Long-Run Changes in the U.S. Wage Structure: Narrowing, Widening, Polarizing," NBER Working Papers 13568

Papers on Economic Activity commenced publication—America enjoyed widespread prosperity. Not only did the national economy grow rapidly, driven by robust productivity growth, but all parts of the income distri-bution expanded at fairly similar rates. America was “growing together.” But in the mid-1970s economic growth slowed. By the early 1980s the wage structure had begun a period of widening that has lasted until the present day. Even though productivity growth surged again starting in the mid-1990s, the benefits of economic growth have been concentrated at the top end of the distribution.1 America has been “growing apart.” These “growing together ” and “growing apart ” patterns are evident in figure 1, which compares real income growth across the family income dis-tribution for the postwar period before 1973 with that after 1973. Before 1973, real income growth was a bit faster near the bottom of the distribution and somewhat slower near the top, making the changes modestly equalizing. In sharp contrast, from 1973 to 2005 family incomes virtually stagnated for the lowest quintile but grew more than three times as rapidly for the top 5 percent as for the middle quintile