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Cambridge Journal o Economics 2013,1 o 26doi:10.1093/cje/bet026

The Author 2013. Published by Oxford University Press on behalf of the Cambridge Political Economy Society.

All rights reserved.

Class structure and economic inequality

Edward N. Wol and Ajit Zacharias*

Existing empirical schemas o class structure do not speciy the capitalist class in an adequatemanner. We propose a schema in which the specication o capitalist households is based onwealth thresholds. Individuals in non-capitalist households are assigned class locations basedon their position in the social labour process. The schema is designed to address the question

o the relationship between class structure and overall economic inequality in the UnitedStates. Although the major portion o inequality occurs within classes, inter-class inequality,especially the large gaps between capitalist households and everyone else, contributedsubstantially to the rise in overall inequality.

Key words: Class analysis; Living standards; InequalityJEL classifcations: B51, D31, P16, Y80

1. Introduction

Confict between major social classes over the distribution o national income was

a central concern o classical economists. Karl Marx urther developed the under-standing o class structure by linking it explicitly to the historically specic orms o

property relations and organisation o the labour process (Milios, 2000; Zweig, 2005).

However, with the emergence and subsequent ascendancy o marginalist theory,

classes disappeared rom the eld o economics, to be replaced by agents possessing

somewhat mysteriously acquired preerences and endowments. Recent debates over

the so-called micro-oundations o Marxian economics have touched on questions o

classparticularly over whether class can be construed as an aggregation o individu-

als or i individuals matter only as bearers o irreducible class relations (Philip, 2005,

pp. 1127; Goldstein, 2006). Although these discussions might have an intrinsic merit,

it is arguable that they do not add much in way o aiding the descriptive task o speci-ying the class structure o modern capitalist economies or in the study o how class

structure shapes various inequalities between individualsor example, in income or

Manuscript received 28 March 2013; nal version received 2 January 2013.Address or correspondence: A. Zacharias, Levy Economics Institute o Bard College, P.O. Box 5000,

Annandale-on-Hudson, NY 12504, USA; email: [email protected].

*Levy Economics Institute o Bard College Institute (ENW and AZ) and New York University (ENW).Our primary debt is to Hyunsub Kum and Thomas Masterson who implemented the statistical matchingalgorithms used in creating the synthetic dataset used in this study. We are grateul or comments romStephan Klasen and Michael Zweig. We have also beneted rom discussions about our paper with partici-

pants in the conerences o the Working Class Studies Association, Eastern Economic Association, AlliedSocial Science Association and International Association or Research on Income and Wealth. We alone areresponsible or any errors and omissions.

Cambridge Journal of Economics Advance Access published June 13, 2013

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Page 2 o26 E. N. Wolff and A. Zacharias

educational outcomes. The descriptive power o class analysis and the relationships

between class structure and orms o economic and social inequality were, however,

key concerns o the classical economists and Marx. These concerns are no less relevant

today, and attention to them can contribute to maintaining the practical useulness o

class analysis.Questions o class structure and the relationship between class and inequality

have been taken up or systematic study within the discipline o sociology, where the

Marxist and Weberian modes o class analysis have dominated the intellectual land-

scape (Srensen, 2000; Therborn 2002). Key contributions towards conceptualising

the class structure o advanced capitalist economies in an empirically useul man-

ner have been made by Erickson and Goldthorpe (1992) andWright (1997). Also,

an impressive body o literature has emerged that relates class structure to inequal-

ity. Wright and Perrone (1977) estimated, or the United States in 1969, regression

models with annual income as the dependent variable and education, age, Duncans

Socio-Economic Index o occupational prestige and class as independent variables.

Their comparisons o alternative specications showed that class categories accounted

or a larger proportion o the explained variance in income than occupational prestige.

Similarly, research based on the Goldthorpe-Erickson class schema challenged the

liberal notion that disparities in educational attainment amongst social classes tend to

decline in advanced capitalist nations. Based on the estimates rom logistic regression

models, using early 1970s data or men age 3065 rom nine European nations, Mller

and Karle (1993) showed that the probability o transition rom the lower to higher

levels o educational attainment was higher or those higher in the class hierarchy.

Although the class schemas have proved useul in empirical research, they are inad-

equate in their specication o the capitalist class. Specically, as we discuss in the next

section, the schemas are unlikely to ully include the rentier class or wealthy businessowners as members o the capitalist class. We propose a schema that attempts to over-

come this deciency. Furthermore, the relationship between class structure and eco-

nomic inequality has not received due attention. The ew available studies (Wright and

Perrone, 1977; Robinson and Kelley, 1979; Schooler and Schoenbach, 1994) ocus on

estimating the (conditional) eects o class categories on income. We adopt an alter-

native strategy, based on the decomposition o the Gini coecient, to highlight the

relationship between overall inequality and stratication along class lines. Unlike the

regression approach, the alternative approach allows the separation o class inequal-

ity (the gap in mean income between classes) and class stratication (a measure o

the extent to which each class orms an exclusive club with respect to their income);it also allows us to identiy the contributions made by between-class inequality and

within-class inequality to overall inequality. We also analyse the contributions made

by dierent sources o income to overall income inequality. Another distinctive eature

o our approach is that unlike most studies that use gross money income or earnings

as the income measure, we use a post-tax, post-transer, wealth-adjusted measure o

income that better refects economic status.

We ocus on the United States, the country currently the worlds leading capital-

ist economy. We chose two benchmark years, 1989 and 2000, because these years

can be considered the terminal years o the last two upswings o economic growth in

the United States during the twentieth century. The availability o data on household

wealth, a pre-requisite or implementing our class schema, was an additional consid-eration behind the choice o the years.

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Class structure and economic inequality Page 3 o26

2. Operationalising class

The primary distinction regarding class in Marxist theory is between those who own

and do not own means o production. Whilst direct ownership dominated at an ear-

lier stage o capitalism, major assets in private hands is held under corporate owner-

ship in modern capitalism. As Marx and Engels noted in volume 3 oCapital, the

separation o ownership and control in production activities had become a powerul

tendency in the second hal o the nineteenth century (Marx, 1991, pp. 56769).

They also noted that the separation leads to the ormation o a managerial class,

entrusted with the charge o other peoples capital, and a nancial capitalist or

rentier class.1

In spite o this undamental transormation in capitalism, empirical studies in the

Marxist tradition tend to identiy the capitalist class as a subset o the sel-employed.

