Income, Consumption and Wealth
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.
Thanks to Carsten Schroder, Darrick Hamilton, Marc St-Pierre, Salvatore Morelli, Karen Dynan, participants at the 35th General Conference of the International Association for Research on Income and Wealth, the 8th ECINEQ meetings, the 2019 Southern Economic Meetings, and the 2019 PSID User Conference, and the NBER Conference on Measuring and Understanding the Distribution and Intra/Inter-Generational Mobility of Income and Wealth for helpful comments, and Nishaad Rao for research assistance. Contact author David Johnson, firstname.lastname@example.org, University of Michigan, 426 Thompson St, Rm 3234, Ann Arbor, MI, 48106. The views expressed in this research are solely those of the authors and do not necessarily reflect the official positions or policies of Stanford University or University of Michigan. The authors accept responsibility for all errors. The authors thank the Russell Sage Foundation for their support. PSID Data collection is supported by the National Science Foundation [SES 1623864], the National Institute on Aging [R01 AG040213], and the National Institute of Child Health &
Human Development [R01 HD069609]. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.