Who Is a Top Earner and For How Long? Top Income Mobility in - - PowerPoint PPT Presentation

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Who Is a Top Earner and For How Long? Top Income Mobility in - - PowerPoint PPT Presentation

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Who Is a Top Earner and For How Long? Top Income Mobility in Switzerland Isabel Z. Mart nez University of St.Gallen First WID.world Conference Paris December 15 2017 Top Income Shares in Switzerland Top 1% labor and total income shares

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Who Is a Top Earner and For How Long? Top Income Mobility in Switzerland

Isabel Z. Mart´ ınez

University of St.Gallen

First WID.world Conference Paris

December 15 2017

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Top Income Shares in Switzerland

Top 1% labor and total income shares

  • 6%

8% 10% 12% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Year Income Share in Percent

  • Total income (tax units)

Labor income (employees and self−employed)

Soruce: F¨

  • llmi and Mart´

ınez (2016)

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 1/26

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Introduction

Top income shares only give a cross-sectional view of inequality What are the dynamics of the income distribution? How did life-time inequality change? Who are the top earners? gender, nationality, occupation, type of employment (Swiss) Tax data contains limited information about the taxpayers

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 2/26

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Contribution

Document the income mobility of top earners from 1981–2010 using social security data Provide a gender perspective on top earners Shed light on the role of foreigners and self-employed

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 3/26

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Outline

1 Introduction 2 Data 3 Results

Who are the Top Earners? Top Income Mobility Income Inequality

4 Conclusion and Outlook

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 4/26

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Data: Matched Social Security - Census Data

2010 Census matched to social security annual earnings records in the years 1981–2010 Sample: everyone who is present in 2010 and generated at least

  • ne SS entry between 1981–2010

Individual earnings histories from employment and self-employment Characteristics: gender, age, country of birth, type of employment (employee vs self-employed), firm id, limited industry information, marital status history Missing SS Records in 1989, 1998, 2007

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 5/26

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Data Coverage

Sample: only individuals present in CH in 2010

0.59 . . . 0.66 . . . . 0.74 . . . . 0.78 . . . . 0.85 . . . . 0.88 . . . . 0.92

1 2 3 4 5 Number of observations (in mio) 1980 1985 1990 1995 2000 2005 2010 AHV (sample, age 20-62) Total population age 20-62

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 6/26

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Sample Selection

Only those in the labor force (positive income or unemployment benefits) Percentiles are always based on the distribution of this population, even when looking at subgroups like women, foreign born, self-employed etc. Sample grows older over time since only individuals present over a long time span can be studied

Coverage by age Age distribution Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 7/26

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Outline

1 Introduction 2 Data 3 Results

Who are the Top Earners? Top Income Mobility Income Inequality

4 Conclusion and Outlook

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 8/26

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Share of Women among Top Earners

.1 .2 .3 .4 .5 Share of women in different income groups 1980 1985 1990 1995 2000 2005 2010 10% 5% 1% 0.1% Total

Top...

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 9/26

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Share of Self-Employed among Top Earners

.1 .2 .3 .4 .5 Share of self-employed in different income groups 1980 1985 1990 1995 2000 2005 2010 10% 5% 1% 0.1% Total

Top...

women Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 10/26

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Share of Foreign-Born among Top Earners

.1 .2 .3 .4 .5 Share of foreign-born in different income groups 1980 1985 1990 1995 2000 2005 2010 10% 5% 1% 0.1% Total

Top...

women Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 11/26

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Age-Profile of the Top 1%

35-44 year olds 45-54 year olds 55-64 year olds .2 .4 .6 .8 1 1980 1985 1990 1995 2000 2005 2010

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 12/26

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Age-Profile of the Top 0.1%

35-44 year olds 45-54 year olds 55-64 year olds .2 .4 .6 .8 1 1980 1985 1990 1995 2000 2005 2010

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 13/26

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Age-Profile of the Top 0.01%

35-44 year olds 45-54 year olds 55-64 year olds 65+ .2 .4 .6 .8 1 1980 1985 1990 1995 2000 2005 2010

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 14/26

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Outline

1 Introduction 2 Data 3 Results

Who are the Top Earners? Top Income Mobility Income Inequality

4 Conclusion and Outlook

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 15/26

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Repeated Presence among Top 1%

0 % 20 % 40 % 60 % 80 % 100 % Share remaining in Top 1% 1980 1990 2000 2010 1 year 4 years 9 years 14 years

In Top 1% after...