Essentially, a capitalist is dened as a sel-employed person who employs some mini-

mum number o employees. The minimum is specied dierently across studies. Thus,

Wright and Perrone (1977, p. 34, table 1; p. 36, note 7) and Western and Wright(1994, p. 610, table 1) dened the required minimum as one employee.Wright (1997,

p. 46) dened the capitalists as sel-employed persons who employ 10 or more work-

ers. Hogan (2005, p. 656) used three employees as the required minimum, whereas

Schooler and Schoenbach (1994, p. 438) dened employers as sel-employed persons

who employ at least our non-amily employees.

The principal rationale behind this criterion is that the hallmark o those who belong

to the capitalist class is their employment o others or the purpose o making prots.

There are a ew problems with this rationale. First, it can be hard to separate the net

income o a sel-employed individual into wages and prots; i some method is employed

or the separation, then the class status o the sel-employed individual hinges on whetherthere is any nontrivial amount o prot let rom net income ater assigning wages.2

Second, or sel-employed individuals who hire a very small number o workers (say,

one two three workers) and work as sub-contractors or large corporations, the social

relation between them and their employees is perhaps better characterised as a supervi-

sory relation than a capitalistworker relation. Most important, this approach neglects

three important acts about the modern US economy: 1) the overwhelming majority o

private-sector employees work or corporations; 2) corporations own the vast majority

o private-sector non-residential xed assets; and 3) corporations account or the bulk

o business receipts. Thus, corporations rather than individual business owners domi-

nate production or private prot. Using the criterion can at best identiy small business

owners.3

An alternative approach, thereore, would be to identiy those who control the

corporations as the capitalist class. This was the approach taken by Michael Zweig,

1 In his supplement to volume 3 oCapital, Engels noted that the rapid pace o capitalist accumulationin the 1870s and 1880s led to a growth in the number o rentiers, people who have tired o routine exer-tion in business and who simply want to amuse themselves or pursue only a light occupation as directors ocompanies (Marx, 1991, p. 1046).

2 This problem is also encountered in estimating aggregate wages or variable capital (e.g., Shaikh andTonak, 1994, pp. 11112). Typically, an arbitrary assumption is made to split the net income o the sel-employed into wages and prots (e.g., estimating an imputed wage by assigning the average wage o employ-ees to the sel-employed and then subtracting the resulting total wages rom net income to obtain imputed

prots).3 Wright and Perrone recognised this limitation but attributed it to the limitation o their particular sam-ple, rather than to a structural eature o modern capitalism (Wright and Perrone, 1977, p. 36, note 7).

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which has its roots in the sociological tradition o studying the elites (Domho,

1998). Zweig argued that the capitalist class is made up o the owners and top man-

agement o big business (dened as enterprises with more than 20 employees). He

estimated that they constituted 2% o the labour orce in 1995. This estimate was

apparently constructed on the basis o the average number o directors on the boardo big business enterprise and the total number o big businesses (Zweig, 2000,

pp. 1719). Thus, whilst Zweigs concept o the capitalist class includes the owners

and the top management, his estimate o it appears to consist only o the board o

directors.

Either criterionthe number o employees under a sel-employed person or

membership in a corporations board o directorsis insucient to include the

nancial aristocracy amongst the ranks o the capitalist class. Wright did recog-

nise this limitation o his criterion but argued that including them will have only

a negligible impact on the estimated size o the capitalist class (Wright, 1997,

p. 48). Given the relatively small number o households that make up the nancial

aristocracy, Wright is indeed correct. Yet admittedly, estimating the distribution o

households or individuals across class locations is only a step in most research; the

interesting and oten more dicult issues pertain to the relationship between class

structure and other characteristics o individuals, such as race, income or educa-

tional attainment.

In this study, we identiy households in the capitalist class by the size o wealth

holdings. Having large amounts o wealth can potentially eliminate the economic

compulsion to engage in wage labour. Individuals in command o great wealth con-

stitute the polar opposites o individuals with very little or no wealth who must

depend on the continual sale o their labour power to reproduce themselves. But

potential reedom rom the compulsion o wage labour is only one dening char-acteristic o the members o the capitalist class. Equally important is their ability,

under normal circumstances, to dominate the political processes, including infu-

encing electoral outcomes, government regulation o business activity, taxation

policy and setting the parameters o public discourse about economic issues. Such

ability is usually backed by substantial personal ortunes. There is also the issue

o social and political solidarity amongst the members o the capitalist class that

derives rom (and in turn is reinorced by) its exclusive character. Although other

axes o social straticationmost prominently, race and national originenter into

play here, the crucial actor determining the membership in the exclusive club is

the amount o wealth.Refecting these considerations, we employ the size o non-home wealth as the

operational criteria. Non-home assets included in the denition o wealth include

real estate and businesses (business equity), liquid assets, nancial assets (stocks,

bonds etc.) and retirement assets (excluding the value o uture benets rom public

or private dened benet pensions). Non-home wealth is calculated by subtracting

all debt (excluding mortgage debt) rom the value o all non-home assets. A house-

hold is considered to be a capitalist household i it has non-home wealth o at least

$4 million or business equity worth at least $2 million (in 2000 dollars). Our thresh-

olds refect wealth levels that would be, under normal circumstances, sucient to

yield a property income that can provide a household with a standard o living that

is over and beyond a lie o leisure. It should also be emphasised that, unlike thealternative approaches sketched beore, our denition includes the so-called rentier

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class those who can enjoy a very high standard o living rom the mere ownership

o their wealth.4

Because the thresholds we chose are arbitrary, we also provide results rom a sen-

sitivity analysis o our key results using a dierent set o thresholds. The alternative

thresholds are relative rather than absolute and pertain to the top 1%. That is, weconsider a household to be a capitalist household i it belonged to the top 1% o the

distribution o non-home wealth or business equity. Translated into 2000 dollars, the

thresholds or non-home wealth and business equity were, respectively, $5.27 mil-

lion and $2.26 million in 2000; in 1989, they amounted to $2.87 million and $1.63

million.

For wage- or salary-earning individuals in non-capitalist households, their position

in the social labour process is the determinant o class location. Previous research has

delineated positions in the labour process using the authority dimension and the skills/

credentials dimension (Wright, 1997, pp. 2425; Goldthorpe, 2000). The complex

approach to operationalising these dimensions is to classiy individuals on the basis o

responses to a battery o questions regarding the actual content o their jobs, the num-

ber o subordinates and superiors they have and so on. The simpler approach classies

individuals based on their occupational titles. Comparison o results based on the two

approaches suggests that the simpler method perorms quite well in capturing the main

eatures o the class structure.5 We used the Census Bureaus detailed occupational

codes (499 in 1989 and 494 or 2000) to group employees into six class locations:

managers, supervisors, proessionals, white-collar skilled workers, blue-collar skilled

workers and nonskilled workers. In this typology, we distinguish workers both by their

supervisory relationship and by the skill content o their work. A comparison between

our schema on the one hand and the Goldthorpe and Wright schemas on the other is

shown inTable 1.Our main dierence with the Wright schema is that we do not make distinctions

within the managerial and supervisory groups according to skills or expertise level.

