This paper combines income tax returns with macroeconomic household balance sheets to estimate the distribution of wealth in the United States since 1913. We estimate wealth by capitalizing the ...incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations’ tax records. We find that wealth concentration was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The top 0.1% wealth share has risen from 7% in 1978 to 22% in 2012, a level almost as high as in 1929. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of the economy’s labor income. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth inequality in recent decades is due to the upsurge of top incomes combined with an increase in saving rate inequality. We explain how our findings can be reconciled with Survey of Consumer Finances and estate tax data.
This paper summarizes the main findings and perspectives emerging from a collective research project on the dynamics of income and wealth distribution. The primary objective is to construct a ...high-quality, long-run, international database on income and wealth concentration, using historical tax statistics. In this database, the data are annual, long-run time series; they are fairly homogenous across countries; and they are also broken down by income source. Hence they offer a unique opportunity to understand the dynamics of income and wealth distribution and the interplay between inequality and growth.
We present new evidence on trends in intergenerational mobility in the United States using administrative earnings records. We find that percentile rank-based measures of intergenerational mobility ...have remained extremely stable for the 1971-1993 birth cohorts. For children born between 1971 and 1986, we measure intergenerational mobility based on the correlation between parent and child income percentile ranks. For more recent cohorts, we measure mobility as the correlation between a child's probability of attending college and her parents' income rank. We also calculate transition probabilities, such as a child's chances of reaching the top quintile of the income distribution starting from the bottom quintile. Based on all of these measures, we find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. However, because inequality has risen, the consequences of the “birth lottery” - the parents to whom a child is born - are larger today than in the past.
The top 1 percent income share has more than doubled in the United States over the last 30 years, drawing much public attention in recent years. While other English-speaking countries have also ...experienced sharp increases in the top 1 percent income share, many high-income countries such as Japan, France, or Germany have seen much less increase in top income shares. Hence, the explanation cannot rely solely on forces common to advanced countries, such as the impact of new technologies and globalization on the supply and demand for skills. Moreover, the explanations have to accommodate the falls in top income shares earlier in the twentieth century experienced in virtually all high-income countries. We highlight four main factors. The first is the impact of tax policy, which has varied over time and differs across countries. Top tax rates have moved in the opposite direction from top income shares. The effects of top rate cuts can operate in conjunction with other mechanisms. The second factor is a richer view of the labor market, where we contrast the standard supply-side model with one where pay is determined by bargaining and the reactions to top rate cuts may lead simply to a redistribution of surplus. Indeed, top rate cuts may lead managerial energies to be diverted to increasing their remuneration at the expense of enterprise growth and employment. The third factor is capital income. Overall, private wealth (relative to income) has followed a U-shaped path over time, particularly in Europe, where inherited wealth is, in Europe if not in the United States, making a return. The fourth, little investigated, element is the correlation between earned income and capital income, which has substantially increased in recent decades in the United States. PUBLICATION ABSTRACT
On weekday afternoons, dismissal bells signal not just the end of the school day but also the beginning of another important activity: the federally funded after-school programs that offer tutoring, ...homework help, and basic supervision to millions of American children. Nearly one in four low-income families enroll a child in an after-school program. Beyond sharpening students’ math and reading skills, these programs also have a profound impact on parents. In a surprising turn—especially given the long history of social policies that leave recipients feeling policed, distrusted, and alienated—government-funded after-school programs have quietly become powerful forces for political and civic engagement by shifting power away from bureaucrats and putting it back into the hands of parents. In State of Empowerment Carolyn Barnes uses ethnographic accounts of three organizations to reveal how interacting with government-funded after-school programs can enhance the civic and political lives of low-income citizens.
As rents have risen and wages have not kept pace, housing affordability in the United States has declined over the last 15 years, impacting the housing and living arrangements of low-income families. ...Housing subsidies improve the housing situations of low-income families, but less than one in four eligible families receive a voucher. In this article, we analyze whether one of the largest anti-poverty programs in the United States—the Earned Income Tax Credit (EITC)—affects the housing (eviction, homelessness, and affordability) and living arrangements (doubling up, number of people in the household, and crowding) of low-income families. Using the Current Population Survey, the American Community Survey/decennial census, and the Fragile Families and Child Wellbeing Study, we employ a parameterized difference-in-differences strategy to examine whether policy-induced expansions to the EITC affect the housing and living arrangements of single mothers. Results suggest that a $1,000 increase in the EITC improves housing by reducing housing cost burdens, but it has no effect on eviction or homelessness. Increases in the EITC also reduce doubling up (living with additional, nonnuclear family adults)—in particular, doubling up in someone else's home—and reduce three-generation/multigenerational coresidence, suggesting that mothers have a preference to live independently. We find weak evidence for a reduction in overall household size, yet the EITC does reduce household crowding. Although the EITC is not an explicit housing policy, expansions to the EITC are generally linked with improved housing outcomes for single mothers and their children.
This paper combines national accounts, survey, wealth and fiscal data (including recently released tax data on high-income taxpayers) in order to provide consistent series on the accumulation and ...distribution of income and wealth in Russia from the Soviet period until the present day. We find that official survey-based measures vastly under-estimate the rise of inequality since 1990. According to our benchmark estimates, top income shares are now similar to (or higher than) the levels observed in the United States. We also find that inequality has increased substantially more in Russia than in China and other ex-communist countries in Eastern Europe. We relate this finding to the specific transition strategy followed in Russia. According to our benchmark estimates, the wealth held offshore by rich Russians is about three times larger than official net foreign reserves, and is comparable in magnitude to total household financial assets held in Russia.
Sweden has been known for having one of the most equal income distributions in the world. However, in recent decades, Sweden has experienced increasing income inequality. An alternative way of ...measuring the development of inequality is to study and compare the income development within and between two birth cohorts according to gender and different positions of income distribution. The focus in this paper is to study how individual disposable personal income has changed by aging and at various positions of the income distribution, as well as the gender disposable income gap and intragenerational income mobility. Three positions of the income distribution were chosen: percentile 10; median; and percentile 99. Two cohorts, including all individuals born in 1948 and 1958, were tracked from 35 years of age to 53 years of age – with two 18-year overlapping periods, 1983–2000, and 1993–2010. The results show a complex and multifaceted image of the development of income inequality and mobility, within and between the two birth cohorts. Especially male low-income earners, born 1958, have been left behind. Income mobility differ according to gender where women have increased mobility in the bottom quintile and decreased in the top quintile, men experienced the opposite. When modelling mobility education have decreased to contribute to an upward mobility, especial for cohort born 1958. Taking all the results together, the development of increasing income inequality in Sweden is apparent.
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