Capital and Labor Income Pareto Exponents across Time and Space

Tjeerd de Vries and Alexis Akira Toda

No 794, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: We estimate capital and labor income Pareto exponents across 475 country-year observations that span 52 countries over half a century (1967–2018). We document two stylized facts: (i) capital income is more unequally dis-tributed than labor income in the tail; namely, the capital exponent (1–3, median 1.46) is smaller than labor (2–5, median 3.35), and (ii) capital and labor exponents are nearly uncorrelated. To explain these findings, we build an incomplete market model with job ladders and capital income risk that gives rise to a capital income Pareto exponent smaller than but nearly unrelated to the labor exponent. Our results suggest the importance of distinguishing income and wealth inequality.

JEL-codes: C46 D15 D31 D52 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in The Review of Income and Wealth (2021). https://doi.org/10.1111/roiw.12556

Downloads: (external link)
http://www.lisdatacenter.org/wps/liswps/794.pdf (application/pdf)

Related works:
Journal Article: Capital and Labor Income Pareto Exponents Across Time and Space (2022)
Working Paper: Capital and Labor Income Pareto Exponents across Time and Space (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lis:liswps:794

Access Statistics for this paper

More papers in LIS Working papers from LIS Cross-National Data Center in Luxembourg Contact information at EDIRC.
Bibliographic data for series maintained by Piotr Paradowski ().