Their principal task is to manage the labour process or prot, and the skill in per-

orming this task denes the social relation between them and others (the owners

above them and the employees under them).6 Our distinctions amongst employees

who are neither managers nor supervisors may be viewed as alling somewhere

between the other two schemas in terms o detail. The central consideration behind

the groupings or us is the degree to which the worker can maintain some control

over the labour process. Wright, on the other hand, viewed the skills and expertise

4 Assuming a modest 4% rate o return, the thresholds imply that the potential property income will be$160,000 (or non-home wealth) or $80,000 (or business equity). In contrast, median household moneyincome in 2000 was $42,000. An income o $80,000 would have placed the household in the top 20% o themoney income distribution and that o $160,000 in the top 5%.

5 The comparison ound that the biggest problem was with the category o managers, where occupa-tional title did not always refect the actual job content: on the basis o the more complex operationalisation,a third o those with the occupational title o managers had to be reclassied as supervisors or nonmanage-rial employees (Wright, 1997, p. 90).

6 Just as at rst the capitalist is relieved rom actual labor as soon as his capital has reached the minimumamount with which capitalist production, properly speaking, rst begins, so now he hands over the work odirect and constant supervision o the individual worker and groups o workers to a special kind o wage

laborer. An industrial army o workers under the command o a capitalist requires, like a real army, ocers(managers) and N.C.O.s (oremen, overseers), who command during the labour process in the name ocapital. The work o supervision becomes their established and exclusive unction (Marx, 1977, p. 450).

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dimension in terms o the ability to command wages over and above the cost o

labour power (Wright, 1997, pp. 2223). For Goldthorpe, the crucial actor is the

dierences in the employment contract (explicit or implicit) aced by dierent

categories o employees (Goldthorpe, 2000, pp. 2078). Admittedly, although the

dierent justications are conceptually important, it is quite unlikely that they

will lead to drastic dierences in the resulting empirical class schemas (Therborn,

2002, p. 222).

Individuals in non-capitalist households who are sel-employed are treated as a dis-

tinct group. We could call this group the petty bourgeoisie, but because it can include

individuals enmeshed in qualitatively dierent sets o social relations, we designate

them simply as sel-employed. This group consists o owners o small enterprises

as well as proessionals (doctors, lawyers, consultants etc.) and skilled cratspeople

(plumbers, electricians etc.).

Occupational codes in our data are available only or those in the civilian labour

orce who worked or pay or those who were sel-employed during the previous year o

the survey. Our schema (like the Wright and Goldthorpe schemas) leaves individuals

who did not engage in market work without any class location. There have been exten-

sive debates about the class character o unpaid household labour (or a review, see

Mutari, 2001); there is also a substantial literature on whether employable adults out

o the labour orce constitute a reserve army o labour or an underclass with a separateclass identity (e.g., Marshall et al., 1996). Because there is hardly a consensus on these

Table 1. Alternative class schemas

Wright

Scheme I Expert managersNon-skilled managers

Expert workersNon-skilled workers

Scheme II Expert managersSkilled managersNon-skilled managersExpert supervisorsSkilled supervisorsNon-skilled supervisorsExpert workersSkilled workersNon-skilled workers

Goldthorpe Proessionals, administrators and managers, higher-grade

Proessionals, administrators and managers, lower-grade, and higher-gradetechniciansRoutine non-manual employees, higher gradeRoutine non-manual employees, lower gradeLower-grade technicians and supervisors o manual workersSkilled manual workersNon-skilled manual workers

This study ManagersSupervisorsProessionalsWhite-collar skilled workersBlue-collar skilled workers

Non-skilled workers

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issues, we ollow the standard procedure o not assigning these individuals a class loca-

tion directly. A class location is assigned indirectly to the subset o these individuals who

live in households with a class location in our schema, as discussed in the next section. 7

Our basic data are drawn rom the public-use les o the Census Bureaus Annual

Demographic Supplement (ADS). However, the ADS does not have any inorma-tion on household wealth, the crucial variable or identiying capitalist households. We

thereore statistically matched the ADS with the Survey o Consumer Finances (SCF),

conducted by the Federal Reserve in 1989 and 2001. The idea behind the matching

algorithm is to nd, or each household record in the ADS, a household record in the

SCF that matches it closely in terms o key characteristics, such as race and age o the

householder, household income and so on (Kum and Masterson, 2008).8 The total

number o capitalist and non-capitalist households in the sample were 47,121 in 1989

and 64,583 in 2000.

3. Class structure

3.1 Unit o analysis

Our unit o analysis is the household. This choice o the unit o analysis requires the

designation o a particular individual in the household as the reerence person. The

class location o the household is considered as equivalent to the class location o the

reerence person. Following the convention, we have picked the person designated as

the householder by the Census Bureau as the reerence person or capitalist house-

holds and households in which the householder is an earner (i.e., either an employee

or sel-employed).9 According to the bureau, the householder is the person in whose

name the housing unit is owned or rented. I the ownership or lease is jointly held, thenone o the individuals is randomly designated as the householder. For non-capitalist

households in which the householder is not an earner, we designated the person with

the highest earnings as the reerence person. Our approach to determining the house-

holds class position can be described as a combination o the conventional approach

7 Households let out o our schema can be subdivided into two types o (non-capitalist) households:households with only individuals 65 years or older (elderly households) and non-earner households with atleast one working-age adult. It could be argued that the elderly households should be assigned a class loca-tion based on their class location beore retirement; however, no such inormation is available in the data.

As or the other type, it turns out that the vast majority o prime-age adults in such households are militarypersonnel (82% in 2000). In the survey, military employment is coded as a separate occupation in itsel andthereore cannot be included in our class schema.

