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At the BEA Advisory Committee meeting today, Dirk van Duym described the BEA efforts to develop statistics on the distribution of state personal income. BEA welcomes questions and feedback.

In recent years, a growing interest in the topic of income inequality has fueled demand for information on the way in which the nation’s prosperity and growth are shared across households, as a complement to published data on total income and output. This paper details the methodology and presents preliminary measures of distribution of income at the regional level. These are based on personal income, a primary economic indicator published by the Bureau of Economic Analysis, and measure how personal income is distributed across households in each state and the District of Columbia. The methodology allocates detailed components of state personal income to households based on household data from the Current Population Survey supplemented with other sources. The household-level data are then aggregated to generate state-level bottom-up inequality statistics, including Gini coefficients, medians, and quintile shares of state personal income. The results show that many of the trends in inequality are similar across measures.
 
Method:  
 
• Use 3-year-pooled CPS and supplementary data to allocate state personal income component totals to households. Household-level personal income sample consistent with state personal income component totals
• Household income is then equivalized for household size, using the number of people in the household, n
• Finally, distributional statistics are computed from the equivalized household personal income sample

• We can deflate state personal income with BEA’s Regional Price Parities
• This does not affect a within-state distribution, because the same adjustment is applied to each household
• However, it does change the mean, median, and other percentiles of the distribution which can be compared across states
• A state-level-RPP-adjusted national Gini would be lower than the published national Gini

Next Steps:
 
• Publish prototype state statistics for public comment
• Update time series for more recent years. Modify pooling strategy for pandemic years
• Update method to align as closely as possible with BEA’s methods for the production of national distributional statistics
 
Background paper: Developing Statistics on the Distribution of State Personal Income: Methodology and Preliminary Results (May 2022) https://www.bea.gov/system/files/papers/BEA-WP2022-6.pdf
Presentation: https://www.bea.gov/system/files/2023-05/VanDuym.pdf

Discussant: Heather Stephens, West Virginia University  https://www.bea.gov/system/files/2023-05/Stephens.pdf

Contact: Dirk van Duym https://www.bea.gov/research/meet-the-researchers/dirk-van-duym

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