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Estimating Trends in US Income Inequality Using the Current Population Survey: The Importance of Controlling for Censoring

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  • Burkhauser, Richard V.

    (University of Texas at Austin)

  • Feng, Shuaizhang

    (Shanghai University of Finance and Economics)

  • Jenkins, Stephen P.

    (London School of Economics)

  • Larrimore, Jeff

    (Federal Reserve Board)

Abstract

Using internal and public use March Current Population Survey data, we analyze trends in US income inequality (1975–2004). Using a multiple imputation approach where values for censored observations are imputed using draws from a Generalized Beta distribution of the Second Kind, we find that the upward trend in income inequality significantly slowed after 1993. Our results closely match the income share trends reported by Piketty and Saez (2003) except for within the top 1 percent of the distribution. Thus, we argue that if inequality has increased substantially since 1993, such increases are confined to this very high income group.

Suggested Citation

  • Burkhauser, Richard V. & Feng, Shuaizhang & Jenkins, Stephen P. & Larrimore, Jeff, 2008. "Estimating Trends in US Income Inequality Using the Current Population Survey: The Importance of Controlling for Censoring," IZA Discussion Papers 3690, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3690
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    Keywords

    CPS; topcoding; censoring; inequality; time trend; US income inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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