Journal Article

Twenty Years of Rising Inequality in U.S. Lifetime Labour Income Values

Audra J. Bowlus and Jean-Marc Robin

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 71, issue 3, pages 709-742
Published in print July 2004 | ISSN: 0034-6527
Published online July 2004 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2004.00301.x
Twenty Years of Rising Inequality in U.S. Lifetime Labour Income Values

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In this paper we study the evolution of lifetime labour income inequality by constructing present value life cycle measures that incorporate both earnings and employment risk. We find that, even though lifetime income inequality is 40% less than earnings inequality, the total increase in lifetime income inequality over the past 20 years is the same as earnings inequality. While the total increase is the same, the pathways there differ with earnings inequality experiencing a steady increase and lifetime income inequality increasing in spurts particularly in the latter half of the 1990s. Finally, we find the changes in lifetime income inequality are primarily driven by changes in earnings mobility and changes in the earnings distribution itself, changes in employment risk and the composition of the sample, such as the shift toward attaining more education and the ageing population, do not play a large role.

Keywords: D31; J31

Journal Article.  13583 words.  Illustrated.

Subjects: Wages, Compensation, and Labour Costs ; Microeconomics

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