NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes?

Steven N. Kaplan, Joshua Rauh

NBER Working Paper No. 13270
Issued in July 2007
NBER Program(s):   CF   LS   PE

We consider how much of the top end of the income distribution can be attributed to four sectors -- top executives of non-financial firms (Main Street); financial service sector employees from investment banks, hedge funds, private equity funds, and mutual funds (Wall Street); corporate lawyers; and professional athletes and celebrities. Non-financial public company CEOs and top executives do not represent more than 6.5% of any of the top AGI brackets (the top 0.1%, 0.01%, 0.001%, and 0.0001%). Individuals in the Wall Street category comprise at least as high a percentage of the top AGI brackets as non-financial executives of public companies. While the representation of top executives in the top AGI brackets has increased from 1994 to 2004, the representation of Wall Street has likely increased even more. While the groups we study represent a substantial portion of the top income groups, they miss a large number of high-earning individuals. We conclude by considering how our results inform different explanations for the increased skewness at the top end of the distribution. We argue the evidence is most consistent with theories of superstars, skill biased technological change, greater scale and their interaction.

download in pdf format
   (305 K)

email paper

This paper is available as PDF (305 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w13270

Published:

Users who downloaded this paper also downloaded these:
Bebchuk and fried w9813 Executive Compensation as an Agency Problem
Abowd and Kaplan w7124 Executive Compensation: Six Questions that Need Answering
Dyck and Zingales w8711 Private Benefits of Control: An International Comparison
Faleye, Mehrotra, and Morck w11254 When Labor Has a Voice in Corporate Governance
Hermalin and Weisbach w8161 Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us