The Effect of Age Structure on US Income Inequality, 1976 to 2007

Abstract

This paper examines the relationship between age structure and income inequality. As a cohort ages, incomes become more unequally distributed within it. Consequently, as the age structure of a population evolves, it may have real effects on the aggregate distribution of incomes in that population. Using March CPS data from 1976 to 2007, I decompose inequality change by age and education. Changes in the age structure have had a net negative impact on inequality since 1976. The aging of the large baby boom cohort has been offset by the aging of the relatively small birth dearth cohort and by trends in mean income by age. I also find some evidence that inequality patterns by education are influenced by the age structure of education groups.