8 We use a constrained statistical matching procedure based on propensity scores. The basic ideabehind the technique is to transer inormation rom one survey (donor le) to another (recipientle). Such inormation is missing in the recipient le but necessary or research purposes. Each indi-vidual record in the recipient le is matched with a record in the donor le, where a match represents asimilar record, based on the several common variables in the two les. The variables are hierarchicallyorganised to create the matching cells or the matching procedure. Some o these variables are consid-ered as strata variables, that is, categorical variables that we consider to be o the greatest importancein designing the match. For example, i we use homeownership as a strata variable, this would meanthat we would match only homeowners with homeowners. Within the cells constructed by combiningstrata variables, we use a number o variables o secondary importance as match variables. The match-ing progresses by rounds in which strata variables are dropped rom matching cell creation in reverse

order o importance.9 About 74% and 60% o householders in such households (capitalist and earner households takentogether) were men in 1989 and 2000, respectively.

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that uses the position o the household head and the dominance approach o Erikson

that uses the position o the earner with the dominant occupational position (Erikson,

1984; Srensen, 1994).

An alternative to this approach would be to choose the individual (with an assigned

class location) as the unit o analysis, that is, to expand the sample to include all indi-viduals with class locations, rather than just the reerence persons. This could poten-

tially change the picture regarding the overall class structure. But in our data, estimates

showed that the class structure was pretty much invariant to the choice o the unit o

analysis: the percentage distribution o class locations was largely the same or both units

(see later discussion).

The substantive question, however, is whether one or the other unit o analysis

could be more suitable or examining the relationships between class structure and

economic inequality. The answer to this question depends on the measure o eco-

nomic status that is to be used or analysis. For example, it seems natural to choose

the individual as the unit o analysis i the objective is to examine the relationship

between class structure and earnings inequality. Our interest here is the inequality

in the potential command over commodities amongst persons living in the capital-

ist and earner households.10 Hence, it is reasonable to adopt the household as the

unit o analysis and determine its class location by means o the reerence persons

class location.11

3.2 Estimates or 1989 and 2000

The percentage breakdown o households classied by our typology in 1989 and 2000

is shown inTable 2, Panel A. Worker householdshouseholds in which the reerence

person was a skilled or non-skilled workerconstituted the majority o householdsin both years (57% and 55% in 1989 and 2000, respectively). Manager households

and proessional householdshouseholds in which the reerence persons were, respec-

tively, a manager and a proessionalwere similar in their total number, which grew

relatively aster than the number o worker households. Supervisor households and

sel-employed households declined as a proportion o total households. The smallest

group was the capitalist households, which constituted 2% o all households in 2000,

sharply up rom 1.1% in 1989. This change refected the large increase in household

wealth over this period.

A working-class majority (the title o Zweigs book), is also evident i we consider

the distribution o class locations amongst all earners, instead o just reerence persons

(Table 2, Panel B). Skilled and nonskilled workers made up 60% o all earners in 2000,down somewhat rom 64% in 1989. Interestingly, the proportion o supervisors in the

total number o earners actually increased slightly in contrast to their notable decline

10 An earner household is dened as a non-capitalist household in which at least one individual has aclass location (i.e., is either a wage earner or sel-employed).

11 An important aspect o economic inequality that we neglect here is intra-household inequality (see,e.g., Sen, 1990) and its relation to class divisions. A separate study will be required to address this issue inan adequate manner. However, it should be noted that by choosing the household as the unit o analysis weare not making any assumption about how household income is shared amongst the members o the house-

hold. We are only assuming that the combined income o all the members o the household (total householdincome) is a suitable measure o the combined potential command that its members can, as a group, exerciseover commodities (total, potential household consumption).

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in the total number o reerence persons. The relatively aster growth in the number o

managerial and supervisory employees over the period perhaps lends support to the

arguments made by David Gordon regarding the attening o the bureaucracy wielding

the stick in the American workplace (Gordon, 1996, pp. 3367). Consistent with the

observed trend or households, the percentage o proessionals amongst earners also

increased notably during the period.

4. Class disparities in income and income composition

4.1 Income measure

The most widely used income measure in studies o inequality is gross household

money income. This measure has been subjected to a number o criticisms or ailing

to refect adequately the households command over commodities (Canberra Group,

2001; Wol et al., 2004). From our standpoint, there are three principal shortcom-

ings. First, it neglects the reduction in the command over commodities imposed by

taxes. Second, by including only cash transers in the income measure, it excludes the

increase in the command over commodities that are obtained by means o non-cash

government transers. Finally, property income (the sum o dividends, interest andrent) included in money income is a poor measure o income rom wealth. We address

Table 2. Class structure

Group 1989 2000

Panel A: Households

Capitalist 1.1 2.1Manager 11.4 13.1Supervisor 6.5 5.8Proessional 11.5 13.7White-collar, skilled worker 6.1 6.2Blue-collar, skilled worker 10.5 8.7Non-skilled worker 40.2 40.0Sel-employed 12.6 10.6All 100.0 100.0

Panel B: EarnersManager 9.8 12.0Supervisor 5.2 5.4

Proessional 11.1 13.4White-collar, skilled worker 5.6 5.8Blue-collar, skilled worker 8.1 7.9Non-skilled worker 49.9 46.3Sel-employed 10.2 9.2All 100.0 100.0

Notes:The class location o a household is determined by its wealth and the class location o its reerenceperson. A capitalist household had a non-home net worth o either $4 million or business equity worth$2 million (in 2000 dollars). For non-capitalist households, the reerence person is the householder, i thatperson is an earner; otherwise, it is the person with the highest labour income. Note that the householderis the person who owns or rents the housing unit. I the ownership or lease is joint, then the Census Bureaurandomly designates one person as the householder.

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these deciencies by constructing an alternative measure, which we call comprehen-

sive income (Table 3).12

The single most important dierence between our measure and the standard income

measures is the treatment o the income rom wealth. Current property income does

not ully capture the stock dimension o the advantages rom the ownership o non-home wealth and completely neglects the disadvantage rom the burden o nonhome

debt (Wol and Zacharias, 2009). I the ability to approximate potential consumption

over a given period o time is a desirable characteristic o a measure o economic status,

then it seems appropriate to take wealth into account in a more comprehensive manner.

Our denition includes income rom home wealth and income rom non-home wealth

separately. Income rom home wealth is estimated as the dierence between the gross

imputed rent on owner-occupied housing and the annutised value o mortgage debt.13

Table 3. Derivation o comprehensive income

Money income (MI)a

Less: Property income and government cash transersa

Plus: Employer contributions or health insurancea

Equals: Base incomea

Less:Income taxesb

Payroll taxesb

Property taxesb

Consumption taxesc

Plus:Annuity rom non-home wealthc

Imputed rent on owner-occupied housingcPlus: Cash transersb

Plus: Non-cash transersb,d

Equals: Comprehensive income (CI)c

a. Items available in the public-use le.b. The amounts estimated by the Census Bureau are modied to make the aggregates consistent with the

NIPA estimates.c. Our estimates.d. The government-cost approach is used. The Census Bureau uses the ungible value method or valu-

ing Medicare and Medicaid. The main dierence between the two methods is that whilst the ungible valuemethod assigns an income value or a benet according to the recipients level o income, the governmentcost approach assigns an insurance value that is independent o the recipients income.

