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Common Trends and Shocks to Top Incomes: A Structural Breaks Approach

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  • Jesper Roine

    (SITE, Stockholm School of Economics)

  • Daniel Waldenström

    (Uppsala University and IFN)

Abstract

We use newly compiled top income data and structural breaks techniques to estimate common trends and breaks in inequality across countries over the twentieth century. Our results both confirm earlier findings and offer new insights. In particular, the division into an Anglo-Saxon and a Continental European experience is not as clear-cut as previously suggested. Some Continental European countries seem to have, experienced increases in top income shares, just as Anglo-Saxon countries have, but typically with a lag. Most notably, Nordic countries display a marked Anglo-Saxon pattern, with sharply increased top income shares, especially when including realized capital gains. Our results help inform theories about the causes of the recent rise in inequality. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 93 (2011)
Issue (Month): 3 (August)
Pages: 832-846

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Handle: RePEc:tpr:restat:v:93:y:2011:i:3:p:832-846

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References

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  1. A.B. Atkinson & Andrew Leigh, 2006. "The Distribution of Top Incomes in Australia," CEPR Discussion Papers 514, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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Cited by:
  1. Salvatore Morelli, 2014. "Banking Crises in the US: the Response of Top Income Shares in a Historical Perspective," CSEF Working Papers 359, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  2. Roine, Jesper & Waldenström, Daniel, 2011. "On the Role of Capital Gains in Swedish Income Inequality," Working Paper Series, Center for Labor Studies 2011:8, Uppsala University, Department of Economics.
  3. Peter Dolton & Li Lin, 2011. "From Grants to Loans and Fees: The Demand for Post-Compulsory Education in England and Wales from 1955 to 2008," CEE Discussion Papers 0127, Centre for the Economics of Education, LSE.
  4. Tuomas, Malinen, 2011. "Inequality and savings: a reassesment of the relationship in cointegrated panels," MPRA Paper 33350, University Library of Munich, Germany.
  5. Tuomas Malinen, 2013. "Is there a relationship between income inequality and credit cycles?," Working Papers 292, ECINEQ, Society for the Study of Economic Inequality.
  6. Peichl, Andreas & Pestel, Nico, 2011. "Multidimensional Affluence: Theory and Applications to Germany and the US," IZA Discussion Papers 5926, Institute for the Study of Labor (IZA).
  7. Salvatore Morelli & Timothy Smeeding & Jeffrey Thompson, 2014. "Post-1970 Trends in Within-Country Inequality and Poverty: Rich and Middle Income Countries," CSEF Working Papers 356, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  8. 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.

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