What Accounts for the Rising Share of Women in the Top 1 percent?

• Published date: 01 March 2023
• Author: Richard V. Burkhauser,Nicolas Herault,Stephen P. Jenkins,Roger Wilkins
• Date: 01 March 2023
• DOI: http://doi.org/10.1111/roiw.12548

© 2021 International Association for Research in Income and Wealth

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WHAT ACCOUNTS FOR THE RISING SHARE OF WOMEN IN THE TOP

1 PERCENT?

by RichaRd V. buRkhauseR

Cornell University

IZA

NBER

Nicolas heRault*

University of Melbourne

stepheN p. JeNkiNs

IZA

University of Melbourne

LSE, ISER (University of Essex)

AND

RogeR WilkiNs

IZA

University of Melbourne

The share of women in the top 1 percent of the UK’s income distribution has been growing over the

last two decades (as in several other countries). Our first contribution is to account for this trend using

regressions of the probability of being in the top 1 percent, fitted separately for men and women, in

order to contrast between the sexes the role of changes in characteristics and changes in returns to

characteristics. We show that the rise of women in the top 1 percent is primarily accounted for by their

greater increases in the number of years spent in full- time education. Although most top income analysis

uses tax return data, we derive our findings taking advantage of the much more extensive information

about personal characteristics that is available in survey data. Our use of survey data requires justifica-

tion given survey under- coverage of top incomes. Providing this justification is our second contribution.

JEL Codes: D31, J16, C81

Keywords: top 1 percent, top incomes, inequality, gender differences, survey under- coverage

1. iNtRoductioN

“In the recent research on top incomes, there has been little discussion of gender”

(Atkinson et al., 2018, p. 225). This is an important gap to fill since top incomes are the

*Correspondence to: Nicolas Herault, Melbourne Institute: Applied Economic & Social Research,

Faculty of Business and Economics, The University of Melbourne, Level 5, FBE Building, 111 Barry

Street, Carlton, Victoria 3010, Australia (nherault@unimelb.edu.au).

Review of Income and Wealth

Series 69, Number 1, March 2023

DOI: 10.1111/roiw.12548

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Review of Income and Wealth, Series 69, Number 1, March 2023

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© 2021 International Association for Research in Income and Wealth

central focus of much recent income distribution analysis, building on the pioneering

research of Thomas Piketty and collaborators (see e.g., Atkinson et al., 2011 for a

review) and the on- going work centred around the World Inequality Database project

(WID, https://wid.world/). Drawing on income tax and related administrative register

data sources, the top incomes research field has highlighted how, in many countries,

the most significant changes in income distribution have been occurring at the top— it

is these increases at that top that are driving the much- discussed increase in inequality.

However, learning more about the gender divide at the top of the income distribution

is important not only because it contributes to our knowledge about trends in vertical

inequality but also because differences between the sexes are a prominent horizontal

inequality and hence interesting in their own right. This issue is made more difficult to

evaluate because there is only limited information about individuals’ characteristics in

the tax and administrative record data available for most countries.

In this paper, we build on recent research documenting a rising share of

women in the top 1 percent of the income distribution of several countries and,

focusing on the UK, analyze the factors that account for this significant shift using

regression- based decompositions applied to yearly cross- sectional survey data cov-

ering fiscal years 1995/96 through to 2015/16. We also demonstrate the validity of

using UK survey data for this exercise— we present evidence that the oft- cited issue

of survey under- coverage of top incomes does not prejudice our analysis, and so

we can exploit the much greater information about personal characteristics that

is available in survey data compared to most of the administrative record data

sources used in top incomes research to date.

Before Atkinson et al.’s (2018) research, there was “a strong suspicion that

women are under- represented [in the top income group], but there is a shortage

of hard evidence” (2018, p. 226). They provide that evidence for eight countries

with income taxation systems in which the income unit is the individual (Australia,

Canada, Denmark, Italy, New Zealand, Norway, Spain, and the UK) and hence

it is possible to separately identify men’s and women’s income shares. In all eight

countries, the share of women in the top income group of the individual gross

income distribution increased between 2000 and 2013, whether “top” is defined as

the top 10 percent, top 1 percent, or top 0.1 percent (2018, Tabl e1). For example,

in the UK, the share of women in the top 1 percent increased from 14.0 percent to

18.2 percent. For the countries for which longer data series are available (Canada,

Denmark, Norway, the UK), there has been a secular upward trend since around

1980 (2018, Figure 1). Atkinson et al. (2018) also document that in each of the

eight countries, the trend increase in the share of women at the top is smaller, the

further one goes towards the very top of the income distribution; thus, the decline

in under- representation of women is lower as one goes up the income scale. The

analysis for all eight countries is based on administrative data.

