IDEAS home Printed from https://ideas.repec.org/p/bis/biswps/184.html
   My bibliography  Save this paper

A nonparametric analysis of the shape dynamics of the US personal income distribution: 1962-2000

Author

Listed:
  • Feng Zhu

Abstract

We provide stylized facts on the evolving shape dynamics of the US personal income distribution from 1962 to 2000. Based on adaptive kernel density estimation, we propose an adaptive bootstrap test for multimodality. Our results indicate that multimodality has been a predominant feature of the US income distribution. Both the number and location of modes change over time, revealing rich distributional dynamics and strong heterogeneity. Decomposing the sample by age, education, gender and race, all groups exhibit multiple modes and follow distinct distributional patterns. For all groups and for the population as a whole, income distribution improved over the 1960s, 1970s and 1980s, but deteriorated dramatically in the 1990s.

Suggested Citation

  • Feng Zhu, 2005. "A nonparametric analysis of the shape dynamics of the US personal income distribution: 1962-2000," BIS Working Papers 184, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:184
    as

    Download full text from publisher

    File URL: http://www.bis.org/publ/work184.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: http://www.bis.org/publ/work184.htm
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Peter Gottschalk, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 21-40, Spring.
    2. Quah, Danny, 1997. "Empirics for growth and distribution," LSE Research Online Documents on Economics 2138, London School of Economics and Political Science, LSE Library.
    3. Durlauf, Steven N & Johnson, Paul A, 1995. "Multiple Regimes and Cross-Country Growth Behaviour," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 365-384, Oct.-Dec..
    4. Majumder, Amita & Chakravarty, Satya Ranjan, 1990. "Distribution of Personal Income: Development of a New Model and Its Application to U.S. Income Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(2), pages 189-196, April-Jun.
    5. Michael C. Wolfson, 1997. "Divergent Inequalities: Theory And Empirical Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(4), pages 401-421, December.
    6. Salem, A B Z & Mount, T D, 1974. "A Convenient Descriptive Model of Income Distribution: The Gamma Density," Econometrica, Econometric Society, vol. 42(6), pages 1115-1127, November.
    7. Cowell, F.A., 2000. "Measurement of inequality," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 2, pages 87-166, Elsevier.
    8. Thurow, Lester C, 1970. "Analyzing the American Income Distribution," American Economic Review, American Economic Association, vol. 60(2), pages 261-269, May.
    9. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339, Elsevier.
    10. McDonald, James B & Mantrala, Anand, 1995. "The Distribution of Personal Income: Revisited," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(2), pages 201-204, April-Jun.
    11. Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-970, September.
    12. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339, Elsevier.
    13. M.‐Y. Cheng & P. Hall, 1998. "Calibrating the excess mass and dip tests of modality," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 60(3), pages 579-589.
    14. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308, Elsevier.
    15. Bianchi, Marco, 1997. "Testing for Convergence: Evidence from Non-parametric Multimodality Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 393-409, July-Aug..
    16. Pagan,Adrian & Ullah,Aman, 1999. "Nonparametric Econometrics," Cambridge Books, Cambridge University Press, number 9780521355643, September.
    17. James B. McDonald, 2008. "Some Generalized Functions for the Size Distribution of Income," Economic Studies in Inequality, Social Exclusion, and Well-Being, in: Duangkamon Chotikapanich (ed.), Modeling Income Distributions and Lorenz Curves, chapter 3, pages 37-55, Springer.
    18. Martin Biewen, 2000. "INCOME INEQUALITY IN GERMANY DURING THE 1980s AND 1990s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 1-19, March.
    19. Charles I. Jones, 1997. "On the Evolution of the World Income Distribution," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 19-36, Summer.
    20. P. M. Hartigan, 1985. "Computation of the Dip Statistic to Test for Unimodality," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 34(3), pages 320-325, November.
    21. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-1381, September.
    22. McDonald, James B & Ransom, Michael R, 1979. "Functional Forms, Estimation Techniques and the Distribution of Income," Econometrica, Econometric Society, vol. 47(6), pages 1513-1525, November.
    23. Danny Quah, 1997. "Empirics for Growth and Distribution," CEP Discussion Papers dp0324, Centre for Economic Performance, LSE.
    24. repec:bla:revinw:v:43:y:1997:i:4:p:401-21 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pinkovskiy, Maxim L., 2013. "World welfare is rising: Estimation using nonparametric bounds on welfare measures," Journal of Public Economics, Elsevier, vol. 97(C), pages 176-195.
    2. Vivek Dehejia & Marcel Voia, 2008. "International Income Comparisons and Location Choice: Methodology, Analysis, and Implications," Carleton Economic Papers 08-02, Carleton University, Department of Economics.
    3. Dominique Guegan & Bertrand Hassani & Kehan Li, 2017. "An alternative class of distortion operators alternative tools to generate asymmetrical multimodal distributions," Documents de travail du Centre d'Economie de la Sorbonne 17030, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. Esteban Cabrera Cevallos & Edwin Buenaño, 2018. "¿Ha crecido la clase media en el Ecuador? Un análisis mediante índices de polarización del ingreso para el periodo 2007-2014," Revista de Economía del Rosario, Universidad del Rosario, vol. 21(1), pages 121-152, June.
    5. Dominique Guegan & Bertrand Hassani & Kehan Li, 2017. "An alternative class of distortion operators," Post-Print halshs-01543251, HAL.
    6. Dominique Guegan & Bertrand Hassani & Kehan Li, 2017. "An alternative class of distortion operators," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01543251, HAL.
    7. Dehejia Vivek H. & Voia Marcel C., 2012. "International Income Comparisons and Social Welfare: Methodology, Analysis, and Implications," Journal of Globalization and Development, De Gruyter, vol. 3(1), pages 1-24, June.

