Recent Trends in Top Income Shares in the United States: Reconciling Estimates from March CPS and IRS Tax Return Data

Richard V. Burkhauser; Shuaizhang Feng; Stephen P. Jenkins; Jeff Larrimore

doi:10.1162/rest_a_00200

Recent Trends in Top Income Shares in the United States: Reconciling Estimates from March CPS and IRS Tax Return Data

Richard V. Burkhauser^1,2; Shuaizhang Feng³; Stephen P. Jenkins⁴; Jeff Larrimore⁵

¹ The University of Melbourne · ² Cornell University · ³ Shanghai University of Finance and Economics · ⁴ University of Essex · ⁵ U.S. Joint Committee on Taxation

The Review of Economics and Statistics 2012 open access

Although most U.S. income inequality research is based on public use March CPS data, a new wave of research using IRS tax return data reports substantially faster inequality growth for recent years. We show that these apparently inconsistent estimates are largely reconciled when the income distribution and inequality are defined the same way. Using internal CPS data for 1967 to 2006, we show that CPS-based estimates of top income shares are similar to IRS data-based estimates reported by Piketty and Saez (2003). Our results imply that income inequality changes since 1993 are largely driven by changes in incomes of the top 1%.

DOI: 10.1162/rest_a_00200
Volume: 94 (2)
Pages: 371-388
Language: en
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