distributional national accounts - catalunya europa
TRANSCRIPT
Distributional National Accounts
Thomas Piketty (PSE)Emmanuel Saez (UC Berkeley)Gabriel Zucman (UC Berkeley)
October 2017
There is a large disconnect today betweenthe study of inequality and macro
Macro: use national accounts, with no distributional information
Inequality: use survey & tax data, inconsistent with macro totals
This gap makes it hard to know growth is distributed and toanalyze the causes of the rise in inequality
How does growth of bottom 50%, middle 40%, top 10% adultscompare to total growth?
What part of rise in inequality owes to change in factor shares vs.changes in the concentration of labor and capital?
How do taxes and gov spending affect the distribution of growth?
To fill the gap, we need DistributionalNational Accounts (DINA)
We construct a micro database of income, wealth, taxes andtransfers consistent with national accounts totals in the US:
First income inequality series covering 100% of national income
First growth statistics by quantile consistent with macro growth
First assessment of total redistributive effects of gov. intervention
→ Back to Kuznets’ intent to study growth & inequality jointly, butwith more and better data
→ Goal: better compare inequality and growth across countries
Methodology:
How we distribute national income
How we move from fiscal income to totalnational income
1. Start with public-use samples of tax returns (1962-2010)
High quality, oversamples top
2. Supplement public-use files using additional IRS data
Age and gender information since 1979
Labor split for couples & fringe benefits on W2 since 1999
3. Impute missing income using SCF and CPS
Non-taxable capital income (pension funds, imputed rents): SCF
Monetary transfers: imputed based on CPS distribution by familyincome deciles and basic demographics
4. Distributionally neutral assumptions for public goods
We consider three main concepts ofincome matching national income
Factor national income
Sum of all labor income and capital income
Pre-tax national income
Subtracts contributions for pensions and social insurance, addscorresponding benefits (pensions, disability, unemployment)
Post-tax national income
Subtracts all other taxes
Adds back all other forms of government spending (individualizedtransfers + public goods)
↓Same national income total for factor, pre-tax and post-tax → gives
the broadest view of the redistributive effects of the government
Final product: a new tool for the study ofinequality & growth
Annual micro-data set representative of US pop. (1962-present):
Detailed income & wealth variables matching national accountsaggregates
Demographic information: age, gender, marital status, children
Can be used to compute wide array of growth & inequality stats,and simulate tax and transfer reforms
For 1913-1961: we rely on tabulated tax statistics → produce seriesfor specific income fractiles (top 10% and above)
The distribution of US nationalincome and growth:
Pre-tax vs. post-tax
DINA confirm the rise of incomeinequality, but post-tax inequality ↗ less
25%
30%
35%
40%
45%
50%
1917
1922
1927
1932
1937
1942
1947
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
2017
% o
f nat
iona
l inc
ome
Top 10% national income share: pre-tax vs. post-tax
Pre-tax
Post-tax
Source: Appendix Tables II-B1 and II-C1
Bottom 50% share has collapsed
10%
15%
20%
25%
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
% o
f nat
iona
l inc
ome
Bottom 50% national income share: pre-tax vs. post-tax
Pre-tax
Post-tax
Source: Appendix Tables II-B1 and II-C1
Growth above average only above 88thpercentile
-1%
0%
1%
2%
3%
4%
5%
6% 5 10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
100
Rea
l ave
rage
ann
ual g
row
th, 1
980-
2014
Income percentile
Average annual growth by percentile, 1980-2014
Top 0.001%
Average adult
Pre-tax
Post-tax
P99
P99.9
P99.99
Post-tax growth for bottom 50% has beenanemic, and eaten up by health spending
0
5,000
10,000
15,000
20,000
25,000
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Aver
age
inco
me
in c
onst
ant 2
014
$
Real income of bottom 50%: pre-tax vs. post-tax
Source: Appendix Tables II-B7, II-C7 and II-C3c.
Post-tax
Post-tax, excluding health benefits
Medicare + medicaid
Pre-tax
The fall of the bottom 50% mirrors therise of the top 1%
10%
12%
14%
16%
18%
20%
22%
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
% o
f nat
iona
l inc
ome
Pre-tax national income share: top 1% vs. bottom 50%
Bottom 50%
Top 1%
Source: Appendix Table II-B1
Decomposing inequality:
Labor vs. capital
Capital is making a comeback in the US
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
The share of capital in pre-tax income
Macro capital share in national income
Capital is making a comeback at the top
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100% 19
13
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
The share of capital in pre-tax income
Top 0.1%
Top 1%
Top 10%
All
Bottom 90%
Source: Appendix Table II-B2d.
