Changing income distribution in the U.S.
The following figure shows estimates of the top decile income share (excluding capital gains) in the U.S. from 1917 to 1998.
There's lots of interesting stuff in this figure - the increase in the top income share from 1917 to 1929, the plateau from 1929 to 1941, the collapse during the World War, the stable, modest percentage from 1945 to 1972, then the relentless increase, through Democratic and Republican administrations alike, from 1972 to 1998.
There's a lot more in the paper - changes in distibution by fractile within the top decile, information on changes in wage and capital income shares, and comparison of top U.S. decile share trends with those in other countries. The paper is available for $5 from the NBER. (P.S. 3-13-04 This work was published in the February 2003 Quarterly Journal of Economics as "Income Inequality in the United States." You may download the entire QJE paper here.) Here's the NBER abstract:
"This paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the US using individual tax returns data.
Top income and wages shares display a U-shaped pattern over the century. Our series suggest that the 'technical change' view of inequality dynamics cannot fully account for the observed facts. The large shocks that capital owners experienced during the Great Depression and World War II seem to have had a permanent effect: top capital incomes are still lower in the late 1990s than before World War I.
A plausible explanation is that steep progressive taxation, by reducing drastically the rate of wealth accumulation at the top of the distribution, has prevented large fortunes to recover fully yet from these shocks. The evidence on wage inequality shows that top wage shares were flat before WWII and dropped precipitously during the war. Top wage shares have started recovering from this shock since the 1960s-1970s and are now higher than before WWII. We emphasize the role of social norms as a potential explanation for the pattern of wage shares.
All the tables and figures have been updated to the year 2000, the are available in excel format in the data appendix of the paper."
I've divided the abstract into paragraphs for easier reading.