Accounting for the Distribution of Income in the U.S. National Accounts

This paper presents simple methods to adjust the household survey (Current Population Survey (CPS)) to more closely match the national accounts measure of personal income. Using the underlying distribution in the CPS along with these adjustments yields a higher mean and median adjusted household income than the reported household income, and yields a larger increase in inequality. Adjusting the distribution by the income distribution available from tax records, increases inequality further, but does not change the trend. Finally, creating a more complete measure of personal income by imputing the value of in-kind health care benefits yields a smaller increase in inequality.