IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2411.08826.html
   My bibliography  Save this paper

The Structure of the U.S. Income Distribution

Author

Listed:
  • Conrad Kosowsky

Abstract

I show that U.S. incomes follow a one-parameter family of probability distributions over more than fifty years of data. I compare statistical models of income, and I highlight the inverse-gamma distribution as a parsimonious model that matches data particularly well and has straightforward theoretical interpretations. However, despite having relatively few parameters, the inverse-gamma distribution still overfits income data. I establish a linear relationship between parameter estimates, and a one-dimensional model emerges naturally when I exploit this relationship. I conclude with theoretical remarks about the model.

Suggested Citation

  • Conrad Kosowsky, 2024. "The Structure of the U.S. Income Distribution," Papers 2411.08826, arXiv.org.
    • Handle: RePEc:arx:papers:2411.08826
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2411.08826
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Charlotte Bartels & Maria Metzing, 2019. "An integrated approach for a top-corrected income distribution," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 125-143, June.
    2. Ghossoub, Edgar A. & Reed, Robert R., 2017. "Financial development, income inequality, and the redistributive effects of monetary policy," Journal of Development Economics, Elsevier, vol. 126(C), pages 167-189.
    3. Monique Graf & Desislava Nedyalkova, 2014. "Modeling of Income and Indicators of Poverty and Social Exclusion Using the Generalized Beta Distribution of the Second Kind," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 821-842, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mathias Silva, 2023. "Parametric models of income distributions integrating misreporting and non-response mechanisms," AMSE Working Papers 2311, Aix-Marseille School of Economics, France.
    2. Thilo N H Albers & Charlotte Bartels & Moritz Schularick, 2022. "Wealth and its Distribution in Germany, 1895-2018," Working Papers halshs-03828863, HAL.
    3. Tetsuo Ono, 2020. "Fiscal rules in a monetary economy: Implications for growth and welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(1), pages 190-219, February.
    4. Can Sever & Emekcan Yucel, 2021. "Electoral Cycles in Inequality Abstract:," Working Papers 2021/01, Bogazici University, Department of Economics.
    5. Silvia De Nicol`o & Maria Rosaria Ferrante & Silvia Pacei, 2021. "Mind the Income Gap: Bias Correction of Inequality Estimators in Small-Sized Samples," Papers 2107.08950, arXiv.org, revised May 2023.
    6. Vladimir Hlasny, 2021. "Parametric representation of the top of income distributions: Options, historical evidence, and model selection," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1217-1256, September.
    7. Callealta Barroso, Francisco Javier & García-Pérez, Carmelo & Prieto-Alaiz, Mercedes, 2020. "Modelling income distribution using the log Student’s t distribution: New evidence for European Union countries," Economic Modelling, Elsevier, vol. 89(C), pages 512-522.
    8. Brzezinski, Michal & Sałach, Katarzyna, 2021. "Nierówności dochodowe i majątkowe w Polsce: nowe wyniki wykorzystujące dane pozaankietowe," SocArXiv s43yr, Center for Open Science.
    9. Rafael Carranza & Marc Morgan & Brian Nolan, 2023. "Top Income Adjustments and Inequality: An Investigation of the EU‐SILC," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(3), pages 725-754, September.
    10. Marko Ledic & Ivica Rubil & Ivica Urban, 2022. "Missing top incomes and tax-benefit microsimulation: evidence from correcting household survey data using tax records data," Working Papers 609, ECINEQ, Society for the Study of Economic Inequality.
    11. Jos'e Miguel Flores-Contr'o, 2024. "The Gerber-Shiu Expected Discounted Penalty Function: An Application to Poverty Trapping," Papers 2402.11715, arXiv.org, revised Sep 2024.
    12. Gonzalez-Eiras, Martín & Sanz, Carlos, 2021. "Women’s representation in politics: The effect of electoral systems," Journal of Public Economics, Elsevier, vol. 198(C).
    13. Kim, Dong-Hyeon & Lin, Shu-Chin, 2023. "Income inequality, inflation and financial development," Journal of Empirical Finance, Elsevier, vol. 72(C), pages 468-487.
    14. Judith Niehues & Maximilian Stockhausen & Andreas Peichl & Charlotte Bartels & Mario Bossler & Bernd Fitzenberger & Arnim Seidlitz & Moritz Kuhn & Till Baldenius & Sebastian Kohl & Moritz Schularick &, 2020. "Ungleichheit unter der Lupe – neue politische Antworten auf ein bekanntes Thema," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(02), pages 03-26, February.
    15. Frank Cowell & Emmanuel Flachaire, 2021. "Inequality Measurement: Methods and Data," Post-Print hal-03589066, HAL.
    16. Tsvetana Spasova, 2019. "Regional Income Distribution in the European Union: A Parametric Approach," Research on Economic Inequality, in: What Drives Inequality?, volume 27, pages 1-18, Emerald Group Publishing Limited.
    17. Zheng, Zhijie & Wan, Xi & Huang, Chien-Yu, 2023. "Inflation and income inequality in a Schumpeterian economy with heterogeneous wealth and skills," Economic Modelling, Elsevier, vol. 121(C).
    18. Hakan Yilmazkuday, 2020. "Unequal unemployment effects of COVID-19 and monetary policy across U.S. States," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 4(S3), pages 45-53, December.
    19. Duangkamon Chotikapanich & William E. Griffiths & Gholamreza Hajargasht & Wasana Karunarathne & D. S. Prasada Rao, 2018. "Using the GB2 Income Distribution," Econometrics, MDPI, vol. 6(2), pages 1-24, April.
    20. Kim, Dong-Hyeon & Lin, Shu-Chin, 2024. "Inflation and wealth inequality," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 893-907.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2411.08826. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.