This paper finds that capital and labor incomes in the United States have become more closely associated since the 1980s. This contributed to the well-known increase in the top 1 percent's share of total income, exacerbating rising inequality in capital incomes and earnings. The paper shows that the trend in the association is U-shaped, as the recent increase contrasts with a tendency toward a weakening association until the 1980s. The paper uses data derived from tax records, studies the asymmetries in the association, tests for robustness to alternative income definitions, and discusses the potential role of declining top marginal tax rates.
Details
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Author
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Document Date
2017/12/11
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Document Type
Policy Research Working Paper
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Report Number
WPS8268
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2017/12/11
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Disclosure Status
Disclosed
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Doc Name
Capital and labor : the factor income composition of top incomes in the United States, 1962-2006
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Keywords
capital income; labor income; income share; top marginal tax rate; factor income; self-employment income; top personal tax rate; increase in income inequality; tax return; capital gain; income components; robustness check; federal income tax; share of income; tax records; internal revenue service; share of capital; total taxable income; corporate tax rate; world war ii; income tax return; income source; marginal distribution; public use; entrepreneurial income; summary statistic; wage distribution; modern economy; wage income; gross income; labor share; income composition; individual taxpayer; negative incomes
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Citation
Atkinson,Anthony B. Lakner,Christoph
Capital and labor : the factor income composition of top incomes in the United States, 1962-2006 (English). Policy Research working paper,no. WPS 8268 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/260871513017553079/Capital-and-labor-the-factor-income-composition-of-top-incomes-in-the-United-States-1962-2006