Cohort Analysis of Economic Well-Being in the United States, 1972-2001

Selcuk Eren, Levy Economics Institute of Bard College
Ajit Zacharias, Levy Economics Institute of Bard College
Edward Wolff, New York University

We examine life-cycle economic disparities within and between population cohorts of households in the United States. The main goal is to understand the changes in level and distribution of economic well-being within cohorts as cohorts age as well as between cohorts as each cohort faces different market conditions and government policies as well as demographic changes that affect well-being. We employ official measures of well-being as well as The Levy Institute Measure of Economic Well-Being, a more comprehensive measure that includes money income, income from wealth, public consumption expenditures and household production. We find that both within and between cohorts inequality has been increasing. Younger cohorts face a larger within cohort inequality that increases as cohorts age. The increasing gap at the start of the work-life that is carried through the life cycle suggests that cross-section estimates of inequality measures may be underestimating the challenges that younger cohorts face.