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  4. May 2014
  5. How Risky Are Recessions for Top Earners?

How Risky Are Recessions for Top Earners?

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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.

Citation

Guvenen, Fatih, Greg Kaplan, and Jae Song. 2014. "How Risky Are Recessions for Top Earners?" American Economic Review, 104 (5): 148-53. DOI: 10.1257/aer.104.5.148

Additional Materials

JEL Classification

  • E32 Business Fluctuations; Cycles
  • J31 Wage Level and Structure; Wage Differentials