Two recent papers show that Atkinson et al.’s findings regarding the upward

trend in the share of top- income women also describe the situation in Finland and

Sweden (two countries also with independent taxation): see Ravaska (2018) and

Boschini et al. (2020) respectively, with the analysis in both cases based on admin-

istrative register data.

The upward trend in the share of top- income women in the 10 countries cited

has had an equalizing impact on each country’s income distribution, other things

Review of Income and Wealth, Series 69, Number 1, March 2023

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© 2021 International Association for Research in Income and Wealth

TABLE 1A

distRibutioN of age aNd goVeRNmeNt office RegioN iN the top 1% iN the suRVey aNd tax RetuRN data (1995/96 to 2015/16)

No. of

Unweighted

Obs.

1995 1996 1997 1998 1999 2000 2001 2002 2003

SPI HBAI SPI HBAI SPI HBAI SPI HBAI SPI HBAI SPI HBAI SPI HBAI SPI HBAI SPI HBAI

5,055 481 6,986 477 18,976 432 25,698 421 31,879 464 31,710 416 36,299 469 36,846 514 39,633 514

No. of

Weighted

Obs.

454,205 453,896 455,596 455,963 456,860 456,998 458,444 458,338 460,577 460,022 463,622 463,444 466,498 466,772 483,103 482,734 486,526 486,276

Age

Under 25 0.0 0.0 0.0 0.3 0.2 0.8 0.2 0.7 0.2 0.9 0.4 2.6 0.5 0.0 0.3 0.0 0.3 0.3

25– 34 0.0 15.3 0.0 14.4 9.4 18.4 10.9 10.0 10.4 11.5 12.6 19.6 11.5 14.4 10.4 11.9 9.0 11.1

35– 44 0.0 32.8 0.0 29.9 30.8 28.0 31.5 31.7 31.2 34.6 33.7 32.8 34.7 38.6 34.0 40.0 33.1 35.7

45– 54 0.0 34.3 0.0 34.7 38.2 32.7 35.6 35.9 36.1 34.5 33.0 30.9 32.6 26.2 33.0 30.1 33.9 29.4

55– 64 0.0 11.4 0.0 14.0 14.8 14.5 15.2 14.8 15.3 13.8 14.4 10.9 15.1 14.6 16.4 14.1 17.4 18.3

65– 74 0.0 4.6 0.0 5.9 4.3 4.8 4.7 5.5 4.8 3.6 4.2 1.7 3.9 4.7 4.2 3.3 4.4 4.8

75 and over 0.0 1.6 0.0 0.7 2.4 0.7 2.0 1.3 2.1 1.0 1.7 1.6 1.7 1.5 1.8 0.5 1.9 0.3

Missing

age

100.0 100.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Sex

Male 86.5 86.7 86.8 87.3 86.4 87.7 86.7 86.4 86.8 88.0 86.1 86.4 85.8 86.8 85.8 86.9 85.2 86.0

Female 10.4 13.3 13.2 12.7 13.6 12.3 13.3 13.6 13.2 12.0 13.9 13.6 14.1 13.2 14.2 13.1 14.8 14.0

Missing sex 3.2 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0

Government

office

region

North East 2.2 1.8 1.6 3.3 1.8 2.1 1.7 2.0 1.6 1.8 1.4 1.3 1.5 1.7 1.6 1.2 1.8 1.1

North West6.8 6.6 6.9 6.5 6.7 6.4 6.8 4.7 7.1 7.4 6.7 5.6 6.4 5.7 6.8 6.6 7.1 6.8

Yorkshire

and the

Humber

5.3 7.0 5.2 5.4 5.1 4.4 4.7 5.4 4.8 5.0 4.3 5.4 4.5 4.1 5.0 4.9 5.1 3.4

East

Midlands

4.5 5.3 5.0 3.6 5.4 4.6 4.8 5.8 5.2 4.0 4.9 4.4 4.8 2.9 5.2 3.3 5.2 3.8

West

Midlands

6.5 6.4 6.2 6.0 5.1 8.8 5.7 6.0 5.7 8.9 5.7 3.4 5.5 3.1 5.7 6.9 5.6 4.9

East of

England

12.4 13.9 11.5 11.0 12.9 14.7 12.4 13.6 12.3 10.0 12.4 12.7 12.1 12.3 11.8 12.7 11.9 10.2

(Continues)