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Pareto and the upper tail of the income distribution in the UK: 1799 to the present

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  • A.B. Atkinson

Abstract

The Pareto distribution has long been a source of fascination to economists, and the Pareto coefficient is widely used, in theoretical and empirical studies, as a summary of the degree of concentration of top incomes. This paper examines the empirical evidence from income tax data concerning top incomes in the UK, contrasting the dramatic changes that took place in the twentieth century, after 1918, with the much more modest changes in the preceding nineteenth century. Probing beneath the surface, it identifies a number of features of the evolution of the UK income inequality that warrant closer attention. These include the changing shape of the upper tail, where there is a link with Pareto's theory of elites, the need for a richer functional form to describe top incomes, and the limited evidence at the top of the distribution for a Kuznets curve in nineteenth century Britain.

Suggested Citation

  • A.B. Atkinson, 2016. "Pareto and the upper tail of the income distribution in the UK: 1799 to the present," CASE Papers /198, Centre for Analysis of Social Exclusion, LSE.
  • Handle: RePEc:cep:sticas:/198
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    References listed on IDEAS

    as
    1. Jess Benhabib & Alberto Bisin, 2016. "Skewed Wealth Distributions: Theory and Empirics," NBER Working Papers 21924, National Bureau of Economic Research, Inc.
    2. A. L. Bowley, 1914. "The British Super-Tax and the Distribution of Income," The Quarterly Journal of Economics, Oxford University Press, vol. 28(2), pages 255-268.
    3. Chipman, John S., 1974. "The welfare ranking of Pareto distributions," Journal of Economic Theory, Elsevier, vol. 9(3), pages 275-282, November.
    4. Richard V. Burkhauser & Shuaizhang Feng & Stephen P. Jenkins & Jeff Larrimore, 2009. "Recent trends in top income shares in the USA: Reconciling estimates from March CPS and IRS tax return data," Working Papers 139, ECINEQ, Society for the Study of Economic Inequality.
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    6. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
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    9. Stephen P. Jenkins, 2017. "Pareto Models, Top Incomes and Recent Trends in UK Income Inequality," Economica, London School of Economics and Political Science, vol. 84(334), pages 261-289, April.
    10. Giulio Bottazzi & Davide Pirino & Federico Tamagni, 2015. "Zipf law and the firm size distribution: a critical discussion of popular estimators," Journal of Evolutionary Economics, Springer, vol. 25(3), pages 585-610, July.
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    12. Richard V. Burkhauser & Shuaizhang Feng & Stephen P. Jenkins & Jeff Larrimore, 2012. "Recent Trends in Top Income Shares in the United States: Reconciling Estimates from March CPS and IRS Tax Return Data," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 371-388, May.
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    16. Xavier Gabaix, 2009. "Power Laws in Economics and Finance," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 255-294, May.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Pareto and the upper tail of the income distribution in the UK: 1799 to the present
      by maximorossi in NEP-LTV blog on 2016-10-25 18:44:54

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    Cited by:

    1. Stephen P. Jenkins, 2017. "Pareto Models, Top Incomes and Recent Trends in UK Income Inequality," Economica, London School of Economics and Political Science, vol. 84(334), pages 261-289, April.
    2. repec:kap:jecinq:v:16:y:2018:i:2:d:10.1007_s10888-018-9387-9 is not listed on IDEAS
    3. repec:kap:jecinq:v:16:y:2018:i:2:d:10.1007_s10888-018-9388-8 is not listed on IDEAS
    4. Frank Cowell & Dirk Van de gaer, 2017. "Condorcet was Wrong, Pareto was Right: Families, Inheritance and Inequality," STICERD - Public Economics Programme Discussion Papers 34, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    5. repec:gam:jecnmx:v:6:y:2018:i:1:p:10-:d:134492 is not listed on IDEAS

    More about this item

    Keywords

    Pareto; income; distribution; tail;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913

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