Income distribution of older Americans

Although remaining concentrated in lower income groups, elderly households achieved significantly greater equality of income distribution between 1967 and 1997; the gap with the income distribution of nonelderly households narrowed are professors of economics, and Luojia Mao Daniel is a doctoral candidate in economics, A lthough many older Americans are financially comfortable, with a significant group being well off, the largest share of elderly (defined as persons aged 65 or older) households has low incomes. Income inequality among older households persists despite more than 30 years of growth of income transfer programs designed to reduce poverty and improve the economic status of elderly persons. This gap highlights the importance of analyzing the income distribution of the elderly to determine the nature and extent of any inequalities that appear in it. Although government transfer programs have substantially enhanced the well-being of many of the elderly, numerous older persons continue to suffer low incomes. Measures of income inequality provide insight into the relative economic positions of households , which are generally reported for the population as a whole. For example, the Bureau of the Census reports a decrease in U.S. household income inequality following World War II, from 1947 to 1968, followed by increased income inequality up to the mid-1990s. 1 This conclusion is reinforced by other studies of income inequality. 2 For the elderly in particular, the income distribution through the 1980s remained more unequal than that of the nonelderly. 3 Daniel B. Radner finds that income inequality declined for the elderly and rose for the nonelderly from 1967 to 1992. However , his findings are unclear, because " taking account of taxes and noncash income could, in actuality, affect the results of the comparisons made. Unfortunately, income data that cover taxes and noncash income do not exist for the full time period covered by this article. " 4 The same argument applies to the analysis set forth herein. Differential patterns of change in household money income distributions for different age groups during the 1990s require an expansion of previous analyses. A clue to changes in the distributions of income can be gleaned from a brief review of changes in median income by age group. While median income for the group aged 45 to 54 years increased 22 percent from 1967 to 1977, it rose only 7 percent during the next decade and actually declined 1 percent from 1987 to 1997. …