How Risky are Recessions for Top Earners?

12 Pages Posted: 31 Jan 2014

See all articles by Fatih Guvenen

Fatih Guvenen

University of Minnesota - Department of Economics; National Bureau of Economic Research (NBER)

Greg Kaplan

Princeton University - Department of Economics

Jae Song

U.S. Social Security Administration

Date Written: January 2014

Abstract

How sensitive are the earnings of top earners to business cycles? And, how does the business cycle sensitivity of top earners vary by industry? We use a confidential dataset on earnings histories of US males from the Social Security Administration. On average, individuals in the top 1% of the earnings distribution are slightly more cyclical than the population average. But there are large differences across sectors: Top earners in Finance, Insurance, and Real Estate (FIRE) and Construction face substantial business cycle volatility, whereas those in Services (who make up 40% of individuals in the top 1 percent) have earnings that are less cyclical than the average worker.

Suggested Citation

Guvenen, Fatih and Kaplan, Greg and Song, Jae, How Risky are Recessions for Top Earners? (January 2014). NBER Working Paper No. w19864. Available at SSRN: https://ssrn.com/abstract=2388451

Fatih Guvenen (Contact Author)

University of Minnesota - Department of Economics ( email )

Minneapolis, MN 55455
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Greg Kaplan

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Jae Song

U.S. Social Security Administration ( email )

Washington, DC 20254
United States
202-358-6403 (Phone)
202-358-6192 (Fax)

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