IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/5372.html
   My bibliography  Save this paper

Comparison of personal income inequality estimates based on data from the IRS and Census Bureau

Author

Listed:
  • Kitov, Ivan

Abstract

This paper demonstrates quantitatively that modern estimates of income inequality based on the data reported by the IRS are not reliable. Principal problem of the IRS data consists in highly volatile income estimates in the low-end of personal income distribution. This volatility is likely related to measurement errors, changes in definitions or improper reporting. Personal income estimates at high and the highest incomes are robust and follow the Pareto law. At high incomes, personal income distributions for 1990 and 2004, when normalized to total population with income and total (gross) personal income, practically coincide. Hence, the inequality estimates based on the IRS data are distorted by inaccurate readings in the low-income zone. At the same time, income data provided by the US Census Bureau are consistent over time in all income ranges. Results presented by Kitov (2007) demonstrate that personal income distributions based on readings obtained in the Current Population Survey are characterized by practically constant Gini coefficient since 1960. This observation implies that normalized personal income distributions are also not changing with time.

Suggested Citation

  • Kitov, Ivan, 2007. "Comparison of personal income inequality estimates based on data from the IRS and Census Bureau," MPRA Paper 5372, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:5372
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/5372/1/MPRA_paper_5372.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Kitov, Ivan, 2007. "Modeling the evolution of Gini coefficient for personal incomes in the USA between 1947 and 2005," MPRA Paper 2798, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kitov, Ivan, 2008. "Modeling the evolution of age-dependent Gini coefficient for personal incomes in the U.S. between 1967 and 2005," MPRA Paper 10107, University Library of Munich, Germany.
    2. Kitov, Ivan & Kitov, Oleg, 2013. "The dynamics of personal income distribution and inequality in the United States," MPRA Paper 48649, University Library of Munich, Germany.

    More about this item

    Keywords

    personal income distribution; economic inequality; Gini coefficient; IRS; Census Bureau;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:5372. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.