Dr. Víctor Manuel Gómez-Blanco (Tilburg University) “Top earners and the Great Compression:New Estimates Based on Tax Records.”

Abstract

This paper presents new estimates of wage inequality in the United States from 1918 to 1949. Building on a new top income methodology, various definitions of top wage groups are provided that consider the sharp fluctuations in the employed population during this period. The results confirm the overall decline in wage inequality during the Second World War, mostly due to the relative stagnation of the top 1% group and the sharp increase at the bottom. However, the decline of top earners is probably overstated, as illustrated by specific case studies on corporate executives and financial workers that show a conversion of highly paid employees into self-employed workers.