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

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

Top Income Shares in Switzerland Top 1% labor and total income shares 12% ● Total income (tax units) Income Share in Percent Labor income (employees and self−employed) ● ● ● ● ● 10% ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 8% 6% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Year Soruce: F¨ ollmi and Mart´ ınez (2016) Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 1/26

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

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

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

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 one 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

Data Coverage Sample: only individuals present in CH in 2010 5 Number of observations (in mio) . 0.92 . 4 . . 0.88 . . . . 0.85 . . . 0.78 . . . . 3 . 0.74 . . . . 0.66 . . 0.59 . 2 1 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

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

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

Share of Women among Top Earners .5 .4 in different income groups Share of women .3 .2 .1 0 1980 1985 1990 1995 2000 2005 2010 Top... 10% 5% 1% 0.1% Total Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 9/26

Share of Self-Employed among Top Earners .5 in different income groups Share of self-employed .4 .3 .2 .1 0 1980 1985 1990 1995 2000 2005 2010 Top... 10% 5% 1% 0.1% Total women Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 10/26

Share of Foreign-Born among Top Earners .5 .4 in different income groups Share of foreign-born .3 .2 .1 0 1980 1985 1990 1995 2000 2005 2010 Top... 10% 5% 1% 0.1% Total women Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 11/26

Age-Profile of the Top 1% 1 55-64 year olds .8 .6 45-54 year olds .4 .2 35-44 year olds 0 1980 1985 1990 1995 2000 2005 2010 Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 12/26

Age-Profile of the Top 0.1% 1 55-64 year olds .8 .6 45-54 year olds .4 .2 35-44 year olds 0 1980 1985 1990 1995 2000 2005 2010 Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 13/26

Age-Profile of the Top 0.01% 1 65+ .8 55-64 year olds .6 45-54 year olds .4 .2 35-44 year olds 0 1980 1985 1990 1995 2000 2005 2010 Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 14/26

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

Repeated Presence among Top 1% 100 % 80 % Share remaining in Top 1% 60 % 40 % 20 % 0 % 1980 1990 2000 2010 In Top 1% after... 1 year 4 years 9 years 14 years Note: Analysis unconditional on being among the top 1% every year. Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 16/26

Constant Presence among Top 1% 100 % 80 % Share remaining in Top 1% 76.9% 60 % 47.0% 40 % 25.6% 20 % 12.1% 6.3% 0 % 1.4% 1980 1990 2000 2010 Total consecutive years among Top 1% 2 5 10 15 20 30 Note: Analysis conditional on being among the top 1% every year. Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 17/26

Constant vs Repeated Presence among Top 1% 80 % 60 % 40 % 20 % 0 % 1980 1990 2000 2010 Presence among Top 1% 5 years, c 15 years, c 5 years, uc 15 years, uc Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 18/26

Persistence of Men and Women among the Top 1% 80 % 60 % 40 % 20 % 0 % 1980 1990 2000 2010 Total consecutive years among Top 1% 5, m 10, m 15, m 5, f 10, f 15, f Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 19/26

Persistence of Different Subgroups among the Top 1% 80 % Share remaining in Top 1% 60 % 40 % 20 % 0 % 1980 1990 2000 2010 Presence among Top 1% for 5 consecutive years women foreign-born employee self-employed Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 20/26

5-year Continuous Presence among the Top 1% by Age 100 % 80 % 60 % 40 % 20 % 0 % 1980 1990 2000 2010 5 consecutive years among Top 1% by age group 25-34 35-44 45-54 55-64 65+ Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 21/26

10-year Continuous Presence among the Top 1% by Age 40 % 20 % 0 % 1980 1990 2000 2010 10 consecutive years among Top 1% by age group 25-34 35-44 45-54 55-64 65+ Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 22/26

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

Top-Percentile to Median Income Ratios 60 40 Percentile-to-Median Ratio 30 20 15 10 5 4 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

Gini of Annual and Multi-year Earnings Mobility did not counteract the overall increase in inequality .44 .42 .4 Gini .38 .36 .34 1980 1990 2000 2010 Annual earnings 3-year earnings 5-year earnings Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 25/26

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

Thank you. Comments and questions welcome: isabel.martinez@unisg.ch Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 27/26

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

Share covered by age and year 100 % 80 % Share covered in AHV-Sample 60 % 40 % 20 % 0 % 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

Age distribution of the sample 70 60 50 Age 40 30 20 1980 1990 2000 2010 Percentile of the age distribution p1 p25 p50 p75 p99 back Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 30/26

Share of Self-Employed Women among Top Earners .1 Share of self-employed women in different income groups .08 .06 .04 .02 0 1980 1985 1990 1995 2000 2005 2010 Top... 10% 5% 1% 0.1% Total back Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 31/26

Share of Foreign-Born Women among Top Earners .1 Share of foreign-born women in different income groups .08 .06 .04 .02 0 1980 1985 1990 1995 2000 2005 2010 Top... 10% 5% 1% 0.1% Total back Top Income Mobility in Switzerland Isabel Z. Mart´ ınez 32/26