Working Paper: NBER ID: w22945
Authors: Thomas Piketty; Emmanuel Saez; Gabriel Zucman
Abstract: This paper combines tax, survey, and national accounts data to estimate the distribution of national income in the United States since 1913. Our distributional national accounts capture 100% of national income, allowing us to compute growth rates for each quantile of the income distribution consistent with macroeconomic growth. We estimate the distribution of both pre-tax and post-tax income, making it possible to provide a comprehensive view of how government redistribution affects inequality. Average pre-tax national income per adult has increased 60% since 1980, but we find that it has stagnated for the bottom 50% of the distribution at about $16,000 a year. The pre-tax income of the middle class—adults between the median and the 90th percentile—has grown 40% since 1980, faster than what tax and survey data suggest, due in particular to the rise of tax-exempt fringe benefits. Income has boomed at the top: in 1980, top 1% adults earned on average 27 times more than bottom 50% adults, while they earn 81 times more today. The upsurge of top incomes was first a labor income phenomenon but has mostly been a capital income phenomenon since 2000. The government has offset only a small fraction of the increase in inequality. The reduction of the gender gap in earnings has mitigated the increase in inequality among adults. The share of women, however, falls steeply as one moves up the labor income distribution, and is only 11% in the top 0.1% today.
Keywords: Income Inequality; National Accounts; Redistribution; Economic Growth
JEL Codes: E01; H2; H5; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| macroeconomic growth (O11) | stagnation of income for lower-income groups (D31) |
| policy changes (J18) | rising income inequality (D31) |
| government redistribution (H23) | increase in posttax income for bottom 50% (H24) |
| rise in income inequality (D31) | driven by capital income (D33) |
| reduction of gender gap in earnings (J79) | alleviated inequality (I24) |