So you really want to know how much Managing Directors make? Leave it to two economists to figure it out. We first came across this working paper by out from the UChicago (by Steven N. Kaplan and Joshua Rauh) reading about income inequality in this WSJ article. In an effort to figure out just exactly who the “rich” (as in the “rich get richer”) is made up of, these economists studied compensation trends of the top 1% of earners in recent years, including lawyers, Wall Streeters, athletes/celebrities and executives.

For the Wall Street bucket, they looked at the top 10 firms, including Goldman Sachs, Bear Stearns, Lehman Brothers, Morgan Stanley, Merrill Lynch, Citigroup, CSFB, JPMorgan Chase, UBS and Deutsche Bank, and estimated that at a minimum, 6,006 managing directors were employed by these banks, but more likely in the 10,000 range for Wall Street as a whole.

Using two different models of income distribution, exponential and pareto, the average income and distribution are as follows (and they believe the exponential to be more “realistic” according to industry info):

The way to read this is that assuming the pareto distribution, 60% of MDs made less than $1.4MM, whereas the exponential distribution results in 31% of MDs making less than that amount. Below are the averages and medians for both distributions.

A lot to wade through here. Interestingly, while the rest of the top 1% has become increasingly Wall Streetified, the absolute number of Wall Streeters basking in high earning glory has increased — from an estimate of about 1,600 partners in 1970 to the 10,000 MDs now.

Private equity and venture capital are doing their share to add heft to the elite earners out there. The economists estimate that based on fees the funds (management fees and carried interest) are generating, VC partners made $1.3MM - $2.0MM and PE partners made $2.3MM - $3.8MM (assuming total industry fees of $18BN or $30 BN in 2004 and 2005).

Oh, and for you lawyers out there — there’s a whole section devoted to you so I’d read up.