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Rising Top-Income Persistence in Australia: Evidence from Income Tax Data

Author

Listed:
  • Herault, Nicolas

    (University of Bordeaux)

  • Hyslop, Dean

    (Motu Economic and Public Policy Research Trust)

  • Jenkins, Stephen P.

    (London School of Economics)

  • Wilkins, Roger

    (Melbourne Institute of Applied Economic and Social Research)

Abstract

We use a new Australian longitudinal income tax dataset, Alife, covering 1991–2017, to examine levels and trends in the persistence in top-income group membership, focussing on the top 1%. We summarize persistence in multiple ways, documenting levels and trends in rates of remaining in top-income groups; re-entry to the top; the income changes associated with top-income transitions; and we also compare top-income persistence rates for annual and 'permanent' incomes. Regardless of the perspective taken, top-income persistence increased markedly over the period, with most of the increase occurring in the mid-2000s and early 2010s. In the mid- to late-2010s, Australian top-income persistence rates appear to have been near the top of the range of tax-data estimates for other countries. Using univariate breakdowns and multivariate regression, we show that the rise in top-income persistence in Australia was experienced by many population subgroups.

Suggested Citation

  • Herault, Nicolas & Hyslop, Dean & Jenkins, Stephen P. & Wilkins, Roger, 2021. "Rising Top-Income Persistence in Australia: Evidence from Income Tax Data," IZA Discussion Papers 14737, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14737
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    References listed on IDEAS

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    1. Muthitacharoen, Athiphat & Burong, Trongwut, 2023. "Climbing the economic ladder: Earnings inequality and intragenerational mobility among Thai formal workers," Journal of Asian Economics, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    income mobility; top-income persistence; top incomes;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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