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Increasing Inequality in Joint Income and Wealth Distributions in the United States, 1995 to 2013

Author

Listed:
  • Louis Chauvel
  • Eyal Bar-Haim
  • Anne Hartung
  • Philippe Van Kerm

Abstract

The study of joint income and wealth distributions is important to the understanding of economic inequality. However, these are extremely skewed variables that present tails containing strategic information that usual methods – such as percentile grouping – cannot easily underline. In this paper, we propose a new method that is able to provide a thorough examination of tails: the isograph and the logitrank. These tools entail a more detailed conception of inequality by describing inequality at different points of the distribution. Using US data 1995-2013 from the Luxembourg Wealth Study (LWS), we find first that income inequality increased significantly, in particular in the upper middle classes. Second, the wealth-to-income ratio measuring the importance of wealth relative to income, increased significantly. The association between high wealth and high incomes, fourth, increased as well. Based on our analysis, we can conclude that this increase in the association between wealth and income is not a trivial consequence of increasing inequality, but a stronger coherence of the diagonal at the top of the income and wealth distributions.

Suggested Citation

  • Louis Chauvel & Eyal Bar-Haim & Anne Hartung & Philippe Van Kerm, 2024. "Increasing Inequality in Joint Income and Wealth Distributions in the United States, 1995 to 2013," LWS Working papers 46, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:lwswps:46
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Econometric and Statistical Methods; Specific Distributions
    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions

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