{
  "title": "Income Polarization in the United States",
  "publication": "IMF Working Papers, June 28, 2016",
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  "summary": "The paper uses a combination of micro-level datasets to document the rise of income polarization—what some have referred to as the “hollowing out” of the income distribution—in the United States, since the 1970s.",
  "sections": [
    {
      "heading": "Summary / Abstract",
      "content": "- The paper documents the rise of income polarization—referred to as the “hollowing out” of the income distribution—in the United States since the 1970s.\n- While in the initial decades more middle-income households moved up rather than down the income ladder, since the turn of the current century most of polarization has been towards lower incomes.\n- After conditioning on income and household characteristics, the marginal propensity to consume from permanent changes in income has somewhat fallen in recent years.\n- During 1998-2013, the rise in income polarization and lower marginal propensity to consume have suppressed the level of real consumption at the aggregate level, by about 3½ percent—equivalent to more than one year of consumption."
    },
    {
      "heading": "Data and Methodology",
      "content": "- Uses a combination of micro-level datasets to analyze income distribution dynamics and consumption responses.\n- Conditions some analyses on income and household characteristics to estimate changes in the marginal propensity to consume from permanent income changes."
    },
    {
      "heading": "Key Findings",
      "content": "- Long-run trend: Rise in income polarization in the United States since the 1970s, characterized as “hollowing out” of the income distribution.\n- Evolution over time:\n  - Initial decades (post-1970s): More middle-income households moved up the income ladder than down.\n  - Since the turn of the current century: Most polarization has been towards lower incomes.\n- Marginal Propensity to Consume (MPC):\n  - Evidence that, after conditioning on income and household characteristics, the MPC from permanent income changes has fallen somewhat in recent years.\n- Aggregate impact on consumption:\n  - For the period 1998-2013, combined effects of increased income polarization and a lower MPC reduced the level of real consumption by about 3½ percent."
    },
    {
      "heading": "Policy-Relevant Implications (as presented in the paper)",
      "content": "- The documented trends—income polarization toward lower incomes and a reduced marginal propensity to consume—have material implications for aggregate private consumption and may inform fiscal and social policy debates regarding income distribution and demand support.\n\n---\n\n Content in this bundle\n\n- wp16121\n  - wp16121 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp16121 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/income-polarization-in-the-united-states-44031"
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    "Authors: Ali Alichi, Kory Kantenga, Juan Sole",
    "Published: June 28, 2016",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475522501.001",
    "The paper documents the rise of income polarization—referred to as the “hollowing out” of the income distribution—in the United States since the 1970s.",
    "While in the initial decades more middle-income households moved up rather than down the income ladder, since the turn of the current century most of polarization has been towards lower incomes.",
    "After conditioning on income and household characteristics, the marginal propensity to consume from permanent changes in income has somewhat fallen in recent years.",
    "During 1998-2013, the rise in income polarization and lower marginal propensity to consume have suppressed the level of real consumption at the aggregate level, by about 3½ percent—equivalent to more than one year of consumption.",
    "Uses a combination of micro-level datasets to analyze income distribution dynamics and consumption responses.",
    "Conditions some analyses on income and household characteristics to estimate changes in the marginal propensity to consume from permanent income changes.",
    "Long-run trend: Rise in income polarization in the United States since the 1970s, characterized as “hollowing out” of the income distribution.",
    "Evolution over time:",
    "Marginal Propensity to Consume (MPC):",
    "Aggregate impact on consumption:",
    "The documented trends—income polarization toward lower incomes and a reduced marginal propensity to consume—have material implications for aggregate private consumption and may inform fiscal and social policy debates regarding income distribution and demand support.",
    "**_wp16121**"
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