Research / BFI Working PaperMay 25, 2021

Lifetime Earnings in the United States over Six Decades

Fatih Guvenen, Greg Kaplan, Jae Song, Justin Weidner

Using panel data on individual earnings histories from 1957 to 2013, we document empirical facts about the distribution of lifetime earnings in the United States. First, from the cohort that entered the labor market in 1957 to the cohort that entered in 1983, median lifetime earnings of men declined by 10%–19%. Moreover, there was little-to-no rise in the lower three-quarters of the male lifetime earnings distribution during this period. Accounting for rising employer-provided health and pension bene- fits partly mitigates these findings but does not alter the substantive conclusions. For women, median lifetime earnings increased by 22%–33% from the 1957 to the 1983 cohort, but these gains were relative to the very low median lifetime earnings for the early cohorts. Much of the difference between newer and older cohorts comes from differences in median earnings at the time of labor market entry. Second, inequality in lifetime earnings has increased significantly within each gender group, but the closing lifetime gender gap has kept overall lifetime inequality virtually flat over the entire period. The increase among men is largely attributable to subsequent cohorts enter- ing the labor market with progressively higher levels of inequality, and not so much to faster inequality growth over the life cycle for newer cohorts. Partial life-cycle earnings data for younger cohorts indicate that both the stagnation of median lifetime earnings and the rise in lifetime inequality are likely to continue.

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