Capitalists in the twenty-first century

Smith, Matthew, Yagan, Danny, Zidar, Owen and Zwick, Eric (2017) Capitalists in the twenty-first century. Centre for Business Taxation Working Paper, Oxford.

PDF (Working paper)
Download (2MB) | Preview


Have passive rentiers replaced the working rich at the top of the U.S. income distribution? Using income tax data linking 11 million firms to their owners, this paper finds that private business owners who actively manage their firms are key for top income inequality. Private business income accounts for most of the rise of top incomes since 2000 and the majority of top earners receive private business income|most of which accrues to active owner-managers of mid-market firms in relatively skill-intensive and unconcentrated industries. Profit falls substantially after premature owner deaths.
Top-owned firms are twice as profitable per worker as other firms despite similar risk, and rising profitability without rising scale explains most of their profit growth. Together, these facts indicate that the working rich remain central to rising top incomes in the twenty-first century.

Item Type: Other Working Paper
Keywords: Oxford University Centre for Business Taxation
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 05 Feb 2019 17:13
Last Modified: 05 Feb 2019 17:13
Funders: Laura and John Arnold Foundation, Chicago Booth's Initiative on Global Markets, Kauffman Foundation, Kathryn and Grant Swick Faculty Research Fund, Neubauer Family Foundation, Polsky Center, Hultquist Faculty Research Endowment, University of Chicago Booth School of Business, University of Chicago Booth School of Business

View statistics

Actions (login required)

Edit View Edit View