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. 2016 Oct;2(6):44-58.
doi: 10.7758/RSF.2016.2.6.03.

Inequality and Mobility using Income, Consumption, and Wealth for the Same Individuals

Jonathan Fisher  1 , David Johnson  2 , Jonathan Latner  3 , Timothy Smeeding  4 , Jeffrey Thompson  5
Affiliations

Inequality and Mobility using Income, Consumption, and Wealth for the Same Individuals

Jonathan Fisher et al. RSF. 2016 Oct.

Abstract

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.

Keywords: Inequality; consumption; income; mobility; wealth.

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Figures

Figure 1:
Figure 1:
Gini index for a variety of measures – income, consumption and wealth
Figure 2:
Figure 2:
Gini coefficients for income, consumption and wealth
Figure 3:
Figure 3:
APC and Wealth/Income ratio by vingtile using PSID, 1999, 2007, 2013
See this image and copyright information in PMC

References

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