TY  - JOUR
AU  - Kaplan, Steven N
AU  - Rauh, Joshua
TI  - Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13270
PY  - 2007
Y2  - July 2007
DO  - 10.3386/w13270
UR  - http://www.nber.org/papers/w13270
L1  - http://www.nber.org/papers/w13270.pdf
N1  - Author contact info:
Steven N. Kaplan
Booth School of Business
The University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4513
Fax: 773/702-0458
E-Mail: steven.kaplan@chicagobooth.edu

Joshua Rauh
Graduate School of Business
Stanford University
Stanford, CA 94305
Tel: 650-723-9898
Fax: 650-725-6152
E-Mail: rauh@stanford.edu
M1  - published as Steven N. Kaplan, Joshua Rauh. "Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes? ," in Michael Weisbach, editor, "Corporate Governance" The Review of Financial Studies, vol. 23, no. 3, March 2010 (2010)

AB  - We consider how much of the top end of the income distribution can be attributed to four sectors -- top executives of non-financial firms (Main Street); financial service sector employees from investment banks, hedge funds, private equity funds, and mutual funds (Wall Street); corporate lawyers; and professional athletes and celebrities.  Non-financial public company CEOs and top executives do not represent more than 6.5% of any of the top AGI brackets (the top 0.1%, 0.01%, 0.001%, and 0.0001%).  Individuals in the Wall Street category comprise at least as high a percentage of the top AGI brackets as non-financial executives of public companies.  While the representation of top executives in the top AGI brackets has increased from 1994 to 2004, the representation of Wall Street has likely increased even more.  While the groups we study represent a substantial portion of the top income groups, they miss a large number of high-earning individuals.  We conclude by considering how our results inform different explanations for the increased skewness at the top end of the distribution.  We argue the evidence is most consistent with theories of superstars, skill biased technological change, greater scale and their interaction.
ER  -