Since the 1990s, top 1% rises because ofcapital income
0%
5%
10%
15%
20%
25% 19
13
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f nat
iona
l inc
ome
Top 1% pre-tax income share: labor vs. capital income
Source: Appendix Table II-B2b
Capital income
Labor income
The top became younger in the 1980s and1990s, since the 2000s is growing older
40
42
44
46
48
50
52
54
56
58 19
79
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
Age
Average age by pre-tax income group
Top 0.1%
Top 1% Top 10%
Average age in the adult population
Source: Appendix Table II-F2.
Decomposing inequality:
the role of taxes and transfers
The macro rate of tax rose until the1960s and has been constant since then
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f nat
iona
l inc
ome
Macroeconomic tax rate (Federal + State + local)
Source: Appendix Table II-G1.
Macroeconomic tax rate
Tax progressivity has declined since the1960s
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f pre
-tax
inco
me
Average tax rates by pre-tax income group
Source: Appendix Table II-G1.
All
Bottom 50%
Top 1%
Taxes have increased for the bottom 50%because of payroll taxes
0%
5%
10%
15%
20%
25%
30%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f bot
tom
50%
pre
-tax
inco
me
Taxes paid by the bottom 50%
Capital taxes
Sales taxes
Individual income taxes
Payroll taxes
Source: Appendix Table II-G2
Taxes have fallen at the top because ofthe decline of corporate and estate taxes
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f top
1%
pre
-tax
inco
me
Taxes paid by the top 1%
Estate taxes
Sales + residential property + payroll taxes
Corporate taxes
Individual income taxes
Source: Appendix Table II-G2
Individualized transfers have increasedsince the 1960s
0%
5%
10%
15%
20%
25% 19
60
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
% o
f nat
iona
l inc
ome
Average transfers: individualized vs. collective consumption expenditure
Source: Appendix Table G4
Collective consumption expenditure
Individualized transfers (cash + in-kind)
More transfers go to the middle class thanto bottom 50%, even incl. Social Security
0%
5%
10%
15%
20%
25%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
% o
f ave
rage
nat
iona
l inc
ome
Average individualized transfer by post-tax income group (including Social Security)
Source: Appendix Table II-G4b.
Middle 40%
Bottom 50%
Top 10%
All
Global DINAs
Top 10% in United States vs. FranceMethods Long run Capital Gender France vs US Conc
25%
30%
35%
40%
45%
50%
55%
1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Top 10 % income shares: France vs USA, 1910-2014
USA
France
243 650 € (PPP)
108 810 €
Distribution of pretax national income (before all taxes and transfers, except pensions and unempl. insurance) among adults. Equal-split-adults series (income of married couples divided by two). Distribution of pretax national income (before all taxes and transfers, except pensions and unempl. insurance) among adults. Equal-split-adults series (income of married couples divided by two).
54 / 61
Bottom 50% in United States vs. France
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000 19
62
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Aver
age
inco
me
in c
onst
ant 2
014
dolla
rs Average pre-tax income of bottom 50%
adults: United States
Average pre-tax income of bottom 50% adults: France
Global income inequality
Key: in 2010, 20.8% of global income accrued to the top 1% earners, using Purchasing Power Parity estimates.Note: per adult pre-tax income. The unit is the adult individual above 20 years old.Regions aggregated: Africa, Asia, Europe, Middle-East, North America, Russia, Latin America. All data from WID.world
5
10
15
20
25
% w
orld
inco
me
1980 1985 1990 1995 2000 2005 2010 2015
Bottom 50% vs top 1% shares of global incomePurchasing Power Parity
Global top1%
Global bottom 50%
The future of global income inequality0
510
1520
2530
% g
loba
l inco
me
1980 1990 2000 2010 2020 2030 2040 2050Notes: Distribution of real per adult income at Purchasing Power Parity. Average national income growth projections based on OECD forecasts.Population growth projections based on UN forecasts. The distribution of growth within countries (actual or projected) is from WID.world.
Purchasing Power ParityTop 1% vs. Bottom 50% shares of global income: 1980-2050
Global top 1% income share
... all countries follow EU 1980-2016 inequality trend = scenario 3
Scenario 2
Global inequality assuming...
