Association for Public Policy Analysis & Management

Income inequality has been rising in the United States since the 1970s. Little is known about how persons with disabilities have fared in this context. This paper studies trends in income inequality across and within disability status and will attempt to assess the determinants of such trends, including the changing roles of the labor market and disability programs. The objective is to examine income inequality as it relates to individuals and families with disabilities.

We use data from the March supplement of the Current Population Survey (CPS) from 1980 to 2015 using the work limitation disability measure of the CPS and from 2007 to 2015 using a disability measure based on six questions on functional limitations. We supplement these findings with data from the Survey of Income and Program Participation (SIPP) for 1984 to 2013 using work limitation and impairment measures.

We construct annual time series of shares of total income accruing to persons with and without disabilities within each decile of the income distribution, and construct measures of the progressivity of Disability Insurance and Supplemental Security Income benefits and other relevant benefits (Kakwani 1977). We compute additional measures of income inequality, such as the generalized entropy indexes for persons with and without disabilities, which are decomposable across population subgroups (Shorrocks 1984) and by factors or income sources (Fields 2003). We can thus measure the contribution of disability to income inequality across persons and households, and also measure the offsetting impact of disability benefits. We also investigate the effects of disability not just for disabled workers, but for workers with a family member with a disability.

The contribution is to examine for the first time income inequality as it relates to disabled workers, and more generally individuals and families with disabilities, which has been an under researched area.

References:

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Kakwani, N. C. 1977. “Measurement of Tax Progressivity: An International Comparison.” The Economic Journal 87(345): 71-80.

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