Data and code for: Growing Income Inequality in the United States and other Advanced Economies

This
paper studies the contribution of both labor and non-labor income in the growth
in income inequality in the United States and large European economies. The
paper first shows that the capital to labor income ratio disproportionately
increased among high-earnings individuals, further contributing to the growth
in overall income inequality. That said, the magnitude of this effect is
modest, and the predominant driver of the growth in income inequality in recent
decades is the growth in labor earnings inequality. Far more important than the
distinction between total income and labor income, is the way in which
educational factors account for the growth in U.S. labor and capital income
inequality. Growing income gaps among different education groups as well as
composition effects linked to a growing fraction of highly-educated workers
have been driving these effects, with a noticeable role for occupational and
locational factors for women. Findings for large European economies indicate
that inequality has been growing fast in Germany, Italy, and the United
Kingdom, though not in France. Capital income and education don’t play as much
as a role in these countries as in the United States.

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