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US Inequality Graphs

December 18, 2013 Leave a comment Go to comments

Here are a couple of graphs that I picked up from John Cassidy’s blog on the New Yorker website.

The first graph shows that at the start of the Second World War and the first oil-price shock of 1973, families in the bottom ninety-nine per cent saw their incomes rise sharply. With the exception of the late nineteen-nineties, the past forty years have been marked by slow growth. For those at the top of the income distribution, recent history has been very different. After growing modestly in the postwar decades, the incomes of families in the top one per cent took off in the late nineteen-seventies, and have been zig-zagging upward since then.

US Ineq 1

The second graph shows that in places where income is divided very unequally, and poorer groups get only a small slice of the pie, very few people manage to start at the bottom and end up at the top. With a measure of inequality on the horizontal axis and a level of social mobility on the vertical axis shows the evidence for metro areas across the United States.

The negative slope indicates that high levels of inequality are associated with low levels of social mobility. Obviously, correlation is not causation. But the relationship, which Princeton’s Alan Krueger, the former chairman of the Council of Economic Advisers, has dubbed the Gatsby Curve, is certainly suggestive. If nothing else, the chart implies that those hoping to rely on high levels of social mobility to offset the effects of rising income inequality are likely to be disappointed.

US Ineq 2

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