The Racial Structure of Economic Inequality in the United States: Understanding Change and Continuity in an Era of “Great Divergence”*

The “great divergence” of America's rich from its middle class and poor has led some observers to see a country increasingly stratified by income and wealth, more so than by race. In this article, the first in a two‐part series, we argue that this conclusion overlooks the persistent importance of the racial “structure” of inequality. A decomposition of income inequality between 1980 and 2010 using the Theil Index shows that inequality between racial groups accounts for a rising share of total income inequality over this period nationally and in most states. We also demonstrate that within‐state trends in the between‐race component of inequality are not fully accounted for by trends in income inequality and racial diversity per se. These findings lay the groundwork for a forthcoming companion piece in Social Science Quarterly that shows that between‐race inequality is strongly linked to welfare policy outcomes in the United States.