Wojciech Kopczuk, Emmanuel Saez, and Jae Song (2007), "Uncovering the American Dream: Mobility and Inequality in Social Security Earnings Data since 1937"
ABSTRACT: This paper uses U.S. Social Security earnings administrative data to analyze the evolution of inequality and mobility since 1937. Uncapped earnings data since 1978 show that mobility [from percentile to percentile] at the top of the income distribution has been very stable. As a result, earnings averaged over periods longer than one year display the same dramatic increase in concentration as annual earnings since the 1970s. Annual earnings data shows that the Great Compression in earnings from 1939-1949 took place in two separate stages: a sharp compression during the war years followed by a slower compression in the post-war period (after a short-lived pause during 1945-46). Since 1937, year to year earnings mobility has followed an inverted U-shape pattern with a large but temporary increase during World War II and the immediate post-war years. Short-term mobility is now at its lowest point since 1937. Mobility measures over the career show that mobility over a life-time has always been relatively modest and has remained fairly stable over the period we analyze. The closing of the gender gap has contributed greatly to reducing long-term inequality across all workers, especially at the bottom of the distribution. However, long-term inequality has increased substantially for male workers in all segments of the distribution.
Early career: 25-36
Mid career: 37-48 Late career: 49-60
Probability of moving from (P0-40) to P(80-100):
- From early to mid-career, 3%
- From mid to late-career: 2%
- From early to late career: 6% for those born in 1930, 7.5% for those forn in 1944, and perhaps 8.5% for those born in 1950 (Emmanuel thinks this is a geneder-feminism effect)
Probability of being in the top quintile of the income distribution during your early career if you are Black is:
- 3.4% if you were born in 1930
- 4% if you were born in 1938
- 9% if you were born in 1945
- 11.8% if you were born in 1950
- 8% if you were born in 1960
- 9% if you were born in 1968
- 9.2% if you were born in 1974 (projected)