Working Paper: NBER ID: w11955
Authors: Thomas Piketty; Emmanuel Saez
Abstract: This paper summarizes the main findings of the recent studies that have constructed top income \nand wealth shares series over the century for a number of countries using tax statistics. Most countries experience a dramatic drop in top income shares in the first part of the century due to a precipitous drop in large wealth holdings during the wars and depression shocks. Top income shares do not recover in the immediate post war decades. However, over the last 30 years, top income shares have increased substantially in English speaking countries but not at all in continental Europe countries or Japan. This increase is due to an unprecedented surge in top wage incomes starting in the 1970s and accelerating in the 1990s. As a result, top wage earners have replaced capital income earners at the top of the income distribution in English speaking countries. We discuss the proposed explanations and the main questions that remain open.
Keywords: No keywords provided
JEL Codes: D3; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Shocks to capital owners during wars and the Great Depression (N13) | drop in top income shares (E25) |
| introduction of progressive taxation (H29) | recovery of top capital incomes (D33) |
| shift from capital income to wage income at the top of the income distribution (D33) | increase in top income shares (D33) |