A Model of the Dynamics of the Distribution of U.S. Labor Incomes Reproduces the 1961--2010 Time-Series of a Variety of Labor Income Inequality Indicators

• Activity Number: 584
• Type: Contributed
• Date/Time: Wednesday, August 1, 2012 : 2:00 PM to 3:50 PM
• Sponsor: Social Statistics Section
• Author(s): John Angle*+
• Companies: Inequality Process Institute
• Keywords: dynamics ; frequency distribution ; indicator ; inequality ; labor income ; time-series

Abstract

A variety of scalar statistics have been used as indicators of inequality in U.S. labor income, even though many of these have grossly dissimilar time-series, 1961-2010. The failure of scalar labor income inequality statistics to covary over time confuses social scientists, journalists, policy analysts, policy makers, and the public about what is happening to U.S. labor incomes. Worse, this failure allows those with a policy agenda to choose among these indicators to support their case that labor income inequality is or is not increasing. This paper shows that a parsimonious model of the dynamics of U.S. labor income distribution, 1961-2010, implies the time-series of six scalar labor income inequality statistics, one in each of six major classes of income inequality statistic. Knowledge of a distribution's dynamics implies knowledge of the time-series of its scalar statistics. This paper's model provides clear, simple answers about what has happened to U.S. labor income distribution and, consequently, to U.S. labor income inequality defined six different ways.