Changing American Earnings Distributions: One-Half Century of Experience

Abstract

Recent increases in earnings inequality have been described as "enormous." Is it that we are experiencing a unique shift toward greater inequality, or are we returning to a more normal state of affairs for the American economy? The recent availability of six decades of data together with important new developments in the theory and measurement of inequality invite a renewed look at the changes in earnings inequality over the past half century. Our findings for male earnings suggest a dramatic contraction in inequality after 1939 followed by a steady rise in earnings inequality through 1989. Focusing on per capita incomes as opposed to earnings eliminates much of the trend toward rising inequality.

JEL Classification: D31, J30