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Top Incomes And National Savings

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  • Andrew Leigh
  • Alberto Posso

Abstract

The relationship between income inequality and national savings is theoretically ambiguous, and past empirical studies have delivered mixed results. We revisit the question using a newly available source of data on inequality: the income share of the richest 10 percent and the richest 1 percent. Combining this with historical data on national savings rates, we are able to investigate the relationship for 11 developed countries over the period 1921-2002. We find no consistent relationship between lagged top income shares and current savings rates, and our standard errors are small enough that we are able to reject more than modest effects in either direction. We view this as suggesting that inequality at the top end of the distribution is not a major driver of national savings rates. Copyright 2009 The Authors. Journal compilation 2009 International Association for Research in Income and Wealth Published by Blackwell Publishing.

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Bibliographic Info

Article provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.

Volume (Year): 55 (2009)
Issue (Month): 1 (03)
Pages: 57-74

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Handle: RePEc:bla:revinw:v:55:y:2009:i:1:p:57-74

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Citations

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Cited by:
  1. Jan Behringer & Till van Treeck, 2013. "Income Distribution and the Current Account: A Sectoral Perspective," INET Research Notes 35, Institute for New Economic Thinking (INET).
  2. Christian Belabed & Thomas Theobald & Till van Treeck, 2013. "Income Distribution and Current Account Imbalances," INET Research Notes 36, Institute for New Economic Thinking (INET).
  3. Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2007. "The Long-run Determinants of Inequality: What Can We Learn from Top Income Data?," Working Paper Series 721, Research Institute of Industrial Economics, revised 30 Apr 2008.
  4. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2009. "Top Incomes in the Long Run of History," NBER Working Papers 15408, National Bureau of Economic Research, Inc.
  5. Dan Andrews & Christopher Jencks & Andrew Leigh, 2009. "Do Rising Top Incomes Lift All Boats?," CAMA Working Papers 2009-17, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  6. Tuomas Malinen, 2011. "Income Inequality and Savings: A Reassessment of the Relationship in Cointegrated Panels," DEGIT Conference Papers c016_076, DEGIT, Dynamics, Economic Growth, and International Trade.
  7. Jan Behringer & Till van Treeck, 2013. "Income distribution and current account: A sectoral perspective," IMK Working Paper 125-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  8. Tuomas, Malinen, 2011. "Inequality and savings: a reassesment of the relationship in cointegrated panels," MPRA Paper 33350, University Library of Munich, Germany.
  9. Alvarez-Cuadrado, Francisco & El-Attar, Mayssun, 2012. "Income Inequality and Saving," IZA Discussion Papers 7083, Institute for the Study of Labor (IZA).
  10. Santo Milasi, 2012. "Top Income Shares and Budget Deficits," CEIS Research Paper 249, Tor Vergata University, CEIS, revised 08 Aug 2013.

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