12 In comparing the income levels o households or analysing inequality using either the standard moneyincome measure or our comprehensive income measure, it is important to account or dierences amongsthouseholds in size and composition. This is usually accomplished by transorming income into equivalentincome using an equivalence scale, though there is no general agreement on what constitutes an appropri-ate scale. We tested to see i our major ndings were sensitive to the use o an equivalence scale. The equiva-lence scale we used is the same scale that is currently used in the ocial experimental poverty measures.For single parents, the scale is (A + 0.8 + 0.5(C1))0.7, whereas or all other households, it is (A + 0.5C)0.7,whereA is the number o adults and Cis the number o children. Because we ound no notable dierences inndings between using equivalent and unadjusted income measure, we do not report results or equivalentincome in this article.

13 An alternative to our approach to measuring the income rom home wealth is to value the benet rom

owner-occupied housing as a return on home equity. This approach, in eect, treats homes like a nancialasset. We consider housing to be a universal need and hence value the benet in the orm o a replacementcost, that is, rental equivalent.

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Income rom non-home wealth is calculated as the dierence between the imputed

lietime annuity on non-home assets and the annutised value o non-home debt.

The most common alternative to the lietime annuity method is the bond-coupon

method (a xed return, say, 3%, on non-home wealth). Our approach better refects

the resources available to the household on a sustainable basis over the expected lie-time. In our calculations, we employed lie tables that are dierentiated by sex and

race. For households with multiple adults, we assumed that the relevant lie expectancy

is the maximum o the lie expectancies o the adults in households. 14 We also used

asset-specic, historical rates o total return (ranging rom 14 to 40 years) in calculat-

ing the annuity value to account or the dierences in portolio composition across

households.15 In contrast, the bond-coupon method assumes away the dierences in

individual household overall rates o return caused by dierences in household porto-

lios (Wol and Zacharias, 2009).16

4.2 Income levels and composition

Households o nonskilled workers ranked at the bottom in terms o median compre-

hensive income (Table 4). Compared to the average household, the average household

o nonskilled workers was about 20% less well-o in both years. Blue-collar skilled

workers occupied the rung just above non-skilled workers. In 1989, the sel-employed

households also had a median income that was practically indistinguishable rom the

blue-collar skilled workers, but in 2000, it was about 9% higher. Supervisor house-

holds enjoyed a higher median household income than the sel-employed in 1989, but

they were in a virtual tie or th place in 2000. White-collar skilled workers and pro-

essionals held the ourth and third ranks, respectively, with a dierence o only about

6% in median income separating the two groups. Manager households had the highestmedian income amongst all earner households. Given that our denition o capitalist

Table 4. Comprehensive income by class (median values in 2005 dollars)

Group 1989 2000 % Change

Capitalist 396,197 484,390 22.3Manager 65,866 68,073 3.4Supervisor 57,130 57,202 0.1Proessional 62,855 65,753 4.6White-collar, skilled worker 59,092 61,972 4.9

Blue-collar, skilled worker 50,684 51,398 1.4Non-skilled worker 39,867 42,922 7.7Sel-employed 50,251 55,968 11.4

All 50,148 53,606 6.9

14 Inormation on lie expectancy by sex and race was rom the lie tables published by the US NationalCenter or Health Statistics.

15 We use the rates o return reported inWol and Zacharias (2009, table 2).16 As pointed out by an anonymous reeree, i our goal is to construct a measure o sustainable consump-

tion alone, we would want to also include a measure o human capital and the present value o both publicand private pension wealth. However, both human capital and public and private pension wealth dier rommarketable wealth in several important ways. First, they cannot be immediately drawn on to pay or current

consumption or to exert economic and political infuence. Second, these two orms are not inheritable andthus do not play a role in the establishment o an economic dynasty. Third, as a result, these two orms owealth are not as directly related to economic power as marketable wealth.

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households includes only a relatively small number o extremely wealthy households,

it is no surprise that they were ar ahead o other groups in median income. However,

our estimate o the gap can only be described as massive, and it actually widened

over the period under study: the median income o capitalist households exceeded the

median income o all households by a actor o 9.04 in 2000 compared with a actoro 7.90 in 1989.

Unlike the income gap between the capitalist households and the rest, the dier-

entials between the other groups showed no dramatic changes between the two years.

Nevertheless, it is notable that the most numerous group, households o non-skilled

workers, were substantially behind the other groups o earner households in 2000,

in spite o experiencing the astest income growth amongst earner households, with

the exception o the sel-employed. Non-skilled workers had the least amount o di-

erential with the blue-collar, skilled workers who had a median income that was 20%

higher in 2000. Managers, on the other hand, had an income that was 59% larger than

that o non-skilled workers in 2000.17

Income composition o households in various class locations is shown inTable 5.

Between 1989 and 2000, the most notable change in the composition o income

overall was a remarkable increase in the share o income rom nonhome wealth, rom

16.7% to 26.5%. This change can be observed or all groups. The increase largely

refects the growth in household wealth over this period, which in turn refects the

stock market boom o the late 1990s.18 The share o base income correspondingly

declined rom 98% to 90% overall over the period, though managers, white-collar

proessionals and the sel-employed were exempt rom this overall trend. Another

notable change was the increase in the share o taxes in comprehensive income expe-

rienced by all earner groups, especially the proessionals and white-collar skilled

workers. In contrast, the share o taxes actually declined or the capitalist class, rom11.4% to 8.9%. The much lower share o taxes or the capitalist class is due to the

act that as much as roughly 80% o their comprehensive income is accounted or

by income rom non-home wealth (imputed lietime annuity) that is obviously not

subject to taxation. The dierential burden o taxes would not appear dierent even

i we were to examine it by means o eective tax rates (taxes divided by pre-tax

income) instead o using the share o taxes in comprehensive (post-tax) income, as

we have done here.

