Income inequality: age-gender dependence

We have demonstrated the difference in mean income between men and women and the evolution of mean income over work experience (age). In this post we join both representation and display the evolution of mean income with work experience for each sex and for both sexes together. As before, we use personal income measurements published by the U.S. Census Bureau (CB). These data come from the CPS Annual Social and Economic Supplement of the Current Population Surveys (http://www.census.gov/cps/). It is worth noting that approximately 90% of working age population, i.e. 15 years of age and over, reports nonzero incomes. This portion is much higher than the rate of participation in labor force (~65% in the USA). Obviously the number of people with income is much higher than the number of employed. This makes consideration of income inequality based on wages slightly weird. There are many people having large incomes but not in the employment. Since employment is not the only way to get reasonable income why should we consider it as a crucial economic variable? In this sense, the rate of participation in labor force strongly varies across developed countries, with higher amplitudes than the rate of real GDP growth.

Figure 1 shows mean income as a function of work experience for male and female group separately since 1967. The male curves demonstrate a clear shift in the age of peak income, as was presented in the previous posts. The female mean income has a more stable shape and clear jump around 1987. It might be associated with new income definition introduced in 1987.

Figure 1. Mean income vs. work experience (i.e. age-15 years) for men and women since 1967.

Figure 2 displays the mean incomes presented in Figure 1 as normalized to the peak mean income for each year. The jump of the peak mean income from the age group between 35 and 44 years into the group between 45 and 54 years of age is well seen in the male curves. For women, the peak age is lower and one can observe the change from the group between 10 and 20 years of work experience to the group between 20 and 30 years. This is in line with the dependence of the peak age on mean income. With time the peak mean income will be drifting into elder age groups. Therefore, people with highest income become older over time. The youngest age group has been suffering relative decrease in the portion of total income, i.e. younger people are getting poorer in relative terms.

Figure 2. Same as in Figure 1 normalized by the peak mean income for given year.

Finally, Figure 3 displays the normalized mean income dependence on age for both sexes. The observed curves also show the increase in the work experience with peak income.
Figure 3. Same as in Figure 2 for the overall population with income.

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