Page 432 - The Principle of Economics

440 PART SIX THE ECONOMICS OF LABOR MARKETS
Table 20-2
INCOME INEQUALITY IN THE UNITED STATES. This table shows the percent of total before- tax income received by families in each fifth of the income distribution and by those families in the top 5 percent.
BOTTOM SECOND
YEAR FIFTH FIFTH
1998 4.2% 9.9% 1990 4.6 10.8 1980 5.2 11.5 1970 5.5 12.2 1960 4.8 12.2 1950 4.5 12.0 1935 4.1 9.2
Source: U.S. Bureau of the Census.
MIDDLE FOURTH
FIFTH FIFTH
15.7% 23.0% 16.6 23.8 17.5 24.3 17.6 23.8 17.8 24.0 17.4 23.4 14.1 20.9
TOP TOP
FIFTH 5 PERCENT
47.3% 20.7% 44.3 17.4 41.5 15.3 40.9 15.6 41.3 15.9 42.7 17.3 51.7 26.5
has received about 4 to 5 percent of income, while the top fifth has received about 40 to 50 percent of income. Closer inspection of the table reveals some trends in the degree of inequality. From 1935 to 1970, the distribution gradually became more equal. The share of the bottom fifth rose from 4.1 to 5.5 percent, and the share of the top fifth fell from 51.7 percent to 40.9 percent. In more recent years, this trend has reversed itself. From 1970 to 1998, the share of the bottom fifth fell from 5.5 percent to 4.2 percent, and the share of the top fifth rose from 40.9 to 47.3 percent.
In Chapter 19 we discussed some of the reasons for this recent increase in in- equality. Increases in international trade with low-wage countries and changes in technology have tended to reduce the demand for unskilled labor and raise the de- mand for skilled labor. As a result, the wages of unskilled workers have fallen rel- ative to the wages of skilled workers, and this change in relative wages has increased inequality in family incomes.
CASE STUDY THE WOMEN’S MOVEMENT AND THE INCOME DISTRIBUTION
Over the past several decades, there has been a dramatic change in women’s role in the economy. The percentage of women who hold jobs has risen from about 32 percent in the 1950s to about 54 percent in the 1990s. As full-time homemakers have become less common, a woman’s earnings have become a more important determinant of the total income of a typical family.
Although the women’s movement has led to more equality between men and women in access to education and jobs, it has also led to less equality in fam- ily incomes. The reason is that the rise in women’s labor-force participation has not been the same across all income groups. In particular, the women’s move- ment has had its greatest impact on women from high-income households. Women from low-income households have long had high rates of participation in the labor force, even in the 1950s, and their behavior has changed much less.
In essence, the women’s movement has changed the behavior of the wives of high-income men. In the 1950s, a male executive or physician was likely to marry a woman who would stay at home and raise the children. Today, the wife of a male executive or physician is more likely to be an executive or physician herself. The result is that rich households have become even richer, a pattern that raises inequality in family incomes.