Presentation Title

The Rich Get Richer

Presentation Type

Oral Presentation

School

School of Sciences and Social Sciences

Discipline

Economics

Mentor

Marie Duggan

Date & Time

April 9th at 4:15 PM - 5:30 PM

Location

L. P. Young Student Center, West Dining and Flag Room

Abstract

Why has the share of income going to the top 20 percent of households risen in the United States from 44 in 1967 to 50 in 2005? A time series regression analysis will be employed to explain how capital gains, CEO pay and top marginal tax rates affect our dependent variable, the share of income going to the top 20 percent of households. Our empirical measure of economic rent refers to economic profit, where those at the top use market power to claim compensations based on “unique skills”. Top marginal tax rate and the base income to which it is applied will be used. Carola Frydman (2010) provides data on CEO compensations from 1967-2005, which will be used in this regression analysis. Frydman finds that CEO pay in non-financial corporations has risen. In addition, she also finds that capital gains from asset speculation accrue to the top as well. Our analysis discovers that CEO pay and lower marginal tax rates are the primary causes of the concentration of income at the top.

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Apr 9th, 4:15 PM

The Rich Get Richer

L. P. Young Student Center, West Dining and Flag Room

Why has the share of income going to the top 20 percent of households risen in the United States from 44 in 1967 to 50 in 2005? A time series regression analysis will be employed to explain how capital gains, CEO pay and top marginal tax rates affect our dependent variable, the share of income going to the top 20 percent of households. Our empirical measure of economic rent refers to economic profit, where those at the top use market power to claim compensations based on “unique skills”. Top marginal tax rate and the base income to which it is applied will be used. Carola Frydman (2010) provides data on CEO compensations from 1967-2005, which will be used in this regression analysis. Frydman finds that CEO pay in non-financial corporations has risen. In addition, she also finds that capital gains from asset speculation accrue to the top as well. Our analysis discovers that CEO pay and lower marginal tax rates are the primary causes of the concentration of income at the top.