17 As noted earlier, we conducted sensitivity analysis o our ndings using an alternative set o relative

wealth thresholds to determine membership in the capitalist class. Because the relative thresholds werehigher than the xed thresholds in 2000, we ound that the capitalist class had a higher income when weused the relative thresholds to dene the capitalist class as compared to using the xed thresholds. The oppo-site pattern was ound or 1989that is, the capitalist class had a smaller income when relative thresholdswere used because relative thresholds were lower than the xed thresholds. As a result, the gap between thecapitalist households and all households in median income widened in a more drastic ashion with relativethresholds: rom a actor o 6.53 in 1989 to a actor o 9.83 in 2000. None o the other results reported inthis section so ar were ound to be sensitive to using the relative thresholds to dene capitalist households.

18 A related issue here is the share o income rom wealth in the total income o the richestan issuethat has gured as an important issue in some o the recent discussions on income inequality, ollow-ing the work o Thomas Picketty and Emmanuel Saez. However, it appears that the level o the share isquite sensitive to the way income rom wealth is measured. Using a method identical to the one used inthis article or measuring income rom wealth, but employing a dierent source o data (the US wealthsurveys),Wol and Zacharias (2009) ound that the share o income rom wealth in 2000 was 46% o the

total income received by the top 1% o households. In contrast, using a conventional measure o personalincome, Piketty and Saez (2003) ound that the share o property income was only 12% in1999 in theincome going to the top 1%.

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5. Inequality

5.1 Inter-class and intra-class inequality

Let Gbe the Gini coecient o household income. The Yitzhaki decomposition allows

us to separate Ginto inter-class inequality (Ib) and a remainder (I

r) that can be inter-

preted as intra-class inequality (Yitzhaki, 1994):

G = Ib + Ir (1)

The amount o inter-class inequality is:

IF y

b

i oi=

2cov( , ( ))

(2)

wherey is income, is mean income or all households, i is mean income or classiand F y

oi( ) is the mean rank o class i, that is, the average position o the members o

Table 5. Composition o comprehensive income by class (%)

Group Baseincome

Incomerom homewealth

Incomeromnon-home

wealth

Transers Taxes Total Meanincome(2005

$)

1989Capitalist 24.7 5.7 79.3 1.7 -11.4 100.0 586,502Manager 113.1 7.3 11.9 3.3 -35.6 100.0 76,030Supervisor 109.0 6.6 9.0 4.6 -29.2 100.0 64,535Proessional 109.7 6.7 12.2 3.9 -32.4 100.0 72,765White-collar,

skilled worker109.6 6.8 11.2 4.3 -31.9 100.0 67,948

Blue-collar,skilled worker

105.0 6.1 8.2 6.3 -25.6 100.0 55,292

Non-skilled

worker

96.0 6.0 8.0 12.7 -22.7 100.0 46,744

Sel-employed 108.5 8.8 16.1 7.3 -40.7 100.0 63,065All 98.0 6.7 16.7 6.9 -28.3 100.0 64,633

2000Capitalist 21.6 4.9 81.2 1.3 -8.9 100.0 825,826Manager 115.6 4.9 14.7 4.4 -39.6 100.0 88,904Supervisor 107.9 5.0 13.3 5.7 -32.0 100.0 69,552Proessional 114.8 4.5 14.3 4.6 -38.3 100.0 83,086White-collar,

skilled worker110.8 5.1 15.0 5.5 -36.4 100.0 77,239

Blue-collar,skilled worker

103.4 4.7 12.4 7.4 -27.9 100.0 60,066

Non-skilled

worker

92.0 4.6 13.0 14.7 -24.3 100.0 52,127

Sel-employed 109.2 5.8 18.2 8.7 -41.8 100.0 80,982All 90.0 4.9 26.5 7.3 -28.7 100.0 83,231

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a class in the overall income distribution.19 Thus, the amount o inter-class inequality

is twice the covariance between the mean incomes and mean ranks o classes divided

by the mean income or all households.20

The remainder term is calculated as:

I s G Or i i i

i

==

1

8

(3)

where si is the share o class i in aggregate income, Gi is the Gini coecient o

the income distribution within class iand Oi is the overlapping index or class i. The

Yitzhaki decomposition thus provides group-specic measures o overlapping. The

index o overlapping proposed by Yitzhaki is a measure o the degree to which the

distribution o income in each group overlaps with the distribution o income or all

households. Overlapping can thus be seen as the opposite o stratication: the higher

the amount o overlap between a class and the population, the less stratied they are

as a class in terms o income (Yitzhaki, 1994, pp. 14849). As an intuitive example,consider two groups: the ocially income-poor households and households headed by

a person 65 years o age or older (elderly). Clearly, a poverty rate o 20% implies that

the income distribution o the poor is coincident with the bottom 20% o the overall

income distribution. On the other hand, the elderly households would include poor

and non-poor households, including some with very high incomes; thereore, the dis-

tribution o their incomes would encompass a broader portion o the income distribu-

tion, say rom the 10th to the 80th percentile. The index o overlapping is designed to

capture this type o inter-group dierences in the distribution o income.

The amount to which class i overlaps with the overall distribution is dened as:

Oy F y

y F yii oi

i i

=

cov ( , ( ))

cov ( , ( ))

(4)

whereFoi(y) is the unction that assigns to the members o class itheir ranks in the

overall distribution,Fi is the unction that assigns to the members o class itheir ranks

in the income distribution within that class and covi indicates that the covariance is

according to the distribution within class i.21 The minimum value o Oi is given by

the share o class iin the total number o households. When the class in question is a

perect stratum, that is, it occupies an exclusive segment o the overall income distribu-

tion, the index equals the minimum possible value. I a particular class has a range oincome that coincides with the range o income o all households then the index will

be equal to 1. Finally, i the index is close to its maximum value o 2, the distribution

o income within the class is much more polarised than in the overall distribution. This

19 For example, i the mean rank is 0.25 or non-skilled workers, then the average workers position in theincome distribution or all households is at the 25th percentile.

20 In contrast, in the standard decomposition o Gini by groups, the between-group component is equalto twice the covariance between the mean income o each group and the rank o each groups mean incomedivided by overall mean income. The Yitzhaki decomposition takes into account the ranking o each house-hold within each class in the overall distribution.

21

In theory, the unctions are actually cumulative distribution unctions. However, when working withactual samples, the cumulative distribution unction is estimated by the rank o the observation and henceour description o the unctions as rank-assigning unctions (Yitzhaki, 1994, p. 149, n. 1).

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can happen i the members o the class constitute two strata, one that has higher and

the other that has lower incomes than , the average income o all households in all

classes (Milanovic and Yitzhaki, 2002, pp. 16263).

