Income Inequality: Does Corporate Income Inequality Parallel Individual Income Inequality?

Abstract

Explanations provided to explain the increasing individual income inequality, particularly in the U.S.
(Saez (2016)), suggest skills/education-related factors play an important role (De Gregorio and Lee
(2002)). Corporate income inequality is also on the rise. The purpose of this paper is to confirm the
existence of corporate income inequality and identify specific factors that shed light on this phenomenon. Results indicate corporate income inequality parallels individual income inequality in its existence, increasing degree over recent periods, and in the association with skills-based factors. Further, corporate income inequality is increasing in firms’ size suggesting an economies of scale effect. Governments can play a role in addressing both types of inequality.