Abstract
This paper’s main objective was to explore the determinants of income inequality using real median household income in the United States. This paper utilizes time series analysis to examine the Gini coefficient, trends in the top 1%’s share of wealth, and the relationship between real median income and varying demographics. The Gini coefficient is a summary measure of income inequality in a country. Income inequality is how unevenly income is distributed throughout a population. The results show that there is a negative correlation between the top 1%’s share of total wealth and the United States Gini rating, and that inequality in the United States has been steadily increasing. This study utilizes panel data analysis through fixed effects, random effects, and pooled ordinary least squares. The study observed the two determinants that had the most impact on real median household income were poverty, which was significantly negative, and human capital, which was significantly positive.
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