Note: Analysis unconditional on being among the top 1% every year.

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 16/26

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Constant Presence among Top 1%

1.4% 6.3% 12.1% 25.6% 47.0% 76.9% 0 % 20 % 40 % 60 % 80 % 100 % Share remaining in Top 1% 1980 1990 2000 2010 2 5 10 15 20 30

Total consecutive years among Top 1%

Note: Analysis conditional on being among the top 1% every year.

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 17/26

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Constant vs Repeated Presence among Top 1%

0 % 20 % 40 % 60 % 80 % 1980 1990 2000 2010 5 years, c 15 years, c 5 years, uc 15 years, uc

Presence among Top 1%

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 18/26

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Persistence of Men and Women among the Top 1%

0 % 20 % 40 % 60 % 80 % 1980 1990 2000 2010 5, m 10, m 15, m 5, f 10, f 15, f

Total consecutive years among Top 1%

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 19/26

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Persistence of Different Subgroups among the Top 1%

0 % 20 % 40 % 60 % 80 % Share remaining in Top 1% 1980 1990 2000 2010 women foreign-born employee self-employed

Presence among Top 1% for 5 consecutive years

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 20/26

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5-year Continuous Presence among the Top 1% by Age

0 % 20 % 40 % 60 % 80 % 100 % 1980 1990 2000 2010 25-34 35-44 45-54 55-64 65+

5 consecutive years among Top 1% by age group

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 21/26

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10-year Continuous Presence among the Top 1% by Age

0 % 20 % 40 % 1980 1990 2000 2010 25-34 35-44 45-54 55-64 65+

10 consecutive years among Top 1% by age group

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 22/26

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Outline

1 Introduction 2 Data 3 Results

Who are the Top Earners? Top Income Mobility Income Inequality

4 Conclusion and Outlook

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 23/26

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Top-Percentile to Median Income Ratios

4 5 10 15 20 30 40 60 Percentile-to-Median Ratio 1980 1990 2000 2010 P99/P50, annual P99/P50, 5-yr avg. P999/P50, annual P999/P50, 5-yr avg. P9999/P50, annual P9999/P50, 5-yr avg. Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 24/26

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Gini of Annual and Multi-year Earnings

Mobility did not counteract the overall increase in inequality

.34 .36 .38 .4 .42 .44 Gini 1980 1990 2000 2010 Annual earnings 3-year earnings 5-year earnings

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 25/26

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Conclusion and Outlook

Women are still strongly underrepresented among Swiss top earners: 1 out of 12 top 1% earners was female in 2010 Top income mobility rose in the 1980s and 1990s but has remained stable afterwards The rise in top income mobility happened for men Income mobility did not increase enough to counteract rising income inequality International comparisons difficult, no unified framework

determine a set of measures agree on data requirements (survey vs. registers) a (top) income mobility database?

Dynamic view of inequality complementary to cross-sectional inequality analysis

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 26/26

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Thank you.

Comments and questions welcome: isabel.martinez@unisg.ch

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 27/26

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Appendix

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 28/26

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Share covered by age and year

0 % 20 % 40 % 60 % 80 % 100 % Share covered in AHV-Sample 20 30 40 50 60 70 80 90 100 age 1981 1991 2001 2010 back Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 29/26

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Age distribution of the sample

20 30 40 50 60 70 Age 1980 1990 2000 2010 p1 p25 p50 p75 p99

Percentile of the age distribution

back Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 30/26

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Share of Self-Employed Women among Top Earners

.02 .04 .06 .08 .1 Share of self-employed women in different income groups 1980 1985 1990 1995 2000 2005 2010 10% 5% 1% 0.1% Total

Top...

back Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 31/26

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Share of Foreign-Born Women among Top Earners

.02 .04 .06 .08 .1 Share of foreign-born women in different income groups 1980 1985 1990 1995 2000 2005 2010 10% 5% 1% 0.1% Total

Top...

back Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 32/26

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References I

F¨

  • llmi, Reto and Isabel Mart´

ınez, “Volatile Top Income Shares in Switzerland? Reassessing the Evolution Between 1981 and 2010,” The Review of Economics and Statistics, 2016. forthcoming.

Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 33/26