Scenario 1
Global bottom 50% income share
... all countries follow US 1980-2016 inequality trend = scenario 2
... all countries follow their own 1980-2016 inequality trend = scenario 1
Scenario 3
Conclusion
Combining tax, survey, and nationalaccounts data
The DINA agenda:
Construct new series on the distribution pre- and post-taxincome consistent with macro totals
Hope will be adopted by govt agencies down the road
Results for the United States:
Collapse of working-age bottom 50% pre-tax income, 0 growthpost transfer
Boom of top-end inequality since late 1990s due to capital
Spectacular gender gap at the top, not shrinking anymore
Gov. has offset only small fraction of the ↗ in pre-tax inequality,due to ↘ in tax progressivity & limited transfers to bottom 50%
Supplementary Slides
1980: Top 1% income = 27 × bottom 502014: Top 1% income = 81 × bottom 50
0
7,500
15,000
22,500
30,000
37,500
45,000
52,500
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000 19
62
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Bot
tom
50%
real
ave
rage
pre
-tax
inco
me
(201
4$)
Top
1% re
al a
vera
ge p
re-ta
x in
com
e (2
014$
)
Real average pre-tax income of bottom 50% and top 1% adults
Source: Appendix Tables II-B7 and II-B10
1980: Top 1% = $428,000
1980: Bottom 50% = $16,000
2014:Top 1% = $1,305,000
2014: Bottom 50% = $16,200
Changes in standards of living in theUnited States since 1946
Income group 1980-2014 1946-1980 1980-2014 1946-1980
Full Population 61% 95% 61% 95%
Bottom 50% 1% 102% 21% 130%
Middle 40% 42% 105% 49% 98%
Top 10% 121% 79% 113% 69%
Top 1% 205% 47% 194% 58%
Top 0.1% 321% 54% 299% 104%
Top 0.01% 454% 75% 424% 201%
Top 0.001% 636% 57% 617% 163%
Pre-tax income growth Post-tax income growth
For bottom 50% working-age adults,pre-tax income has collapsed since 1979
0
5,000
10,000
15,000
20,000
25,000
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Aver
age
inco
me
in c
onst
ant 2
014
$
Real pre-tax income of bottom 50%, by age group
Real values are obtained by using the national income deflator and expressed in $2014. Income is divided equally among spouses.
All age
20-45 years old
45-65 years old
At the bottom, only retirees’ pre-taxincome is growing
0
5,000
10,000
15,000
20,000
25,000
1979
1983
1987
1991
1995
1999
2003
2007
2011
2015
Aver
age
inco
me
in c
onst
ant 2
014
$
Real pre-tax income of bottom 50%, by age group
Source: Appendix Tables II-B7 and II-B7b.
All age
20-45 years old
45-65 years old
>65 years old
Even after transfers, 0 growth inworking-age bottom 50% income since 79
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000 19
79
1983
1987
1991
1995
1999
2003
2007
2011
2015
Aver
age
inco
me
in c
onst
ant 2
014
$
Real post-tax income of bottom 50%, by age group
Source: Appendix Tables II-C7 and II-C7b.
All
20-45 years old
45-65 years old
65+ years old
Average income is growing less in tax andsurvey data than in the economy
100
140
180
220
260
300
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Average real income growth: national accounts vs. survey vs. fiscal data (1946 = 100)
Source: Appendix Table A0 and Census Bureau.
Fiscal income per tax unit (CPI)
National income per adult
CPS income per household (CPI)
Three culprits: inflation, fewer marriages,rising non-taxable income
100
140
180
220
260
300
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Average real income growth: national accounts vs. fiscal data (1946 = 100)
Source: Appendix Table A0.
Fiscal income per tax unit (CPI)
National income per adult
Fiscal income per tax unit (national income deflator)
Fiscal income per adult (national income deflator)
Top 1% income share: pre-tax vs.post-tax
5%
10%
15%
20%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f nat
iona
l inc
ome
Top 1% national income share: pre-tax vs. post-tax
Pre-tax
Post-tax
Source: Appendix Tables II-B1 and II-C1
For bottom 50% elderly, all the growthcomes from health transfers
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000 19
79
1983
1987
1991
1995
1999
2003
2007
2011
2015
Aver
age
inco
me
in c
onst
ant 2
014
dolla
rs
Post-tax income of the bottom 50% of elderly Americans (65+)
Source: Appendix Table II-C7c.
Post-tax income excluding health benefits
Post-tax income Medicare + Medicaid
Still a lot of inequality between genders,especially for older workers
100%
150%
200%
250%
300%
350%
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Average labor income of all men aged 20-64 / all women aged 20-64, by age group
Source: Appendix Table F1.
