Top Incomes in the Long Run of History

102 Pages Posted: 13 Oct 2009 Last revised: 7 Feb 2021

See all articles by Anthony B. Atkinson

Anthony B. Atkinson

University of Oxford - Nuffield Department of Medicine; CESifo (Center for Economic Studies and Ifo Institute)

Thomas Piketty

Paris School of Economics (PSE)

Emmanuel Saez

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2009

Abstract

This paper summarizes the main findings of a recent literature that has constructed top income shares time series over the long-run for more than 20 countries using income tax statistics. Top incomes represent a small share of the population but a very significant share of total income and total taxes paid. Hence, aggregate economic growth per capita and Gini inequality indexes are very sensitive to excluding or including top incomes. We discuss the estimation methods and issues that arise when constructing top income share series, including income definition and comparability over time and across countries, tax avoidance and tax evasion. We provide a summary of the key empirical findings. Most countries experience a dramatic drop in top income shares in the first part of the 20th century in general due to shocks to top capital incomes during the wars and depression shocks. Top income shares do not recover in the immediate post war decades. However, over the last 30 years, top income shares have increased substantially in English speaking countries and in India and China but not in continental Europe countries or Japan. This increase is due in part to an unprecedented surge in top wage incomes. As a result, wage income comprises a larger fraction of top incomes than in the past. Finally, we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open.

Suggested Citation

Atkinson, Anthony B. and Piketty, Thomas and Saez, Emmanuel, Top Incomes in the Long Run of History (October 2009). NBER Working Paper No. w15408, Available at SSRN: https://ssrn.com/abstract=1486544

Anthony B. Atkinson

University of Oxford - Nuffield Department of Medicine

CESifo (Center for Economic Studies and Ifo Institute)

Thomas Piketty

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Emmanuel Saez (Contact Author)

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-642-4631 (Phone)
510-642-6615 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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