From Fatih Guvenen and Greg Kaplan in a new NBER paper.
We revisit recent empirical evidence about the rise in top income inequality in the United States, drawing attention to four key issues that we believe are critical for an informed discussion about changing inequality since 1980. Our goal is to inform researchers, policy makers, and journalists who are interested in top income inequality. Our analysis is based on a reexamination of publicly available detailed statistics from two administrative data sources: (i) Internal Revenue Service (IRS) data on total incomes (labor income plus capital income), reported in Saez (2012), and (ii) individual-level micro data on labor income (wage plus self-employment income) from the U.S. Social Security Administration (SSA) reported in Guvenen et al. (2014).One key take-away:
Put simply, so far in the 21st century, all the action in top income shares has been S-corporation income at very, very high income levels.
National Bureau of Economic Research Working Paper 23321.