45 to 64
20 to 44
All
Capital is making a comeback in the US:robust to assuming fixed return on capital
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1946
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
2011
The share of capital in pre-tax income, assuming constant 5% return on capital
Top 0.1%
Top 1%
Top 10%
All (macro capital share in national income)
Top-end inequality is high and growing atall ages
0%
2%
4%
6%
8%
10%
12%
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
% o
f pre
-tax
inco
me
Top 0.1% pre-tax national income share by age group
20-45
All
Source: Appendix Table II-B11b.
45-65
65+
Transfers have softened blow to themiddle-class during Great Recession
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000 19
62
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Aver
age
inco
me
in c
onst
ant 2
014
dolla
rs
Real income of the middle 40%: the role of transfers
Source: Appendix Table II-C3b.
Post-tax income excluding transfers
Post-tax income Transfers
Pre-tax national income inequality hasrisen less than fiscal income inequality
30%
35%
40%
45%
50%
1917
1922
1927
1932
1937
1942
1947
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
Top 10% income share: comparison of estimates
Fiscal income per tax unit (Piketty-Saez)
Pre-tax income per adult
Source: Appendix Table II-B1 and Piketty and Saez (2003, updated to 2014).
Part of the difference owes to incomemissing from tax returns in 1950s-1970s
30%
35%
40%
45%
50%
1917
1922
1927
1932
1937
1942
1947
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
Top 10% income share: fiscal income vs. pre-tax income
Pre-tax income per tax unit
Source: Appendix Tables II-B9 and Piketty and Saez (2003, updated to 2014)
Missing income
Fiscal income per tax unit (Piketty-Saez)
Rest of the difference owes to adults vs.tax units
30%
35%
40%
45%
50%
55%
1917
1922
1927
1932
1937
1942
1947
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
% o
f tot
al in
com
e
Top 10% income share: tax units vs. equal-split adults
Pre-tax national income per tax unit
Source: Appendix TablesII- B1 and II-D1.
Pre-tax national income per adult (equal split)
Bottom 50% income with differenttreatment of education spending
0
5,000
10,000
15,000
20,000
25,000
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
Aver
age
inco
me
in c
onst
ant 2
014
$
Real post-tax income of bottom 50%: Different allocation of education spending
Source: Appendix Tables II-C3d.
Eduction lump sum per child
Education proportional to disposable income (excluding health)
Gender inequality and its effect on
individual-level inequality
When assigning each spouse her ownlabor income, inequality has increased less
30%
35%
40%
45%
50%
55%
1917
1922
1927
1932
1937
1942
1947
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
2017
% o
f nat
iona
l inc
ome
Top 10% pre-tax income share: equal-split vs. individuals
Pre-tax income per adult (individuals)
Source: Appendix Table II-B9.
Pre-tax income per adult (equal split)
This is due to the decline in the inequalityof labor income between genders
100%
150%
200%
250%
300%
350%
400%
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Average pre-tax labor income of men aged 20-64 / women aged 20-64
Source: Appendix Table II-F1.
Part of the decline in gender inequalityowes to rising female labor force particip.
0%
10%
20%
30%
40%
50%
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Share of women in the employed population
Source: Appendix Table II-F1.
Men still make 85% of the top 1% of thelabor income distribution
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Share of women in the employed population, by fractile of labor income
Source: Appendix Table II-F1.
Top 10%
Top 0.1%
Top 1%
All
At the median, no growth for working-agemen over half a century
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000 19
62
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Rea
l med
ian
pre-
tax
inco
me
($20
14)
Median pre-tax labor income: working-age men vs. working-age women
Source: Appendix Table II-B13.
Working-age men
Working-age women
Working age adults
Comparison with fiscal incomes
Bottom 90% has grown more than in taxdata
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000 19
46
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Aver
age
inco
me
in c
onst
ant 2
014
dolla
rs
Bottom 90% income growth: Pre-tax income vs. fiscal income
National income per adult Bottom 90% fiscal income per tax unit (Piketty-Saez) Bottom 90% pre-tax income per adult
Source: Appendix Table II-B3 and Piketty and Saez (2003, updated to 2014)
+2.0%
+1.8%
+1.4%
+0.8% +2.1%
-0.1%
Without fringe benefits, 0 growth forbottom 90% since 1970s
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000 19
62
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
Aver
age
inco
me
in c
onst
ant 2
014$
Average pre-tax income of the bottom 90%
Taxable labor income
Capital income
Tax-exempt labor income
Source: Appendix Table II-B2e