Income Inequality, Mobility and Volatility among U.S. Families

Deirdre Bloome, Harvard University

Most dominant explanations of rising family income inequality in the U.S. highlight differences between groups defined by such characteristics as education and family structure. However, growing inequality within finely-defined groups motivates research on variation across individual life courses. Cross-sectional measures obscure how individuals' situations change from childhood through adulthood. This paper introduces a comprehensive decomposition of income inequality, capturing differences between individuals and across time for each individual. It unites aspects of income dynamics that have generally been studied independently: mobility between generations, mobility within generations, and year-to-year volatility. Using data from the Panel Study of Income Dynamics and the Current Population Survey, this paper studies cohort change in the relative contributions of interpersonal inequality, inter- and intra-generational mobility, and volatility to overall income inequality. Preliminary results suggest that individual income dynamics are non-trivial but interpersonal inequalities are much larger, and their relative contributions have been rather stable across cohorts.