A Consistent Data Series to Evaluate Growth and Inequality in the National Accounts

23 Pages Posted: 5 Dec 2017

See all articles by Dennis Fixler

Dennis Fixler

US Bureau of Economic Analysis

David Johnson

University of Michigan at Ann Arbor

Andrew Craig

Government of the United States of America - Bureau of Economic Analysis (BEA)

Kevin Furlong

Government of the United States of America - Bureau of Economic Analysis (BEA)

Date Written: December 2017

Abstract

Recent headlines frequently refer to rising inequality and its implication on economic growth and social welfare. Addressing the latter is difficult and requires more than simply looking at GDP, as Kuznets long ago pointed out. In this paper we focus on the importance of the income measure underlying the inequality measure when examining the relationship between GDP growth and inequality. We create a mapping using Census Bureau household survey data and Bureau of Labor Statistics (BLS) consumer expenditure data to create distributional measures of the Bureau of Economic Analysis (BEA) personal income. We show that for the period 2000‐2012, inequality using personal income is substantively lower than inequality measured using Census Bureau money income, and the trends in both inequality and median income are different. This demonstrates the importance of using a measure a national accounts based measure of income when examining the relationships between inequality and growth.

Keywords: growth, inequality, national accounts

JEL Classification: E01, D31, O40

Suggested Citation

Fixler, Dennis and Johnson, David and Craig, Andrew and Furlong, Kevin, A Consistent Data Series to Evaluate Growth and Inequality in the National Accounts (December 2017). Review of Income and Wealth, Vol. 63, pp. S437-S459, 2017. Available at SSRN: https://ssrn.com/abstract=3079943 or http://dx.doi.org/10.1111/roiw.12324

Dennis Fixler (Contact Author)

US Bureau of Economic Analysis ( email )

4600 Silver Hill Road
Washington, DC 20233
United States

David Johnson

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Andrew Craig

Government of the United States of America - Bureau of Economic Analysis (BEA)

1441 L Street NW
Washington, DC 20910
United States

Kevin Furlong

Government of the United States of America - Bureau of Economic Analysis (BEA)

1441 L Street NW
Washington, DC 20910
United States

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