EPCI (Economie politique du changement institutionnel) Seminar

Du 29/11/2019 de 11:00 à 12:30

MSE, Salle 18 (Nouveau Bât) 106-112 Bd de l'Hôpital 75013 Paris

CHAUVEL Louis (U. Luxembourg)

On the way to extreme inequality. A New Method to Measure Changes in Income and Wealth Distributions: Results on the United States, 1995 to 2013

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 reveal. The well-known indices proposed by Anthony Atkinson are more flexible as they allow for adjusting sensitivity at different parts of the distribution. In this paper, we propose a method that distinguishes inequality at different points of the distribution. More specifically, we propose a new method providing a more appropriate examination of tails: the isograph and the logitrank. These tools offer a more detailed conception of inequality. 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.