Distributional National Accounts

This projects aims at bridging the gap between national accounting—-which exclusively focuses on macro totals and growth—-and inequality analysis—-which focuses on distributions but without trying to be consistent with macro aggregates. Bridging this gap is necessary to meaningfully address questions such as: What fraction of total economic growth accrues to the top 10%, top 1%, etc.? How does growth per capita of the bottom 90% compare to overall growth? We plan on constructing both pre-tax and post-tax distributions so that we can assess the distributional role of the government when taking into account all taxes, transfers, and government spending on public goods. We will construct annual micro-level datasets that are consistent with the national accounts and would allow researchers to carry out many different types of distributional analysis. All the data and programs will be publicly posted online on a dedicated website. We view this project as a prototype attempt at building the first distributional national accounts, which we hope in the long run will become part of the economic statistics produced by government agencies around the world. Good data on the distribution of pre-tax vs. post-tax income, matching macro aggregates, should become a core component of teaching in public economics at both the undergraduate and graduate level.