Title

Disaggregating the Effect of the Business Cycle on the Distribution of Income

Author(s)

Rebecca M. Blank Rebecca Blank (Princeton University)

Abstract

This paper disaggregates total household income into a complete set of components and studies the comparative cyclicality of these com- ponent< to economic growth. Comparisons of the relative responsiveness to GNP growth of wages, hours of work, and total labor market income of heads and wives, and transfer income sources of households are made across income, race, sex and age groups. This provides a picture of the channels by which economic growth produces income change. Significant differences in elasticities are found to exist both between different income components and between different population groups for the same component. The narrowing income distribution in times of high growth occurs primarily because of large elasticities on head's labor market income among the poor. Both wages and hours show evidence of cycli- cality. The labor market earnings of women -- both wives and household heads - is far less responsive to growth. Cyclicality in transfer income varies enormously between population groups and by type of transfer.

Creation Date

1985-05

Section URL ID

IRS

Paper Number

189

URL

https://dataspace.princeton.edu/bitstream/88435/dsp012227mp659/1/189.pdf

File Function

Jel

C9, C90, C91

Keyword(s)

income distribution, business cycle, economic growth, women in the labor market

Suppress

false

Series

1