Top Earners: Cross-Country Facts

Badel, Alejandro; Daly, Moira; Huggett, Mark; Nybom, Martin

doi:10.20955/r.100.237-57

Cited by 5 publications

(5 citation statements)

References 9 publications

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“…Most importantly, however, earnings distributions display thinner upper tails than the wealth distribution. The tail indices of earnings reported by Badel, Dayl, Huggett and Nybom (2016) are about 2 for the US and Canada, and close to 3 for Sweden. Corresponding tail indices for wealth are about 1:5 for the U.S.(Vermeulen (2015)) , 1:4 for Canada and 1:7 for Sweden (Cowell, 2011).…”

Section: Skewed Earningsmentioning

confidence: 83%

Skewed Wealth Distributions: Theory and Empirics

Benhabib

Bisin

2018

Journal of Economic Literature

200

108

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Invariably, across a cross-section of countries and time periods, wealth distributions are skewed to the right displaying thick upper tails, that is, large and slowly declining top wealth shares. In this survey, we categorize the theoretical studies on the distribution of wealth in terms of the underlying economic mechanisms generating skewness and thick tails. Further, we show how these mechanisms can be micro-founded by the consumption–savings decisions of rational agents in specific economic and demographic environments. Finally we map the large empirical work on the wealth distribution to its theoretical underpinnings. (JEL C46, D14, D31, E21, J31)

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Section: Skewed Earningsmentioning

confidence: 83%

Skewed Wealth Distributions: Theory and Empirics

Benhabib

Bisin

2018

Journal of Economic Literature

200

108

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“…However, these estimates are computed from total income, and because (as we document in Section 3.3) the capital income Pareto exponents tend to be smaller than labor exponents, their estimates are best understood as capital income (hence wealth) Pareto exponents. Benhabib et al (2017) make the point that wealth is more skewed than income, citing a few Pareto exponent estimates from Badel et al (2018) for income and Vermeulen (2018) for wealth. Using the 2013-2014 individual income tax data from Romania, Oancea et al (2018) document that the capital income Pareto exponent (1.44) is smaller than the labor exponent (2.53).…”

Section: Related Literaturementioning

confidence: 99%

“…(2017) make the point that wealth is more skewed than income, citing a few Pareto exponent estimates from Badel et al . (2018) for income and Vermeulen (2018) for wealth. Using the 2013–2014 individual income tax data from Romania, Oancea et al .…”

Section: Introductionmentioning

confidence: 99%

Capital and Labor Income Pareto Exponents Across Time and Space

Vries

Toda

2021

Review of Income and Wealth

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We estimate capital and labor income Pareto exponents across 475 countryyear observations that span 52 countries over half a century .We document two stylized facts: (i) capital income is more unequally distributed than labor income in the tail; namely, the capital exponent (1-3, median 1.46) is smaller than labor (2-5, median 3.35), and (ii) capital and labor exponents are nearly uncorrelated. To explain these findings, we build an incomplete market model with job ladders and capital income risk that gives rise to a capital income Pareto exponent smaller than but nearly unrelated to the labor exponent. Our results suggest the importance of distinguishing income and wealth inequality.

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“…Our findings lend support to the role of higher-order moments of earnings growth to characterize labor market uncertainty, both over the business cycle (Guvenen, Ozkan, and Song (2014)) and over the life cycle of individual workers (Guvenen, Karahan, Ozkan, and Song (2015)). Our focus on the entire income distribution complements work by Badel, Daly, Huggett, and Nybom (2018) who study the properties of life-cycle earnings dynamics for the top 1% of the earnings distribution in Sweden and other OECD countries. We emphasize differences in life-cycle dynamics driven by hours and wages and provide evidence on substantial heterogeneity by gender and region of origin, complementing the analysis by education in Friedrich, Laun, Meghir, and Pistaferri (2019).…”

Section: Introductionmentioning

confidence: 99%

Earnings dynamics of immigrants and natives in Sweden 1985–2016

Laun

Meghir

Friedrich

2022

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This paper analyzes earnings inequality and earnings dynamics in Sweden over 1985–2016. The deep recession in the early 1990s marks a historic turning point with a massive increase in earnings inequality and earnings volatility, and the impact of the recession and the recovery from it lasted for decades. In the aftermath of the recession, we find steady growth in real earnings across the entire distribution for men and women and decreasing inequality over more than 20 years. Despite the positive trend, large gender differences in earnings dynamics persist. While earnings growth for men is more closely tied to the business cycle, women face much higher volatility overall. Earnings volatility is also substantially higher among foreign‐born workers, reflecting weaker labor market attachment and high risk of large negative shocks for low‐income immigrants. We document an important role of social benefits usage for the overall trends and for differences across subpopulations. Higher benefits enrollment, especially for women and immigrants, is associated with higher earnings volatility. As the generosity and usage of benefit programs declined over time, we find stronger earnings growth among low‐income workers, consistent with higher self‐sufficiency.

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Top Earners: Cross-Country Facts

Cited by 5 publications

References 9 publications

Skewed Wealth Distributions: Theory and Empirics

Skewed Wealth Distributions: Theory and Empirics

Capital and Labor Income Pareto Exponents Across Time and Space

Earnings dynamics of immigrants and natives in Sweden 1985–2016

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