Burkhauser, Richard V., Feng, Shuaizhang, Jenkins, Stephen P. and Larrimore, Jeff (2012) Recent trends in top income shares in the USA: reconciling estimates from March CPS and IRS tax return data. Review of Economics and Statistics, 94 (2). pp. 371-388. ISSN 0034-6535
- Accepted Version
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Although most US income inequality research is based on public-use March CPS data, a new wave of research using IRS tax-return data reports substantially faster inequality growth for recent years. We show that these apparently inconsistent estimates are largely reconciled when the income distribution and inequality are defined the same way. Using internal CPS data for 1967–2006, we show that CPS-based estimates of top income shares are similar to IRS data-based estimates reported by Piketty and Saez (2003). Our results imply that income inequality changes since 1993 are largely driven by changes in incomes of the top 1 percent.
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