The index o overlapping o the overall distribution by a class, dened in equation

(4), is the weighted sum o overlapping o each o the other classes by that class, withthe relative size o each class serving as the weights:

O p p Oi i j ji

j i

= +

(5)

wherepi is the share o class iin the total number o households and Oji is the index

o overlapping o classjby class i. Since the overlapping o a group by itsel is equal to

1 by denition, its contribution to Oi is equal to its relative size.

In turn, the class-by-class overlapping indexes are calculated as:

Oy F y

y F yji

i ji

i i

=

cov ( , ( ))

cov ( , ( ))(6)

whereFji is the unction that assigns members o class itheir ranks in the income

distribution o classj. The index Ojiindicates the extent to which the incomes o house-

holds in class jalls in the range o incomes o households in class i; the higher the

raction o classjthat alls in the range o class i, the higher will be the value oOji; and

or a given raction o classjthat alls in the range o class i, the closer the incomes o

the households in that raction are to the mean income o class i, the higher will be the

value oOji. The index can take values between 0 (no overlap) and 2. Perect overlapoccurs when the index equals 1, indicating that the rankings o members o class ipro-

duced byFiandFjiare identical (Yitzhaki, 1994, pp. 15052).

We now turn to the results o the Yitzhaki decomposition or our data (Table 6).22

The most striking result is that the increase in overall inequality between 1989 and

2000 was solely due to an increase in inter-class inequality. The remainder term or

intra-class inequality (Ir in equation (3)) contributed the same amount to overall ine-

quality in both years and its share in overall inequality declined considerably rom 70%

Table 6. Results rom the Yitzhaki decomposition: decomposition o the Gini into inter-class and

intra-class inequality

1989 2000

Gini Share (%) Gini Share (%)

Total 0.393 100 0.473 100Inter-class 0.106 27 0.187 39Intra-class 0.287 73 0.287 61

22 We present only the results or 2000 because the 1989 results are very much similar. Decomposition othe Gini by groups was perormed using the ANOGI program (Jann and Masterson 2007).

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to 58%. Class divisions amongst households thus accounted or a substantial amount

o overall inequality, refecting primarily the huge gap in income between the capitalist

class and everyone else.23

The results rom decomposing the remainder term are shown inTable 7. Looking

rst at the column o overlapping indexes, it is important to note that the compari-son o the index across groups should take into account the act that the minimum

value that the index can take is the population share. Thus, a more numerous group

is more likely to have a greater value or its overlapping index than a less numerous

group. A simple way to adjust or this property o the index is to divide it by the popu-

lation share and the resulting estimates are shown in column (6). They reveal that,

unsurprisingly, the capitalist households showed the lowest amount o overlapping

and constituted a near-perect stratum. We also ound that there were notable dier-

ences amongst the other classes, especially when the adjusted values o the index are

compared: non-skilled worker had the lowest amount o overlapping (2.44) whilst the

supervisory group had the highest amount (15.72).

Within-class inequality is the highest amongst the capitalist and sel-employed

households, yet their indexes o overlapping are drastically dierent. The high degree

o inequality amongst the capitalist households is the inequality between the very rich

and the extremely rich. In contrast, the inequality amongst the sel-employed refects

their more heterogeneous character, ranging rom prosperous small business owners

to loss-making ones and rom highly paid proessionals to those in modestly paid non-

skilled occupations. Capitalist households are concentrated at the very high end o the

overall distribution with very little overlap, whilst the sel-employed are more spread

out over the distribution with a great deal o overlap.

Amongst the employee groups, blue-collar workers showed the lowest amount o

within-class inequality, whilst managers showed the highest, with the other our groups

23 The same result regarding the nature o inter-class inequality emerged with the denition o capitalist

class using relative thresholds. We ound that the contribution o inter-class inequality increased rom 0.121to 0.176 whilst that o the remainder changed only rom 0.274 to 0.297, between 1989 and 2000. Theseestimates suggest that the principal orce behind increasing inequality was the rise in inter-class inequality.

Table 7 Results rom the Yitzhaki decomposition: decomposition o intra-class inequality, 2000

(1) (2) (3) (4) (5) (6)

Class Populationshare (pi)

Incomeshare(si)

Overlapindex (Oi)

Gini (Gi) Contributionto theremainder(siOiGi)

Adjustedoverlapindex(Oi/pi)

Capitalist 0.02 0.20 0.037 0.456 0.003 1.68Manager 0.13 0.14 0.858 0.383 0.046 6.62Supervisor 0.06 0.05 0.908 0.346 0.015 15.72Proessional 0.14 0.14 0.878 0.374 0.045 6.49White-collar, skilled worker 0.06 0.06 0.912 0.371 0.019 14.79Blue-collar, skilled worker 0.09 0.06 0.901 0.322 0.018 10.53Non-skilled worker 0.40 0.25 0.975 0.365 0.089 2.44Sel-employed 0.11 0.10 1.021 0.458 0.048 9.64Total 1.00 1.00 0.5 0.492 0.284 0.5

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alling in between. The relatively lower inequality amongst blue-collar workers was

probably a refection o their higher degree o unionisation and relatively lower degree

o occupational heterogeneity, which limits the pay range. Collective bargaining is

rare amongst occupational groups included under the broad category o managers.

Additionally, the occupational groups included in this category are quite heterogene-ous, potentially encompassing the CEO o a large corporation as well as the assistant

manager o a small-town ast-ood restaurant. Both actors probably contributed to the

relatively high inequality within the managerial class.

In terms o their respective contributions to the remainder term, the contribution o

the capitalist households was the lowest at 1%, whereas the contribution o the non-

skilled workers was the largest at 32% (Table 7). The low contribution o the ormer

refected primarily their very low amount o overlapping. This suggests that the con-

tribution o the capitalist class to overall inequality is not via its contribution to the

remainder (or within-class) term but via its contribution to inter-class inequality.

Further details are presented in Table 8 that show the overlapping matrix or 2000.

The reerence group (the class represented by the subscript iin the overlapping index

Oji) is shown in the rows o the table; other groups are shown in the columns (the

classes represented by the subscriptj). As we would expect rom our denition o capi-

talist households, the overlapping o other classes by the capitalists is extremely small.

In contrast, the overlapping o capitalists by each o the other classes is much larger, as

indicated in the column labeled Capitalists.

