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American Standards of Living:1918-1988


1. Frank Levy, Dollars and Dreams, New York:W. W. Norton, 1988, documents how the slower income and productivity growth, combined with demographic trends, has changed the American income distribution. Overall, the position of the elderly has improved, the position of children has deteriorat-ed, and sons face a lower earnings profile than their fathers. Paul Krugman, The Age of Diminished Expectations, Cambridge: MIT Press, 1990, explores the macroeconomic foundations of the decline in income and productivity growth and the role that United States economic policy played.

2. Funeral expenses and occupational expenses are also included in miscellaneous. Over the years, these two categories declined substantially in their importance. On the theoretical development of transactions costs, see Oliver Williamson, The Economic Institutions of Capitalism. New York: Free Press, 1985.

3. David M. Cutler and Lawrence F. Katz in "Rising Inequality? Changes in the Distribution of Income and consumption in the 1980s," paper presented to the AEA meetings, January 1992, present data that shows the lowest quintile in the family income distri-bution had a higher share of consumption in 1973 than in 1960 or during the 1980s and that their share of consumption continued to fall during the 1980s, largely as a result of their relative increase in family size. Cutler and Katz also estimated the 1989 poverty rates based on consumption were 18% for children under 18 years old and 5% for seniors (over 65 years old).

4. This and the following data on life expectancy and death rates are form Historical Statistics and Statistical Abstract of the United States, various issues. Death rates should be used with caution since they are not adjusted for comparability.
5. Employed families met basics in medical care provided they had a major medical health insurance policy sponsored by their employer.

6. J. K. Galbraith, The Affluent Society. 4th edition, Boston: Houghton Mifflin, 1984.

7. See, for example, Newman, Declining fortunes (1993).

8. Congress of the United States, Congressional Budget Office, Baby Boomers in Retirement: An Early Perspective, Washington, D.C., 1993. The parents of the baby boomers are defined to be people aged 55 to 74 in 1989. Two notable exceptions to the average improvement in the economic situation of the baby boomers are those without a high school degree and those who are unmarried with children. In general, the financial position of the older baby boomers, those born before 1955, was even more improved than that of the younger boomers born after 1995. However, real wealth of the older boomers who are not homeowners fell.

9. One of every four boomers had completed four years of college by 1989.

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