University of Kentucky
Stalled Progress? Five Decades of Black-White and Rural-Urban Income Gaps
Grade Level at Time of Presentation
Senior
Major
Mathematical Economics
Minor
Political Science, Statistics
Institution 23-24
University of Kentucky
KY House District #
91
KY Senate District #
34
Faculty Advisor/ Mentor
James Ziliak, PhD
Department
Department of Economics
Abstract
We examine the contribution of the U.S. tax and social safety net to ameliorating racial and geographic household income gaps. Using nearly five decades of data from the Current Population Survey Annual Social and Economic Supplement, we make a comparative assessment of after-tax and transfer Black-White and rural-urban household income gaps in relation to similar gaps based solely on household earnings. Our results paint a mixed portrait of economic progress of Black and rural households relative to their White and urban counterparts over the last 50 years. The tax and transfer system in any given year provides substantial redistribution to low-income Black and rural households, which has resulted in a narrowing of level gaps over time. However, those same level gaps have been exacerbated in the upper tail of the distribution, suggesting the tax code does not undo the underlying economic forces pulling White and urban incomes apart from Black and rural households in the top half of the distribution. This is borne out in the stagnation of rank positional gaps across race and geography.
Stalled Progress? Five Decades of Black-White and Rural-Urban Income Gaps
We examine the contribution of the U.S. tax and social safety net to ameliorating racial and geographic household income gaps. Using nearly five decades of data from the Current Population Survey Annual Social and Economic Supplement, we make a comparative assessment of after-tax and transfer Black-White and rural-urban household income gaps in relation to similar gaps based solely on household earnings. Our results paint a mixed portrait of economic progress of Black and rural households relative to their White and urban counterparts over the last 50 years. The tax and transfer system in any given year provides substantial redistribution to low-income Black and rural households, which has resulted in a narrowing of level gaps over time. However, those same level gaps have been exacerbated in the upper tail of the distribution, suggesting the tax code does not undo the underlying economic forces pulling White and urban incomes apart from Black and rural households in the top half of the distribution. This is borne out in the stagnation of rank positional gaps across race and geography.