نابرابری درآمد در ایالات متحده : فرضیه بازنگری شده کوزنتس

Using annual data from 1919 to 2002, the structural transformation hypothesis proposed by Simon Kuznets helps explain the U-shape of U.S. top 1% or 0.01% income share distributions. Flexible autoregressive lag representations are employed and generalized methods of moments reinforce our results. First, as the employment share in goods producing activities falls, income inequality increases in the long run. Second, federal top taxation has only shortterm negative impacts. Third, these major results hold to business cycle controls (linear time trend and real output fluctuations) and to robustness checks of structural changes documented for the U.S. economy around the late 1970s.

A strong U-shape pattern of the top income share of highest income individuals has been documented for the U.S. in the long run. Fig. 1 displays the well known U-shape of the top 1% income share in the U.S. (percentile 99 or P99) together with the 0.01% income share in the U.S. (percentile 99.99 or P9999). The series come from Piketty and Saez (2003) and suggest that income concentration at the top increases in the 1920s, drops during WWII, and then starts to rise again in the 1980s. As one can see from the figure, the top 1% highest income individuals held about 16% of income in the U.S. in 1919 and in 2002! Similarly, the top 0.01% highest income individuals held about 3.73% of income in the U.S. in 1928 (right before the onset of the Great Depression) and 3.44% in 2002!1 At least two important explanations are possible for the U-shape of Fig. 1. First, the structural transformation of the economy has been directed into more service producing activities, which are usually conducive to more wage disparity than goods producing sectors. Second, the heavy taxation on top wage earners to finance war and large spending government programs is believed to have had an important role in ameliorating income inequality. We explore these two major explanations jointly in this paper, controlling for economic cycles.2 In order to address these two issues, we should place them in proper context. On the one hand, early analysis by Kuznets (1955, pp. 7–8) contrasted rural (the sector with lower average income per capita and narrower inequality in the percentage shares) to urban populations and concluded that, other conditions equal, the increasing share of urban population means an increasing share for the more unequal of the two components. The shift of labor from manufacturing into service activities within the recent U.S. economy has been addressed by several authors, including Kuznets (1973) himself.3 Theoretical models of the structural transformation start with the analysis of two sectors (progressive and stagnant) by Baumol (1967) and include Baumol et al. (1985), Laitner (2000), Kongsamut et al. (2001), Hansen and Prescott (2002), Gollin et al. (2002), Ngai and Pissarides (2007), and Blum (2008). The model by Kongsamut et al. (2001) displays a path of generalized balanced growth combining structural change with Kaldorian “balanced growth” facts. Blum (2008) builds a multi-sector general equilibrium model and finds that changes in the sectoral composition of the economy (from manufacturing to services and other non-tradable sectors) are the most important force behind the widening of the wage gap, accounting for about 60% of the relative increase in wages of skilled workers between 1970 and 1996. Income distribution changes as the new dynamic sector receives more capital than the more sluggish sector. On the other hand, an overview of the collective research project on income distribution in the long run for over 20 countries for most of the 20th century in Piketty (2005, p. 382) emphasizes the role of progressive taxation in reducing income inequality: “One important conclusion is that the decline in income inequality that took place during the first half of the 20th century was mostly accidental, and does not have much to do with a Kuznets-type process. Top capital incomes were hit by major shocks during the 1914–1945 period, and were never able to fully recover from these shocks, probably because of the dynamic impact of progressive income and estate taxation.” See also Atkinson (2005), Dell (2005), and Saez and Veall (2005) on income distribution of other countries.4 Although Piketty and Saez (2006) suggest that changes in the tax structure might be the most important determinant of income concentration, empirical work on this issue is scant for the long run. Other studies have covered particular (historic) time periods. Williamson and Lindert (1980) conclude that wealth inequality increased from the late 1700s through the second quarter of the twentieth century and declined thereafter. Linking data from the federal censuses of 1820–1910 to data in the property tax records of Massachusetts, Steckel and Moehling (2001) propose a “new mechanism” based on luck, rents, and entrepreneurship to explain the growing heterogeneity within occupations and within rural and urban areas. In an examination of the Italian Household Budgets Database, Rossi et al. (2001) find that the impact of structural changes was relatively modest when compared to the forces at work at the micro level. The substantial widening of the U.S. wage structure during the 1980s has been extensively documented by, e.g., Bound and Johnson (1992), Katz and Murphy (1992) and Beaudry and Green (2005), and has been extended to other countries by Berman et al. (1998). One way to characterize this body of work is through the “ongoing, secular rise in the demand for skill that commenced decades earlier and perhaps accelerated during the 1980s with the onset of the computer revolution. When this secular demand shift met with an abrupt slowdown in the growth of the relative supply of college-equivalent workers during the 1980s … wage differentials expanded rapidly.” (Autor et al., 2008, p. 300).5 Against this so-called skill-biased technical change (SBTC) hypothesis, institutional explanations to wage inequality have been proposed as well. Lee (1999) examines the U.S. experience in the 1980s and the concurrent decline in the federal minimum wage. He finds that the minimum wage can account for much of the dispersion in the lower tail of the wage distribution, particularly for women. Card and DiNardo (2002) support the institution-based view and contend that the widening of U.S. income inequality was primarily an “episodic” event of the early 1980s. Lemieux (2006) finds that a large fraction of the 1973–2003 growth in residual wage inequality (wage dispersion among workers with the same education and experience) is due to composition effects linked to the secular increase in experience and education.6Gabaix and Landier (2008) also put forward the role of institutions and conclude that the six-fold increase of U.S. CEO-pay between 1980 and 2003 can be fully attributed to the six-fold increase of market capitalization of large companies during that period. The revisionist approach has very recently been challenged by Autor et al. (2008). While the late 1970s and 1980s have been studied in detail by these studies, we are not aware of a long-run approach connecting structural transformation with progressive taxation. We attempt to fill this void in this paper. These two competing explanations, which can coexist, have been put forward independently to explain income concentration. On the one hand, progressive taxation carries the role of public policies in ameliorating income disparities and very much represents the institutional framework: a more “liberal” (in the U.S. sense of the word) government is likely to tax high incomes more severely and a more conservative government may be more willing to adopt a less interventionist stance and let the rich households (with more disposable income) be ultimately in charge of job creation. On the other hand, the structural transformation can be more clearly viewed through the interaction of factor inputs in the process of production. For example, “technology-skill complementarity emerged in manufacturing early in the twentieth century as particular technologies, known as batch and continuous-process methods of production, spread. The switch to electricity from steam and water-power energy sources was reinforcing because it reduced the demand for unskilled manual workers in many hauling, conveying, and assembly tasks.” (Goldin and Katz, 1998, p. 695). The resulting outcome, as far as the story goes, is that wage differentials increase with technology-skill complementarity. This paper reconsiders these two major forces (one from public sector finances and another structural) in an examination of the top 1% or 0.01% U.S. income shares in the long run. Using long-run time series and econometric approaches to annual data from 1919 to 2002, we find that the structural transformation hypothesis has a very important role in explaining the U.S. top income share. Employing standard cointegration analysis and the flexible approach offered by the autoregressive distributed lag (ARDL) methodology of Pesaran et al. (2001), the goods producing employment share has a negative and statistically significant long-run coefficient varying between −1.477 and −0.782 (with the time trend) or between −0.743 and −0.445 (with real output). As the share of goods has fallen, income concentration has moved up. The federal top tax burden, however, has only short-term negative impacts on income distribution. These results are robust to the treatment of controls by including the time trend or by allowing for actual economic fluctuations, in which real output has a clear negative effect on income inequality. The paper is structured as follows. Three more sections follow. The next section contains the data and the following one introduces the empirical model. The results of the estimations appear in Section 4 and Section 5 concludes.

