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Levels and Trends in United States Income and Its Distribution A Crosswalk from Market Income Towards a Comprehensive Haig-Simons Income Approach

  • Philip Armour
  • Richard V. Burkhauser
  • Jeff Larrimore

Recent research on United States levels and trends in income inequality vary substantially in how they measure income. Piketty and Saez (2003) examine market income of tax units based on IRS tax return data, DeNavas-Walt, Proctor, and Smith (2012) and most CPS-based research uses pre-tax, post-transfer cash income of households, while the CBO (2012) uses both data sets and focuses on household size-adjusted comprehensive income of persons, including taxable realized capital gains. This paper provides a crosswalk of income growth across these common income measures using a unified data set. It then uses a more consistent Haig-Simons income definition approach to comprehensive income by incorporating yearly-accrued capital gains to measure yearly changes in wealth rather than focusing solely on the realized taxable capital gains that appear in IRS tax return data. Doing so dramatically reduces the observed growth in income inequality across the distribution, but most especially the rise in top-end income since 1989.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19110.

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Date of creation: Jun 2013
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Handle: RePEc:nbr:nberwo:19110
Note: LS PE
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  1. Richard Burkhauser & Shuaizhang Feng & Stephen 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 09-26, Center for Economic Studies, U.S. Census Bureau.
  2. Stephen Davis & John Haltiwanger & Ron Jarmin & Javier Miranda, 2006. "Volatility and Dispersion in Business Growth Rates: Publicly Traded Versus Privately Held Firms," Working Papers 06-17, Center for Economic Studies, U.S. Census Bureau.
  3. Jeff Larrimore & Richard Burkhauser & Shuaizhang Feng & Laura Zayatz, 2008. "Consistent Cell Means for Topcoded Incomes in the Public Use March CPS (1976-2007)," Working Papers 08-06, Center for Economic Studies, U.S. Census Bureau.
  4. Yonatan Ben-Shalom & Robert A. Moffitt & John Karl Scholz, 2011. "An Assessment of the Effectiveness of Anti-Poverty Programs in the United States," Mathematica Policy Research Reports cfc848ed6ab647bcb38ab47bb, Mathematica Policy Research.
  5. repec:cbo:report:43373 is not listed on IDEAS
  6. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality In The United States, 1913-1998," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 1-39, February.
  7. Lynn Karoly & Gary Burtless, 1995. "Demographic change, rising earnings inequality, and the distribution of personal well-being, 1959–1989," Demography, Springer, vol. 32(3), pages 379-405, August.
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