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Top earners: A labor productivity process

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  • Campanale, Claudio
  • Fernández-Bastidas, Rocío

Abstract

In the present paper we compare standard wage processes used in the quantitative literature on the optimal tax progressivity and a process with heterogeneous life-cycle profiles (HIP hereafter) that we propose against the data. We find that the former fail to capture several features of the earnings dynamics at the very top of the distribution while our proposed model improves along some of these dimensions.

Suggested Citation

  • Campanale, Claudio & Fernández-Bastidas, Rocío, 2023. "Top earners: A labor productivity process," Economics Letters, Elsevier, vol. 229(C).
    • Handle: RePEc:eee:ecolet:v:229:y:2023:i:c:s0165176523002203
    DOI: 10.1016/j.econlet.2023.111195
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    References listed on IDEAS

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    1. Greg Kaplan, 2012. "Inequality and the life cycle," Quantitative Economics, Econometric Society, vol. 3(3), pages 471-525, November.
    2. Fatih Karahan & Serdar Ozkan & Jae Song, 2019. "Anatomy of Lifetime Earnings Inequality: Heterogeneity in Job Ladder Risk vs. Human Capital," Staff Reports 908, Federal Reserve Bank of New York.
    3. Fatih Guvenen & Fatih Karahan & Serdar Ozkan & Jae Song, 2021. "What Do Data on Millions of U.S. Workers Reveal About Lifecycle Earnings Dynamics?," Econometrica, Econometric Society, vol. 89(5), pages 2303-2339, September.
    4. Guner, Nezih & Lopez-Daneri, Martin & Ventura, Gustavo, 2016. "Heterogeneity and Government revenues: Higher taxes at the top?," Journal of Monetary Economics, Elsevier, vol. 80(C), pages 69-85.
    5. Fatih Guvenen & Greg Kaplan & Jae Song, 2021. "The Glass Ceiling and the Paper Floor: Changing Gender Composition of Top Earners since the 1980s," NBER Macroeconomics Annual, University of Chicago Press, vol. 35(1), pages 309-373.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Earnings concentration; Top earnings dynamics; Heterogeneous income profiles; Quantitative models of taxation;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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