Income Inequality in the 1990s: Re-forging a Lost Relationship

Abstract

Using data from the March Current Population Survey, summary inequality measures as well as kernel density estimations, we find gains from economic growth over the 1990s business cycle (1989-2000) were more equitably distributed than over the1980s business cycle (1979-1989). The entire distribution of household size-adjusted income moved upwards in the 1990s with profound improvements for African Americans, single mothers and those living in households receiving welfare. Most gains occurred over the growth period 1993-2000. Improvements in average income and income inequity over the latter period are reminiscent of gains seen in the first three decades after World War II.