Is the U-Curve That Pronounced? Revisiting Income Inequality in the United States, 1917-1945

31 Pages Posted: 13 Jun 2017 Last revised: 15 Jun 2017

Vincent Geloso

Texas Tech University

Phillip W. Magness

George Mason University - School of Policy, Government, and International Affairs

John A. Moore

Northwood University

Philip D. Schlosser

University of Detroit Mercy

Date Written: May 30, 2017

Abstract

In this article, we reconsider the level and trend of the income inequality series produced by Piketty and Saez (2003, 2015) for the United States using tax data for the period prior to 1945, which forms the left-side of a century-long distributional Ucurve. We argue that there are reasons to doubt the depicted shape of the left-side of the U-curve of inequality. We make corrections to the series for reporting behavior conditional on tax regimes, minor changes to the definition of the tax unit population, and the fiscal income denominator. All of these corrections show comparatively stable top income shares throughout the period. We point out that comparisons with other state-level tax datasets - like Wisconsin which has conceptual advantages over the IRS data - yield dramatically different results that should make us skeptical of the trends observed with the IRS data.

Keywords: Inequality, Top Incomes, US Economic History

JEL Classification: H2, N32

Suggested Citation

Geloso, Vincent and Magness, Phillip W. and Moore, John A. and Schlosser, Philip D., Is the U-Curve That Pronounced? Revisiting Income Inequality in the United States, 1917-1945 (May 30, 2017). Available at SSRN: https://ssrn.com/abstract=2985234

Vincent Geloso

Texas Tech University ( email )

1901 University Avenue
Lubbock, TX Texas 79410
United States

Phillip W. Magness (Contact Author)

George Mason University - School of Policy, Government, and International Affairs ( email )

Founders Hall
3351 Fairfax Dr.
Arlington, VA 22201
United States

John A. Moore

Northwood University ( email )

United States

Philip D. Schlosser

University of Detroit Mercy ( email )

4001 McNichols Rd
Detroit, MI 48221
United States

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