This paper reexamines Kuznets (1955), who linked savings of the wealthier individuals and the structural transformation of developed economies to income inequality. At the time of his writing, Kuznets (1955, p. 1) considered the field of study as “plagued by looseness in definitions, unusual scarcity of data, and pressures of strongly held opinions.” While the latter is still present today, the former have been minimized by the research efforts of Piketty and Saez, 2003 and Piketty and Saez, 2006 and others, who elaborated long-term databases based on tax files. Leigh (2007) finds that there is a strong and significant relationship between top income shares calculated in this way and broader inequality measures, such as the Gini coefficient. Along the lines of two-sector models in Rogerson (2008), our empirical estimates find support for the structural transformation hypothesis for the U.S. from 1919 to 2002. We conjecture that only a long time span allows wage differentials to respond to technology-skill complementarity as in Goldin and Katz (1998). In this paper the goods producing employment share has a negative impact on U.S. income inequality in the long run, while the taxation of top incomes has no long-run impact. These findings are robust to the treatment of business cycles, whether by including the time trend to capture SBTC as in Katz and Murphy (1992) or by allowing for actual economic fluctuations. Previous microeconomic evidence for the U.S. has been provided by Gruber and Saez (2002) for the 1979–1990 period. There are long-run (1920–2000) estimates for Canada by Saez and Veall (2005) and for Sweden (1943–1990) by Roine and Waldenström (2008), who suggest inelastic effects of net-of-tax rates on top income shares. However, none of these studies have considered the dramatic change in employment share at the sector level as we do in this paper. The very long-run approach adopted herein suggests that income inequality is ultimately caused by structural forces of the economy. Kuznets (1955, p. 26) referred to his own paper as “perhaps 5 per cent empirical information and 95 per cent speculation.” We believe the empirical information part is considerably higher in the present study.