Income Distribution
Income Growth and Inequality Among Aged and Nonaged Cohorts, 1975-96
Research Report
John Gist, AARP Public Policy Institute
Ke Bin Wu, AARP Public Policy Institute
January 2000
Increased attention has been focused in recent years on the issue of the relative economic well-being of older and younger generations. This Issue Paper by John R. Gist and Ke Bin Wu of the Public Policy Institute, compares the relative well-being of older and younger families and the trends in inequality within the older and younger populations over the last two decades. The study employed the March Supplement of the Current Population Survey (CPS) over the 1975 to 1996 period to study income growth and inequality both over time and over the life cycle. Between 1975 and 1996, the incomes of older Americans have grown twice as fast as those of younger Americans, after adjusting for inflation. However, mean family income (not adjusted for family size, underreporting of income, taxes, and non-cash transfers) for those under age 65 still was 60 percent greater than for those over age 65. Between 1975 and 1996, inequality increased over time, across age cohorts, and over the life cycle, but only up to or near retirement age. At that point, Social Security becomes a leveling influence on the income of older families and keeps inequality from increasing. (33 pages)
Pub ID: 2000-01