A nonparametric analysis of the shape dynamics of the US personal income distribution: 1962-2000

BIS Working Papers No 184
October 2005
We provide stylized facts on the evolving shape dynamics of the US personal income distribution from 1962 to 2000. Based on adaptive kernel density estimation, we propose an adaptive bootstrap test for multimodality. Our results indicate that multimodality has been a predominant feature of the US income distribution. Both the number and location of modes change over time, revealing rich distributional dynamics and strong heterogeneity. Decomposing the sample by age, education, gender and race, all groups exhibit multiple modes and follow distinct distributional patterns. For all groups and for the population as a whole, income distribution improved over the 1960s, 1970s and 1980s, but deteriorated dramatically in the 1990s.

JEL Classification Numbers: C12, C14, C15, E25

Keywords: Adaptive kernel method, adaptive multimodality test, bootstrap, income distribution, nonparametric density estimation, population heterogeneity