Capital Gains and the Distribution of Income in the United States

Jacob Robbins
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Jacob Robbins: Brown University

No 202, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: Abstract: This paper constructs a new data series on aggregate capital gains and their distribution, and documents that since 1980 capital gains have been the main driver of wealth accumulation. Over this period, capital gains averaged 8% of national income and comprised a third of total capital income. Capital gains are not included in the national income and product accounts, where the definition of national income reflects the goal of measuring current production. To explain the accumulation of household wealth and distribution of capital income, both of which are affected by changes in asset prices, this paper uses the Haig-Simons income concept, which includes capital gains. Accounting for capital gains increases the measured capital share of income by 5 p.p., increases the comprehensive savings rate (inclusive of capital gains) by 6 p.p., and leads to a greater measured increase in income inequality.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:202

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