The Divide among the Rich: Within-Group Inequality at the Top of the U.S. Income Distribution

Hyeongwoo Kim () and Donggyu Sul

No auwp2026-07, Auburn Economics Working Paper Series from Department of Economics, Auburn University

Abstract: We employ an alternative decomposition framework to assess group-level contributions to economic inequality. Using microdata from 1962 to 2019, we show that the rise in U.S. inequality has been driven primarily by increasing within-group dispersion among top earners rather than by differences in average income across groups. Although inequality growth slowed after 2000, partly reflecting a moderation in the growth of within-top-decile dispersion, the dominant share of post-2000 pre-tax income inequality remains attributable to within-top-decile variation, with the top 1% playing a particularly important role. Post-tax measures exhibit a weaker but similar pattern. Further decomposition by income source identifies rising dispersion in labor income within top-income groups as a key driver of the increase in U.S. inequality.

Keywords: Inequality; Generalized Entropy; Within-Group Inequality; Between-Group Inequality; Factor Labor Income; Factor Capital Income (search for similar items in EconPapers)
JEL-codes: C43 D31 E25 (search for similar items in EconPapers)
Date: 2026-09
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