Has Income Mobility in the US Declined? Updating Studies of Income Mobility

• In Event: Inequality and Measurement

Abstract

While some studies using U.S. income data have shown significant income mobility and turnover at the top of the income distribution, others have drawn more pessimistic conclusions (Chetty, et al, various studies).
This study updates the findings of our two prior studies (Auten and Gee 2009, Auten, Gee and Turner 2013) to investigate whether income mobility in the U.S. has continued or declined.
Income mobility has been measured in various ways, including changes in where individuals are in the income distribution after 5 or 10 years, how long individuals at the top of the distribution remain there, and on how real incomes (adjusted for tax unit size) have changed over time. Other measures include intergenerational mobility and the way succeeding 20th-century generations have occupied the top 1 percent. In 1987, for example, the pre-war generations accounted for almost 80 percent of the top 1 percent. By 2000, the postwar “Baby Boom” generation held the largest share. Our analysis will examine the extent to which Generations X, Y and Z now occupy significant shares of the top one percent.
This paper considers the dimensions of income mobility and how this can affect thinking about income inequality. Recent income data is used examine the extent to which income mobility has changed in recent decades.

Authors

• Gerald Auten, US Treasury Department, Office of Tax Analysis

• Geoffrey Gee