Over at the American Enterprise Institute, James Pethokoukis has an excellent write-up on a new study by Steven Kaplan (University of Chicago Booth School of Business) and Joshua Rauh (Stanford Graduate School of Business) on income inequality and the “1% vs. 99%” war cry. The findings:

• The increase in pay at the highest income levels has been broad-based, ranging from public and private company executives to pro athletes.¹
• Instead of drastically rising, the afer-tax, after-transfer income share of the top 1% is about the same as it was in 1987-1988, 1996, and 2001 (most inequality alarmists cite pre-tax, pre-transfer income).
• Top earners come less from inherited wealth (which dropped from 60 to 32% between 1982 and 2011) and more from modest households, access to education (the share of those with no college dropped from 17 to 5 percent, with college grads rising from 77 to 87% between ’82 and ’11), and placing their efforts in tech-based industries.

“We believe,” write Kaplan and Rauh,

that the US evidence on income and wealth shares for the top 1 percent is most consistent with a “superstar”-style explanation rooted in the importance of scale and skill-biased technological change. In particular, we interpret the fact that the top 1 percent is spread broadly across a variety of occupations as most consistent with an important role for skill-biased technological change and increased scale. These facts are less consistent with an argument that the gains to the top 1 percent are rooted in greater managerial power or changes in social norms about what managers should earn.²

Though globalization “may have contributed to greater scale,” it “cannot drive the increase in inequality at the top levels given the breadth of the phenomenon across the occupations we study.”³ Funny enough, increasing globalization has actually decreased global inequality over the last few decades.⁴

So, maybe the superrich aren’t all Gordon Gekkos. Maybe they’ve just got mad skillz in the globalized economy.