≡ Menu

Quotation of the Day…

… is from pages 135-136 of the late, great Wesleyan University economic historian Stanley Lebergott’s insightful 1975 book, Wealth and Want (footnote deleted; link added):

When an economy shifts from underemployment to high employment, incomes will rise. Reported income inequality may rise in consequence. For example, the increase in U.S. incomes from the 1930s to the 1940s led elderly persons to move out of their children’s homes into rooms and apartments of their own. Presumably both the older persons and the families with growing children found that separate establishments provided a real advance in their welfare. Yet the usual income distribution data will report an increase in inequality: the number of “low-income families” – in the form of newly created “families” of older persons who had previously been included with their children – has increased.

Similarly, the stronger the labor market, the earlier young people find work and establish homes of their own. As a result, instead of one family being reported, with a combined income including the incomes of young persons and older persons, two families will be reported – each with a lower income.