Increasing Inequality in Joint Income and Wealth Distributions in the United States, 1995 to 2013

Louis Chauvel (), Eyal Bar-Haim (), Anne Hartung and Philippe Van Kerm

No 46, LWS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: The study of joint income and wealth distributions is important to the understanding of economic inequality. However, these are extremely skewed variables that present tails containing strategic information that usual methods – such as percentile grouping – cannot easily underline. In this paper, we propose a new method that is able to provide a thorough examination of tails: the isograph and the logitrank. These tools entail a more detailed conception of inequality by describing inequality at different points of the distribution. Using US data 1995-2013 from the Luxembourg Wealth Study (LWS), we find first that income inequality increased significantly, in particular in the upper middle classes. Second, the wealth-to-income ratio measuring the importance of wealth relative to income, increased significantly. The association between high wealth and high incomes, fourth, increased as well. Based on our analysis, we can conclude that this increase in the association between wealth and income is not a trivial consequence of increasing inequality, but a stronger coherence of the diagonal at the top of the income and wealth distributions.

JEL-codes: C16 C46 D31 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2024-09
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Published in A revised version of this paper is published as ""Income and Wealth Above the Median: New Measurements and Results for Europe and the United States"", Decancq, K. and Kerm, P.V. (Ed.) What Drives Inequality? (Research on Economic Inequality, Vol. 27), Emerald Publishing Limited, Leeds, pp. 89-104. https://doi.org/10.1108/S1049-258520190000027007)

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