PhD student presents at the Econometric Society Meetings
John Schwendel presents research from his on-going PhD dissertation (under the direction of Prof. Mohtadi) at the 2019 North American meeting of the Econometric Society in Seattle. He presents the paper “Inequality in the United States: 1946-2015.”
ABSTRACT
Collecting long run and geographically precise income data directly from the
Internal Revenue Service, this paper estimates annual state-level distributions of
household income of the United States population from 1946 to 2015. Additionally
and critically, by studying the central range of the US distribution of income over
this time period, it focuses on an area of investigation that has received little or no
attention in the literature which either focuses on a shorter time period or on top
earners. Simulations also demonstrate the appropriateness of our estimation
technique. Specifically, if earnings follow a known distributional form, the proposed
method is found to be superior for estimating inequality indices when compared to
alternatives for dealing with binned data. Various measures of inequality derived
from the estimated distributional parameters are presented. National inequality
represented by the Theil index shows the rise of inequality is concentrated in the
late 1940s, the late 1960s, and from 2000 onward. The movement of relative
earnings among the 10th, 50th, and 90th percentile of earners supports the well-
known “hollowing out” effect. Owing to the rich historical aspect of the data
collected, we extend the understanding of the presence of this effect to the mid-
20th century, i.e., the late 1940s and 1950s. State-level inequality follows a similar
pattern to the national trend, but with some variation. While within-state inequality
is the most substantial part of national inequality, an inverted W shaped pattern of
between-state inequality is also found, with peaks in the early 1950s and early 2010s.