Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income | Zendy

Philip Armour | Zendy; Richard V. Burkhauser | Zendy; Jeff Larrimore | Zendy

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Deconstructing Income and Income Inequality Measures: A Crosswalk from Market Income to Comprehensive Income

Author(s) -

Philip Armour,

Richard V. Burkhauser,

Jeff Larrimore

Publication year - 2013

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.103.3.173

Subject(s) - economics , taxable income , income inequality metrics , comprehensive income , adjusted gross income , income distribution , economic inequality , gross income , net national income , passive income , unearned income , total personal income , labour economics , income in kind , inequality , demographic economics , public economics , state income tax , tax reform , mathematical analysis , mathematics , accounting

Recent research on levels and trends in the United States in income inequality vary substantially in how they measure income. We show the sensitivity of alternative income measures in capturing income trends using a unified data set. Focusing solely on market income or including realized taxable capital gains based on IRS tax return data in more comprehensive household income measures will dramatically increase inequality growth compared to capital gains measures more in keeping with Haig-Simons principles. Using a measure of yearly accrued capital gains dramatically reduces observed growth in income inequality across the distribution, but also equalizes income growth since 1989.

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