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

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  • Roine, Jesper

    ()
    (Stockholm School of Economics)

  • Waldenström, Daniel

    ()
    (Research Institute of Industrial Economics (IFN))

Abstract

In this paper we use newly compiled top income share data to estimate common breaks and trends across countries over the twentieth century. By using the most re-cent structural breaks techniques, our approach both confirms previous notions and offers new insights. In particular, the division into an Anglo-Saxon and a Continental European experience does not seem to be as clear cut as previously suggested. Some continental European countries have had increases in top income shares, just as in the Anglo-Saxon countries, but typically with a lag. Most notably, we find that the Nordic countries display a marked “Anglo-Saxon” pattern, with sharply increased top income shares. Unlike in the Anglo-Saxon countries, however, including realized capital gains seems important in these countries. Our results help inform theories about the causes of the recent rise in inequality.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 801.

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Length: 31 pages
Date of creation: 16 Jun 2009
Date of revision:
Handle: RePEc:hhs:iuiwop:0801

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Keywords: Top Incomes; Income Inequality; Economic Development; Common Structural Breaks;

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References

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Cited by:
  1. 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.
  2. Jesper Roine & Daniel Waldenström, 2012. "On The Role Of Capital Gains In Swedish Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(3), pages 569-587, 09.
  3. 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).
  4. Tuomas Malinen, 2013. "Is there a relationship between income inequality and credit cycles?," Working Papers 292, ECINEQ, Society for the Study of Economic Inequality.
  5. 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.
  6. Tuomas, Malinen, 2011. "Inequality and savings: a reassesment of the relationship in cointegrated panels," MPRA Paper 33350, University Library of Munich, Germany.

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