At Notes On Liberty Vincent Gelloso presents data suggesting that, due to inadequacies of the pre-World War II data, the widely accepted “U”-shaped model of income inequality in the United States is wrong:
In our paper, we highlight how the state-level data is conceptually superior to the federal-level data. The problem that we face is that we cannot convert those measures into adjustments for the national level of inequality. All that our data do is suggest which way the bias cuts. While we find this unfortunate, we highlight that this would unavoidably alter the left side of the curve in the first graph of this blog post. The initial level of inequality would be less than it is now. Thus, combining this with the criticisms made for the post-1960 era, we may be in presence of a U-curve that looks more like a shallow tea saucer than the pronounced U-curve generally highlighted. The U-curve form is not invalidated (i.e. is it a quadratic-looking function of time or not), but the shape of the curve’s tails is dramatically changed.
I find that even more damning of the present day than the conventional model. For one thing it doesn’t suggest a return to the status quo ante but a relatively new phenomenon.