James P. Ziliak

This paper uses newly harmonized survey and register data on incomes and labor market outcomes as the basis for consistent comparisons of inequalities across 17 North American and European countries over the period 1995–2021. We examine trends in disposable income inequality in the working-age population, defined as persons aged 25 to 60, as well as its component parts of market income inequality and redistribution through government tax and transfer systems. We adjust incomes to allow for changes in education, population aging, and household structure in each country. We test for convergence across countries in demographically-adjusted disposable income inequality, along with market income inequality and redistribution. There is strong evidence of convergence over time in disposable income inequality across the 17 countries, despite a divergence in the dispersion of market income inequality driven by very heterogeneous trends for hours of work and the number of workers in households across countries. Consistent with this we find a strong convergence across countries in the dispersion of our measure of redistribution. There are reductions over time in inequality-reducing redistribution in the Nordic countries and increases in some other European and North American countries, with the net effect being more similarity across countries, a lower average level of redistribution, and a higher average level of disposable income inequality. These trends are being driven by the bottom 95% of the income distribution. Our results are robust to a variety of alternative specifications including the measure of inequality, trimming of data outliers, and sample period.

We examine trends in household disposable income inequality and potential mechanisms shaping inequality through changes to work, wages, earnings, marriage, and the tax and transfer system in the United States over the nearly five‐decade period from 1975 to 2022. Overall after‐tax and transfer income inequality increased more than 25 per cent since the mid‐1970s, and by as much as 50 per cent when comparing the 90^th and 10^th percentiles. While there has been substantial upgrading in formal education credentials among both men and women – an inequality‐reducing development – those with fewer credentials have increasingly been less likely to work and marry, each of which could result in higher inequality. The latter effects are exacerbated by those selecting into marriage and cohabitation being more likely to partner with those holding similar educational credentials and earning power. Moreover, the decline in work among the less skilled coincided with the transformation of the safety net to rewarding work. These demographic and policy changes have resulted in a pulling apart of the US income distribution.

We estimate the distribution of life cycle wages for cohorts of prime-age men and women in the US.

We present new estimates of earnings volatility over time and the lifecycle for men and women by race and human capital.

We present new estimates of earnings volatility over time and the lifecycle for men and women by race and human capital.

We estimate the distribution of life cycle wages for cohorts of prime-age men and women in the US.

We estimate the distribution of life cycle wages for cohorts of prime-age men and women in the US.

There is a large literature on earnings and income volatility in labor economics, household finance, and macroeconomics. One strand of that literature has studied whether individual earnings volatility has risen or fallen in the U.S. over the last several decades. There are strong disagreements in the empirical literature on this important question, with some studies showing upward trends, some showing downward trends, and some showing no trends. Some studies have suggested that the differences are the result of using flawed survey data instead of more accurate administrative data. This paper summarizes the results of a project attempting to reconcile these findings with four different data sets and six different data series–three survey and three administrative data series, including two which match survey respondent data to their administrative data. Using common specifications, measures of volatility, and other treatments of the data, four of the six data series show a lack of any significant long-term trend in male earnings volatility over the last 20-to-30+ years when differences across the data sets are properly accounted for. A fifth data series (the PSID) shows a positive net trend but small in magnitude. A sixth, administrative, data set, available only since 1998, shows no net trend 1998-2011 and only a small decline thereafter. Many of the remaining differences across data series can be explained by differences in their cross-sectional distribution of earnings, particularly differences in the size of the lower tail. We conclude that the data sets we have analyzed, which include many of the most important available, show little evidence of any significant trend in male earnings volatility since the mid-1980s.