	Introduction

The historically slow pace of recovery in the labor market from the 2007-2009 recession appears to be partly responsible for the renewed interest among some members of the public policy community in the long-term trend of growing inequality in the distribution of income. In other words, the benefits of economic growth (e.g., higher national income) began accruing unequally across U.S. households long before the late 2000s. Inequality is the label commonly applied to income distributions in which a group's share of total income is larger (smaller) than its share of the population (e.g., the top 20% of U.S. households accounted for slightly more than 50% of aggregate household income in 2011, as shown in Table 1 .) This report presents recent analysis of the distribution of income and the extent of income mobility in the United States over time and in comparison with other advanced economies. The report then compares the U.S. income distribution with the distributions of other industrialized countries and presents explanations for cross-country differences in measures of income dispersion. To the degree that a more equal distribution of income arises from policy decisions rather than market forces, the willingness of a country to incur any economic costs related to attaining greater equality may reflect varying national beliefs about the opportunity to ascend the income ladder. If aggregate income was equally divided across households with income, each quintile would account for 20% of total money income. Between 1968 and 2011, the income share of the three middle quintiles fell from 53.2% to 45.7% (see Table 1 ). Although there is no official definition of the middle class, the middle 60% of households is sometimes regarded as such. In contrast, the income shares of the top fifth and the top 5% of households generally have risen from year to year. The top 20%'s share grew from 42.6% in 1968 to 51.1% in 2011, and the top 5%'s share grew from 16.3% to 22.3%. First, many other countries devote a much larger share of their national output (gross domestic product, GDP) to income transfers, which have an equalizing effect on the distribution of income. Second, taxes in these countries vary with respect to progressivity, and thus have different effects on the distribution of after-tax income. Third, equality in the distribution of earnings, which make up the majority of household income, varies substantially from one country to another. Whereas they found that, compared with the other countries analyzed, social transfers make up a low percentage of the U.S. budget and are not as well targeted at those at the bottom of the income distribution; the researchers suggest that the refundable Earned Income Tax Credit (EITC) "makes the US tax system rather progressive." The results of a study that compared the relationship between individuals' perceptions of their well-being and the extent of inequality in the United States and Europe suggest that inequality in the distribution of income is less important to people in the United States due to Americans believing that they live in a comparatively mobile society. More specifically, between 20% and 30% of children whose fathers were in the bottom fifth of the earnings distributions remained at the bottom as adults, but for the United States, about 40% of children stayed in the bottom fifth. Families, whether they started at the bottom or top of the income distribution, became increasingly less likely to move up or down the income ladder during their working lives. Concluding Remarks

Measures of income dispersion show a distribution of income across U.S. households that has become comparatively more unequal over time as high-income U.S. households have benefitted disproportionately from economic growth and that is less equal compared with distributions in many other developed countries. It also appears that going from rags to riches is relatively rare; that is, where one starts in the U.S. income distribution greatly influences where one ends up.
The historically slow rebound in the labor market from the 2007-2009 recession appears to be partly responsible for the current focus of some within the public policy community on the unequal distribution of the benefits of economic growth (e.g., higher national income) across U.S. households. This report examines changes over time and across countries in the shape of the income distribution to afford Members of Congress a broader perspective when deliberating such policy issues as the progressivity of income tax rates, the generosity of social insurance programs, and the level of the minimum wage.
If income were equally divided across households, each quintile (fifth) of households would account for 20% of total income. Inequality is the term commonly used to describe an income distribution in which one or more quintiles account for less (more) than 20% of aggregate income. The Congressional Budget Office and others have documented that the bottom fifth has long accounted for much less than its proportionate share (20%) of total income. The bottom quintile's share of income has remained little changed for the past few decades at less than 4%, according to U.S. Census Bureau data. The middle class, defined as the middle 60% of households, received a disproportionately smaller share of the total economic pie in 2011 (45.7%) than in 1968 (53.2%). Over the same period, the disproportionately large income shares of the top 20% and the top 5% of households have trended upward. The top fifth's share of total household income rose from 42.6% in 1968 to 51.1% in 2011; the top 5%'s share rose from 16.3% to 22.3%. Estimates derived from federal income tax data, which allow researchers to look within the top 5% of the U.S. income distribution, suggest that those at the very top have reaped disproportionately larger gains from economic growth. These, among other measures of income dispersion, have led analysts to conclude that inequality has increased in the United States as a result of high-income households pulling further away from those lower in the distribution.
Based on the limited data that are comparable across nations, the U.S. income distribution appears to be among the most unequal of all major industrialized countries and the United States appears to be among the nations experiencing the greatest increases in measures of income dispersion. Three leading explanations are put forth for these cross-country differences: (1) other advanced economies devote a larger share of national output to transfers, which tends to equalize income across households; (2) the progressivity of tax rates varies by country and thus has different effects on the distribution of after-tax income; and (3) equality in the distribution of earnings, which account for most household income, varies substantially across countries.
The extent to which countries undertake policies that affect their income distributions may reflect national differences in perceptions about the degree of income mobility. In the United States, a longstanding argument against redistributionary policies has been that each person has an equal opportunity to move up the income ladder. Research raises questions about whether Americans' perceptions of their likelihood of upward mobility are exaggerated. Empirical analyses estimate that the United States is a comparatively immobile society, that is, where one starts in the income distribution influences where one ends up to a greater degree than in several advanced economies. Children raised in families at the bottom of the U.S. income distribution are estimated to be especially less likely to ascend the income ladder as adults.