reader john h. Write words about Econbrowser:
Amazingly, Krugman’s minimalist treatment of inequality goes way beyond what I’ve seen here!
For his edification, I will reprint a After 2011.
Dismiss the income inequality plot in the previous post [0] (related articles [1] [2]), an Econbrowser reader asked:
“Do you agree that measures of wealth distribution have been mostly static since the 1970s, and that wealth is more evenly distributed today than it was in the 1940s (the peak of the modern era in America)?”
Well, I thought this was an interesting question, so I started searching the data. Here’s what I found, which leads me to a “no” answer.
figure 1: The top one percent wealth share, from Kopczuk and Saez (2004) (blue+), and from Ken Nichols (2009) (red square). source: kopchuk and sez [xls] and Ken Nichols (2009)Table A3a-g.
I don’t see a wealth peak associated with the top 1% in the 1940s that the reader asserts (looks like circa 1930 to me), but I’ll set that aside. As far as I know, inequality in 2007 was higher than it was during most of the 1940s. Note that we have Kennickell’s 2007 estimate based on surveys of consumer finances, and Kopczuk and Saez’s 1940 estimate based on estate tax filing data. Still, the similar movements and levels in the overlapping time periods suggest that the series are not entirely uncomparable.
The last two red squares are 2004 and 2007 respectively. Note the large jump from 2001 to 2004, and the plateau through 2007.
It will be interesting to see what conclusions the authors draw from their research.from abstraction to Wojciech Kopczuk and Emmanuel Saez, “The Largest Share of Wealth in the United States, 1916-2000: Evidence from Estate Tax Returns,” vol. national tax magazine 57(2) Part 2:
This paper presents a new homogeneous series of top US wealth shares from 1916 to 2000 using estate tax declaration data. The top wealth share was very high early in the period, but was hit hard by the shocks of the Great Depression, the New Deal and World War II. These shocks have had permanent effects. Following a decline in the 1970s, the top wealth share recovered in the early 1980s, but the share in 2000 was still much lower than it was in the early decades of this century. Most of the changes we record are concentrated among the top wealth holders, with much smaller changes in groups below the top 0.1%.Consistent with Consumer Finance Survey Findings, Top Wealth
Since 1995, there has been no significant increase in stocks based on Estate Tax Returns estimates. Evidence from the Forbes 400 Richest Americans shows that only the ultra-wealthy have experienced significant growth relative to the average over the past decade.Our results are consistent with the declining importance of capital income at the top of the income distribution documented by Piketty and Saez
(2003), and suggests that the rentier class of the last century has not yet been reorganized. This paper proposes several preliminary explanations to illustrate the facts.Piketty and Saez’s data sample ends in 2000, just before the last boom. What have we gleaned from recent data?from Arthur Kennickell, “Ponds and Streams: Wealth and Income in America, 1989-2007”, vol. Financial Discussion Series Paper No. 2009-13:
Much discussion takes working definitions of wealth and income as self-evident, but the choice of definition can have a significant impact on the overall picture. To provide a clear basis for examining the interrelationships between household wealth and income, this paper begins with a fundamental discussion of a range of possible measures of these concepts. Using established measures, this paper examines the distribution of wealth and income and their common attributes using data from the 1989-2007 Survey of Consumer Finances (SCF) wave.Among
Elsewhere, the data showed a complex pattern of changes in the distribution of wealth, with clear gains at both the middle and the top. For income, the picture of rising inequality is more immediate. The wealth-to-income ratio has risen in both the wealth and income distributions during this period. Nonetheless, their joint copula distribution (a distribution with uniform margins) showed no significant change over this period. The consistent pattern is that very high wealth and income coexist with very low wealth and income, but between these two extremes the relationship is fairly diffuse.The document also presents information on the composition of wealth and income over the 18-year period; general holding patterns in the distribution are not
The changes are notable, but there are also some important shifts. In terms of wealth, across the wealth distribution, debt has increased as a percentage of assets, principal residences have risen primarily below median net worth, tax-deferred retirement accounts have risen, and other financial assets have declined. For income, the most obvious change is the general decline in the relative importance of capital income over corporate income.For completeness, I repeat This chart of income for the top 1% and 5% in comparable terms for the period 1913-2008:
figure 2: Pre-tax income share (including realized capital gains) of the top 5 percent of households (blue line) and top 1 percent of households (red line).Source: updated version Piketty and Seth (2007).
In addition to that thread, I seem to remember discussing a CBO Assessment of Income Inequality Topicswrote about minimum wage and inequality, in topicas well as Monetary Policy Impactnarrative Dr. Yellen’s viewcompare one Democracy and the Plutocratic CPIintroduces something about Allocation of BEA National Accountshow do Iequal pressure on interest rates,etc. In other words, I found it offensive that JohnH described the blog’s reporting without actually reading its content.
Recall that this is JohnH, who thinks The U.S. government does not report real median income informationWho would have thought Real wages rise under Camerondon’t know what is the record high gas pricesand think Inflation with a one-year lag is a good proxy for long-run expected inflation.
In any case, I have to conclude that this gentleman is illiterate.
