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The Feasibility of a Quarterly Distribution of Personal Income

Author

Listed:
  • Dennis J. Fixle
  • Marina Gindelsky
  • Robert Kornfeld

    (Bureau of Economic Analysis)

Abstract

The U.S. Bureau of Economic Analysis (BEA) conducted a feasibility study to evaluate whether it is possible to produce a quarterly distribution of personal income and construct inequality metrics that are valid, informative, and transparent. The primary obstacles to producing such estimates are the lack of available quarterly microdata and inability to follow households over time (panel data). Therefore, we cannot account for household behavioral responses to shocks, such as applying for transfers after a wage loss, or participating in the gig economy, and we miss interdependency of these income sources. In this paper, BEA presents estimates of an interpolated quarterly distribution for 2007–2018. The estimates are driven by changes in aggregate income composition, such that the average of the quarterly estimates for each year is equal to the annual estimate. Many sources of data were considered to improve the quarterly estimates. An in-sample forecast exercise using a simplified methodology shows reasonable results during stable growth years but significantly underestimates inequality during periods of economic volatility (Great Recession and recovery). Forecast results can incorrectly show rising (falling) inequality during quarters when it is falling (rising).

Suggested Citation

  • Dennis J. Fixle & Marina Gindelsky & Robert Kornfeld, 2021. "The Feasibility of a Quarterly Distribution of Personal Income," BEA Working Papers 0191, Bureau of Economic Analysis.
    • Handle: RePEc:bea:wpaper:0191
    as

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    File URL: https://www.bea.gov/system/files/papers/BEA-WP2021-8_1.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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