An Estimable Model of Income Redistribution in a Federation: Musgrave Meets Oates

By Kevin Milligan and Michael Smart

American Economic Journal: Economic Policy, February 2019

We develop a theory of cross-border income shifting in response to subnational personal taxation in a federation and examine its implications for the excess burden of personal taxes. We show how a properly chosen federal tax rate can offset the fiscal ext...

Familiarity Does Not Breed Contempt: Generosity, Discrimination, and Diversity in Delhi Schools

By Gautam Rao

American Economic Review, March 2019

I exploit a natural experiment in Indian schools to study how being integrated with poor students affects the social behaviors and academic outcomes of rich students. Using administrative data, lab and field experiments to measure outcomes, I find that ha...

Wealth Distribution and Social Mobility in the US: A Quantitative Approach

By Jess Benhabib, Alberto Bisin, and Mi Luo

American Economic Review, May 2019

We quantitatively identify the factors that drive wealth dynamics in the United States and are consistent with its skewed cross-sectional distribution and with social mobility. We concentrate on three critical factors: (i) skewed earnings, (ii) differenti...

Does Environmental Policy Affect Income Inequality? Evidence from the Clean Air Act

By Akshaya Jha, Peter H. Matthews, and Nicholas Z. Muller

AEA Papers and Proceedings, May 2019

This paper quantifies the impact of environmental policy on income inequality. We focus on the Clean Air act and the National Ambient Air Quality standards for fine particulate matter and ozone. Using a matched difference-in-differences estimator, we find...

Simplified Distributional National Accounts

By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman

AEA Papers and Proceedings, May 2019

This paper develops a simplified methodology to distribute total national income across income groups that reproduces closely the sophisticated methodology of Piketty, Saez, and Zucman (2018). It starts from top income share series based on fiscal income ...

Unequal Distributions: EG DNA versus DINA Approach

By Jorrit Zwijnenburg

AEA Papers and Proceedings, May 2019

In the past years, projects have been initiated to develop distributional results in line with national accounts totals. Their results differ from those obtained from micro statistics, but also show differences across projects, due to different underlying...

Improving the Measure of the Distribution of Personal Income

By Dennis Fixler, Marina Gindelsky, and David Johnson

AEA Papers and Proceedings, May 2019

Developing a national account-based measure of the distribution of income from the commonly used census-based concept of money income has been the subject of earlier research. We use publicly available survey and administrative data to construct a distrib...

Top 1 Percent Income Shares: Comparing Estimates Using Tax Data

By Gerald Auten and David Splinter

AEA Papers and Proceedings, May 2019

Many studies have used tax data to measure the U.S. income distribution, but their results vary widely. For example, in 2014 the top 1 percent share of income is 21.5 percent in Piketty and Saez (2003 and updates), 16.7 percent in the Congressional Budget...

Robot Arithmetic: New Technology and Wages

By Francesco Caselli and Alan Manning

American Economic Review: Insights, June 2019

Existing economic models show how new technology can cause large changes in relative wages and inequality. But there are also claims, based largely on verbal expositions, that new technology can harm workers on average or even all workers. This paper show...

Tax Evasion and Inequality

By Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman

American Economic Review, June 2019

Drawing on a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia, we show that offshore tax evasion is highly concentrated among the rich. The skewed distribution of offshore...

Unhappiness and Pain in Modern America: A Review Essay, and Further Evidence, on Carol Graham's Happiness for All?

By David G. Blanchflower and Andrew J. Oswald

Journal of Economic Literature, June 2019

In Happiness for All? Unequal Hopes and Lives in the Pursuit of the American Dream, Carol Graham raises disquieting ideas about today's United States. The challenge she puts forward is an important one. Here we review the intellectual case and of...

Capital Accumulation, Private Property, and Rising Inequality in China, 1978–2015

By Thomas Piketty, Li Yang, and Gabriel Zucman

American Economic Review, July 2019

We combine national accounts, surveys, and new tax data to study the accumulation and distribution of income and wealth in China from 1978 to 2015. The national wealth-income ratio increased from 350 percent in 1978 to 700 percent in 2015, while the share...

Liquidity Constraints of the Middle Class

By Jeffrey R. Campbell and Zvi Hercowitz

American Economic Journal: Economic Policy, August 2019

Existing evidence from US middle class households shows that their MPCs out of tax rebates greatly exceed the PIH's prediction and are weakly related to their liquid assets. The standard precautionary-saving model predicts the first fact but counterfactua...

Do the Rich Get Richer in the Stock Market? Evidence from India

By John Y. Campbell, Tarun Ramadorai, and Benjamin Ranish

American Economic Review: Insights, September 2019

We use data on Indian stock portfolios to show that return heterogeneity is the primary contributor to increasing inequality of wealth held in risky assets by Indian individual investors. Return heterogeneity increases equity wealth inequality through two...

A Review on Basic Income: A Radical Proposal for a Free Society and a Sane Economy by Philippe Van Parijs and Yannick Vanderborght

By Caterina Calsamiglia and Sabine Flamand

Journal of Economic Literature, September 2019

In order to clarify the potential impact of a basic income, we argue that any discussion on whether to adopt a basic income policy should be framed within the greater context of the transfer system as a whole. In particular, such discussion should conside...

Minimum Wages and the Distribution of Family Incomes

By Arindrajit Dube

American Economic Journal: Applied Economics, October 2019

There is robust evidence that higher minimum wages increase family incomes at the bottom of the distribution. The long-run (3 or more years) minimum wage elasticity of the non-elderly poverty rate with respect to the minimum wage ranges between −0.220 a...

Review of Walter Scheidel's The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century

By William Easterly

Journal of Economic Literature, December 2019

The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-first Century's thesis is that violence and only violence significantly reduces inequality. It shows supportive cases of violence reducing inequality, es...

The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment

By Ricardo Perez-Truglia

American Economic Review, April 2020

In 2001, Norwegian tax records became easily accessible online, allowing everyone in the country to observe the incomes of everyone else. According to the income comparisons model, this change in transparency can widen the gap in well-being between richer...

Time Discounting and Wealth Inequality

By Thomas Epper, Ernst Fehr, Helga Fehr-Duda, Claus Thustrup Kreiner, David Dreyer Lassen, Søren Leth-Petersen, and Gregers Nytoft Rasmussen

American Economic Review, April 2020

This paper documents a large association between individuals' time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged indi...

The Long-Term Effects of Communism in Eastern Europe

[Symposium: The Departure of Communism]

By Nicola Fuchs-Schündeln and Matthias Schündeln

Journal of Economic Perspectives, Spring 2020

We analyze the long-term effects of communism on both policies and preferences in Eastern Europe in four areas in which the communist and capitalist doctrines fundamentally differ: government intervention in markets, political freedom, and inequality in i...