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The Structure of the U.S. Income Distribution

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  • Conrad Kosowsky

Abstract

I show that U.S. incomes follow a one-parameter family of probability distributions over more than fifty years of data. I compare statistical models of income, and I highlight the inverse-gamma distribution as a parsimonious model that matches data particularly well and has straightforward theoretical interpretations. However, despite having relatively few parameters, the inverse-gamma distribution still overfits income data. I establish a linear relationship between parameter estimates, and a one-dimensional model emerges naturally when I exploit this relationship. I conclude with theoretical remarks about the model.

Suggested Citation

  • Conrad Kosowsky, 2024. "The Structure of the U.S. Income Distribution," Papers 2411.08826, arXiv.org.
    • Handle: RePEc:arx:papers:2411.08826
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    References listed on IDEAS

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