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Personal income inequality in USA from a two-class perspective: 2004-2018

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  • Kumar, Rishabh

    (University of Massachusetts Boston)

Abstract

US incomes follow a two class pattern -- an insight originally shown by physicists in the econophysics literature. The upper class fits a power-law, or Pareto distribution, while the lower class follows an exponential distribution. Growing income inequality is explained by rising between-class inequality over the 2004-2018 period. The upper class has two important features which I analyze: it has expanded in size, accounting for the top 6 percent of the income distribution in 2018, and it is more complex than just capitalists because the labor income distribution also follows a two-class structure. This shows that homoploutia -- individuals rich in both labor and capital income -- is a defining characteristic of the upper class under modern capitalism. I argue that despite what appear as blurred lines from a traditional sense, income inequality and its rise in the US is very much a class based phenomena.

Suggested Citation

  • Kumar, Rishabh, 2021. "Personal income inequality in USA from a two-class perspective: 2004-2018," SocArXiv fmkj3_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:fmkj3_v1
    DOI: 10.31219/osf.io/fmkj3_v1
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