Rand Report: Trends In Income Inequality From 1975 To 2018

  • The three decades following the Second World War saw a period of economic growth that was shared across the income distribution, but inequality in taxable income has increased substantially over the last four decades.
  • This work seeks to quantify the scale of income gap created by rising inequality compared to a counterfactual in which growth was shared more broadly. We introduce a time-period agnostic and income-level agnostic measure of inequality that relates income growth to economic growth.
  • From 1975 to 2018, the difference between the aggregate taxable income for those below the 90th percentile and the equitable growth counterfactual totals $47 trillion. We further explore trends in inequality by applying this metric within and across business cycles from 1975 to 2018 and also by demographic group.

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Categories: Business, Labor

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