Personal income inequality in USA from a two-class perspective: 2004-2018

Rishabh Kumar

No fmkj3, SocArXiv from Center for Open Science

Abstract: US incomes follow a two class pattern -- an insight originally shown by physicists in the econophysics literature. The upper class fits a power-law, or Pareto distribution, while the lower class follows an exponential distribution. I show that these patterns hold over 2004-2018 and that the upper class has expanded, from 1-3 percent until 2001, to almost the top 6 percent by 2018. I find that growing income inequality is explained by growing \emph{between-class} inequality. As the fraction in the upper class increases, higher average incomes are allocated to more members of the population, while the lower class is constrained tightly around mean incomes that are an order of magnitude smaller.

Date: 2021-06-22
New Economics Papers: this item is included in nep-hme
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:fmkj3

DOI: 10.31219/osf.io/fmkj3

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