We use administrative records on the incomes of more than 40 million children and their parents to describe three features of intergenerational mobility in the United States. First, we characterize the joint distribution of parent and child income at the national level. The conditional expectation of child income given parent income is linear in percentile ranks. On average, a 10 percentile increase in parent income is associated with a 3.4 percentile increase in a child's income. Second, intergenerational mobility varies substantially across areas within the U.S. For example, the probability that a child reaches the top quintile of the national income distribution starting from a family in the bottom quintile is 4.4% in Charlotte but 12.9% in San Jose. Third, we explore the factors correlated with upward mobility. High mobility areas have (1) less residential segregation, (2) less income inequality, (3) better primary schools, (4) greater social capital, and (5) greater family stability. While our descriptive analysis does not identify the causal mechanisms that determine upward mobility, the publicly available statistics on intergenerational mobility developed here can facilitate research on such mechanisms. The United States is often hailed as the "land of opportunity," a society in which a child's chances of success depend little on his family background. Is this reputation warranted? We show that this question does not have a clear answer because there is substantial variation in intergenerational mobility across areas within the U.S. The U.S. is better described as a collection of societies, some of which are "lands of opportunity" with high rates of mobility across generations, and others in which few children escape poverty. We characterize intergenerational mobility using information from de-identified federal income tax records, which provide data on the incomes of more than 40 million children and their parents between 1996 and 2012. We organize our analysis into three parts. In the first part, we present new statistics on intergenerational mobility in the U.S. as a whole. In our baseline analysis, we focus on U.S. citizens in the 1980-1982 birth cohorts-the oldest children in our data for whom we can reliably identify parents based on information on dependent claiming. We measure these children's income as mean total family income in 2011 and 2012, when they are approximately 30 years old. We measure their parents' income as mean family income between 1996 and 2000, when the children are between the ages of 15 and 20. 1 Following the prior literature (e.g., Solon 1999), we begin by estimating the intergenerational elasticity of income (IGE) by regressing log child income on log parent income. Unfortunately, we find that this canonical log-log specification yields very unstable estimates of mobility because the relationship between log child income and log parent income is non-linear and the estimates are sensitive to the treatment of children with zero or very small incomes. When restricting the samp...

This paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the United States using individual tax returns data. Top income and wages shares display a U-shaped pattern over the century. Our series suggest that the large shocks that capital owners experienced during the Great Depression and World War II have had a permanent effect on top capital incomes. We argue that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks. Top wage shares were at before World War II, dropped precipitously during the war, and did not start to recover before the late 1960s but are now higher than before World War II. As a result, the working rich have replaced the rentiers at the top of the income distribution. I. INTRODUCTIONAccording to Kuznets' in uential hypothesis, income inequality should follow an inverse-U shape along the development process, rst rising with industrialization and then declining, as more and more workers join the high-productivity sectors of the economy [Kuznets 1955]. Today, the Kuznets curve is widely held to have doubled back on itself, especially in the United States, with the period of falling inequality observed during the rst half * We thank Anthony Atkinson, Lawrence Katz, and two anonymous referees for their very helpful and detailed comments. We have also bene ted from comments and discussions with Daron Acemoglu, Philippe Aghion, Alberto Alesina, David Autor, Abhijit Banerjee, Francesco Caselli, Dora Costa, David Cutler, Esther Du o, Daniel Feenberg, William Gale, Claudia Goldin, Alan Krueger, Howard Rosenthal, and numerous seminar participants. We acknowledge nancial support from the MacArthur foundation. All our series are available in machine readable format in an electronic appendix of the working paper version at www.nber.org/papers/W8467.

A recent literature has constructed top income shares time series over the long run for more than twenty 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 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 twentieth 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 postwar decades. However, over the last thirty years, top income shares have increased substantially in English speaking countries and in India and China but not in continental European 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

This paper combines income tax returns with macroeconomic household balance sheets to estimate the distribution of wealth in the United States since 1913. We estimate wealth by capitalizing the incomes reported by individual taxpayers, accounting for assets that do not generate taxable income. We successfully test our capitalization method in three micro datasets where we can observe both income and wealth: the Survey of Consumer Finance, linked estate and income tax returns, and foundations’ tax records. We find that wealth concentration was high in the beginning of the twentieth century, fell from 1929 to 1978, and has continuously increased since then. The top 0.1% wealth share has risen from 7% in 1978 to 22% in 2012, a level almost as high as in 1929. Top wealth-holders are younger today than in the 1960s and earn a higher fraction of the economy’s labor income. The bottom 90% wealth share first increased up to the mid-1980s and then steadily declined. The increase in wealth inequality in recent decades is due to the upsurge of top incomes combined with an increase in saving rate inequality. We explain how our findings can be reconciled with Survey of Consumer Finances and estate tax data.