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How Pronounced is the U-Curve? Revisiting Income Inequality in the United States, 1917–60

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  • Vincent J Geloso
  • Phillip Magness
  • John Moore
  • Philip Schlosser

Abstract

Piketty and Saez (2003) found a pronounced U-curve pattern of American income inequality since 1917, displaying a precipitous decline during World War II to a level that would hold until 1980. We offer revisions to their income inequality estimates prior to 1960 with three important findings. First, Piketty and Saez overstate inequality levels in this period. Second, the decline during World War II was smaller than depicted. Third, the Great Depression, rather than World War II, played the more significant role. These findings indicate a need to re-evaluate commonly held assumptions about the evolution of inequality during the period of the ‘great levelling’, as well as the nature of its posited relationship to tax policy.

Suggested Citation

  • Vincent J Geloso & Phillip Magness & John Moore & Philip Schlosser, 2022. "How Pronounced is the U-Curve? Revisiting Income Inequality in the United States, 1917–60," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2366-2391.
    • Handle: RePEc:oup:econjl:v:132:y:2022:i:647:p:2366-2391.
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    File URL: http://hdl.handle.net/10.1093/ej/ueac020
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    Cited by:

    1. Martha J. Bailey & Leah Platt Boustan & William J. Collins, 2024. "Introduction to "The Economic History of American Inequality: New Evidence and Perspectives"," NBER Chapters, in: The Economic History of American Inequality: New Evidence and Perspectives, National Bureau of Economic Research, Inc.
    2. Anna Naszodi, 2023. "Historical trend in educational homophily: U-shaped or not U-shaped? Or, how to set a criterion to choose a criterion?," Papers 2305.00231, arXiv.org, revised Feb 2024.
    3. Anna Naszodi, 2023. "What do surveys say about the historical trend of inequality and the applicability of two table-transformation methods?," Papers 2303.05895, arXiv.org.

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