Emmanuel Saez, UC Berkeley

Abstract

This paper uses U.S. Social Security earnings administrative data to analyze the evolution of inequality and mobility since 1937. Uncapped earnings data available since 1978 show that mobility at the top of the earnings 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 inequality data shows that the Great Compression in earnings from 1939 to 1949 took place during the war in the upper part of the distribution and immediately after the war in the lower part of the distribution. 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. Upward mobility has increased slightly overtime for the earlier cohorts we can study but is decreasing for cohorts born after 1950.