Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data
Richard V. Burkhauser
Cornell University - Department of Policy Analysis & Management (PAM)
Shanghai University of Finance and Economics - Department of Economics; Princeton University; Institute for the Study of Labor (IZA)
Stephen P. Jenkins
London School of Economics & Political Science (LSE) - Department of Social Policy and Administration; Institute for the Study of Labor (IZA); University of Essex - Institute for Social and Economic Research (ISER)
Cornell University - Department of Economics
IZA Discussion Paper No. 4426
Although the majority of research on US income inequality trends is based on public-use March CPS data, a new wave of research using IRS tax return data reports substantially higher levels of inequality and faster growing trends. We show that these apparently inconsistent estimates are largely reconciled if the inequality measure and the income distribution are defined in the same way. Using internal CPS data for 1967-2006, we closely match IRS data-based estimates of top income shares reported by Piketty and Saez (2003). Our results imply that any inequality increases since 1993 are concentrated among the top 1 percent of the distribution.
Number of Pages in PDF File: 35
Keywords: March CPS, top income shares, US income inequality, IRS tax return data
JEL Classification: D31, C81working papers series
Date posted: October 15, 2009
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