Earnings Inequality and Mobility in the United States: Evidence from Social Security Data since 1937^*

Abstract

This paper uses Social Security Administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the United States. Annual earnings inequality is U-shaped, decreasing sharply up to 1953 and increasing steadily afterward. Short-term earnings mobility measures are stable over the full period except for a temporary surge during World War II. Virtually all of the increase in the variance in annual (log) earnings since 1970 is due to increase in the variance of permanent earnings (as opposed to transitory earnings). Mobility at the top of the earnings distribution is stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s. Long-term mobility among all workers has increased since the 1950s but has slightly declined among men. The decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women are the driving force behind the increase in long-term mobility among all workers.

Wage inequality, technology and trade: 21st century evidence

“…Meghir and Pistaferri, 2011), as do formal decompositions of wage dynamics. There does not appear to be a large change in mobility around within workers' position in the wage distribution however (Wojciech, Emmanuel Saez and Jae Song, 2010).…”

What Do Data on Millions of U.S. Workers Say About Life Cycle Income Risk?

“…This can be seen in the left panel of Figure 1, which plots the empirical density of income changes (y t+1 -y t ) for the 2008-09 period. Notice how pointy the center is, how narrow the shoulders are, and how 1 Haider and Solon (2006) and Kopczuk et al (2010) focus on earlier periods (starting from the 1950s), when labor income was top coded at the SSA contribution limit (until 1978). Because this limit was very low in the 1960s and 1970s, about 2/3 of Haider and Solon (2006)'s observations are top-coded during this period.…”

“…While this is appropriate in survey data, given the data limitations, it imposes some restrictions on the data that one might be skeptical about, such as the uniformity of mean reversion for positive and negative shocks, for large and small shocks, and so on. Here, the substantial sample size allows us to get a much higher resolution picture of the data, and in particular, characterize persistence without making 6 In fact, the SSA also maintains the 1% LEED dataset, which covers 1957 to 2004 (used, for example, in Kopczuk et al (2010)). This dataset can be used to construct even longer time series for each individual and compute full life time earnings.…”

The Impact of Cohort Membership on Disposable Incomes in West Germany, France, and the United States

“…Bommier et al (2010), who only look at transfers and not living standards, argue that all cohorts born after 1930 benefited from public social transfers. Kopczuk, Saez and Song (2010) document decreasing within-cohort inequality until the birth cohort of early 1950 and increasing intra-cohort inequality for later born cohorts (also cf. Antonczyk / DeLeire / Fitzenberger 2010).…”