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The Divide among the Rich: Within-Group Inequality at the Top of the U.S. Income Distribution

Author

Listed:
  • Hyeongwoo Kim
  • Donggyu Sul

Abstract

We employ an alternative decomposition framework to assess group-level contributions to economic inequality. Using microdata from 1962 to 2019, we show that the rise in U.S. inequality has been driven primarily by increasing within-group dispersion among top earners rather than by differences in average income across groups. Although inequality growth slowed after 2000, partly reflecting a moderation in the growth of within-top-decile dispersion, the dominant share of post-2000 pre-tax income inequality remains attributable to within-top-decile variation, with the top 1% playing a particularly important role. Post-tax measures exhibit a weaker but similar pattern. Further decomposition by income source identifies rising dispersion in labor income within top-income groups as a key driver of the increase in U.S. inequality.

Suggested Citation

  • Hyeongwoo Kim & Donggyu Sul, 2026. "The Divide among the Rich: Within-Group Inequality at the Top of the U.S. Income Distribution," Auburn Economics Working Paper Series auwp2026-07, Department of Economics, Auburn University.
    • Handle: RePEc:abn:wpaper:auwp2026-07
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    File URL: https://cla.auburn.edu/econwp/Archives/2026/2026-07.pdf
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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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