Measuring Income and Wealth at the Top Using Administrative and Survey Data

FEDS Working Paper No. 2015-030

http://dx.doi.org/10.17016/FEDS.2015.030

65 Pages Posted: 24 May 2015

See all articles by Jesse Bricker

Jesse Bricker

Board of Governors of the Federal Reserve System

Alice Henriques

Board of Governors of the Federal Reserve System

Jacob Krimmel

Board of Governors of the Federal Reserve System; University of Pennsylvania - The Wharton School

John Sabelhaus

affiliation not provided to SSRN

Date Written: April 9, 2015

Abstract

Administrative tax data indicate that U.S. top income and wealth shares are substantial and increasing rapidly (Piketty and Saez 2003, Saez and Zucman 2014). A key reason for using administrative data to measure top shares is to overcome the under-representation of families at the very top that plagues most household surveys. However, using tax records alone restricts the unit of analysis for measuring economic resources, limits the concepts of income and wealth being measured, and imposes a rigid correlation between income and wealth. The Survey of Consumer Finances (SCF) solves the under-representation problem by combining administrative and survey data (Bricker et al, 2014). Administrative records are used to select the SCF sample and verify that high-end families are appropriately represented, and the survey is designed to measure comprehensive concepts of income and wealth at the family level. The SCF shows high and rising top income and wealth shares, as in the ad ministrative tax data. However, unadjusted, the levels and growth based on administrative tax data alone appear to be substantially larger. By constraining the SCF to be conceptually comparable, we reconcile the differences, and show the extent to which restrictions and rigidities needed to estimate top income and wealth shares in the administrative data bias up levels and growth rates.

Keywords: administrative data, survey data, top income shares, top wealth shares

JEL Classification: D31, D63, H2

Suggested Citation

Bricker, Jesse and Henriques, Alice and Krimmel, Jacob and Sabelhaus, John, Measuring Income and Wealth at the Top Using Administrative and Survey Data (April 9, 2015). http://dx.doi.org/10.17016/FEDS.2015.030. Available at SSRN: https://ssrn.com/abstract=2604152 or http://dx.doi.org/10.2139/ssrn.2604152

Jesse Bricker (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Alice Henriques

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Jacob Krimmel

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

John Sabelhaus

affiliation not provided to SSRN

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