Figure 7.12 in the "Macroeconomics" textbook by Chad Jones characterizes the "distribution" of income growth in the United States. From the list of statements below, select all that are correct.

Note: If you are interested, the New York Times has a dynamic chart that plots the average 34-year income growth for every year between 1980 and 2014. It's available here
Links to an external site.
(if you don't have a New York Times subscription, try to access the link through the library portal).

Question

Figure 7.12 in the "Macroeconomics" textbook by Chad Jones characterizes the "distribution" of income growth in the United States. From the list of statements below, select all that are correct.

Note: If you are interested, the New York Times has a dynamic chart that plots the average 34-year income growth for every year between 1980 and 2014. It's available here
Links to an external site.
 (if you don't have a New York Times subscription, try to access the link through the library portal).

BlackTom AI · Accepted Answer

To approach this question, I will evaluate each statement against the pattern shown in Figure 7.12 and the accompanying discussion about income growth distributions.
Option 1: Real incomes (per capita) converged from 1946 to 1980.
This statement aligns with the standard postwar convergence narrative: per-capita real incomes tended to become more similar across the distribution during the mid-20th century, with slower divergence after mid-century. If the figure highlights a period where dispersion narrows between groups, this option would be consistent with that pattern.
Option 2: Real incomes (per capita) converged from 1980 to 2014.
If the data show widening dispersion or persistent inequality after 1980, this option would be incorrect. In the modern U.S. distribution, the long-run trend often points to greater divergence among percentile groups rather than convergence, so this statement is likely false.
Option 3: Economic growth causes inequality.
This is a broad causal claim. While some growth periods accompany rising dispersion, the figure typically illustrates distributional changes rather than establishing a direct causal link from growth to inequality. Without a clear causal claim in the chart, this statement is not something one would derive as a definite takeaway from the distribution alone, making it an unfounded generalization in this context.
Option 4: Inequality undermines economic growth.
This is a normative or theoretical assertion about causality in the opposite direction (from inequality to growth). The figure on income growth distribution shows who gains, but it does not by itself prove that inequality undermines growth. Therefore, this statement would be considered unsupported by the displayed distribution data, making it unlikely to be a correct takeaway from the chart alone.
Option 5: For households at or below the 90th percentile of the income distribution in 1980 and 2014, average income growth in the previous 34 years was higher in 1980 than in 2014.
This option directly references a specific comparison across two time points (1980 vs 2014) for a defined group (<=90th percentile) over a 34-year window, which matches the description in the prompt about the New York Times dynamic chart and the distribution of income growth. If the figure or accompanying text notes stronger growth over the earlier 34-year span (leading up to 1980) for lower-to-middle portions of the distribution relative to the later period, this statement would be correct.
In summary, the statements that coherently reflect the typical interpretation of the distribution plots in this context are: the convergence from 1946 to 1980 (Option 1) and the specific 1980 vs 2014 comparison for the 90th percentile and below (Option 5). The remaining options either describe broader causal claims not directly supported by the distribution figure (Options 3 and 4) or assert convergence in a period where the data more commonly show persistent or rising inequality (Option 2).

FA25 ECON 302 002 Homework #5 (Labor Market)

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