Sunday, December 7, 2014

The Gini coefficient for full-time workers: Has it really changed over time and if so, was it because of technical reasons?

See How to Distort Income Inequality by Phil Gramm and Michael Solon, WSJ. Excerpt:
"An equally extraordinary distortion in the data used to measure inequality (the Gini Coefficient) has been discovered by Cornell’s Mr. Burkhauser. In 1992 the Census Bureau changed the Current Population Survey to collect more in-depth data on high-income individuals. This change in survey technique alone, causing a one-time upward shift in the measured income of high-income individuals, is the source of almost 30% of the total growth of inequality in the U.S. since 1979.

Simple statistical errors in the data account for roughly one third of what is now claimed to be a “frightening” increase in income inequality."
Now if we look at the following graph, we see the rise in the Gini coefficient for full-time, year-round workers went up just about this time. If that blip up is not there, we would not see much change over time.




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