Economic Inequality, Social Safety Nets, and Distributional Outcomes: Understanding the Stratified Nature of Redistribution Mechanisms in the U.S., 1990-2012

Sarah K. Bruch, University of Iowa
Marcia K. Meyers, University of Washington
Janet C. Gornick, City University of New York (CUNY)

This paper examines the distributional consequences for income inequality and household income packages of the U.S. tax and transfer system from 1990 to 2012. Using household level data from the Current Population Annual Social and Economic Supplement and NBER’s TAXSIM program, we examine the contribution of four redistributive mechanisms (national social insurance, decentralized social assistance, state taxes and national taxes) to the household income package, and the reduction of market generated income inequalities for the population as a whole and for different types of households. In preliminary work, we find that while each mechanism reduces inequality, the categorical structure of U.S. tax and transfer policies sorts individuals and households into different tiers of programs that vary by policy design features and structure, and that this sorting results in stratified progressivity in income redistribution which reinforces status differences by sorting lower status households into programs that have the weakest redistributive capacity.