NBER WORKING PAPER SERIES UNCOVERING THE AMERICAN DREAM: INEQUALITY AND MOBILITY IN SOCIAL SECURITY EARNINGS DATA SINCE 1937 Wojciech Kopczuk

This paper uses Social Security Administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the United States. Earnings inequality follows a U-shape pattern, decreasing sharply up to 1953 and increasing steadily afterwards. We find that short-term and long-term (rank based) mobility among all workers has been quite stable since 1950 (after a temporary surge during World War II). Therefore, the pattern of annual earnings inequality is very close to the pattern of inequality of longer term earnings. Mobility at the top has also been very stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s. However, the stability in long-term earnings mobility among all workers masks substantial heterogeneity across demographic groups. The decrease in the gender earnings gap and the substantial increase in upward mobility over a career for women is the driving force behind the relative stability of overall mobility measures which mask declines in mobility among men. In contrast, overall inequality and mobility patterns are not significantly influenced by the changing size and structure of immigration nor by changes in the black/white earnings gaps. Wojciech Kopczuk Columbia University 420 West 118th Street, Rm. 1022 IAB MC 3323 New York, NY 10027 and NBER [email protected] Emmanuel Saez University of California 549 Evans Hall #3880 Berkeley, CA 94720 and NBER [email protected] Jae Song Social Security Administration, Office of Research 500 E Street, SW, 9th Floor Washington, DC 20254 [email protected]