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Levels and Trends in U.S. Income and its Distribution: A Crosswalk from Market Income towards a Comprehensive Haig-Simons Income Approach

Author

Listed:
  • Philip Armour

    () (Cornell University, Department of Economics, 404 Uris Hall, Cornell University, Ithaca, NY 14853, USA)

  • Richard V. Burkhauser

    () (Cornell University and the University of Melbourne, Department of Policy Analysis and Management, 259 MVR Hall, Cornell University, Ithaca, NY 14853, USA)

  • Jeff Larrimore

    () (Federal Reserve Board, 20th and Constitution Avenue, Washington, DC 20551, USA)

Abstract

Recent research on U.S. levels and trends in income inequality varies substantially based on how these studies measure income. We crosswalk (move between standards) from a market income of tax units to a more comprehensive measure of income including realized capital gains of households using a unified data set and replicate common findings in the literature. By using a comprehensive income definition in the spirit of Haig-Simons, considering yearly accrued capital gains rather than focusing on the delayed reporting of capital gains that appear in Internal Revenue Service tax return data, the observed growth in income inequality and top income shares since 1989 is dramatically reduced.

Suggested Citation

  • Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2014. "Levels and Trends in U.S. Income and its Distribution: A Crosswalk from Market Income towards a Comprehensive Haig-Simons Income Approach," Southern Economic Journal, Southern Economic Association, vol. 81(2), pages 271-293, October.
  • Handle: RePEc:sej:ancoec:v:81:2:y:2014:p:271-293
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    File URL: http://dx.doi.org/10.4284/0038-4038-2013.175
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    Citations

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    Cited by:

    1. Richard V. Burkhauser & Nicolas Hérault & Stephen P. Jenkins & Roger Wilkins, 2016. "What has Been Happening to UK Income Inequality Since the Mid-1990s? Answers from Reconciled and Combined Household Survey and Tax Return Data," NBER Working Papers 21991, National Bureau of Economic Research, Inc.
    2. Kitov, Ivan & Kitov, Oleg, 2015. "Gender income disparity in the USA: analysis and dynamic modelling," MPRA Paper 67146, University Library of Munich, Germany.
    3. Bruce D. Meyer & James X. Sullivan, 2017. "Consumption and income inequality in the US since the 1960s," AEI Economics Working Papers 953873, American Enterprise Institute.
    4. Larrimore, Jeff & Mortenson, Jacob & Splinter, David, 2015. "Income and Earnings Mobility in U.S. Tax Data," Finance and Economics Discussion Series 2015-61, Board of Governors of the Federal Reserve System (U.S.).
    5. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Measuring Income and Wealth at the Top Using Administrative and Survey Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 261-331.
    6. Looney, Adam & Moore, Kevin B., 2015. "Changes in the Distribution of After-Tax Wealth: Has Income Tax Policy Increased Wealth Inequality?," Finance and Economics Discussion Series 2015-58, Board of Governors of the Federal Reserve System (U.S.).

    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
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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