Replication data for: Zipf's Law, Pareto's Law, and the Evolution of Top Incomes in the United States

Principal Investigator(s): View help for Principal Investigator(s) Shuhei Aoki; Makoto Nirei

Name	File Type	Size	Last Modified
AEJMacro-2015-0051_data			10/25/2021 01:14:PM
LICENSE.txt	text/plain	14.6 KB	10/12/2019 03:49:PM

Project Citation:

Aoki, Shuhei, and Nirei, Makoto. Replication data for: Zipf’s Law, Pareto’s Law, and the Evolution of Top Incomes in the United States. Nashville, TN: American Economic Association [publisher], 2017. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114112V1

Project Description

Summary: We construct a tractable neoclassical growth model that generates Pareto's law of income distribution and Zipf's law of the firm size distribution from idiosyncratic, firm-level productivity shocks. Executives and entrepreneurs invest in risk-free assets, as well as their own firms' risky stocks, through which their wealth and income depend on firm-level shocks. By using the model, we evaluate how changes in tax rates can account for the evolution of top incomes in the United States. The model matches the decline in the Pareto exponent of the income distribution and the trend of the top 1 percent income share in recent decades.

Scope of Project

Subject Terms: Zipf's Law; Wealth Distribution; Firm Size Distribution; Top Income Share; Pareto Exponent; Income Distribution

JEL Classification:
      D31 Personal Income, Wealth, and Their Distributions
      H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
      L11 Production, Pricing, and Market Structure; Size Distribution of Firms

Geographic Coverage: United States

Time Period(s): 1970 – 2012

Universe: Aggregated data in the United States

Data Type(s): aggregate data

Methodology

Data Source: Alvaredo, Atkinson, Piketty, and (2013), World Top Incomes Database. Davis, Haltiwanger, Jarmin, and Miranda (2007), "Volatility and Dispersion in Business Growth Rates: Publicly Traded versus Privately Held Firms," in NBER Macroeconomics Annual 2006, Vol. 21. Clementi and Cooley (2009), "Executive Compensation: Facts," NBER Working Papers 15426. Frydman and Saks (2010), "Executive Compensation: A New View from a Long-Term Perspective, 1936{2005," Review of Ficial Studies, Vol. 23, No. 5. Edmans, Gabaix, and Landier (2009), "Multiplicative Model of Optimal CEO Incentives in Market Equilibrium," Review of Ficial Studies, Vol. 22, No. 12.

Unit(s) of Observation: Country, Year,

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Published Versions

V1 [2019-10-12]

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