Income Business Cycles

We document the cyclical behavior of the post-tax income distribution in the US. The analysis is based on a dataset that is informative for the lower and the upper tail of the post-tax income distribution and that also matches aggregate national income. Most importantly, lower and higher income individuals experience significantly larger fluctuations across the business cycle than middle-income individuals. Specifically, their standard deviation relative to the median income is of almost double magnitude. These findings are robust to the choice of the business cycle filter