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Capital and Labor Income Pareto Exponents across Time and Space

Tjeerd de Vries, Alexis Akira Toda

arXiv 3 Jun 2020 · Econometrics · publishedReview of Income and Wealth (2021) · 1 citations (OpenAlex)

arXiv:2006.03441 · PDF · DOI · OpenAlex · Extracted main text

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 distributed 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.

Citation extraction

61
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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Luxembourg Income Study (LIS) Database (2019) http://www.lisdatacenter.org (multiple countries; September 2019–June 2021), 20211.000133100%
2Yannick Hoga (2018) Detecting tail risk differences in multivariate time series0.87472100%
3Qingyin Ma, John Stachurski, and Alexis Akira Toda (2020) The income fluctuation problem and the evolution of wealth self0.7948350%
4Anthony B. Atkinson and Thomas Piketty, editors (2010) Top Incomes: A Global Perspective0.73732100%
5Marat Ibragimov and Rustam Ibragimov (2018) Heavy tails and upper-tail inequality: The case of Russia0.64422100%
6Alexis Akira Toda (2012) The double power law in income distribution: Explanations and evidence self0.64422100%
7William J. Reed (2003) The Pareto law of incomes–-an explanation and an extension0.64422100%
8Émilien Gouin-Bonenfant and Alexis Akira Toda (2018) Pareto extrapolation: An analytical framework for studying tail inequality self0.5112250%
9Anders Hedegaard Jessen and Thomas Mikosch (2006) Regularly varying functions0.5112250%
10Qingyin Ma and Alexis Akira Toda (2021) A theory of the saving rate of the rich self0.5112250%

Showing the top 10 of 61 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Tuning Parameter-Free Nonparametric Density Estimation from Tabulated Summary Data0.40511