The super-rich get less from rent, more from labor


Greg Mankiw...

http://gregmankiw.blogspot.com/2006/09/who-are-richest-rich.html

~~~

..... The top 0.01 percent of the income distribution, those now making
more than $5 million a year, have increased their take of the income
distribution (before taxes) from 0.86 percent in 1980 to 3.19 percent
in 2004, the most recent year available. (It peaked in 2000 at 3.44
percent.)...

Putting aside for a moment the typical overwrought discussion of
policy and politics, the positive question of why the richest rich
have done so well is fascinating as a matter of economics.

Here is the question I would like answered: Who is this group? They
make up about 14,000 taxpayers. Some of them are CEOs, but the Fortune
500 has only about 500 of them. The group includes some athletes,
actors, media personalities, hedge fund managers, and trial lawyers.
Some of the richest rich start and run their own businesses. Some are
authors (but, sadly, none is a textbook author)...

One thing we do know is that, according to Saez and Piketty, there has
been "a sharp change in the composition of top incomes away from
capital income and toward labor income." The percent of this elite
group's income that comes in the form of dividends, interest, and rent
has fallen from 56 percent in 1980 to 25 percent in 2004.

Increasingly, the top income group is not the idle rich but the
working rich...
.

Relevant Pages

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