Homoploutia: Top Labor and Capital Incomes in the USA

Homoploutia: Top Labor and Capital Incomes in the United States, 1950-2020

Homoploutia describes the situation in which the same people (homo) are wealthy (ploutia) in the space of capital and labor income. In this paper, Yonatan Berman and Branko Milanovic combine several datasets to document homoploutia in the United States from 1950 to 2020. They find that homoploutia was low after World War II, has increased by the early 1960s, and then decreased until the mid-1980s. Since 1985 it has been sharply increasing. This makes the traditional division to capitalists and laborers less relevant today. They also find that rising homoploutia accounts for about 20% of the increase in total income inequality in the US since 1986.

Key findings

• Homoploutia, measured by the share of top decile capital-income earners also in the top decile of labor income, has increased considerably since 1950, from about 10% to 30%, most notably in the past 35 years (figure 1)
• The rising labor income inequality during the 1970s and 1980s may have fueled the increase in homoploutia (table 1)
• Rising homoploutia acted to increase total income inequality, accounting to 2 percentage points, or 20%, of the rising top 10% income share from 1986 to 2020 (figure 5)

Figure: Top Labor and Capital Incomes in the United States, 1950-2020

This figure shows the evolution of the share of top decile capital-income earners in the top decile of labor-income earners. Results are based on three data sources: The US DINA (Piketty, Saez and Zucman 2020), the SCF+ (Kuhn, Schularick and Steins 2020) and Luxembourg Income Study (2020).

Contacts

Authors

• Yonatan Berman (London Mathematical Laboratory): y.berman@lml.org.uk
• Branko Milanovic (Stone Center on Socio-Economic Inequality, The Graduate Center, CUNY and International Inequalities Institute, London School of Economics): bmilanovic@gc.cuny.edu

Media inquiries

• Olivia Ronsain: olivia.ronsain@wid.world; +33 7 63 91 81 68