Implications of Potential Causes in Rising Top Income Shares - Eip

One final way to look at this data. In this graph we've graphed out the income shares of each of these occupations in years after 1979 relative to what their income share was in 1979. So we can see how the income shares of each of these groups changed over time. So if we look at the income share going to the top one percent of financial professionals who were in the top one percent during this time period we see that they're the top line there. Their share -- as a fraction of their share in '79 increased pretty dramatically. So their share was about three and a half times in 2005 what it was in 1979. Executive, managers and supervisors are about the third line from the bottom toward the end of the period. So the increase in their share was much less dramatic. So their share went up by about 70 percent. But their share was so large at the beginning of the period that that 70 percent increase in their share over this time period relative to their '79 share is what helps to explain so much of the overall increase. And if we look at the top of the one-tenth of one percent again we see the share of financial professionals now among this group went up more than four times relative to what it was in 1979. Executives, managers, and supervisors -- that increase was larger than it was for the top one percent. So their share went up by two and a half times. And looking at both of these graphs you see a couple of things. One is that there's been a fanning out across occupations. There's been a variety of relative changes across these occupations. So all of the occupations didn't move up in lock steps. Certain occupations had a much larger increase than other occupations. So for example, that second line down those are people who are in real estate, their share went up by almost five and a half times at the end of the period what it was in 1979. But again their share was relatively small at the beginning of the period. And so they don't help to explain that much of the overall increase. So what does this say about why income shares have gone up over this time period? Given the large number of executives, managers, supervisors, and financial professionals in the top one-tenth percent of income earners and in top one-tenth of one percent of income earners, it's hard to make an argument that those explanations as to as why executive pay and financial pay have gone up don't explain or don't help to explain the overall increase in the top income share. There are a lot of these people at the top. And as we saw their increase in income explains a large amount of the overall increase in income, okay? It also looks like shifting between tax bases helps to explain some of the increase in income shares not just because of that blip up around 1986, but because of this change in the composition of executives, managers, and supervisors from people working for someone else to people who are executives of their own closely held business. So that also could help to explain the increase. Superstar theory might play a small role. But it's going to be a small role given that the share of the top income earners that are in one of those professions is relatively small. And finally in trying to search for an explanation as to why top incomes have gone up if the explanations is based on something that changed in the same way for everyone at the top -- tax policy, larger economic forces and so on -- all of those explanations have to contend with this fanning out of changes across occupations and within occupations. And so if there is some role for tax policy you have to come up with another story as to why different occupations responded differently to those changes. Thanks. [Applause]