How Risky Are Recessions for Top Earners?
Fatih Guvenen, Greg Kaplan, Jae Song
American Economic Review · 2014 · Volume 104 · Issue 5
Abstract
How sensitive to business cycles are the earnings of top earners? And, how does the business cycle sensitivity of top earners vary by industry? We use a confidential dataset on earnings histories of US males from the Social Security Administration. On average, individuals in the top 1 percent of the earnings distribution are slightly more cyclical than the population average. But there are large differences across sectors; top earners in Finance, Insurance, and Real Estate (FIRE) and Construction face substantial business cycle volatility, whereas those in Services (who make up 40 percent of individuals in the top 1 percent) have earnings that are less cyclical than the average worker.
Keywords
Business Fluctuations, Cycles, Wage Level and Structure, Wage Differentials
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