Tax policy colloquium, week 4: Gerald Auten's Income Inequality in the United States, part 2

My prior blog post noted that, while the Auten-Splinter (AS) paper, despite its clear merits, seems in tension with the vast anecdotal evidence (and other empirical studies) suggesting that there has been a substantial rise in U.S. high-end inequality over the last three decades, there are ways of getting past the initial head-scratching. Let me start with the question of why high-end inequality might matter, which relates to how one might try to measure it for different purposes, and then turn to a few of the particular empirical issues in the debate, along with the relationship between AS and the most recent work in the same area by Piketty, Saez, and Zucman (PSZ).AS seek a "broad and consistent income measure" for purposes of measuring high-end inequality. For the most part, they look to market measures of income earned by different households and individuals, and at taking national income and trying to allocate it to people, although this is influenced by issues…

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