Homoploutia: Top Labor and Capital Incomes in the United States, 1950-2020

Yonatan Berman and Branko Milanovic

No 806, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: Homoploutia describes the situation in which the same people (homo) are wealthy (ploutia) in the space of capital and labor income in some country. It can be quantified by the share of capital-income rich who are also labor-income rich. In this paper we combine several datasets covering different time periods to document the evolution of homoploutia in the United States from 1950 to 2020. We find that homoploutia was low after World War II, has increased by the early 1960s, and then decreased until the mid-1980s. Since 1985 it has been sharply increasing: In 1985, about 17% of adults in the top decile of capital-income earners were also in the top decile of labor-income earners. In 2018 this indicator was about 30%. This makes the traditional division to capitalists and laborers less relevant today. It makes periods characterized by high interpersonal inequality, high capital-income ratio and high capital share of income in the past fundamentally different from the current situation. High homoploutia has far-reaching implications for social mobility and equality of opportunity. We also study how homoploutia is related to total income inequality. We find that rising homoploutia accounts for about 20% of the increase in total income inequality in the United States since 1986.

Pages: 31 pages
Date: 2020-12
New Economics Papers: this item is included in nep-his, nep-isf and nep-ltv
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Citations: View citations in EconPapers (11)

Published in Review of Income and Wealth. (2023). https://doi.org/10.1111/roiw.12659

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Related works:
Working Paper: Homoploutia: top labor and capital incomes in the United States, 1950–2020 (2023)
Working Paper: Homoploutia: Top Labor and Capital Incomes in the United States, 1950-2020 (2020)
Working Paper: Homoploutia: Top Labor and Capital Incomes in the United States, 1950-2020 (2020)
Working Paper: Homoploutia: Top Labor and Capital Incomes in the United States, 1950—2020 (2020)
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