Rising Inequality: Transitory or Persistent? New Evidence from a Panel of U.S. Tax Returns

DeBacker, Jason; Heim, Bradley T.; Panousi, Vasia; Ramnath, Shanthi; Vidangos, Ivan

doi:10.1353/eca.2013.0004

Cited by 80 publications

(41 citation statements)

References 46 publications

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“…The permanence of shocks to the income distribution is consistent with the evolution of income inequality between 1983 and 2008, and with the evidence of Kopczuk, Saez, and Song (2010) and DeBacker et al (2013). It is nevertheless interesting to ask what quantitative role pure consumption smoothing, in the complete absence of a wealth accumulation motive, could play if shocks to the income distribution were perceived to be more temporary.…”

Section: E Pure Consumption Smoothing and Shock Persistencesupporting

confidence: 59%

Inequality, Leverage, and Crises

Kumhof

Rancière

2015

American Economic Review

499

373

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International audienceThe paper studies how high household leverage and crises can be caused by changes in the income distribution. Empirically, the periods 1920-1929 and 1983-2008 both exhibited a large increase in the income share of high-income households, a large increase in debt leverage of low- and middle-income households, and an eventual financial and real crisis. The paper presents a theoretical model where higher leverage and crises are the endogenous result of a growing income share of high-income households. The model matches the profiles of the income distribution, the debt-to-income ratio and crisis risk for the three decades preceding the Great Recession

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Section: E Pure Consumption Smoothing and Shock Persistencesupporting

confidence: 59%

Inequality, Leverage, and Crises

Kumhof

Rancière

2015

American Economic Review

499

373

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“…2 DeBacker et al (2013) use a large panel of tax returns to study income dynamics in the U.S. over the period 1987-2009. 3 Their estimates point to the importance of allowing for time dependence in the variance components of income.…”

Section: Introductionmentioning

confidence: 99%

Labor income dynamics and the insurance from taxes, transfers and the family

Blundell

Graber

Mogstad

2014

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What do labor income dynamics look like over the life-cycle? What is the relative importance of persistent shocks, transitory shocks and heterogeneous profiles? To what extent do taxes, transfers and the family attenuate these various factors in the evolution of life-cycle inequality? In this paper, we use rich Norwegian population panel data to answer these important questions. We let individuals with different education levels have a separate income process; and within each skill group, we allow for non-stationarity in age and time, heterogeneous experience profiles, and shocks of varying persistence. We find that the income processes differ systematically by age, skill level and their interaction. To accurately describe labor income dynamics over the life-cycle, it is necessary to allow for heterogeneity by education levels and account for non-stationarity in age and time. Our findings suggest that the redistributive nature of the Norwegian tax-transfer system plays a key role in attenuating the magnitude and persistence of income shocks, especially among the low skilled. By comparison, spouse's income matters less for the dynamics of inequality over the life-cycle.

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“…Again, results for other years, income measures, and stratum are available upon request. 16 See, for example, DeBacker et al, (2013), Guvenen, Kaplan, and Song (2014), and Parker and Vissing-Jorgenson (2010).…”

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confidence: 99%

Measuring Income and Wealth at the Top Using Administrative and Survey Data

Bricker

Henriques

Krimmel

et al. 2015

FEDS

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Administrative tax data indicate that U.S. top income and wealth shares are substantial and increasing rapidly (Piketty andSaez 2003, Saez andZucman 2014). A key reason for using administrative data to measure top shares is to overcome the under-representation of families at the very top that plagues most household surveys. However, using tax records alone restricts the unit of analysis for measuring economic resources, limits the concepts of income and wealth being measured, and imposes a rigid correlation between income and wealth. The Survey of Consumer Finances (SCF) solves the under-representation problem by combining administrative and survey data (Bricker et al, 2014). Administrative records are used to select the SCF sample and verify that high-end families are appropriately represented, and the survey is designed to measure comprehensive concepts of income and wealth at the family level. The SCF shows high and rising top income and wealth shares, as in the administrative tax data. However, unadjusted, the levels and growth based on administrative tax data alone appear to be substantially larger. By constraining the SCF to be conceptually comparable, we reconcile the differences, and show the extent to which restrictions and rigidities needed to estimate top income and wealth shares in the administrative data bias up levels and growth rates. JEL Codes: D31, D63, H21 Board of Governors of the Federal Reserve System, Washington, DC.2 Corresponding author, jesse.bricker@frb.gov. The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors. We would like to thank our colleagues on the SCF project who made this research possible: Lisa Dettling, Sebastian Devlin-Foltz, Joanne Hsu, Kevin B. Moore, Sarah Pack, Max Schmeiser, Jeff Thompson, and Richard Windle. We also thank Diana Hancock, Arthur Kennickell, Wojciech Kopczuk, Victor Rios-Rull, Emmanuel Saez, Gabriel Zucman, and seminar participants at the Federal Reserve Board, the Bank of England, the Bank of Spain, and the HFCN meeting at the European Central Bank for input and comments on earlier versions of this paper. The corresponding author also thanks Olympia Bover and the Bank of Spain for hospitality at the early stages of this paper. Finally, we are grateful to Michael Parisi for providing SOI income growth rate tabulations and to Barry Johnson and the SOI staff for contributions to the SCF sample design.

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Rising Inequality: Transitory or Persistent? New Evidence from a Panel of U.S. Tax Returns

Cited by 80 publications

References 46 publications

Inequality, Leverage, and Crises

Inequality, Leverage, and Crises

Labor income dynamics and the insurance from taxes, transfers and the family

Measuring Income and Wealth at the Top Using Administrative and Survey Data

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