The long-run determinants of inequality: What can we learn from top income data?

Roine, Jesper; Vlachos, Jonas; Waldenström, Daniel

doi:10.1016/j.jpubeco.2009.04.003

Cited by 329 publications

(394 citation statements)

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“…In financial markets, interest rates are less inflated by profit margins. It becomes evident -following this chain of argument -that the larger the levels of openness to international trade are, then the lower income inequality is (Roine et al, 2009).…”

Section: Economic Growth and Income Inequalitymentioning

confidence: 97%

“…Such variables are commonly referred to when investigating the determinants of wage inequality (for a more detailed discussion, see Roine et al (2009)). 10 More precisely, as discussed in Section 2, the impact of trade openness on inequality may be both positive and negative, depending on the forces at work.…”

Section: Econometric Strategymentioning

confidence: 99%

“…10 More precisely, as discussed in Section 2, the impact of trade openness on inequality may be both positive and negative, depending on the forces at work. If intensified trade reduces barriers in domestic markets and generates favourable conditions for the operating of more workable competition, more equal income distribution should follow (Roine et al, 2009). If, on the other hand, trade openness enhances the expansion of productive scale, with the positive impact on either demand for skilled labour, or rent extraction, or both, income inequality (also via increasing skill premia) may increase.…”

Section: Econometric Strategymentioning

confidence: 99%

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Technological change, rent and income inequalities: A Schumpeterian approach

Antonelli

Gehringer

2017

Technological Forecasting and Social Change

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Increasing levels of income inequality have recently attracted much attention. The literature has concentrated on the hypothesis that increasing levels of income inequality are the cause of slow growth and social unbalances. This paper contributes to exploring an alternative hypothesis according to which increasing levels of income inequality are the consequence, rather than the cause, of slow growth and more specifically of the slowing pace of technological change. The paper articulates the Schumpeterian hypothesis that the rate of technological change exerts a significant influence in reducing income distribution. Due to the powerful effects of creative destruction, the rate of technological change engenders a reduction in wealth and rent inequalities that are highly skewed and, consequently, limits income inequality. We test this hypothesis in an empirical exercise by implementing quantile regressions on a large dataset of advanced and industrializing economies. The inequality diminishing effect of technological change holds along the entire income inequality distribution, but exhibits larger effects in countries where the concentration of wealth and, consequently, income asymmetries are stronger. These results have novel welfare implications and suggest some crucial insights for economic policy analysis.

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Section: Economic Growth and Income Inequalitymentioning

confidence: 97%

Section: Econometric Strategymentioning

confidence: 99%

Section: Econometric Strategymentioning

confidence: 99%

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Technological change, rent and income inequalities: A Schumpeterian approach

Antonelli

Gehringer

2017

Technological Forecasting and Social Change

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“…However, their evidence is consistent with the third interpretation, the incentive for aggressive bargaining on the part of top income earners. Roine, Vlachos, and Waldenström (2009) test the hypothesis that the size of government affects the top income share. Their hypothesis is that it will have a negative effect on top income shares.…”

Section: Policymentioning

confidence: 99%

“…To date, this has not been attempted. To our knowledge, there are only two pooled time series analyses of the determinants of the top income shares and neither of these focuses on the recent rise in top income shares (Scheve and Stasavage 2009;Roine, Vlachos, and Waldenström 2009). Volscho and Kelly (2012) do provide a time series analysis of 1 We discuss the typology of political economies below.…”

Section: Introductionmentioning

confidence: 99%

Power, Markets, and Top Income Shares

Huber¹,

Huo

Stephens³

2015

SSRN Journal

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The Kellogg Institute for International Studies at the University of Notre Dame has built an international reputation by bringing the best of interdisciplinary scholarly inquiry to bear on democratization, human development, and other research themes relevant to contemporary societies around the world.Together, more than 100 faculty and visiting fellows as well as both graduate and undergraduate students make up the Kellogg community of scholars. Founded in 1982, the Institute promotes research, provides students with exceptional educational opportunities, and builds linkages across campus and around the world. The Kellogg Working Paper Series:! Shares work-in-progress in a timely way before final publication in scholarly books and journals ABSTRACTThe rise of the super-rich has attracted much political and academic attention in recent years. However, to date there have been few attempts to explain the cross-national variation in the recent rise of very top incomes. Drawing on the World Top Incomes Database, we study the income share of the top 1% in almost all current postindustrial democracies from 1975 to 2012. We find that extreme income concentration at the very top is a predominantly political phenomenon, not the outcome of economic changes. Top income shares are largely unrelated to economic growth, increased knowledge-intensive production, export competitiveness, market size, financialization, and wealth accumulation. Instead, they are driven by various political and policy changes that reflect a decline in the relative power and resources of labor, such as union density and centralization, secular-right governments, and cuts in top marginal income tax rates as well as in public spending on education. RESUMENEn los últimos años, el ascenso de los super-ricos atrajo mucha atención política y académica. Sin embargo, hasta el momento se hicieron pocos intentos de explicar la variación internacional en el crecimiento reciente de los ingresos más altos. Tomando información de la Base Mundial de Datos sobre los Ingresos más Altos (World Top Incomes Database) estudiamos la porción del ingreso del 1% superior en casi todas las democracias postindustriales actuales desde 1975 hasta 2012. Encontramos que la extrema concentración del ingreso en la cúspide es un fenómeno predominantemente político y no resulta de cambios económicos. La participación de los ingresos superiores no está relacionada en ninguna medida significativa con el crecimiento económico, un aumento en la producción que hace un uso intensivo del conocimiento, la competitividad de las exportaciones, el tamaño de los mercados, el desarrollo del sector financiero o la acumulación de riqueza. En cambio, está guiada por varios cambios en la política y en las políticas que reflejan una declinación en el poder relativo y en los recursos de los trabajadores, tales como la densidad sindical y la centralización, los gobiernos seculares de derechas y las reducciones tanto en las tasas marginales superiores de impuestos sobre los ingresos como en el gasto púb...

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Does financial market growth improve income distribution? A comparison of developed and emerging market economies of the global sample

Paramati

Nguyen

2018

Int. J Fin Econ

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The objective of this research is to investigate the effects of stock market indicators, banking, and foreign direct investment inflows on income inequalities in developed and emerging market economies around the world. For this reason, the study utilizes annual data that range from 1981 to 2014 on the selected indicators. Given the nature of our variables, we employ panel autoregressive distributed lag models to explore the long‐run estimates of income inequalities. The long‐run estimates indicate that the stock market indicators have significant positive and negative impact on income inequalities in developed and emerging market economies, respectively. Further, our findings show that the banking credit adversely affects income inequalities both in developed and emerging economies. Our results also establish significant short‐run causalities among stock market indicators and income inequalities. Given these findings, we argue that the stock markets are playing an important role in reducing income inequalities in emerging economies whereas they contribute for higher inequalities in developed economies.

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The long-run determinants of inequality: What can we learn from top income data?

Cited by 329 publications

References 46 publications

Technological change, rent and income inequalities: A Schumpeterian approach

Technological change, rent and income inequalities: A Schumpeterian approach

Power, Markets, and Top Income Shares

Does financial market growth improve income distribution? A comparison of developed and emerging market economies of the global sample

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