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The Growth of US Top Income Inequality: A Hierarchical Redistribution Hypothesis

Blair Fix
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Blair Fix: York University

No suqnk, SocArXiv from Center for Open Science

Abstract: What accounts for the growth of US top income inequality? This paper proposes a hierarchical redistribution hypothesis. The idea is that US firms have systematically redistributed income to the top of the corporate hierarchy. I test this hypothesis using a large-scale hierarchy model of the US private sector. My method is to vary the rate that income scales with hierarchical rank within modeled firms. I find that this model is able to reproduce four intercorrelated US trends: (1) the growth of the top 1% income share; (2) the growth of the CEO pay ratio; (3) the growth of the dividends share of national income; and (4) the ‘fattening’ of the entire income distribution tail. This result supports the hierarchical redistribution hypothesis. It is also consistent with the available empirical evidence on within-firm income redistribution.

Date: 2018-07-23
New Economics Papers: this item is included in nep-hme
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:suqnk

DOI: 10.31219/osf.io/suqnk

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