Income Growth and its Distribution from Eisenhower to Obama: The Growing Importance of In-Kind Transfers (1959-2016)

63 Pages Posted: 18 Nov 2019

See all articles by James Elwell

James Elwell

Government of the United States of America - Joint Committee on Taxation

Kevin Corinth

Council of Economic Advisers

Richard V. Burkhauser

Cornell University - Department of Policy Analysis & Management (PAM); University of Melbourne, Melbourne Institute

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Abstract

We provide the first survey-based look at levels and trends in income and its distribution from 1959 to 2016 by linking Current Population Survey data from 1967 through 2016 with decennial Census data for 1959. We find that the dramatic decline in the market income of the middle class (measured as the median American tax unit or the mean value of the middle quintile of American tax units) began in 1969. However, we find that this decline was more than offset by government tax and transfer programs – especially in-kind transfers. Conventional measures of median income and income inequality that exclude the market value of in-kind transfers will substantially understate the impact of government policies in offsetting the stagnation of median market income growth and the rise in market income inequality since 1969.

Keywords: long-term growth trends (1959-2016), median income, income inequality, survey-based CPS data, market income, valuing in-kind transfers, full-income series

JEL Classification: D31, C81

Suggested Citation

Elwell, James and Corinth, Kevin and Burkhauser, Richard V., Income Growth and its Distribution from Eisenhower to Obama: The Growing Importance of In-Kind Transfers (1959-2016). IZA Discussion Paper No. 12757, Available at SSRN: https://ssrn.com/abstract=3488184

James Elwell (Contact Author)

Government of the United States of America - Joint Committee on Taxation ( email )

Kevin Corinth

Council of Economic Advisers ( email )

Richard V. Burkhauser

Cornell University - Department of Policy Analysis & Management (PAM) ( email )

120 Martha Van Rensselaer Hall
Ithaca, NY 14853
United States

University of Melbourne, Melbourne Institute ( email )

Level 5, FBE Building, 111 Barry Street
161 Barry Street
Carlton, VIC 3053
Australia

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