Towards a Performance Measure of Income Inequality: Trends in Income 1975-2018

Abstract

This work introduces two novel methods in measuring income inequality. The first uses publicly available tax summary data to improve estimates of top-coded income in the Current Population Survey. The second is a time-period agnostic and income-level agnostic measure of inequality that relates income growth to economic growth. This new metric, the Growth Share Measure, can be applied over long stretches of time, applied to subgroups of interest, and easily calculated. We apply both methods to the time period 1975-2018 to show the trends in income inequality relative to per capita gross domestic product. We find that only incomes at the top 1 percent paced economic growth over this period. We discuss how our inequality measure could be applied to public program evaluation in a manner similar to the supplemental poverty rates.