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arXiv · 2411.08826

The Structure of the U.S. Income Distribution

Conrad Kosowsky
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Abstract

I show that U.S. incomes follow a one-parameter family of probability distributions over more than fifty years of data. I compare statistical models of income, and I highlight the inverse-gamma distribution as a parsimonious model that matches data particularly well and has straightforward theoretical interpretations. However, despite having relatively few parameters, the inverse-gamma distribution still overfits income data. I establish a linear relationship between parameter estimates, and a one-dimensional model emerges naturally when I exploit this relationship. I conclude with theoretical remarks about the model.

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Conrad Kosowsky. 2024-11-13. The Structure of the U.S. Income Distribution. https://arxiv.org/abs/2411.08826

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