RT Journal Article
SR Electronic
T1 Inequality and Mobility Using Income, Consumption, and Wealth for the Same Individuals
JF RSF: The Russell Sage Foundation Journal of the Social Sciences
FD Russell Sage Foundation
SP 44
OP 58
DO 10.7758/RSF.2016.2.6.03
VO 2
IS 6
A1 Jonathan Fisher
A1 David Johnson
A1 Jonathan P. Latner
A1 Timothy Smeeding
A1 Jeffrey Thompson
YR 2016
UL http://www.rsfjournal.org/content/2/6/44.abstract
AB Recent studies of economic inequality almost always separately examine income inequality, consumption inequality, and wealth inequality, and hence, these studies miss the important synergy between the three measures explicit in the life-cycle budget constraint. Using the Panel Study of Income Dynamics (PSID), we study inequality in three dimensions, focusing on the conjoint distributions of income, consumption, and wealth for the same individuals. We find that the trends in inequality in income, consumption, and wealth similarly increase between 1999 and 2013. We examine the pairwise distributions of our measures using the average propensity to consume and the wealth-income ratios. Using the longitudinal nature of the PSID, we follow people over this period and find mobility is similar using income, consumption, and wealth. We conclude that while all three types of inequality are rising, wealth increasingly acts as a buffer to cushion income changes, which could reduce mobility—both intra- and inter-generational mobility.