The Evolution of Top Incomes: A Historical and International Perspective
This paper summarizes the main findings of the recent studies that have constructed top income
and wealth shares series over the century for a number of countries using tax statistics. Most countries experience a dramatic drop in top income shares in the first part of the century due to a precipitous drop in large wealth holdings during the wars and depression shocks. Top income shares do not recover in the immediate post war decades. However, over the last 30 years, top income shares have increased substantially in English speaking countries but not at all in continental Europe countries or Japan. This increase is due to an unprecedented surge in top wage incomes starting in the 1970s and accelerating in the 1990s. As a result, top wage earners have replaced capital income earners at the top of the income distribution in English speaking countries. We discuss the proposed explanations and the main questions that remain open.
Piketty, Thomas and Emmanuel Saez. “The Evolution of Top Incomes: A Historical and International Perspective.” American Economic Review: Papers and Proceedings, 96, 2 (May 2006): 200-205. citation courtesy of
Manza, Jeff and Michael Sauder. Inequalities and Societies Reader, First Edition. New York: W.W. Norton & Company, February 2009.