    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. Daniel J. Henderson, 2010. "A test for multimodality of regression derivatives with application to nonparametric growth regressions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(3), pages 458-480.
    2. 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.
    3. Falko Juessen, 2009. "A distribution dynamics approach to regional GDP convergence in unified Germany," Empirical Economics, Springer, vol. 37(3), pages 627-652, December.
    4. Fabio Clementi & Francesco Schettino, 2013. "Income polarization in Brazil, 2001-2011: A distributional analysis using PNAD data," Economics Bulletin, AccessEcon, vol. 33(3), pages 1796-1815.
    5. Sung Y. Park & Anil K. Bera, 2018. "Information theoretic approaches to income density estimation with an application to the U.S. income data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(4), pages 461-486, December.
    6. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2004. "Polarization: Concepts, Measurement, Estimation," Econometrica, Econometric Society, vol. 72(6), pages 1737-1772, November.
    7. Christophe Muller, 2001. "The Properties of the Watts Poverty Index under Lognormality," Economics Bulletin, AccessEcon, vol. 9(1), pages 1-9.
    8. F. Clementi & A. L. Dabalen & V. Molini & F. Schettino, 2017. "When the Centre Cannot Hold: Patterns of Polarization in Nigeria," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 608-632, December.
    9. Quah, Danny, 2001. "Searching for prosperity a comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 305-319, December.
    10. Gordon Anderson, 2004. "Making inferences about the polarization, welfare and poverty of nations: a study of 101 countries 1970-1995," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 537-550.
    11. Gordon Anderson & Oliver Linton & Teng Leo, 2012. "A polarization-cohesion perspective on cross-country convergence," Journal of Economic Growth, Springer, vol. 17(1), pages 49-69, March.
    12. Chang-Yang Lee, 2012. "Learning-by-doing in R&D, knowledge threshold, and technological divide," Journal of Evolutionary Economics, Springer, vol. 22(1), pages 109-132, January.
    13. Kazuhiko Kakamu & Haruhisa Nishino, 2016. "Bayesian Estimation Of Beta-Type Distribution Parameters Based On Grouped Data," Discussion Papers 2016-08, Kobe University, Graduate School of Business Administration.
    14. Maxim Pinkovskiy & Xavier Sala-i-Martin, 2009. "Parametric Estimations of the World Distribution of Income," NBER Working Papers 15433, National Bureau of Economic Research, Inc.
    15. Maasoumi, Esfandiar & Racine, Jeff & Stengos, Thanasis, 2007. "Growth and convergence: A profile of distribution dynamics and mobility," Journal of Econometrics, Elsevier, vol. 136(2), pages 483-508, February.
    16. Kazuhiko Kakamu & Haruhisa Nishino, 2019. "Bayesian Estimation of Beta-type Distribution Parameters Based on Grouped Data," Computational Economics, Springer;Society for Computational Economics, vol. 54(2), pages 625-645, August.
    17. Park, Seonyoung & Shin, Donggyun, 2020. "Recent Changes in the Nature of Distribution Dynamics of US County Incomes," Working Paper Series 8075, Victoria University of Wellington, School of Economics and Finance.
    18. Steven N. Durlauf & Andros Kourtellos & Chih Ming Tan, 2008. "Empirics of Growth and Development," Chapters, in: Amitava Krishna Dutt & Jaime Ros (ed.), International Handbook of Development Economics, Volumes 1 & 2, volume 0, chapter 3, Edward Elgar Publishing.
    19. Daniel J. Henderson & Christopher F. Parmeter & R. Robert Russell, 2008. "Modes, weighted modes, and calibrated modes: evidence of clustering using modality tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(5), pages 607-638.
    20. Paul Johnson & Chris Papageorgiou, 2020. "What Remains of Cross-Country Convergence?," Journal of Economic Literature, American Economic Association, vol. 58(1), pages 129-175, March.

    More about this item

    Keywords

    Adaptive kernel method; adaptive multimodality test; bootstrap; income distribution; nonparametric density estimation; population heterogeneity;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

    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:bis:biswps:184. 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: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.html .

    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.