New Perspectives on Income Mobility and Inequality

Abstract

This study examines several dimensions of income mobility and inequality-mobility of individuals through their peak earnings years, intergenerational mobility, and persistence in the top 1 percent. Its main fi ndings can be summarized as follows. Half of those age 35-40 in the bottom quintile of their cohort moved to higher quintiles 20 years later; over 60 percent moved up relative to the full population. About 70 percent of dependents from low-income households were themselves in higher quintiles 20 years later. Younger generations gradually replaced those that dominated the top percentile in 1987. The results show the importance of life cycle effects and the changing composition of top income groups.

The potential of tax microdata for tax policy

“…The large-scale of tax microdata supports more advanced research designs including quasi-experimental research, natural experiments and rare event analysis that would be otherwise not be feasible with traditional data sources. Such analysis can be enhanced by borrowing the new econometric techniques from the so-called 'credibility revolution' in empirical economics (Angrist and Pischke, 2010 [54]).…”

Top Income Concentration and Volatility

“…They find that the probability of remaining at the top of the earnings distribution for consecutive years was steady or slightly rising between the late 1970s and the early 1990s, at which point the probability of remaining at the top started to decline. Auten, Gee, and Turner (2013) In this paper, we extend both of these earlier papers in different ways. Kopczuk, Saez, and Song (2010) are evaluating top-earning workers, whereas we are looking to high-income households.…”

“…In doing so, this paper is most similar to Kopczuk, Saez, and Song (2010) and Auten, Gee, and Turner (2013). Kopczuk, Saez, and Song (2010) with a single year of data, but both measures follow the identical long-term trend.…”

“…income inequality (Piketty Saez, 2003 and updates;DeBacker, Heim, Panousi, Ramnath, and Vidangos, 2012;Auten, Gee, and Turner, 2013;CBO, 2014). Tax returns offer many advantages for studying inequality: the data sets are large, timely, span many years, and include high-income households.…”

Inclusive Growth and Absolute Intragenerational Mobility in the United States, 1962-2014

“…Previous related studies focus on relative mobility measures and on short term mobility at the top of the distribution (Kopczuk, Saez and Song, 2010;Auten, Gee and Turner, 2013;Martínez, 2017), on earnings (Kopczuk, Saez and Song, 2010;Shin and Solon, 2011;Dynan, Elmendorf and Sichel, 2012), on income variability and growth (Splinter, 2018) and on limited subgroups of the population or limited time periods (Fontenay, Gørgens and Liu, 2002). Thus, the primary contribution of this paper is to provide new series on the evolution of absolute intragenerational mobility in the United States.…”