The mechanism can be illustrated by considering the overlapping between capital-

ists and non-skilled workers. The overlapping o non-skilled workers by capitalists is

quite negligible at 0.01. This refects the act there are very ew worker households with

incomes that all in the interval o capitalists incomes. As a result, the ranks o capital-

ist households, when each o them are considered as belonging to the income distri-bution o worker households, will not dier much rom each other and this renders

the covariance in the numerator o equation (6) rather small. On the other hand, the

overlapping o capitalists by non-skilled workers is somewhat larger at 0.06, refecting

the act that there are relatively more capitalist households in the interval o workers

incomes.24

I we exclude the row and column labeled capitalist rom consideration, then the

table shows a great deal o overlapping between the classes. The lowest number in this

submatrix0.76occurs at the intersection o the manager row and the non-skilled

worker column. In general, the overlapping o non-skilled workers by other employee

groups is relatively smaller.The index o overlapping depends on the ranks and incomes o households in each

class. It is thereore susceptible to bias rom extreme values. Hence, an examination o

the ranking o one class in terms o another is instructive. This provides the answer to

the ollowing type o question: what will be the position o an average worker household

24 Consider the ollowing hypothetical example. Suppose there is one worker household that has anincome equal to the minimum income o the capitalist class. Further suppose that this minimum turnsout to be the income o ve capitalist households. Then the proportion o worker households alling in theincome interval o capitalists (say, between $50 million and $900 million) income will be lower than the

proportion o capitalist households alling in the income interval o workers. Note, however, that the value othe overlapping index is not merely a unction o the proportion o households in one class that is includedin the income interval o the other class (see the discussion ollowing equation (6)).

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Table

8.Overlappingbetweenhouseholdsinvariousclasses,

2000

Cap

itali

st

Manager

Supervisor

Pro

fess

ional

White-co

llar,

skilledworker

Blue-co

llar,

skilledworker

Non-s

killed

worker

Sel

f-emp

loye

d

Capit

alist

1.0

0

0.0

3

0.0

1

0.0

2

0.0

2

0.0

0

0.0

1

0.0

3

Mana

ger

0.1

7

1.0

0

0.9

6

0.9

9

0.9

8

0.9

1

0.7

8

0.8

7

Superv

isor

0.0

9

1.0

0

1.0

0

1.0

0

0.9

9

0.9

9

0.8

7

0.8

9

Profess

ional

0.1

4

1.0

0

0.9

8

1.0

0

0.9

9

0.9

4

0.8

2

0.8

8

White-co

llar,

skilledworker

0.1

0

1.0

1

1.0

0

1.0

1

1.0

0

0.9

7

0.8

5

0.8

9

Blue-co

llar,

skilledworker

0.0

4

0.9

5

0.9

8

0.9

6

0.9

6

1.0

0

0.9

0

0.8

6

Non-sk

illedworker

0.0

5

0.9

7

1.0

3

0.9

9

1.0

0

1.0

7

1.0

0

0.9

2

Sel

f-e

mp

loye

d

0.1

4

1.1

1

1.1

0

1.1

1

1.1

0

1.0

8

0.9

7

1.0

0

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in the income distribution o managers? The average rank o each class in the distribu-

tion o other classes is shown in the matrix o ranks (Table 9).

Numbers along the row labeled Capitalist, or example, indicate the average rank

o the households in that class in the distribution o income within each o the other

classes. It should be noted that, by denition, the average rank o a class in its ownranking is equal to 0.5, and hence, the numbers on the diagonal are all equal to 0.5.

An average rank exceeding 0.5 would indicate that, on average, households in that

class have a rank that is higher than in their own distribution; the converse holds or an

average rank alling below 0.5.

Consider rst the most numerous o the classes, non-skilled worker households.

Numbers reported along their row indicate that they were, on average, at the very bot-

tom o the capitalist distribution and at the third or the ourth decile in the distribu-

tion o other classes. The least numerous class, capitalist households, were at the very

top or in the top 1st percentile o the distribution o other classes, as we would expect

rom the criteria that we used to dene capitalists. Managers and proessionals had a

similar standing, on average, in each others distribution as they had in their own (i.e.,

very close to the 50th percentile) and denitely belonged to the upper portions o the

distributions o all other earner groups.25

5.2 Inequality and sources o income

As we saw previously, the capitalist households received about 18% o aggregate income

in 2000. This was twice as much as the share o income they had in 1989 (Table 10).

The managerial class and the white-collar proessionals maintained their shares in

income (roughly 13% to 14% each), whilst the other ve groups suered losses in their

income shares. Thus, the increase in the share o the capitalist class between 1989 and2000 was accompanied by the shrinking income shares o supervisors, blue-collar and

white-collar skilled workers, non-skilled workers and the sel-employed.

The latter groups, with the exception o white-collar skilled workers, whose

share remained constant, also suered losses in their share o base income, which

consist primarily o earnings. On the other hand, capitalists, managers and proes-

sionals saw their share o base income increase between 1989 and 2000. Over the

same period, income rom wealth became much more concentrated in the hands o

the capitalist households. The capitalist class, constituting about 2% o all house-

holds, accounted or 32% and 50% o income rom wealth in, respectively, 1989

and 2000. In short, the big jump in the share o the capitalist class in the aggregate

economic pie came rom greater income rom wealth. The growth in the share othe capitalist class in aggregate income and income rom wealth, and the growing

share o the more well-o segments o earners (i.e., managers and proessionals) in

base income contributed towards to the increase in inequality between 1989 and

2000.26

We next examine how much the dierent sources o income contributed to ine-

quality using the so-called natural decomposition method (Lerman, 1999). The Gini

25 Our sensitivity analysis using the relative thresholds denition o the capitalist class produced resultsthat are practically identical to the results reported here regarding overlapping and within-group inequality.

26

We ound that the same results emerged regarding income shares when we employed relative thresholdsto dene the capitalist class. For example, the share o capitalists in aggregate income increased rom 11%to 17% and their share in income rom wealth grew rom 38% to 47% between 1989 and 2000.

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Table9.Averagerankofaclassinthe

distributionofotherclasses,

2000

Cap

ital

ist

Manager

Supervisor

Professional

White-co

llar,

skilledworker

Blue-co

llar,

skilledworker

Non-s

killed

worker

S

elf-emp

loye

d

Capita

list

0.5

0

0.9

9

1.0

0

0.99

0.9

9

1.0

0

1.0

0

0

.99

Manager

0.0

1

0.5

0

0.5

8

0.52

0.5

4

0.6

3

0.7

0

0

.58

Superv

isor

0.0

0

0.4

2

0.5

0

0.45

0.4

6

0.5

6

0.6

3

0

.51

Profe

camb. j. econ.-2013-wolff-cje bet026

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