This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. May 2013
  5. Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income

Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income

  • Philip Armour
  • Richard V. Burkhauser
  • Jeff Larrimore
American Economic Review
vol. 103, no. 3, May 2013
(pp. 173-77)
Download Full Text PDF

Abstract

Recent research on levels and trends in the United States in income inequality vary substantially in how they measure income. We show the sensitivity of alternative income measures in capturing income trends using a unified data set. Focusing solely on market income or including realized taxable capital gains based on IRS tax return data in more comprehensive household income measures will dramatically increase inequality growth compared to capital gains measures more in keeping with Haig-Simons principles. Using a measure of yearly accrued capital gains dramatically reduces observed growth in income inequality across the distribution, but also equalizes income growth since 1989.

Citation

Armour, Philip, Richard V. Burkhauser, and Jeff Larrimore. 2013. "Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income." American Economic Review, 103 (3): 173-77. DOI: 10.1257/aer.103.3.173

Additional Materials

JEL Classification

  • D31 Personal Income, Wealth, and Their Distributions
  • D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
  • H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies