Drawing on the author’s work, this lecture presents evidence on U.S. income and wealth inequality. It presents series for top income and wealth shares, and the distribution of economic growth by income groups. It discusses the mechanisms behind the evolution of U.S. income and wealth inequality from historical and comparative perspectives. It analyzes the role of public policy and in particular...

This paper suggests multidimensional affluence measures for the top of the distribution. In contrast to commonly used top income shares, they allow the analysis of the extent, intensity and breadth of affluence in several dimensions within a common framework. We illustrate this by analyzing the role of income and wealth as dimensions of multidimensional well-being in Germany and the US in 2007 ...

Using state-level variation over time in the top deciles of the income distribution, we observe that nonrich households consume a larger share of their current income when exposed to higher top income levels. We argue that permanent income, wealth effects, or upward local price pressures cannot be the sole explanation for this finding. Instead, we show that the budget shares non-rich households...

Top income inequality, defined as the income gap within the top 1% income group, has been rising in the United States since the 1980s. Coinciding with this rise, the large reductions in the topmarginal tax rate exhibit a strong correlation with the increase in both top income inequality and top income shares. This paper identifies endogenous human capital accumulation as the link between change...

Pooling data for 1905 to 2000, we find no systematic relationship between top income shares and economic growth in a panel of 12 developed nations observed between 22 and 85 years. After 1960, however, a one percentage point rise in the top decile’s income share is associated with a statistically significant 0.12 point rise in GDP growth during the following year. This relationship is not drive...