TY  - JOUR
AU  - Burkhauser,Richard V.
AU  - Feng,Shuaizhang
AU  - Jenkins,Stephen P.
AU  - Larrimore,Jeff
TI  - Estimating Trends in US Income Inequality Using the Current Population Survey:  The Importance of Controlling for Censoring
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14247
PY  - 2008
Y2  - August 2008
UR  - http://www.nber.org/papers/w14247
L1  - http://www.nber.org/papers/w14247.pdf
N1  - Author contact info:
Richard V. Burkhauser
Cornell University
Department of Policy Analysis & Management
259 MVR Hall
Ithaca, NY 14853-4401
Tel: 607/255-2097
Fax: 607/255-4071
E-Mail: rvb1@cornell.edu

Shuaizhang Feng
Department of Economics
Shanghai University of Finance and Economics
Shanghai China
E-Mail: shuaizhang.feng@gmail.com

Stephen Jenkins
University of Essex
Institute for Social and Economic Research
Colchester, ENGLAND CO4 3SQ
E-Mail: stephenj@essex.ac.uk

Jeff Larrimore
Joint Committee on Taxation
1625 Longworth House Office Building
Washington, D.C. 20515
E-Mail: jeff.larrimore@mail.house.gov
AB  - Using internal and public use March Current Population Survey (CPS) data, we analyze trends in US income inequality (1975-2004). We find that the upward trend in income inequality prior to 1993 significantly slowed thereafter once we control for top coding in the public use data and censoring in the internal data. Because both series do not capture trends at the very top of the income distribution, we use a multiple imputation approach in which values for censored observations are imputed using draws from a Generalized Beta distribution of the Second Kind (GB2) fitted to internal data. Doing so, we find income inequality trends similar to those derived from unadjusted internal data. Our trend results are generally robust to the choice of inequality index, whether Gini coefficient or other commonly-used indices.  When we compare our best estimates of the income shares held by the richest tenth with those reported by Piketty and Saez (2003), our trends fairly closely match their trends, except for the top 1 percent of the distribution. Thus, we argue that if United States income inequality has been substantially increasing since 1993, such increases are confined to this very high income group.
ER  -